Voluntary Sector

Why Speak Ill of Charity?

It’s sad. There are too many people who speak ill of charities.

Some making sweeping accusations or conclusions without any real evidence or understanding.

Some prefer to focus on the mistakes charities make (and of course they make some) rather than the good they deliver,

There are some who think the continuation of social problems means charities have failed because not everyone is housed, or healthy, or free of violence. Imagine saying to a heart surgeon she is a failure because for every life she saves, others die from heart disease – as if that is her fault. I trust you understand my point.

Some analyze charitable activity by the numbers alone, especially the the most common one, administration costs.

And for some reason some folks just aren’t charitable.  And more times than not, they are not shy about expressing their derision.

Truth be told I think leaders of charities should listen to all of those voices and all the others that arise and see what truths might exist even in those comments found to be disdainful.

To my colleagues, especially to the leaders of our charities, please rethink the current narrative about how the charity model has failed and how we need to move away from it.  Don’t replace the word charity with new words that likely won’t stand the test of time. Charity is good. Being charitable is good for all involved. Being charitable is about being human.

It’s not about moving away.

It’s not about moving on.

It’s about changing how we do charity when change is needed, when new ways are necessary.

It’s about getting better.

And it’s not about admitting defeat and then changing the conversation.

Mega-Charities: the 100 Largest Charities in Canada

I am working on a major paper currently entitled, Mega-Charities and All the Rest: Money, Power, Folk Lore, and Transformation. It will include research and data about the revenue sources of charities in Canada and, drawing upon CRA data will provide a comprehensive look at all the ways charities fund raise.

The paper will include revenue information from all levels of government (as displayed in this posting), from foundations across Canada, as well as revenues generated from many other sources including from United Ways from across Canada to the human services sector. There will also be research and commentary on administration and fundraising costs and how the benchmarks used by funders of the sector for “allowable” costs are one of the major challenges facing charities. The paper will also provide more commentary on duplication (I have written about this before but my research was limited to Alberta – click here), and culminate with commentary about transformation ideas and directions that I suggest require our attention.

It will be published within a couple of weeks, most likely and offered free as a PDF.  Meanwhile here is some of the data and trends that will be in the paper.

Note: Some of the charts and tables may be difficult to read. They are clickable for larger versions.

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Premier Prentice – My Two Cents about the Budget

UPDATE… at the request of the Edmonton Journal, I rewrote the piece below and the EJ published it HERE.

Dear Premier Prentice:

We met west of Edmonton at a BBQ when you were campaigning for your position. I appreciated your speech and remember thinking you could be a strong Premier and move our Province forward in a variety of ways. I am sure you weren’t all that happy that shortly after winning the post you faced plummeting oil prices and the prospect of $7 billion or so in lost revenue.

I imagine you have a few voices offering up their advice about what to do now. I filled out your online form about the budget. I hope many, many other Albertans did, too. At the risk of being one more voice amongst the din of thousands, here’s mine, written from the perspective of a boomer who has held numerous leadership positions in the community sector as well as operated a couple of businesses. I will try to be as concise as possible.

We have a revenue problem
I would suggest that the loss of $7 billion in revenue represents a revenue problem, not an expenditure problem. It’s a structural problem in our economy – too much dependency on oil. Markets can be volatile and cyclical; we need a more diverse and optimally reliable revenue mix. I know you know that, but I encourage you to do more than release an annual budget. We need a long-term plan that doesn’t allow for a knee-jerk reaction to our revenue issue to rule the day in year one of that plan.

The economy should work for the majority
Please keep in mind that during the boom times, the good times in Alberta, the poor and disenfranchised typically do not benefit, if at all, to the degree of folks like you and me do. The steady rise in the wealth gap provincially, nationally, and around the world indicates that no matter the ups and downs in the economy, it is most often true that those who have wealth continue to grow wealth and those who lack income remain, at best, stagnant. Those in deep poverty are actually worse off than they were a decade ago. This suggests to me that we need leadership that ensures those who are the worst off in our Province should not be pushed further away from what little hope they have of experiencing the Alberta Advantage.

It’s time to raise some taxes and fees
I imagine you know that the Government could raise taxes to generate an additional $8 to $10 billion in revenue and still legitimately claim that Alberta is the lowest tax Province in Canada. That just tells us how much lower we are taxed now.

No one hugs the tax man, but all of us want to benefit from living in Alberta. I hear a sales tax is off the table. Maybe you are right about that, I don’t really know for sure. That said, in Canada, corporate taxes have decreased markedly over the years while personal income tax has not decreased at all. Do you think this requires some review, perhaps a rethink on what corporate social responsibility should be in terms of paying taxes? Corporations create wealth and the wealthy are growing income and assets consistently and significantly.

It’s good to hear that you are concerned about the flat tax we have currently which hurts lower income workers. A progressive tax will help with the revenue problem and lessen the tax burden on those who need every dime they earn to have a decent living.

Isn’t it time to rethink Alberta Health Care fees? We lost $2 billion in revenues when that fee was eliminated. I would think it mostly helped employers because that benefit was typically paid in full or partially by businesses and organizations. It seems to me that it was about that time when our health care system became over-stressed due to a shortage in doctors, and incredibly long waits in emergency wards. There’s some fixing there we need to do.

Public Education needs more support, not less
Teachers are coming out of a three year freeze on their wages. That’s a long time to stay flat as housing, food, clothing and other costs continue to rise. I am not sure we can blame teachers for the looming deficit. Not only do we need to address the wage challenge here, but my sense is some promises made by the Government have not been fulfilled. For example, classrooms now are integrated which means special needs students included as full members in the general student population.

It’s a good thing, but unfortunately this principle of integration has not been supported by the funds required to support teachers in a class room of 35 (which is too big a number) that might have a blind student, a disabled student, three students with learning disabilities and several who don’t speak English. Without the resources, it’s not really integration; it’s more of a gathering of students that teachers must do their best to educate. And by the way, each year our public school teachers spend between $500 and $2500 of their own wages on classroom supplies because our school system has no money to stock classrooms with the basics. Can you imagine the outrage if business forced their employees to spend that amount of their hard earned money on office supplies? Everyone knows this is happening. Time to do something about that.

Don’t abandon the poverty elimination strategy and the ten year plan to end homelessness
The ten-year plan is working and its existence is a prime example of a caring government. If anything, we need a renewed commitment, not the dissipation over time of this incredible and important initiative. We need to end poverty, Mr. Premier. Poverty is wrong and we need to set things right. Hundreds of thousands of citizens are living poor and data suggests that nearly half of the population is living pay cheque to pay cheque. We need a government that pays attention to that because if the economic vulnerability of so many people continues to grow and deepen, we will face decreased consumer spending, impacts on tax revenues, and social unrest.  I know it’s hard right now, but now more than ever is when we need leadership that speaks clearly and boldly about ending poverty for so many Albertans: Aboriginal people, newcomers, youth, single parents, the disabled, the mentally-ill, and the growing number of working poor.

Be careful about what you do to the non-profit sector
Yes, I have a vested interested, given where I work, but please think about this: non-profit organizations are structurally underfunded by governments as well as nearly all community based funders. This means that non-profit employees are paid substantially less than the comparable staff employed by the government and most of the time they receive no pension or RRSP benefits. It’s not that they are not worth the money because often your government departments recruit my staff away and offer them much higher wages. Often these are the same departments that fund our human service contracts and insist on inadequate funding levels. It is often the case that long-term non-profit workers end up retiring into poverty. It’s ironic, don’t you think?

If you cut 9% or 10% to human service agencies doing contract work with you, you are in effect cutting back on contract funds that frankly do not pay the full cost of the contract and haven’t for years. So please be careful because deep cuts here – and for some any cuts at all – will not only harm more low paid workers but will result in less support for those Albertans that need it the most.

I know. No matter what you do, you will be vilified and praised and everything in between. You won’t please everyone and frankly how could you? I am just asking you to consider the above points and then do what you believe is fair and just as you move forward with your budget.

Thanks for listening.

Mark

Let’s Stop Assuming Non-Profits Should Just Be Run Like a Business.

It is not uncommon for business leaders or entrepreneurs to suggest that charities need to behave more like business. Of course non-profit operations should be based on sound financial and management principles and practices, but I suggest blanket statements like “be more like business” ignore some fundamental differences between private and non-profit sector organizations.

Often this advice is offered pejoratively, as if such business-minded people believe that non-profits lack business-savvy and consequently are inefficient or at least could be run much more effectively.  There’s another angle on this: business-savvy tends to be about sales and profits and doesn’t automatically provide for a comprehensive or fully relevant driver for doing philanthropy.

When business leaders cast their “non-profits should be more like us”  into the philanthropic sea, I am often surprised – and a little dismayed – by the number of non-profit leaders who nod their heads up and down in agreement.  I don’t know what troubles me more: the banker who thinks banking qualifies him as an expert in non-profit leadership and management or the non-profit executive who actually believes her sector should operate more like a bank. I have a feeling that few private sector folks would do much more than chuckle if advice was offered the other way around, even though such advice might be worth considering.

In reality there are sectorial differences that should be understood and considered before making such carte blanche judgements.  In an article written for Forbes in 2013, Tom Watson addresses those differences.

I summarize:

  • The philanthropic marketplace is dramatically different from private sector markets. The latter lends itself to measurements that are not applicable to what is known as “social capital.” How does one definitively measure the dollars and cents of social capital?
  • In the private sector we assess results or impact through such metrics as shareholder value, sales, the stock market, housing start-ups, and so on. All of these metrics can be assigned comparable numbers over time. It’s a lot murkier when it comes to assigning measures to social indicators of success. What numbers can be used to identify personal changes brought about by counselling or one’s process of healing from trauma? I am not saying there are no measures, but they aren’t as straight forward. As Watson writes, “The [social] return on investment will always have some haze beyond the spreadsheets.”
  • Motivations are different as well between the two sectors. One’s desire to give to charity or to get engaged financially or otherwise in social change are not the same motivations that drive entrepreneurs to create profitable businesses. In fact, the competitive nature of the private sector often includes a conquering mindset. One’s success in the private sector is tied to winning the battle for consumers and driving competitors away, if not out of business.  Charities don’t measure their progress in terms of displacing other charities or increasing market share.  They do compete for grants and for donor dollars, but not in a way that attempts to demonstrate the inadequacies of other charities.
  • Watson points out another fundamental difference: “Capital markets tolerate failure at a much higher rate than would be acceptable to non-profit donors. Most business ventures fail. Most non-profits do not – or rather, more accurately, they do not close their doors, merge with other organizations, or write down lost venture funding. In the worst cases, they tend to soldier on, withering slowly as their appeal to private donors and other funders diminishes – and their impact falters. That’s because there is no market for philanthropic stock, almost no liquidity for social capital.”

Another major difference has to do with what drives an organization’s resource engine. In business, customers drive revenues. Strategies are developed to address the needs of various customer segments and these strategies are designed to generate optimal revenues from those segments. At the same time the costs of engaging customers are managed as much as possible to ensure that profits are as high as possible.

Generally speaking, non-profits do not have these types of customers. We do have clients (we call them “participants” at Bissell Centre) and donors. While we should provide stellar service to our “customers,” our clients are, in a financial context, cost centres. We do not make money from them directly. It is true that some organizations charge user-fees but the majority of the time such fees do not cover the full cost of service, much less produce a profit.

One might see a donor as a customer, but I think it is inappropriate to equate being a donor with being a customer. The exchange a donor is looking for is not the same exchange a customer seeks. Their donation is purposed to benefit others, typically those less fortunate than they are. What they wish to experience is the satisfaction of seeing positive results for others, not themselves.

Watson’s perspective suggests that business people might better serve their non-profit colleagues by providing their bright minds and experiences to non-profit organizations within the context and environment non-profits experience, rather than assume what is good for the private sector must make sense for the non-profit sector.

I have worked with many community and business leaders who understand this. Our success together has not happened because of an “I know more than you” mindset. Rather, we have clicked because we have come to the table with what we know and a desire to learn what others know, no matter what sector they come from.

The truth is that all of us need to think and act more like one another do. It just depends on the context really. I do believe there are many private sector practices that can help non-profits, whether they are financial management processes or tools or methods of developing strategy. I have helped a couple of non-profit organizations adapt the Balanced Scorecard to their operations and I have referenced many HR practices, risk management approaches, customer service functions, and other private sector elements in the development of our own at Bissell Centre.

In this day and age of dissipating customer loyalty, businesses might be better served if they treated customers like well-run non-profits treat donors. At Bissell Centre, for example, every donor receives a thank you phone call from a volunteer or staff member, regardless of the size of donation. We don’t ask for more money, don’t pitch any further involvement; we just say thank you for believing in our work. Saying thank you is our way of recognizing the relationship we have with the donor and hopefully that simple act of saying thanks sends our intended message: you matter to us. Most businesses I buy goods and services from don’t make me feel that way.Often it is quite the contrary to be frank.

Non-profits put mission first before money. While it is true non-profits require revenue to do mission work, we believe an individual’s alignment with our brand should be clearly mission-connected, not an alignment based on transactions.

People wish to feel engaged in life and that includes their work life. Dan Ehrenkrantz wrote a piece earlier this year in Forbes Magazine, “Why You Should Run Your Business Like a Non-Profit.” One of his suggestions to business leaders is to treat employees like volunteers.

“Your best employees are a lot like volunteers: They have other options and can leave. This is especially true in fast-growing fields such as health care, environmental science, and technology, where demand outstrips supply and new knowledge is scarce and valuable.

“Most businesses mistakenly assume that their most valued employees will stay put and stay happy if they pay them enough. But research indicates that salary is not the most effective motivator, and the cost of disengagement is high.  A 2013 Gallup study showed a direct link between employee engagement and shareholder return; companies where 90% of employees felt engaged had earnings per share 147% higher than their competitors in 2010 and 2011.”[1]

There are lessons to be learned everywhere, no matter what sector we are in or looking at. Operating with a bias that has one sector being better than another is not only a misguided bias, it narrows our capacity to learn from one another.

 

[1] Retrieved from http://www.forbes.com/sites/forbesleadershipforum/2014/02/26/why-you-should-run-your-business-like-a-nonprofit/ September 28, 2014.

Heretical Propositions: Toward Democratic Philanthropy (Part One)

 This is the first installment of a series from a long essay I am writing about philanthropy or more specifically about the need for a major, if not radical shift, toward democratic philanthropy. The essay will be included in a book of exposition and criticism I am writing, currently entitled “Heretical Propositions.”

Money can mean a lot of things for those who have it. It can feed us, open doors, and keep us safe and warm. For those who have a lot of it — we call that “wealth” — it also provides influence and power. Those who make policy are those in power and most of those in positions of power are making enough money to do more than survive. In fact, once you have a certain amount of money and influence, one can use both to create more wealth and power.

It’s what we all want, isn’t it? Our friends south of the border still believe in the American Dream, which is invariably tied to financial success, albeit of various degrees. We don’t really have a Canadian Dream that all of us hold up like a shrine. But if we are paying attention, success in Canada is more times than not tied to personal financial gains.

quote1Most of us would admit that we would welcome wealth in our lives. Most of us are satisfied with making enough to buy a home, save for retirement, and escape to the Caribbean now and again.  Some of us aspire for more than that and undertake actions to achieve wealth and the comforts and security it provides us and those we love. None of us, however, would say that we would be satisfied with having less than we need to scrape by. Scraping by is not an aspiration. There are no best sellers about that, I imagine.

Wealth is not a bad thing in and of itself. It is true that wealth can create jobs (although what kind of jobs is the real question) and fuel innovation and learning. It can be used to support needed research into disease or to support efforts to help those who are disadvantaged. And we do see how billionaires like Warren Buffet and Bill Gates use their wealth for good. In my community, wealthy individuals and families contribute to causes they believe in. I admire people who share their wealth.

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