The capitalist nonprofit? Dan Pallotta speaks in Vancouver

Cancelled dreams
Image credit: Chris Devers and Banksy

Dan Pallotta, author of Uncharitable, recently spoke to a sold-out crowd in Vancouver, hosted by Vantage Point and sponsored by TELUS. I wasn’t sure at first if his speaking style could sustain the hour+ talk, but he won me (and the audience) over early with his humour and his substance. I had the pleasure of watching the presentation twice – I listened the first time, and tweeted the second.

The basis of Pallotta’s talk was based around two ingratiating issues that face the nonprofit sector. I’ll outline them briefly here, but I also recommend reading the book.

Be like business, without all the benefits of business

Nonprofit organizations are often told they should “be more business-like” or “become more professionalized”. However, the tools that business use to succeed are not available to nonprofit organizations (or perhaps are available, but organizations are harshly judged when they use them). Hence the subtitle of Dan’s book: how restraints on nonprofits undermine their potential. Charities must respond to the great inequities that the powerful tools of capitalism have created, but without using those same powerful tools.

What percentage of my donation is going to the cause and how much to overhead?

This is just a less educated way of asking “are you effective at advancing your mission?” Because evaluation of programs is difficult to do and to share effectively, and the only way that charities officially report on progress is through CRA reports and return, the easiest (but not the most valid) way of measuring charities’ effectiveness at advancing their missions is through financial ratios that show how much money goes to programming (aka “the cause”) vs other costs, like administration and fundraising (also “the cause” but somehow not understood as so).

Constraints

Dan deals with these two issues with describing the constraints they put on nonprofits.

  1. Compensation: “Nonprofit salaries should be low.”So, apparently it’s OK for people to get paid well if they play football, or refine oil, or create magic weight loss pills. But if they are doing good, attempting to rebalance the inequities of our world, getting paid well is taboo. Because of the feel good “psychic benefit” we’re told.The nonprofit compensation debate in Canada came to a head recently when Liberal MP Albina Guarnieri proposed Bill C-470 (which Dan rebutted in an op-ed piece), which seeks to limit nonprofit compensation. However, I would like to note that financial incentives indeed are important for furthering the good in the world. There is a reason that we offer tax receipts for donations to charities. The feeling of doing good doesn’t do it all. And if we truly want hunger eradicated, our rivers protected, and our diseases cured, should we be attracting the best and the brightest to do it?Someone I met recently attacked the salary (not even the level of salary, just the fact that there was a salary) of the SPCA CEO. “A volunteer could do that,” he said. Umm, a volunteer could run an organization with a budget of over $10 million dollars and a staff in the hundreds? We wouldn’t imagine asking that of a private sector CEO.
  2. Marketing. “Nonprofits shouldn’t pay for advertising.”Dan argues that it would be irresponsible to put a new product out on the market and not advertise. But somehow nonprofits are held to a different standard, even though nonprofits are fighting for a market share of consumer spending like any other business.
  3. Risktaking. “Nonprofits should not take risks when fundraising.”If an event or campaign isn’t profitable in its first year, it will likely be squashed. However, success is built on experience, which means that new, innovative and perhaps risky fundraising opportunities are not sought out. Many businesses are not profitable in their first year(s), but again, nonprofits in general and fundraising campaigns more specifically are held to a different standard.
  4. Long term investments. “Nonprofits results have to happen now or else.”Nonprofit funding from large proportions of their revenue bases (government, foundations, corporate giving) is often done on a yearly basis. Which means that any outcomes of the program have to happen within 12 months. However, the private sector benefits from huge investments over years in research and development before final products go to market. Nonprofits lack that advantage.
  5. Profit incentives. “Nonprofits can’t offer profit incentives in order to grow.”Private and public companies benefit from being able to offer the opportunity for financial profit over time in exchange for an influx of growth capital. Small examples of this exist in Canada (CDCs, or community development corporations) but a whole new corporate model needed to be created for these types of organizations. Revenue generating arms of nonprofit organizations miss out on this opportunity.

Dan asks: if organizations with purposes of community benefit aren’t able to do these five things, how can they be expected to succeed?

Perhaps we should remark upon was has been done to date in spite of all of these expectations and constraints existing since the beginning of charity.

So what about the issues with “overhead”? The CBC infused fear into the public’s perception of nonprofits when it ran a series on nonprofit overhead and costs of fundraising. This has been responded to (fairly pathetically, I might add, but hey, nonprofits aren’t supposed to pay for advertising at therefore have weak relationships with news agencies, so it’s OK that the alternative voice was heard so weakly, right?) by many, including Vantage Point and Imagine Canada. Sure, there are crooked organizations in the nonprofit sector, but these are crooks, not nonprofits.

Dan takes issue with three factors.

  1. A focus on overhead leads to overhead being taken to be separate from “the cause”. Overhead is part of the cause. The fundraiser, the accountant, the HR manager, the receptionist, the maintenance staff – these are all important roles that make an organization function. Without them, the programs (aka “the cause”) wouldn’t exist, or would function less effectively. Just as in the private sector, a product is more that just the sum of its parts.
  2. A focus on overhead leads nonprofits to forgo things that are needed to advance causes. In an effort to keep overhead low, nonprofits may be unable to hire experienced, strategic staff that are going to advance a cause more effectively. They may cut out professional development, which means the nonprofit would lose out on enhanced skills, productivity, and likely high staff retention. They cut out marketing costs, which may decrease awareness of the cause and donations to the cause.Dan counters, “Fundraising isn’t sexy but it’s where the hope lies. If we want to ramp up impact, we need to invest in fundraising.”
  3. A focus on overhead gives donors bad information. The problem with looking at overhead is that overhead only addresses efficiency, but not effectiveness. Would you buy a pair of uncomfortable shoes littered with holes and made from toxic materials if the overhead of the shoe company was low? “Sure, the shoes are shit, but man, that overhead, wow is it ever low!”Yet somehow, we measure the value of our nonprofits based on overhead, not how well they are advancing their missions. Even Charity Navigator, one of the most often referred to charity evaluator in the US, says that evaluating the effectiveness of charities’ programs is out of their scope. They measure some sort of efficiency, which does not give the full picture to donors.

Dan offered a variety of humourous anecdotes to shed light on these issues, but what was missing was how to tangibly change the public discourse around these issues. He was speaking to a room of converts, and the room was overflowing with self-reassurance and pats on the back. However, how do we respond to questions and criticisms about our practices and our overhead? Dan covered the “what?” and “so what?”, but missing was the “now what?”

But, as this post is going on way longer than I expected (really, if you’ve got as far as this, you should probably just read Dan’s book), I’ll propose some “now what?” in a future post.

So in the meantime, I want suggestions. How would you respond to these questions and comments?

  1. Wow, I heard how much your CEO makes. That’s ridiculous. She’s siphoning off money that should be going to the <insert disadvantaged population>.
  2. I’m not sure about donating to your cause. How much of my donation is going to actually go to the cause instead of overhead?
  3. I saw your ad in the front of Vancouver Sun. How can you justify those sorts of costs?
  4. You shouldn’t be expecting a high salary if you work for charity, because doing good makes you feel good.

What’s in your message to donors? Technology to assess communications

I was really excited to attend Net Tuesday last week, and I wasn’t disappointed. Ben Johnson (currently with Union Gospel Mission) was one of two presenters giving a talk on data for social change. While he had tonnes of great points re: data analysis, what excited me most was the visualization of text data using Wordle.net. (I used Wordle last year to demonstrate what my blog was about, and it was right on target!)

Question 1: What message are you sending out?

What message does your board chair’s message in the annual report send?
What message does your vision and vision statements send?
What message does your newsletter send?

While we obviously write these items with very specific intents, sometimes our language, when we dig down deep, doesn’t actually reflect our intentions.

Copy and paste your text (or an rss feed) into Wordle, and voila! (See below for an example). You may be surprised. At UGM, Ben found that some of the language actually focused on programs, when really what they wanted to focus on was people.

Question 2: What messages do your donors respond to?

On UGM’s online donor form, an open box question asks “What inspired you to give today?”. Ben then took all the responses and threw them into World, and voila!

Many at UGM (a faith-based social services organization) might assume that faith and God would be reasons behind giving. These words were present, but even more so were words that indicated a connection to family (brother, father, sister, etc.) and times of year (eg Christmas).

If you analyze what is inspiring donors to give, you can update (and assess!) your communications accordingly to match donors’ interests.

Example: UBC Vision and Mission

UBC is my alma mater, and I have always loved and identified with their vision and mission. I would have done SFU’s but alas, we DON’T HAVE THEM (ridiculous and uninspiring, I know).

UBC vision and mission by Wordle
Image Credit: Wordle.net

I can see easily now why I connect with UBC’s vision and mission. Beyond the obvious university words like “research” and “students”, the next most prominent words are “society”, “sustainable”, “global” and “citizens”. I’m surprised that “learning” isn’t more prominent though.

Try it! You might like it! What results did you get?

Fundraising through engaged staff

Take a Hike reflection
Image credit: Take a Hike Youth at Risk Foundation

One of my favourite charities, Take a Hike Youth at Risk Foundation, was fortunate to be on the receiving side of Clara Hughes’ Winter Olympics bronze medal bonus.

Ten thousand unexpected dollars.

And then her sponsor, Bell Canada, matched her donation. That’s now $20,000.

And with the news stories on the donation, thousands of more dollars came in.

This wasn’t the result of some long-term relationship building between the ED and Hughes. It didn’t require shmoozing, prospecting, donor analysis or any other hard work of a fund development team.

It started because one of the Take a Hike program’s teachers embodied Take a Hike. He had met Clara Hughes’ partner randomly while on a remote kayaking trip on the northwest coast of Vancouver Island. Friendships developed, and Take a Hike came to mind when Hughes was looking to make a difference by contributing any bonus she might win along with a medal.

The teacher didn’t have a script. He wasn’t trained in fund development. He knows his work and the impact it makes in the lives of youth and feels confident sharing.

The lesson

I think it’s often easy for fundraising to be relegated to the ED and fund development staff. That way you can contain messages and hit key talking points. Because you can’t trust the program staff to always say the right thing, you might only let them connect to fundraising when a tour of their workspace needs to be done to show donors how the charity is serving <insert disadvantaged group here>. Or maybe you only call on them when you need statistics to report back to funders or donors to show that your efforts are successful.

I think that most people, no matter where they work in an organization, like to know how their work contributes to the bigger picture. The mission of the organization. To what end your charity exists. Staff are more than just their job titles, and very likely have interests and abilities beyond their job descriptions.

So let them in on the big picture. Connect them with opportunities to contribute to the mission more directly through committees, communication, or other work.

Be sure your staff are engaged with your mission. The payoffs could be huge.

How NOT to do corporate social responsiblity

Thumbs Down
Image Credit: zaveqna

I got an email today from a company looking to support nonprofit organizations.

Their first question of me:

Do you have suggestions about how I could go about finding non-profit groups in British Columbia that are looking for new funding sources?

Uh, toss a rock and you’re likely to hit one.

Their (not-so-mindblowing) plan is for nonprofit organizations to promote this companies members, and when the nonprofit’s supporters frequent these businesses, the nonprofit gets 3% of the value of the transaction. However, in order to get the 3%, the supporter would have had to print off and bring in a special form or make a booking with the companies through a special website.

Here was my response to their inquiry. Was it even worth a response?

Hi <name>,

I would say all nonprofit organizations in the province are looking for new funding sources. If there is a nonprofit in your community that you think is worthwhile, ask them.

However, having reviewed your site, I would not recommend this program to nonprofit organizations, as efforts directed to promoting the <member businesses> (which only give a return of $15 per person per year as per your estimates) would not be as valuable as efforts directed to promoting the organization itself, resulting in donations directly to the organization.

While supporting the nonprofit sector could be commended, requiring specific actions like printing a form from the website or booking through a unique website will likely result in people bypassing the fundraising requirements – resulting in business for your members, but not money for the nonprofit. If you want to truly support community organizations, don’t add strings. When you do [add strings], it’s a very thinly disguised effort to just make money for your own company.

Trina

Balancing paper and prospects

This rant on paper waste is a part of
Blog Action Day 2009 | Climate Change
.

Image Credit: striatic

Many people that I work with know me to be obsessive about using less paper. First I reduce, then I reuse, then, at last, I recycle.

This carries over beyond my work life and into my personal life. I’m one of those people that calls my service providers to be removed from solicitation lists (did you know you can even get the paper inserts taken out of your credit card statements, even if you can’t get bills online?). I’d love to get zero mail (confession: birthday cards are still OK;).

This carries over beyond my work life and into my philanthropic life. I donate online.

I’ve worked in fund development before. I know that it’s important to meet donor preferences.

But this rule seems to breakdown when it comes to reducing paper.

Exhibit A

  • I donated to at least 5 different organizations last year. All of them I donated online with.
  • Of those five, four of them followed up with print material – direct mail, invitations, newsletters, etc.
  • Of those four, I emailed each of them asking them to remove me from their (paper) mail lists, though I added that I was happy to receive any information by email.
  • Of those four, NONE have sent me any email. I actually had to email two of them after getting paper mail an additional time. I have received no further solicitations from any of them otherwise.
  • Of those original five, only one continues to connect with me via email. Very intermittently – nothing to be considered spam. I also have found out about their campaigns via Twitter and Facebook. I have followed their campaigns’ success online.  And surprise, they’re the one I donate the most to and have begun to donate most regularly to.

