No wise charity leaders out there or fundraising will be suggesting that their organization plan its Christmas appeal around covering administration costs this season. However as wise leaders understand we do have to invest in our administration or our fundraising to increase our ability to make the impact our charity is intended to make. Imagine if a friend suggested that you invest in the favorite companies stock. The company bragged that it invested no money on staff, operations ,technology or training and development. You might thing that this company might not be a good long term investment. However Marina Glogovac President and CEO of CanadaHelps.org, points out in her recent Huffington Post blogpost that this is what we do to charities when we expect them to direct donations. We encourage or demand of them that they spend money only on direct programs not the other things we would expect a for profit company to do. Below is a link to a vlog post that further covers this double standard we have for charities:
Tag: charity overhead
If you donate to, volunteer or work for a charity you do it because you want to change the world. You are changing the world, but what if our political, moral and business practice beliefs about the sector changed so dramatically that your efforts could improve your outcomes 10 fold? 100 fold?
Almost 3 million people have watched this video, if you volunteer, donate or work for a charity and haven’t seen it –stop right now and watch it:
Dan Pallotta: The way we think about charity is dead wrong
Now I am not going to suggest that if you run a charity or are on the board that you stop paying attention to your administration costs or your fundraising costs. I am suggesting that you do pay more attention to your mission and maximizing your mission. Pallotta in this video takes on some of the sacred cows for nonprofits. Years ago when I first entered the sector, I had been taught nonprofits are not well managed or that they did not have good managers. As I wanted to make a difference in the world and in the sector I started taking a lot of business and management courses- not a bad thing. However years later I realize that some of the best and most skilled managers are nonprofit managers. Think about Pallotta’s points on compensation, marketing and advertising, investment in development. Nonprofit managers are often working with what is a shoe string budget compared to their for-profit counter parts and look at what some charities are achieving. I do believe that as Pallotta suggests that it is possible to increase donations to charities from 2% of GDP to a modest 3% but not without some very creative leadership and I am sure some public or even internal resistance.
The world and beliefs about the sector are not going to change overnight. However as leaders in the nonprofit sector we need to continue to have our supporters focus on our mission instead of just what our overhead costs are. Brinckerhoff (2004) describes how you balance between good stewardship and the need to generate revenue:” Advocates passionately believe in the mission or the organization and keep it focused on mission, mission, mission. Businesspeople understand and are passionate about finance, marketing, human resources and other business issues and keep the organization focused on that second rule of not-for-profits:” No money-no mission.” Brinckerhoff (2004, p.22) goes on to describe:” A mission-based steward is a person who consistently leads the organization in managing the resources of the community in a manner that maximizes its mission effectiveness.”
I think good stewardship is very important, but I know when two different people reading the sentence above will interpret it in different ways. Some will see “managing the resources of the community” and immediately think we need to spend less money or be frugal. Others probably the entrepreneurs or the venture capitalists would read the same sentence and think we need to do more, we need to maximize our mission so we have to spend more to do that. After all everybody knows that it takes money to make money.
Again I am not recommending that you throw everything you know about stewardship and cost controls out the window. But definitely the next time you want to make some type of long term investment in your charities future or you want to try something a little risky that you think might change the impact of your charity-start asking questions. Don’t try to convince you board members or donors that your idea is the way to go. First ask them “How does your business approach this type of problem?” What would your business consider a good ROI on a percentage basis for this type of advertising? Helping those closest to your organization to understand what Pallotta describes as the double standard between for profit business and nonprofit business is the first step in changing the beliefs that hold our sector back from doing everything we can for those our mission is focused on helping.
Brinckerhoff, P.C (2004) Nonprofit Stewardship: A better way to lead your mission-based organization.
New Jersey: John Wiley &Sons Inc.
Ted Talks (2013) Dan Pallotta: The way we think about charity is dead wrong as retrieved from: