Tag Archives: fundraising

Donation As Investment

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Sasha Dichter has written a great post about why it is NOT bad for nonprofits to pay decent salaries for talented, hard working people or to invest in new technologies:

…we find ourselves having the same conversation, one that boils down to: is it a wasteful to pay nonprofit professionals to do their jobs well?

I wonder if it is we in the nonprofit space who need more guts when we take on this question. Maybe it’s time to say something along the lines of, “if you want your money to go directly into the hands of very poor people who need it, you should do just that and give to Give Directly.” GiveDirectly is optimized for this, they are efficient and transparent in their operations, they rigorously study their results, and they’ve shown the effectiveness of direct cash transfers for creating both short- and long-term improvements in people’s lives. It’s a completely legitimate way to help others, and it’s a great benchmark against which to measure our work.

“Or,” we should have the courage to continue, “you can have the point of view that the programmatic work that we’re doing is better than giving cash.” “Better” can be because it does different things (fights corruption); “better” can be because the impact of giving a dollar is more than $1 (investing in a scalable social business); “better” can be because of long-term return on investing that’s higher than the social return on giving cash (supporting a child’s education).

“But,” we should be sure to say, “if you believe that the IT that we do matters, if you believe that there is something real that we are bringing to the table that goes above and beyond your money ending up in the hands of someone who will benefit from it, then you’re saying that our judgment, our relationships, our expertise, our capacity for oversight, and our ability to create leverage for each dollar you give is real. This means that you trust this judgement and our expertise. So please give in a way that respects that judgment and expertise, or don’t give at all.”

He references a TED talk on the same subject that’s an essential watch for anyone interested in how we can make sure the nonprofit sector can deliver the goods and services that are increasingly in demand. Here’s a link to it and I highly recommend you watch it.

While I do work for a nonprofit, it’s a trade association so it truly feels much more like a business. Our members pay dues and we provide services and products to help their companies and industry at large succeed. Basically our members see us as more of a business and while we do sometimes have to defend our compensation it isn’t viewed as morally wrong for our staff members to be paid a decent wage. On the other hand the “feel good” nonprofits that are addressing a social need, like the food bank I often volunteer with, often are judged harshly if they pay a competitive wage because every dollar they spend on compensation is seen as a dollar not spent on food.

As Dichter points out this is faulty logic. If you pay a competitive wage and invest in good tools then you can attract and retain talented, dedicated people who, properly armed, can work magic with those dollars and generate a return that is many times greater than the dollar given. Take the food bank example – would you rather go to the store and spend a dollar that would buy one can of soup on sale, or donate it to an organization that could turn it into seven full meals? That’s the kind of thing that well run nonprofits can do.

This isn’t to say that nonprofits shouldn’t be monitored and evaluated to make sure they’re providing the best possible service for the communities they serve. It is to say that if a nonprofit is delivering the goods, so to speak, that there is nothing inherently wrong with the people doing the good work making a decent living or with them being provided adequate tools to do their jobs.

Anyone who has spent time volunteering with a social nonprofit has likely seen the effects that poor pay and lack of capital investment can have on an organization. People who spend 80 hours a week doing something they truly believe in, but are hamstrung because they’re using outdated technology that was likely donated, and barely make enough money to keep food on their own tables, much less save money for retirement or their kids’ college education, tend to burnout and that leads to turnover. Turnover leads to increased hiring expenses and a loss of expertise that puts even more pressure on the staff and volunteers who are left to do the work, which leads to more turnover, and so on, and so on, and so on.

Please, the next time you hear someone criticize the pay of a nonprofit staff, or question the wisdom of buying a new computer, tablet, truck, etc. please try put it in perspective by looking at the big picture. If the organization is barely serving anyone while the senior executive is tooling around in a new Mercedes leased by the organization, then by all means ask a lot of hard questions. But if the organization is meeting a community’s needs, if it’s returning multiple dollars of service for every dollar donated, then support their efforts and find a way to help them do even more.

