What is the RIGHT Question?

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 All charitable organizations MUST begin to provide information about the impact we are having in the community. We must tell the story of what really changes because of what we do.

Dan PallottaWe must talk about the difference we make - and learn to talk about the quality and the quantity of that difference. Or Joe and Josephine Public will continue to think the important measurement is how much it costs us to do our business. That is the story others choose to tell about us. Therefore the generous, amazing people who give money think that is the right question to ask. We have to tell the right story - so the generous giving people know the right question to ask.

Vantage Point is excited to be working with Dan Pallotta to have him come and speak to multiple groups in Vancouver in November. He imagines a different way. Dan outlines his message in his book, Uncharitable, which questions the status quo and the way we have always worked. Dan talks about the puritanical roots of the charitable sector and how so much of that thinking has not worked well for us in the last centuries. We know most of us work diligently to make our communities strong - with clear focus and great passion. And there are many contributors out there who want to work with us.

This week CBC tells the story of how much money charitable organizations pay fundraisers to attain those financial resources. Is that really the story? The truth is wonderful people give their hard-earned money to make our communities better. They don't want to pay their money to fundraisers. They always want their money to go directly to the recipient of the service. The contributors - all those wonderful people - have decided that information about fundraising is what matters. That is at least partly because we don't provide other information. Yet, are fundraising costs truly what we care about? What if an organization, through their own amateur efforts, raises $1,000 - and with the assistance of expert fundraising, they raise $10,000? Even if they pay the fundraising organization $5,000, they still have an additional $4,000 - a 400% increase for their organization. They have significantly greater financial resources. They will be able to better achieve their mission. Is that a good business decision? Is that best for our community?

Both Dan Pallotta and CBC are addressing the same issue - and they have different answers. The answers are different because of their perspectives. CBC examines the question from the traditional, puritanical perspective. Dan examines the issue from a place of what works best for community. Ultimately, is the right question how much money the organization spends making money or what difference the organization makes in the community?

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Comments

Calvin Taplay's picture
Calvin Taplay (not verified) on
Dear Colleen, Respectfully, I think that you missed the point of the CBC coverage of fundraising practises. I was shocked that external fundraising companies were collecting up to 80% of the revenue for their efforts and giving the remaining 20% of that revenue to the charities involved. Many Canadians, I am sure, are also shocked by this practise. This discourages people from giving to charity and charitable organizations need to address this problem in order to protect the integrity of the system. Calvin Taplay
Colleen Kelly's picture
Colleen Kelly (not verified) on
Dear Calvin, Thank you so much for your comment! I absolutely understand why you are shocked with the information presented. And it is only part of the story. I also agree we have much education to do to really work with the wonderful people who contribute to our community organizations. However, I do think there are many variables not presented in the recent coverage. I will admit there are some “bad” fundraising companies. There are also many great ones. And the way CBC presents the information is without comprehending the complexity of the art and science of fund development. Consider this hypothetical example - which we believe could have happened at many strong organizations, including our own. Imagine that in 2008 we raised $100,000 through an event. In 2009 we then could have determined that by hiring a good fundraising company, we likely could double that amount. So we hired a great fundraising company that follows the ethical code for fundraisers. We agreed to pay them a reasonable fee (ethical fundraisers will NOT work for a percentage) of $40,000 - anticipating this company can easily double the amount raised to $200,000. Look what happened in 2009! Community organizations experienced a huge drop in philanthropic dollars. The good fundraising company then only raised $50,000. The fee we had agreed to was $40,000 – 80% of the amount raised. That was a very likely scenario! So, if the CBC examined our organization based on this question alone, we would be one of the shocking stories. Those stories happened often in 2009. And, in retrospect, we would say our organization made a very bad business decision to hire a fundraising company. If we had known what was going to happen in 2009, we would have chosen a different way. We didn’t. The real issue in this example is: Was this organization still able to continue to deliver their mission to make a difference in the community? Colleen
Greg's picture
Greg (not verified) on
Yes, a difference was made in your example. But that difference was one of $10,000 at a cost of $50,000. Except that $10,000 difference is likely less after the internal administration costs of the charity (you don't work for free, do you?). Not to mention the additional funds required to educate the community about the great differences your organization has made. The problem is, at this point, the difference you show is one worth less than $10,000 while the community is thinking, "we gave $50,000... for that?!" Education and transparency are a great way to build confidence in donors. That confidence, however, is secondary to the proper management of any given charity. Remember, that $40,000 mistake in the example is $40,000 that could have been spent to make a difference in the community.
Colleen's picture
Colleen (not verified) on
Thanks Greg, I do absolutely agree with you the key is a strong organization! My example outlines a very costly mistake - and one that could be "deadly" for an organization that is not properly managed. (It shows how possible it is!) I don't believe the information CBC has presented about fundraising provides a good indicator of well-managed organization. It would be so much better if we could provide data about how well we deliver our mission. That would be a clear message about how well or poorly the organization is led and managed. Colleen
TheTruth?'s picture
TheTruth? (not verified) on
With peers, I've raised a lot of money for charity in my life - probably broke fundraising records at times. In one case, a very successful charity by industry standards was grown: several hundred staff (many cities). One day, an aid worker told me, the best thing a charity can do is make its jobs redundant "but it will never happen." Internally, it's all too human to think job security. I know people on the same charity payroll for more than 10 years, more job security than i've ever seen outside of charity. So for me, the line is really is blurred - what a charity does for change or for $. Not to say, charities are not safeguards or safety nets...that i do believe they are on the whole. More regularly, they are more this, than agents of change.
Aaron Sanderson's picture
Aaron Sanderson (not verified) on

