Now more than ever, your dollar needs to go further. I am saddened when I hear about how donations are taking advantage of their donors' charitable investments.

• The Canada Revenue Agency revokes the charitable status of Universal Aide Society

I can't stress enough how important it is for donors to ask organizations where their money is going and how it is being used to further the mission/mandate of the organization. In this case, according to CRA, the Universal Aid Society was using donated dollars for personal expenses. Copies of the Donor Bill of Rights and other resources for making informed decisions can be found here. I encourage you to ask the organizations that you are involved with if they have adopted this code and how they do their fundraising.

On October 26th, 2008 the Malawi Project praised the work of the Universal Aide Society. There are always two sides to every story, and it is unfortunate that the ripple effect of the actions of the management of this society will be felt by organizations that are on the front-lines.

In related news:

• The Canada Revenue Agency revokes the charitable status of The Children's Emergency Foundation

 

There have been several blog posts on this site as well as others about tax shelters and charities. As donors, it is up to you and your advisors to do your due diligence around how and where you charitable investments are going.

 

Dexterity Consulting recently hosted a last minute "coffee-clatch" with Adam Aptowitzer, Drache LLP, on issues concerning charity law. What came out of that discussion was an obvious need of both donors and charities to get some more clarification around the complexities of the law and charities. As a result there will be a series of posts from Adam on this blog on a variety of topics. I encourage your feedback and suggestions for other topics.

CBC Radio One had some very interesting programs this week, all of which can be tied back to Generating Social Capital, effective community development and the interconnectedness of our social and economic systems.

Spark, a program about technology hosted by Nora Young, was discussing the use of open source software, APIs and Wikis. It is quite serendipitous that this show aired now, I am just in the middle of Dan Tapscott's book, Wikinomics. The interview and the book have got me thinking about what a new organizational system in the non-profit sector would look like.

In the Karma & Cents winter newsletter this year I talked about collaboration. This article was followed by a piece in the spring newsletter about Community Economic Development models and how the most effective ones have mulitple partners.

With ideas provided through the Wiki and Open Source communities the way we collaborate and how we define collaboration has changed. The traditional collaborative model was typically a connection between a few people or organizations around a topic/issue. In the new collaborative model we have thousands of people sharing their expertise and holding each other accountable for effective delivery of the program, project, or solution to the issue. In addition, new economic models are evolving out of this collaborative space thereby identifying new resources (human and financial).

So what would this new model look like if we expaned it to the organizational structures of today's society, specifically around the Non-Profit and Charitable sector?

I would argue that by breaking dow the silows around issues, tearing up the turf around donors, and engaging multiple agencies in program development and delivery, we would have a more efficient, effective and impactful non-profit sector.

How would this work?

1. Donors will be able to direct their resournces to a couse as opposed to an organization. The cause being managed by multiple agencies from different angles will ensure that the donor's dollars are being directed at the most effective approach at that time. This in turn will limit duplication and force organizations to address the issue and not just the program.
2. Cultural Barriers between users and supporters, rich and poor, ethnic groups, geography will be torn down (over time). This tear down will result in communities building each other up, instead of individuals directing resources down.
3. Resource Attraction to organizations will be easier because people will self-select by their attraction to solving the problem. People who have the solutions or parts of the solutions to the issue will be the ones who focus their energies in that direction. The growth the charitable sector will be by qualified, innovative people, thereby shoring up the leadership gap that is currently facing the sector as baby-boomers retire. From this we will see the creation of a new economy within the non-profit sector, not one driven by donor dollars, but one that is driven by social enterprise AND community investments (individuals and companies).

What does this new society look like?

Currently our society is built in silos. There are three of them, Non-Profit, Government and Private. Information is being passed on an inconsistent and limited basis down each of these silos and across on an even more limited basis. What this new system could look like would be a pool of individuals from a cross-section of industries, geographies, backgrounds, etc. From this pool are different tributaries pulling people by interest, knowledge, expertise down around an issue and then spitting them back out again into a different pool with a different collection of individuals looking at a different problem. Each pool generates new ideas, solutions, micro-economies, governance systems and ultimately connections.

