Comments

Disgusting and far too common. Please review the 990 before making any contributions.

Posted by Todd Lowe at December 9, 2009 12:02 PM

Any report from egalitarian Vermont on how often the "professional fundraisers" also had an "insider" link to leadership within the charitable organizations they "served"?
That is too often the case elsewhere.

Posted by Randy Bosch at December 9, 2009 12:38 PM

Randy, alas, you are quite probably on the mark.

Posted by tom peters at December 9, 2009 12:51 PM

Tom - You did well to call them scalawags. By far worse descriptives came to mind. This is so very disgusting and disheartening. Did we ever determine where the billions of dollars that was supposed to have gone to the Katrina victims went? Many of these thieves should be prosecuted and jailed. See the problem is that when we allow ethics to slip continuously we are outraged for a while but those who perpetrate such acts whether on Wall Street or in big business, where it appeared that most of the Katrina money went, just sit low or take the abuse long enough to allow the storm to pass. Meanwhile, the people who need it most never get it.

Posted by Judith Ellis at December 9, 2009 1:25 PM

A great Vermont organization that I give to regularly is The BOMA Fund. Kathleen Colson's organization was featured here earlier this year and it is amazing how committed she is to the women and families in Kenya. The BOMA Fund assists in business development in villages in remote parts of Kenya where the people so desperately need it. The people are so beautiful and Kathleen is so wonderful. Her work is heartening.I feel so great giving to this organization, knowing that what I give will get to those who need it most. Give to The BOMA Fund!

Posted by Judith Ellis at December 9, 2009 1:40 PM

I agree this is a poor state of affairs but there is a wider issue here and it applies to most charities, whether they use 'professional fundraisers' or work under their own steam. The question to ask is: What percentage of the donations actually gets paid out in charitable works and what percentage is consumed by salaries, office costs, admin etc etc - i.e. actually running the charity.

The amount consumed on salaries and running costs is often frighteningly high. The truly sad thing about the case Tom posts about may very well be that the charities thought that this was a better return than what they could manage by themselves.

Posted by Mark JF at December 9, 2009 1:59 PM

There are many charity watchdog organizations that can let you know the efficiency of your contribution. One is here: www.charitynavigator.org/. Mark may be right here though, especially for smaller charities. Outing the bad ones is about the best you can do, thanks Tom. And thanks for your generous example Judith. Tis the season, please give.

Posted by Terry Ransbury at December 9, 2009 4:58 PM

"The question to ask is: What percentage of the donations actually gets paid out in charitable works and what percentage is consumed by salaries, office costs, admin etc etc - i.e. actually running the charity."

What kind of initiative would these professional fundraisers have to keep costs low? In the case of the Missionary of Charity, I'm just wondering about the ratio that went towards running the charity and those in Calcutta who need it. Their commitment probably means more than stuffing their personal pockets with millions of dollars that people gave to a just cause.

By the way, I'm not sure if we need professional fundraisers at that cost. They are probably among the many "experts" with briefcases that don't add susbstantial value. Any organization that I give where the costs exceed the cause, I stop giving in a heartbeat. While we would not expect these professional fundraisers to live as the nuns of Mother Teresa's Charity, they should certainly not expect millions in compensation or a ratio like that above no matter the administration and other costs. Get real! This is probably largely greed.

Do you think that when Warren Buffett gave billions of dollars to the Bill and Melinda Gates Foundation that he thought that there would be a 68/32 ratio? NOT! People will do what we allow and if we are fooled enough to believe that they are needed more likely than not in many cases we will be taken. These people need to be held accountable for how they spend donations and we need to be wiser about where our money goes.

Terry – Thanks for your encouraging words. I shall continue to give. It is indeed my pleasure, really. My mother quoted this scripture to us often, "To whom much is given much is required." As "much" is a relative term, we are all "required" to give. (I am sure there are similar sayings in other faiths.) Yes, give during this season for sure, but it is good to also give throughout the year in any way we can. "But where you treasure is there will your heart be also." So, we should get up off of those greenbacks. :-)

Posted by Judith Ellis at December 9, 2009 7:16 PM

How do tax deductions for non-profit organizations work here?
Even though a big chunk of the donattion goe to a for profit organization, I bet the whole deduction can be applied. To stop this proctice, change the tax law.