Colleen, I’m with you.

What is missing in the chatter is a sense of balance.

Yes, fundraisers have an obligation to act in the best interest of the organization they support. Spending needlessly or accepting excess compensation for value added is unreasonable. Unfortunately, like every other business sector, there are those who take advantage, and cause public suspicion of all charitable entities (eg, the severance package for Michael O'Mahoney past CEO of Sick Kids, and, likely, the three cases referred to in the CBC article).

However, suspicion and scrutiny are not the same. CBC references 200 cases (note: not 200 organizations)—out of over 85,000 currently registered charities in Canada according to the Canada Revenue Agency. What we have here, I think, are a few rotten apples—not the whole orchard, as I feel the CBC article has implied.

So where is the balance? The fact is that donors have obligations too. If you don’t know how your money is helping—don’t give. If you feel strongly about how much of your money can go to pay for administration, but don’t ask or can’t find the answer—don’t give. Your giving ought not to be a thoughtless act. It should be something special to you, supporting a cause that aligns with your philanthropic goals.

However, a word of caution: personally, I would not want to give to an organization that designates a miniscule amount of revenue received to the proper functioning of its business. Would you invest with an advisor who receives so little that you are unsure of their ability to manage your savings? I think not. The same is true for fundraising.

As Colleen says, charities need to share the good news, and clearly outline in their case for support how your donation will make an impact. Funny enough, this might cost some money to do properly. And, if a charity doesn’t tell you, ask. It should be important to you, which makes it important for them.

Aaron Sanderson

Anonymous's picture
Anonymous (not verified) on
Having been in fundraising, I know that many charities and not-for-profits (at least the ones I was involved with) move numbers in the annual report (it’s legal…but it's an ethically gray area) to change perception about the cost of fundraising. For example, allocating a portion of a fundraisers salary to a "special project" is not uncommon. People often say they got into fundraising because of the cause, etc… fundraisers make big money. I wonder how many would do it if the salaries weren’t so high. I’m really starting to wonder whether charities are still focused on making a difference or are just becoming another form of big business. Does a cancer researcher truly want to find a cure, even though it means it will put them out of work?
Lynda's picture
Lynda on

Thanks to all who commented so far!  It is wonderful to see such a thoughtful discussion taking place on our blog. 

Some of you might be interested in this response, which appeared this week on Charity Village.  The author characterizes the CBC coverage as "sensationalistic, unfair to most clients and fundraisers, and partly accurate."  I hope you'll read it, and continue to share your ideas and opinions with us.

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