My Pentathlon of Pain for Second Harvest Food Bank of NWNC

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JonTutuHeels
I’ve been talking about this for a while, but now I’ve finally decided to pull the trigger. From 9/11/15 to 10/11/15 I’m going to engage in what I’ve dubbed Jon’s Pentathlon of Pain to raise money and awareness for Second Harvest Food Bank of NWNC. What exactly is it? Actually it’s pretty simple: it’s five physically trying or embarrassing activities that I will undertake to raise money on behalf of the food bank. Here’s how it will work:

  • Someone sponsors me for a certain amount of money and they get to pick the embarrassing or physically challenging thing I will do. For example I jumped in a pool last year wearing a tiara, tutu and high heals and with a slogan painted on my back. In exchange the Blue Ridge Companies gave hundreds of dollars to Second Harvest.
  • Another option is that I will do something trying and people will donate to the food bank after I complete the task. So if I run 15 miles then they’ll donate a dollar a mile – that kind of thing.

So how can you help? Well I’ve already signed up to do the 9/11 World Trade Center memorial stair climb. That’s 110 flights of stairs I will climb and descend on the morning of the 11th. You could agree to donate a certain amount per flight if you’d like. Or you can suggest an activity and have your company sponsor it. I’ll gladly promote your company in the process and every single dollar will go to Second Harvest.

If you want to simply make a donation just visit GoFundMe page I set up for the campaign. Or check out the schedule below and if you see an available slot and you have something crazy or challenging for me to do, then just reach out and see what we can work out!

Schedule of Events

  1. Sep 11, 2015: World Trade Center Memorial Stair climb – I’m gonna climb 100 stories!
  2. Sep 26, 2015: Salem Lake 30K Trail Race – I’ve never run more than 13.1 before and I have NOT been training beyond my normal routine so this is gonna hurt.
  3. To Be Determined. You can submit a proposal via email here.
  4. To Be Determined. You can submit a proposal via email here.
  5. To Be Determined. You can submit a proposal via email here.

How We Think About Charity is Wrong

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This is a fantastic TED presentation by Dan Pallotta on why the non-profit industry is perpetually hamstrung by its inability, among other things, to break out of a structure that limits compensation, suppresses risk-taking, prohibits access to capital markets, imposes frugality at the expense of future growth potential and tags all overhead as negative.  It’s a must-watch for anyone in the non-profit sector, but the charitable arm of the non-profit sector in particular.

Here’s a link to the full transcript and a couple of excerpts that really hit home:

So in the for-profit sector, the more value you produce, the more money you can make. But we don’t like nonprofits to use money to incentivize people to produce more in social service. We have a visceral reaction to the idea that anyone would make very much money helping other people. Interesting that we don’t have a visceral reaction to the notion that people would make a lot of money not helping other people. You know, you want to make 50 million dollars selling violent video games to kids, go for it. We’ll put you on the cover of Wired magazine. But you want to make half a million dollars trying to cure kids of malaria, and you’re considered a parasite yourself…

Businessweek did a survey, looked at the compensation packages for MBAs 10 years of business school, and the median compensation for a Stanford MBA, with bonus, at the age of 38, was 400,000 dollars. Meanwhile, for the same year, the average salary for the CEO of a $5 million-plus medical charity in the U.S. was 232,000 dollars, and for a hunger charity, 84,000 dollars. Now, there’s no way you’re going to get a lot of people with $400,000 talent to make a $316,000 sacrifice every year to become the CEO of a hunger charity.