This idea brings me to the next CBC interview from this week on Q hosted by Jian Ghomeshi. Jian interviewed Zambian author, Dambisa Moyo on her new book Dead Aid. This book reveals the negative effects that foreign aid from individuals and governments is having on African societies.

The idea that our aid is having a negative impact is not new to readers of this blog. I have written in the past how donations to some organizations overseas have unintended consequences.

Moyo highlighted effective CED funding models like Kiva, and how building businesses and capital systems ins better than aid. She also stated that she likes what China is doing on the continent, by bringing business investments, employing people and driving the economy. I think that using China as an investing company is not a good example.

China might be bringing in new businesses and thereby driving up other businesses supplying to the workers and their families, but China has some well-known distasteful approaches to business. Specifically around the blatant disregard for human life standards. It is the Chinese business in Sudan that is propping up a corrupt government, that has led to mass murder of those living in Darfur, and created an even wider socio-economic gap. Another example is one that is not so widely known about - China built much of the road infrastructure in Ethiopia. This was originally seen as a good thing because it enabled the food producers in the north to transport goods to the desert communities in the south. What these roads also provided was for flower growers from places like India to move into the country and start drawing up precious water resources for flowers to be exported out of Ethiopia. In essence, these roadways are contributing to another drought. What is even more ironic is that Ethiopia was the only African country not colonized, and today, it has more countries exploiting its resources than ever before (one might argue the exploitation is going unchecked).

I believe that if this was an effective model, this type of capitalism would be driving down corruption, not strengthening it.

There has been some good come out of China's investment and the work that NGO's are doing on the African continent. I have written about where your jeans go when you send them overseas - how used clothing is sold in the market and has provided a cottage industry for tailors. Another revenue stream provided by NGO's is the volunteer corps that arrive in the countries and stay in the guest houses (not major hotel chains... but there is an economic trickle from that too) run by families. We might not agree about how volunteers and donors should travel and work in developing countries, but let's face it, these people require services and supports that can be provided by the local citizenry.

In tying these two interviews together this is what I see:

Effective CED should be conducted in an open source, wiki manner. By doing so, a new economic system will be created: new avenues for donors (community investors) to participate, new governance and accountability systems will provide ease of growth and partnerships. This structure will integrate the private public and non-profit sectors as one system - the Human system.

Next week Prime Minister Stephen Harper is going to release his budget to Parliament.  As our country, alongside the US, are looking at multi-billion dollar bail-outs for various for-profit sectors, the importance of a strong non-profit and charitable sector is ever more apparent.

The Calgary Herald reported in today's paper that the charitable sector is a $112 billion industry employing 2.1 million Canadians and comprises 8.6 per cent of the nation's GDP.  This is a sector that has been filling in where government has fallen short and has managed to function, for better or worse, during the booms and busts of our economy for decades.

If we are looking at a stimulus package - perhaps the for-profits that are turning to government for bail-out funding should take a page out of a charity's operating handbook.  How many organizations have generated innovative and far-reaching programs and services based on shoe-string budgets?

In Alberta, the incentives for donating are great - almost a 50% tax deduction for charitable giving.  With over 19,000 charities and non-profits in Alberta the financial power is quite significant.  Perhaps, in addition to (or instead of) bailing out the for-profit entities, the government should also look at increasing the capacity supports for the organizations that are filling the gaps where government and business has fallen short?

While they are at it, this might be a good time to review the approval process for registering charities and non-profits.  One thing they might start looking at is the issue of duplication of services and stop issuing registration numbers to organizations that are not adding to the sector, instead using their extensive database to link similar organizations in order to share resources and do even better work? 

Just a thought during our tighter financial times...

One of the many good things about the holiday season is that it gives me the opportunity to catch up on reading that I have been putting off.  In my pile of MUST READS are several back issues of The Atlantic, Walrus Magazine, Corporate Knights, Business Edge and Mompreneur.  There are not only magazines in the pile, but several books.  One that I had started a few months ago and put aside due to lack of time.  I have since returned to it - The World is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman.

This book was published in 2005 and with the ever advancing use of technology, especially Web 2.0, it has been updated since the version that I read. 