Posted by zorro at December 9, 2009 7:35 PM

Good point, Zorro.

Posted by Judith Ellis at December 9, 2009 8:34 PM

The sad part is that since I know this happens, I refuse to donate to a fundraiser. Unfortunately, the charity itself takes the hit. I suspect more and more people are doing this. Where does that leave the charity?

Then again I suspect the charity feels that a couple of million dollars is still a pretty good take.

Posted by Edward Davis at December 9, 2009 9:30 PM

And then beware of charitable money spent on "research". Research is a vague and all-encompassing activity that needs to show no practical benefits at all.

Posted by Mike L. at December 10, 2009 12:11 AM

I have very slowly but steadily been getting back into the world of education reform and community development. I was on a call yesterday with a group of non-profits who were trying to set up a "strategic partnership" to link their resources to improve after school programs for kids in our state, much needed to be sure. But as the call went on I had a similar thought to the one Mike L expresses above...maybe one of the six groups who presented actually "delivered" something tangible. The rest were research based or provided "technical assistance"...i'e consulting. Research is indeed necessary and "technical assistance" is too but service delivery should be the focus one would think. They new and dutifully recited every business babble buzzword on the planet. and spoke of the travelling they had done to "obeserve" and "benchmark"...but in the end really had no clue as to how proceed with the organizing and planning for this partnership. Which is exactly the type of "technical assistance" several were funded to provide to other community groups. I e-mailed the organizer to offer to facilitate the planning and development of this partnership. I'm betting my offer will be ignored. How much money gets wasted, don't know. But I get angry just thinking about it! In a good way!

Posted by Dave Wheeler at December 10, 2009 12:32 AM

Yes, it looks bad, but has anyone done the maths on how much a $1000-a-plate fundraising dinner actually contributes net to a good cause? It's certainly not $1000 times the number of guests - not by a long, long way. Fundraising costs can be high until you can convert one-off donors into regular, loyal contributors. And it is this essential bit that many professional fundraisers don't like doing, since it reduces the charities' dependency on their services. So they tend not to offer a long-term fundraising/development strategy, and focus instead on short-term tactical (and expensive) campaigns. The charities like the income, and the awareness and goodwill events can generate, but the effects are short-term, and it is not a sustainable economic model for non-profits. As recent times have shown.

Posted by RobCH at December 10, 2009 2:15 AM

A step on the journey?

Ethics aside I think society is still struggling with how to deal with the grey area between commercial and NFP orgs. (political, NGO etc as well as charities). It's that interface, either on the fundraising side or the delivery side, that seems to be a problem.

I think there are a number of elements here:

The types of people who work for non profit, the culture of those orgs and how they deal with "professionals" and commercial orgs. I have worked on grant allocation in a big company and the submissions from charities (down to earth local stuff not big orgs) varied considerably. Often charities work to their own (slow) timetables and struggle to hone their message and delivery to match the donators

The reporting of numbers - what margin (which effectively this is) should an non profit org be making? There are plenty of commercial orgs that would kill for margins like that.

Note I am not condoning practices here It's just that this thread has set me thinking (thank you) I haven't a clue what a "good" margin should be for a Not for Profit - and yet most of the time we have a fair idea what a good marging in most industries looks like.

sorry for the confused ramble - the Ethics is important but I think there other stuff that we are a long way from here

Posted by PaulH at December 10, 2009 3:51 AM

"the Ethics is important but I think there other stuff that we are a long way from here."

Paul - What does this mean?

Posted by Judith Ellis at December 10, 2009 4:08 AM

Judith - I guess I was my usual unclear self!

What I meant was this thread opened up a whole raft of thoughts. In particular around the culture of NFP and the interface between NFP and commercial. You have potentially very different goals and values going on in that situation and I think society and management is only scratching the surface of how this is managed, portrayed or what the expectations of this really should be.

Sorry to repeat this but the question - what margin SHOULD they operate at keeps coming back into my head.

Posted by PaulH at December 10, 2009 6:28 AM

Zorro, love your change to the tax exemption policies.

Posted by tom peters at December 10, 2009 8:40 AM

Uh, NOT, Paul. I usually enjoy reading your comments, as they are very thoughtful and compassionate. I didn't understand. Thanks for the explanation. With regards to your question, I guess there are such margins as with any consulting gig, but they vary depending on the goals and investment of time, long term and short term goals. I have worked with non-profits, arts and community development organizations, and I had a sliding scale and we often had long-term goals and broke it down in pieces that they could manage based on the success of my advice and their implementation over a certain period of time, all things considered.

Many times I have said "if we don't add value, you don't have to pay us." This has worked for me in that I am confident in my skills and always add value. The ratio is more like 10-15 percent no matter the value we add. (I am the founder and majority owner, but I have two partners. We all have other businesses independently of this one. We’ve kept the administrations costs very low.) This gives me, in particular, an incentive to work really hard, besides the knowledge of the charity work being done. This alone gets me fired up. I have also on occasion offered my services for free.

For The BOMA Fund, I have agreed to do an event here next year that will raise money for a village in Kenya, Because of the current economic environment around here, I couldn't promise anything. But I know that my effort will not change and that I can always get my friends and family to donate something even if an event is not doable. But I can usually get a beautiful donated space, get various upscale restaurants to contribute, and get people to give. It's about the cause. Whether I'm paid or not my effort doesn't change.

I'm usually very good at this stuff. For various churches, I have been quite successful at raising money for various causes for many years. Many times I do not consider payment. It's not always about payment and I live rather well. Of course, it’s all about what you’re trying to achieve and why you’re trying to achieve it. I’m not trying to make a killing. But there is A LOT OF PROFIT IN NON-PROFIT as the Vermont attorney general office proved, not to mention mammoth companies like Blue Cross and Blue Shield.

Posted by Judith Ellis at December 10, 2009 8:44 AM

Judith,
"...I know that my effort will not change..."
Absolutely beautiful!!!

Professional services, whether pro bono or for "wow, look at that!" must provide professional effort regardless of whether pro bono or for a fee.
Yes, we can negotiate service tasks or work product, but not caring and professionalism. And, we should not work (pro bono or for a fee) to support or advocate any goals with which we do not morally and ethically agree or not care about other than for fame or fortune.

Posted by Randy Bosch at December 10, 2009 3:44 PM

I love your comment, Randy. It's inspiring and encouraging. I shall retain it. Thank you.

Posted by Judith Ellis at December 10, 2009 4:45 PM

PaulH, it's indeed a key question, although I tend to think of it in terms of conversion ratios. For both income and expenditure non-profits need to ask continuously how they can drive down cost and overhead, and so increase the net income from their fundraising and the proportion of their operating activity producing the real benefit which they were founded to deliver.

Costs will still exist, however, and in some cases may seem disproportionate, but no two non-profits operate in exactly the same conditions. So what seems a bad ratio for one may seem more than acceptable to another. And if the choice is between higher fundraising costs to generate more income or tiny cost but less income, many non-profits will choose the former, however much we may instinctively (ethically?) wish it were otherwise.

So I don't feel there is one right number for all cases. What is not productive is to think that because in some specific instances money comes in at no or low cost, it can or indeed should do so always.

On this particular story, it would also be interesting (not to mention responsible) to see the underlying figures rather than just the politicians' headlines. I don't believe the fundraisers "took home" $5.7 million; their actual profit would have been a fraction of that after costs. And assuming those costs were necessary to raise the money at all (I did say "assuming"), then if we wish we can choose between damning the charities for being inefficient (costs too high) or the fundraisers for being greedy (profits too big). Win, win. Or we can recognise that some charities use fundraisers because they themselves aren't very good at fundraising (it's surprisingly common) or good at organising high-profile events, or they want to get into a new, unfamiliar donor network, or they need some mainstream advertising done. Some fundraisers carry the cash risk themselves because the charity can't. There are lots of reasons to turn to professionals, and it doesn't necessarily make those professionals bad people if they charge money for doing a good job.

Posted by RobCH at December 12, 2009 5:11 AM

Here are some suggestions for making sure the most is made of your charitable donations:

1. Give monetary aid directly to those who need it, even if they are street panhandlers, etc. You may not know what they do with it, but you know 100% goes directly to them.

Instead of money...

2. Give time.

3. Give blood.

Posted by The Ghost of Christmas Present at December 14, 2009 2:57 PM