Some people say, “Well, that’s just because those MBA types are greedy.” Not necessarily. They might be smart. It’s cheaper for that person to donate 100,000 dollars every year to the hunger charity, save 50,000 dollars on their taxes, so still be roughly 270,000 dollars a year ahead of the game, now be called a philanthropist because they donated 100,000 dollars to charity, probably sit on the board of the hunger charity, indeed, probably supervise the poor SOB who decided to become the CEO of the hunger charity,and have a lifetime of this kind of power and influence and popular praise still ahead of them…

So we’ve all been taught that charities should spend as little as possible on overhead things like fundraising under the theory that, well, the less money you spend on fundraising, the more money there is available for the cause. Well, that’s true if it’s a depressing world in which this pie cannot be made any bigger. But if it’s a logical world in which investment in fundraising actually raises more funds and makes the pie bigger, then we have it precisely backwards, and we should be investing more money, not less, in fundraising, because fundraising is the one thing that has the potential to multiply the amount of moneyavailable for the cause that we care about so deeply…

This is what happens when we confuse morality with frugality. We’ve all been taught that the bake sale with five percent overhead is morally superior to the professional fundraising enterprise with 40 percent overhead, but we’re missing the most important piece of information, which is, what is the actual size of these pies? Who cares if the bake sale only has five percent overhead if it’s tiny? What if the bake sale only netted 71 dollars for charity because it made no investment in its scale and the professional fundraising enterprise netted 71 million dollars because it did? Now which pie would we prefer, and which pie do we think people who are hungry would prefer?

 

Crossing Your Ts, Dotting Your Is

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A story from Mt. Airy, NC highlights why you have to be very careful when you have a raffle or other fundraising contest at one of your events:

Vickie Riekehof was called out as the winner of the raffle for a 2013 limited edition Fiat Abarth, or that is what she thought. After arriving to claim the car, she said David Chaloupka, owner of Amadour Winery and Vineyards who oversaw the contest, told her that she had to toss a Frisbee into the car’s open window from a point estimated to be about 90 feet away.

She claims there was no such rule for the contest when she purchased the $100 raffle ticket.

Bob Meinecke, organizer of the festival and member of the Mount Airy Rotary Club, said it was his understanding the instructions would be printed on the ticket and on the literature about the event.

“There was a misunderstanding. We refunded her money and apologized,” said Meinecke. “It was a he said she said thing. My understanding was that verbal instructions were given to each person who purchased a ticket from the salesperson.” He said that person was Chaloupka.

Word of advice: whenever you're trying to separate people from their money, even for a good cause, never allow it to be organized in such a way that it come down to a "he said, she said thing."

Having Their Cake and Eating It Too

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According to an article in today's Winston-Salem Journal the Triad affiliate of Susan G. Komen for the Cure is experiencing a deep decline in its fundraising after the Planned Parenthood controversy the national organization created last year. That's not terribly surprising, but a quote from the president of the Triad affiliate is a bit befuddling:

Natasha Gore, president of the Triad affiliate, acknowledged the challenges that the local group faces, stressing that most of the money raised here stays in the region. She also expressed frustration that some would-be donors do not differentiate between the local affiliate and the national organization.

"A lot of the time, people think we are one and the same," Gore said. "If they're boycotting us because of something happening with the national organization, it does not really fit with what's going on."

The quote is befuddling because it's amazingly naive, if not downright disingenuous. Of course people are going to confuse the organizations because in the grand scheme of things they are the same organization. Sure the local affiliate has it's own board, staff, volunteers, grants, etc. but it has affiliated itself with the national organization, which means it benefits or suffers from the national organization's activities. The Triad affiliate certainly benefited from the national organization's advertising and branding activities and I don't recall hearing any concerns about brand confusion from the local affiliate before the controversy.

So the donors aren't confused, rather they're saying loudly and clearly that they've lost faith in the organization and it is up to organization on both the national and local level to win back that faith. If the local affiliate thinks the brand is too damaged to repair then they might want to consider:

  • Disassociation from the national organization
  • A name change (would likely be required by the national group anyway)
  • A clear articulation of the local group's principles/standards and how they're different from the national group's
  • An ad/branding campaign to introduce the "new" organization to the Triad, and to highlight all of the organizations that benefit from its grants

In the end an affiliation is like a marriage: you're stuck with it in good times and bad, and if the bad gets horrific then your only choice might be a divorce.