Mr. Friedman lays out 10 "flatteners" that have shaped the world we are in today, and for me clearly explains how we got into the economic position we currently are in.  But it also got me thinking about how the Charitable Sector can apply some of these concepts.  Learning from what has transpired in the corporate sector as a result of these flatteners (good and bad), I believe there is an opportunity to improve knowledge sharing/ transfer of information between organizations.

Brandy Agerbeck of Loosetooth.com created the following illustration based on what Friedman is saying in his book:

 

Taking Friedman's 10 flatteners I have come up with a list relevant to the non-profit sector:

Friedman's Flattener	Dexterity Flattener	Application to Charitable Sector
Fall of the Berlin Wall	Non-Profit and Voluntary Sector official recognized	Governments around North America began recognizing the economic powerhouse behind the charitable sector.  This in turn paved the way for additional resources to be directed at some of the innovations that were being developed within the sector (not including academic institutions)
Netscape Goes Public	Organizations start integrating technology into their agencies	Telling the agency's story became easier and quicker with the integration of technology.  Not only could organizations highlight their services on a local level, but they could find out about others who are offering similar services in other parts of the world and connect with them too.
Workflow Software	Universities offer degrees in Non-Profit Management	Jobs in the charitable sector become careers.  Professional associations are created and the positions within the sector are legitimized.  Salaries slowly start to reflect the education of those running institutions.
Open Sourcing	Still Under Construction...	Charities have a history of "turf" issues.  This is most likely due to the way that fundraising has been occurring over the years.  What we are seeing now is a breakdown of those silos.  Innovation can only come from cross-pollination of ideas.  The charitable sector is pushing this, most notably, in the academic medical research labs.
Out Sourcing	Third-Party Fundraising becomes the norm	The Rotary Club is probably one of the most visible of this type of out sourcing.  From special events in support of organizations like CAWST and Ronald McDonald House to golf tournaments and parties for Seniors.  These third-party events take the burden of special event planning off the shoulders of recipient organizations allowing them to focus on what they do best - service delivery addressing a need.
Off Shoring	Community Economic Development	It used to be that international development NGO's would go into a country, tell them what was wrong, fix it for those people and leave them in maelstrom.  Ultimately, one would see abandoned equipment and complete lack of know-how by those who were on the receiving end of the aid.  What we are seeing now is a complete reversal of this approach to development.  Communities are putting together what they feel they need to survive.  They are developing the plan and identifying the best ways to implement that plan using indigenous resources.  NGO's are providing some of the technical support, financial investments and resources, but otherwise have empowered those who need the help to figure out how to do it themselves.  What we are seeing as a result are communities growing and learning from within.  As well, products that are produced in those communities are being sold in North American shops like 10,000 Villages thereby generating additional revenue for the community.
Supply Chaining	The Community Campus Idea	A friend of mine used to live in Moncton, NB.  When she moved their from Ontario she was so impressed that she had to go to only one building to get her new drivers license, her new provincial health insurance card and various pieces to start her new life in this new location.  She quipped that if she had to do this in Ontario she would be driving all over town and standing in several different lines to accomplish the same thing.  Clustering is something that is happening within the charitable sector around North America.  I believe this mostly driven by property values and not so much by ease of use for the client, regardless, it is happening.  Organizations that provide services to a similar clientele are starting to share work-space.  As a result, HR and intellectual resources are being shared thereby streamlining the supply chain of the service.  Now a person who is dealing with unemployment issues can also seek assistance for food hampers, emergency shelter, job training and the like.  Each of these services may be provided by different organizations housed under the same roof.  One of the challenges facing these groups however, is the privacy laws around personal contact information.  Each Cluster has had to create statements around how clients' contact information is being shared within the Cluster.  As this model evolves and strengthens new laws governing privacy may be created.
In Sourcing	Capacity building organizations like the Centres for Non-Profit Management and Centre for Philanthropy are created	Access to cross-sector information is made available to organizations.  So an organization that deals with women's health that is going through a management transition can learn from an organization that deals with homelessness that recently went through a similar transition.  The information is "stored" within other agencies that specialize in capacity building and non-profit management.
In Forming	United Way begins facilitating collaborative work between its funded agencies	Donors and other stakeholders begin "forcing" the organizations in which they are involved to work with each other to benefit the common good. Imagine Canada and other similar agencies begin fostering relationships between businesses and charities to share knowledge and best practices.
The Steroids: Digital, Mobile, Personal and Virtual	Web 2.0 and Proof of Impact Philanthropy	Kiva, Donors Choose, ChristmasFuture, Net2 - International charities begin showing proof of impact of donations.

