What is the right “cost” of doing the business of philanthropy?

Based on some of the conversations I have been having at TheCardThat.Gives booth at Sunridge Mall and via the various social media and blog posts, there is a general consensus that the average donor doesn’t know, or understand the costs of doing the business of philanthropy.  

It’s time to change this.  

It’s time that charities take the lead on articulating the true cost of their business.  I don’t mean writing reports to community or saying how many families have been helped.  I mean the nuts and bolts of the organization so that there is context for the numbers that are provided.  

According to Stats Canada, did you know that 80% of charities are volunteer run with less than $500K operating budget?  Or that the average charity spends upwards of $20K in professional fees (legal and accounting)?  Or that paying a living wage is more than just a salary; it ensures that charities are not creating cycles of poverty within their own organizations.

When considering the operational costs of a charity here are some things to consider:

1. Everyone working in the charitable sector should earn a living that maintains, or is above, the standard of living within a given jurisdiction (i.e. not creating or reinforcing a cycle of poverty within the charity system).  In Calgary this means that for entry-level staff a minimum of $18.69/hour. For professional staff, market rate as it compares to non-profits and similar for-profit businesses. We use the Boland Survey and other resources to determine rate of pay.

2. It costs money to make money.  In the case of Place2Give, we set a goal to positively influence $1Billion in charitable transactions through everyday consumer, banking and online engagement.  In order to achieve this goal, I need to make sure we invest in promoting our foundation and more importantly the thought leadership around strategic and tactical philanthropy.  

3. Banks charge fees to process funds. Lawyers charge fees to maintain compliance. Accountants and auditors charge fees for annual filing.  So why should a charity not be able to charge fees to provide some of the services that they offer?  In our case, it is the ability to easily and directly donate to an organization through an everyday consumer or banking experience.  We have a number of different pricing models in order to meet the needs of our clients as well as ensure the majority of the funds get transferred to charities - For guaranteed volume transactions we charge a flat-fee; for low-volume or one-off transactions we charge a percentage per transaction and for ongoing project management we charge a project management fee.  

4. What is the broader industry that the organization is operating in? For Place2Give we operate across three industries: technology, financial services and retail.  As such we need to understand the market trends in all three of these sectors in an effort to stay competitive and relevant.

So when we talk about the cost of doing business let’s look at all the pieces, that at the end of the day the charity needs to ensure that it is providing the best quality service to all of their stakeholders - donors, clients, community, volunteers, etc.