It (figuratively) breaks my heart to see nonprofits not getting it. Traditional ways of communicating with donors (ie mail) are still important for connecting with traditional donors. But “new” ways of communicating with donors (though “new” is debatable – the web has been used commonly for over a decade) are important to connect with and retain new donors AND cut down on paper.

Reduce and prosper?

Nonprofits should play their part in reducing waste (in both paper and the cost for stamps) by – at the very least – respecting the methods donors have gone out of their way to request to be solicited.

Read on:

What do you do daily to be a better fundraiser?

Coinage
Image Credit: Michal Zacharzewski

There are activities and strategies that fundraisers can engage in over time that help raise more funds. Systems, procedures, methods, ladders, etc. that lead to more incoming funds. Sometimes one-time activities or projects take an organization’s fundraising to the next level. What are small things that can be done, however, on an ongoing daily basis?

Straight from the horse’s practitioner’s mouth: I recently asked some of my friends who fundraise what they do daily that makes them better fundraisers. Here’s what they told me (some more “daily” than others)….

1. News and Blogs

I read news and blogs on fundraising (am subscribed to a couple enewsletters) such as Charity Village’s Village Vibe.

2. Online Seminars

I attend professional development seminars through AFP (find the Vancouver chapter of AFP here)

3. Connect to People

I write personal notes to contacts and take the time in phone conversations to connect on a personal level, share my passion for my work and look for common ground to build stronger relationships.

4. Program Elevator Message

I think about and try to verbalize my program’s objectives in a way that anyone could understand and make sure those objectives are aligned with my organization’s mission. Then I can clearly explain to funders how I believe their support will help us fulfill that mission.

5. Prepare for Contact

I look into our records (database and hard files) to see exactly what contact we’ve had with the donor recently/ever. This way I’m knowledgeable on the donors needs and interests. I also have a clear objective for the contact.

Thank you to those that contributed! – Merissa Myles, Virginia Edelstein, and anonymous others.

What do YOU do daily to be a better fundraiser?

Twitter: An engagement tool, not a fundraiser ticket-seller

I’ve had multiple conversations with friends and former colleagues about Twitter recently, particularly it’s use in promoting special events. (Who hasn’t? To be honest, the number of blogs and articles about Twitter could make a person twvomit. So now I’m adding to the gag reflex. Alas.)

Most of my responses follow along the lines of a phrase I hear over and over again on Twitter from people like @rootwork. Twitter is a tool, not a strategy. Twitter-less doesn’t necessarily equal boat-missing.

Should we use Twitter to help sell tickets to our upcoming fundraising event?
What’s your online relationship with supporters? If you communicate with donors, volunteers and other supporters through good old Canada Post, Twitter is probably not the next logical step to communicate with them and get them to buy tickets.

But we want to connect with new supporters too. What about Twitter for that?
Are possible new supporters on Twitter?
If you want them to come to your event, or if your cause is a local one, you’re likely looking for geographically-close people. Geographically-close Twitter users. If you’re trying to raise money to build a knitting museum in small town Salmon Arm, BC … sorry, my Grandma’s not on Twitter. (Actually, my Grandma probably wouldn’t come to your event anyway.) However, your target demographic might be a nice fit with Twitter users (Gen X and Y communicators, on average).

So how do I reach out to these possible new supporters?
Engage them. Add value. If your Vancouver-based environmental organization is having a fundraising event at which young local “green” entrepreneurs are being recognized, you’ll need to build a Twitter following that includes people that are into this sort of thing. To do this, you’ll need to tweet about things and be a part of the conversation related to corporate social responsibility, environmental issues, entrepreneurism, etc.

I need specific examples. Vague phrases like “adding value” and “engagement” are annoying.

  • Tweet about interesting articles you have read (eg More demand than supply for green graduates – Vancouver Sun http://ow.ly/br7y)
  • Support others doing similar good work by tweeting about them (eg Vancouver entrepreneur wants to “green-up fleet vehicles” http://ow.ly/brfl)
  • Find people on Twitter that are already tweeting about this stuff, follow them, and hope they reciprocate (eg do a Twitter search of “environment vancouver” or “green vancouver“)

Alright, I think I’m ready. Giddy up!
Whoa. Keep in mind that Twitter takes time and effort. Do you have someone at your organization that has room in their workload for this? Many people and organizations that sign up for Twitter are excited at first (like Oprah and her followers) but soon tire of it and quit. Your reasons for using Twitter should go beyond just selling tickets.

For more ideas: