What are the fundraising challenges for the next ten or twenty years?
By Ken Wyman
March 28, 2001; Canadian FundRaiser
The water in Toronto stinks. In Walkerton it turned deadly. The challenge
is to make the water from our taps so good nobody ever buys bottled water
again. There is a homeless person on just about every corner downtown in Toronto.
There is a homeless person sleeping in just about every ravine in the suburbs.
The challenge is not to provide sleeping bags and soup kitchens, but to build
affordable houses and create more meaningful jobs for people who aren’t
computer programmers or McFood servers.
There is a battered woman down the street from you. The challenge is
to make sure there is a safe haven for her — and classes and societal
changes so her sons and daughters don’t repeat the pattern. There’s
a poor kid who wants to dance ballet, a young woman in high school who doesn’t
think she can do math, a lonely senior. Help them all. That’s the challenge.
That’s the vision.
The technical challenges we face to help them are just that — mere technicalities.
They are daunting, impossible mountains when we lose sight of the vision and
focus on the molehills. But day by day, we have to solve those technical problems.
So let me list the most pressing ones.
Government cutbacks won’t go away
For the last ten years drastic government cutbacks have been the rule. Nonprofits
in Canada were dangerously dependent on government funding. Many did not see
the writing on the wall. One of the worst cases was the network of international
development awareness centres across Canada which, after years of secure funding,
had 100% of their funding cut in a single day. To make matters worse, the
cuts were retroactive to the date, three months before, when the government
stopped sending cheques and started sending promises. This left many of the
agencies — and their board members and staff — deep in debt.
Some nonprofits are still deep in denial, hoping that a new government might
have a change of heart. Well hope and work for the best, but prepare for the
worst. All signs are that government funding is gone, and it won’t be
back anytime soon. This is the challenge for the many charities that still
get 30% or more of their funds from a single government department: diversify
your income sources now, before the next round of cutbacks.
Corporations must do better
As government funding for nonprofit groups gets still scarcer, they have turned
hopefully to corporations and foundations. However they have not been met
with a rush of cash. Corporate and foundation funding is up, a little, but
nearly enough to compensate for the losses. Corporate giving would have to
increase by 600% to completely compensate for government cuts, and no one
believes that will happen.
It’s pitiful. Only 550 companies have signed on to the Imagine
campaign and committed 1% of their profits to charity. And the Imagine
campaign has spent years working on them, just to get this far — which
is no small feat. I congratulate the Imagine campaign but I am frightened
by what this means for life, as we know it in Canada.
But we, as consumers, and as shareholders, are increasingly telling the corporations
it’s not good enough. Vote with your purchases, by buying from companies
that have a social conscience. And if you have investments, even in a mutual
fund inside an RRSP, you are a part owner of those companies. Write them and
tell them what you expect of them.
Sponsorship is big business
Corporations are increasingly switching their budgets from philanthropy to
sponsorship. What’s the difference? At the extreme end of philanthropy,
anonymous corporate donors give to controversial causes and demand that their
names be kept confidential for fear of hurting their market share while doing
good. At the extreme end of sponsorship, corporations sponsor projects with
no redeeming social value because it helps them make a profit. Molson,
for example, does not support Indy car racing because it is an important cultural
experience that defines the essence of twentieth century vehicular co-dependence
— Indy racing sells beer. The day they find a better way to sell beer,
the Indy’s funding will evaporate like yesterday’s spilled lager.
Or be sold off like the Montreal Canadiens. Sponsorship is about return
on investment, not doing good.
How is your average nonprofit supposed to compete in that market-driven sponsorship
race? Five years ago I determined that sponsors wanted to see a measurable,
quantifiable return on investment for their sponsorship dollars of three dollars
returned for every one the risked on charity. Now that is up near fifteen
to one — and yet few nonprofits have figured out how to demonstrate any
market value. "Goodwill" is not enough anymore.
Sponsorship is not for everyone
The Olympics have found new sources of funding with corporate sponsors,
but not without criticism. Jazz festivals have been fun — but we don’t
all approve of the tobacco sponsorships, and we are challenged to replace
them as they are banned. And the cola wars in the school halls are just the
beginning of more to come. It will be a challenge for nonprofits to function
in a market economy. For many it is contrary to their very world view: a necessary
evil at best.
For those who do get into sponsorship the greater challenge is, "Can
they function in a market economy and still retain their original vision?"
Or will self-censorship cause nonprofits to become more middle-of-the-road
in their statements and actions for fear of losing another funding source.
Will TVOntario be forced to privatize? If so, will it become bland,
like so much of the American PBS, which is dependent on corporations for so
much?
Gambling revenue is not sustainable
Sustainability is another challenge for the nonprofit sector. If long-term
funding is gone with the government grant, what do they replace it with?
For many groups, the answer has been gambling revenue. Bingo, break-open tickets,
raffles and lotteries have become an essential part of the funding mix for
too many charities. It’s not just that I have moral qualms about gambling
— though I do. The biggest problem is that it is not reliable. Bingo
revenue is already declining for many groups. In many communities the opening
of casinos has meant the closing of bingo halls. Gambling is hugely risky
— the United Way of Peel Region lost well over a million dollars
with their mega-raffle, and the Canadian Olympic Association topped
that with some $15 million in losses.
And even when gambling produces a good income, it does not establish a bond
of loyalty with the donors. They don’t go to your bingo game because
they love you, but because they like to play on Wednesday evening. They don’t
know what charity benefits from the break open tickets. In fact, a new wave
of backlash against gambling, such as that seen when Alberta brought in video
terminals in every bar, could remove this source of revenue in a flash.
For nonprofits, gambling revenue is like a breakfast of a donut and a strong
cup of coffee — it gives you a sugar high and a caffeine rush, but it
has no nutritional value. We have to eat our vegetables to be healthy individuals,
and we have to fundraise from reliable sources to be healthy organizations.
The answer to the sustainability challenge lies in mass support, from ordinary
Canadians who give $5 here and, sometimes, $100 or $1,000 there. Long-term
relationships with many people are the only secure form of funding.
The "halo handcuffs" mean being too pure to be effective
Reaching a lot of supporters raises a new challenge: "the halo handcuffs"
— the expectation that charities will raise money without spending much
money (if any). The "halo handcuffs" mean charities have to hide
a dirty little secret — fund-raising costs money — often a lot of
money.
Here’s an example few fundraisers acknowledge in public: Direct mail
campaigns to find new donors are so expensive that every cent the charity
raises is spent paying for the mailing. No one likes to admit this out loud,
but it is true. In fact, many charities hide the real costs by claiming that
their prospect mailings are actually an "educational" expense, a
questionable, albeit legal dodge. And as long as the public expects that fundraising
costs should be 10 cents on the dollar, they will have to continue the pretence.
You have to spend money to make money
And that includes spending money on staff salaries. I long for the day when
the news media runs a scandal story not about the rare "over-paid"
charity executive (who still gets paid less than comparable corporate or government
leaders) but instead report on the real scandal — how badly paid most
nonprofit staff are.
The halo handcuffs carry with them the expectation that nonprofit staff will
work long hours at low pay — sacrificing their families, and surviving
on poverty-wages because of their commitment to the cause. That just leads
to burn out, rapid staff turn over, and the high cost of reinventing the wheel
every few years. When industrial bosses demand this of workers, we yell "sweat
shop" and sing the old union hymns about the fight for Bread and Roses.
When nonprofit groups keep us at work until we are exhausted, the halo handcuffs
mean we question our own commitment before we complain. We have internalized
the boss. Let’s shed the halo handcuffs and make the nonprofit sector
one of the nicest places to work — not luxurious, just humane!
Which are the best nonprofits to work for?
Every year business magazines publish a list of the 50 Best Companies to
Work For. Canada Customs and Revenue Agency restricts charities
to spending 20% of their money on fund-raising costs. At least that’s
the official line. In fact it is a rule broken more often than met, especially
by small charities, or those trying to grow fast. Actually, CCRA only has
jurisdiction over donations for which a tax receipt has been given —
so charities can spend unreceipted money as they wish. And, as noted above,
the real fundraising costs are often written off and hidden as educational
or project costs.
It’s time the government changed this silly and unenforceable rule. It’s
time the public learned the facts of life about fundraising and nonprofit
management. If the public wants health care and tax cuts, if they want education
and less government spending, if they want to get homeless people off the
streets and reduce welfare, they have to take off our halo handcuffs and let
us get to work.
Charity is no longer a holy calling, it is a profession.
Fundraising is no longer a hobby, it is an industry.
Doing good is no longer an option, it is a necessity.
The misplaced permanent-press halo
Slipping the bonds of the halo handcuffs does not mean we can become selfish
and look after ourselves first. We don’t have a permanent-press halo
either. The executive director of one large charity faced with the loss of
a major government grant said to its board "our first priority is to
protect our employees’ jobs".
No, it is not. A charity’s first priority is to serve its clients. Saving
employees jobs is not even the second priority, which is to honour promises
made to donors. Charities can do wrong — even good charities — we
do not have a permanent-press halo.
Here’s another case of misplaced permanent-press halo. Nonprofit groups
sometimes have problems with special events, and ask staff to do what volunteers
were supposed to do. That’s a minor problem when fundraising staff take
over to save the day. If it happens occasionally, it’s normal. If it
happens constantly, it’s a sign of an organization in trouble. But when
non-fundraising programme staff are conscripted, it is not just a case of
bad planning, it is misappropriation of funds. Someone gave the funds to have
programme staff meet clients — do counselling, give art classes, teach
sports, whatever — and when that money is spent paying the staff to work
on fundraising, that is arguably fraudulent misuse of funds. And the worst
part is that the programme staff usually hate doing fundraising and aren’t
very good at it, so it isn’t even a productive fraud.
Canadians are cheapskates
If we are to escape this trap, the next challenge will be to get more Canadians
involved. Studies show that one-third of Canadians say they would volunteer
"if asked". We need to start asking, and asking better. And we need
to get Canadians involved at a meaningful level. One of the biggest challenges
is that Canadians are — there is no nice way to say this — cheapskates.
