Is it really about compensation?...?

Earlier this month the charitable sector has once again been under scrutiny... First with the CBC Marketplace Report - Canadian Cancer Society Spends more on Fundraising than on Research then the CTV report on charity CEO compensation.  What these two stories have in common is perceived lack of trasparency around how money is being raised, spent, and social issues addressed.

When I was deciding what approach I wanted to take to this topic I came across a blog post that sums things up quite nicely.  Brady Josephson of ReCharity writes that charitable ignorance is a two-way street.  By donors not asking the right questions and charities not communicating effectively we enter into a vortex of misinformation, lack of accountabilities and unarticulated expectations for delivery.

Janet Gadeski focuses in on some of those expectations and questions in her blog post Marketplace misses the mark on the Canada Cancer Society.  Donors should have a clear understanding the mandate of the organization before donating.  Charities have an obligation to share with donors what their deliverables are, and how resources are used to achieve those deliverables.

I recently reviewed an umbrella organization (agency that funds other agencies and also provides front-line work) for some background research on how community infrastructures are built.  I learned that this organization (and others around North America, it turns out) classify fundraising as a program, because that is their mandate.  Even though a significant percentage is used internally for their organization the fundraising costs are spread out as a program cost.  As a donor, unless you know to ask how programs and services are financed within an agency, something like this can be misunderstood.

CEO compensation should be considered. But let's look at the compensation package in its entirety of the operations of the organization.  If you are the CEO managing a multi-million dollar charity, and you have the skill-set and acumen to manage this type of organization, and you are meeting the deliverables effectively and efficiently, one could argue that your salary should match the intended and achieved outcomes and impacts.  In the for-profit sector we talk about organizational optimization and efficiencies being good - i.e. spend money on overhead and deliver your product to market quicker in order to generate revenue and an ROI for investors.  In the non-profit sector this same approach is seen as taking away from resources going directly into the program/service being provided.  Perhaps we should move away from operational efficiencies and start looking at operational EFFECTIVENESS.  If paying a higher compensation of top executive means that more kids are going to bed with a roof over their head and food in their bellies - is that not meeting the interests of the donors who are funding the shelter and food program for those youth?

I work with all types of donors, and the number one thing that we stress when entering into a relationship with an organization is understanding what are they committing to deliver on and what is it that the donor is "paying" for.  For some, the donation is a reflection of who they are within a segment of society (work related donation to support a client, for example); for others it is a response to personal experience (funding cancer research) or reaction to a social imbalance (drought relief).  Understanding your motivation is the cornerstone to any donation.  It provides the groundwork for the conversation around what the philanthropic expectations are.

Charitable organizations play a vital role in our society.  These agencies pick up where government and corporations fall off.  What would our society look like if we didn't have these types of agencies? Are we prepared to start changing the way that we build these types of organizations?  As donors and community investors, will we start pushing, engaging, pulling and directing our resources, not based on the cost of raising a dollar or by the CEO compensation, but rather by the proven results of the organizations we support? 

How are you going to articulate your expectations of the charities you support?

At the end of the day, as a donor can you say for certainty that you know what society would look like if you did not fund one of the agencies you currently support?  As a charity, can you articulate what gap, niche, void, your organization plays (i.e. what would society look like if we didn't exist)? 

These are tough questions that challenge how our whole social system is built, how policies are set, how corporate giving programs are established and how fundraising campaigns are marketed.  Are we, as a social system, prepared to ask some of these tough questions AND act on the answers that we hear?

Comments

Amen!

Thanks for the mention and furthering the discussion. I particularly loved this line "Perhaps we should move away from operational efficiencies and start looking at operational EFFECTIVENESS."

Easier said than done of course but charity as we know it is evolving and donors, media, marketplace and managers all need to evolve with it.

Thanks for sharing.

And the conversation grows

Hi Brady;

Great connecting with you through your blog and Twitter.

Since this post went up I have had three different conversations with three different types of stakeholders - a donor who felt it was the responsibility of the charity to help her manage her perceptions and/or misconceptions (but she wasn't prepared to ask for information); a wealth manager who was trying to figure out what questions he should ask on behalf of his client; and a charity who wanted to share some information with a donor and was concerned about optics (even though the charity didn't know if what they were presenting was going to be an issue because they had never had the conversation with the donor).

It's so interesting to me how donors are abdicating due-diligence responsibility to the charities, instead of taking the time to ask some very simple but important questions around how their donation dollars are being used.

I look forward to reading more of your posts!

Cheers,

Gena

You are so right, but why?

Hi, Gena,

I could not agree more with everything you've said here, and I've often struggled with this overwhelming popular desire to focus on what (when examined in the context of how much good is being done) seem like the wrong measures.

I've just finished reading a phenomenal book on the subject - "Uncharitable" by Dan Pallotta. It offers some fascinating theories as to why so many of us feel so passionately that charity should focus on cost cutting, while giving almost no thought to effectiveness. He goes all the way back to the Puritans to explain the roots of the paradigm, and it makes a lot of sense. For anyone who is interested in this topic, I strongly recommend it.

Nadine

Uncharitable

Hi Nadine;

I have a lot of respect for what Dan is doing in pushing the charity sector revenue paradigm. I find it fascinating that we have this view of how our social services sector should work, and yet we insist on tying their hands to shoe-string budgets and delivery expectations that most for-profit companies would scoff at.

That doesn't mean that non-profit organizations should always use a "profit-motive" as their business driver.

One of the things that I would like to see are more MBA's who specialize in non-profit management and more schools offering a Business of Philanthropy program (not just non-profit fundraising and governance).  Heck, Dan could be the first "chair" of this program...??? I know that Harvard and Indiana offer something like this, but again, it is focused on the charities doing charitable work, and not on business methods of social change.  Do I hear Stanford calling?!?...

Thanks for continuing the conversation!

~ Gena

PS - For those interested in other books on this topic - please visit our Bookshelf section of this website.

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