Americans give three times as much per person — -and, No their tax laws
do not explain that big a gap.
One in four Canadians gives less than $24 a year to charity -- all charities
combined, according to the latest figures from the Canadian Centre for
Philanthropy. Another 25% of Canadians give between $25 and $75 a year
to charities. That’s 50% of us giving less than $75 a year. The next
25% give up to $205 a year. Only one in four Canadians gives more than the
price of a Sony Walkman to charity. And the most generous five percent of
Canadians are the people who give more than $915 a year to charity. $915 —
that’s about $2.50 a day. That’s the measure of outstanding generosity.
And that 5% of Canadians gives 47% of the money that charities get from the
public!
Compassion fatigue: We just don’t think it’ll make a difference
Is the problem "donor fatigue"? "Compassion fatigue" is
the trendy term for people who can reach for another slice of pizza when the
TV news shows a nation of starving refugees. People who can throw away letters
from charities without even opening them. People who can walk past a homeless
woman on the street and not give her a quarter because she might spend it
on beer or cigarettes. I have compassion fatigue. You probably do too.
The major cause of compassion fatigue is not that people — you and I
— are asked to give too often, by too many charities. You never hear
that consumers are turned off because they get too many sales flyers, that
shoppers are exhausted by too many interesting retail stores. The cause of
compassion fatigue is not being thanked enough. Not believing that it really
matters if I give or not. If I really believed that I could change the life
of that homeless woman I pass everyday at Queen and Yonge, really get her
out of the street and into a happy productive life, I’d not only give
her a quarter, I could probably find much more: $10, $100, maybe more. So
could you. If you believed.
We’ve got to make people believe
We are so shy about asking that we are not challenging people to really put
their money where their mouths are. We are so sensitive to complaints, that
we shut down successful campaigns because a handful of people complain. How
often do you see advertisements to spend your money on self-indulgent, environmentally-destructive,
unnecessary crap? Hundreds of times every day. TV, radio, newspapers, magazines,
billboards, Spam in the e-mail, signs in washrooms, tiny stickers on fruit
in the supermarket.
Watch TV for an evening and you will see the same ad for the same product
repeated five, ten, a dozen times or more — sometimes twice in a row
on the same channel in the same two-minute commercial break. Are the corporate
marketing departments nuts? Are they wasting millions? No, they have refined
the art of repetition to a science. The call in "flighting". And
it works.
But when consultants like me tell charities to send their donors fund-raising
appeals five or six or seven times a year, the charities panic. Some of the
donors will complain! And they are right: some will complain. So instead of
counting the number of complaints against the number of donations, which proves
that frequent asking works, charities back off.
Privacy laws a major challenge
Consultants like me tell charities to exchange mailing lists with other charities.
There are safe and standard ways to exchange lists without risk. List exchanges
cut the cost of fundraising by 50% or more. It cuts the number of trees chopped
up for paper by 50% or more. But a few donors complain about their right to
privacy, and the charities back off. This ‘right to privacy’ issue
is now a major challenge. It is already a legal problem in several provinces
and the new Canadian federal privacy laws will affect charities too.
I am as much in favour of real privacy as anyone. I don’t want the government
listening in on my conversations. I don’t want corporations to steal
data from my computer with their ‘cookies’ so they can manipulate
me. But if charities get caught in the same privacy-laws, your fundraising
costs will go up. The environmental costs will go up. And the funds available
to serve the people you want to help will go down. Funding will drop like
a rock.
The challenges nonprofits face in the new millennium are very real. We have
a lot to change.
- Government funding is gone and won’t be back for a long time.
Get over it.
- The corporate sector’s pitiful giving is not enough — and
as consumers and shareholders we can demand better. If you have a mutual
fund in your RRSP, you are part owner of several major Canadian companies.
Tell them you want the company to give away more money and product.
- Charities can function in a market economy without losing our vision
for a better world. We are not too pure or too inept.
- We’ll resist the tempting, short term high of gambling revenue,
instead of the balanced diet of sustainable fund-raising.
- We’ll shed the halo handcuffs, where we don’t allow charities
the freedom spend enough to succeed.
- We’ll shed the misplaced permanent press halo, where we look
the other way as good charities do the wrong things in the best of causes.
- We’ll learn to ask Canadians to give more. We’ll ask more
often and ask better. Because when we do, kids will be able to take classes
in arts, or languages or science.
When we do overcome the challenges, homeless people will have homes, battered
women will have safe shelters, waiting lists at hospitals will shrink. And
you and I won’t have to drink bottled water because the stuff from the
tap stinks.
Ken Wyman provides training and consulting services in fundraising and volunteering.
For more information, contact Ken Wyman & Associates Inc. at 64 Lamb Ave.,
Toronto, ON M4J 4M3; tel: 416/362-2926; fax: 416/352-5470; e-mail KenWyman@CompuServe.com.
You can also e-mail Ken and subscribe to receive free fundraising tips. Find
his free fundraising books at: www.greenability.org.
Fundraising courses live in the classroom at Humber College.
PART-TIME http://cecalendar.humber.ca/fundrsng
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