 

Lucy Bernholz is the president and founder of Blueprint Industry & Design Inc.  She is also the author of the blog: Philanthropy2173 has put together similar ideas around how the philanthropic sector is flattening.

So why is this important?  As we move through the ever growing quagmire of our current economic times, understanding the forces at play is important.  I believe that we can take some of these ideas, learn from them, and then apply them more effectively to the charitable sector.  We need to do this now, especially in light of the shrinking economy.

I have been asked by a few different organizations to post the following job opportunities -

For more information please contact the organizations directly.

Peer Support Services for Abused Women -2 positions: Admin. Ass't. and a Volunteer Coordinator

ChristmasFuture - Internship: Primary responsibilities are day-to-day operations.  Great learning opportunity.

 

Here is a blog posting that outlines some of the metrics for evaluating Return on Investment (ROI).  From the donor perspective, they are not all relevant.  It does give you a sense of how charities are starting to measure themselves and the use of social media to attract and retain donor investments (financial and time).

Enjoy the read - The Social Organiztion.

Also, a quick thank you to Joe Solomon for his advice and recommendations!

I was recently asked by Lyndon Ward, a member of Dexterity Consulting's advisory committee, why there was so much duplication in the charitable sector.  Here are my thoughts around this...

The province issues non-profit numbers to organizations that "...promote art, science, religion, charity or other similar endeavors, or they may be formed solely for the purpose of promoting recreation for their members."  The Federal Government issues a charitable number that allows organizations to issue tax-receipts.  Just to complicate things, here is what the Canadian Government says about regulating charities.

"... the Income Tax Act does not define what is charitable, the Canada Revenue Agency (CRA) determines whether or not an organization qualifies as a charity at law by applying the common law: that is court decisions.

To be charitable at common law, an organization must have exclusively charitable purposes and carry on exclusively charitable activities that further these purposes. In this document, the words purposes and objects are used interchangeably. Both refer to the way that an organization describes and identifies the reason(s) for which it was created i.e., what it intends to achieve. Activites are the organization's programs - or how it will accomplish its purposes.

A charity's objects are set out in its governing document. If the objects allow the organization to do something that the law does not recognize as charitable, the organization is not considered to be a charity and is not eligible for registration."

All charities are non-profits, but not all non-profits are charities.  So what is with the duplication???

The provincial government issues the non-profit registration without looking at what other organizations are currently offering similar services.  The same thing happens at the Federal level.  It then becomes up to the communities to self-regulate.  This is done in a number areas, most noticably through donor investment.  If people are going to make financial contributions to organizations that are duplicating services, then they are feeding the problem. 

The United Way has begun encouraging its recipient organizations to collaborate.  In fact, there has been talk about limiting funds to organizations that are blatantly duplicating services.  I am not sure if this is policy.  What do wonder, if this is the case, what is United Way, Imagine Canada and others doing about mitigating the turf issues around duplicating services.  In Calgary for example, there are 6 organizations (that I know of) that support families who have a child or family member with Autism.  These six organizations could easily merge into half that, share resources, reallocate program dollars, conduct medical research and lower costs.  They don't (and they aren't). 

United Way only supports social service organizations (approximately 1/3 of Calgary social service sector receives United Way support).  What would happen if they were to get like-minded organizations that are distinctly overlapping services to begin a dialogue (not contingent on funding) about sharing resources.  What would it look like for these agencies if their overhead was cut because they managed the duplication better?  How would donors feel if they knew that their dollar was going to go further since a program or a service was better managed under a different operating umbrella?

I think that the government bodies who issue the registration numbers ought to do their due diligence before issuing the number.  They should find out if the applicant has considered the other agencies that are doing similar work.  With 161,000 non-profits and registered charities in Canada, and the number growing, it is in the best interest of Canadians overall and philanthropic investors to encourage government and the organizations already existing to stop duplicating services and to start merging. 

The economy is slowing.  People and granting bodies are becoming more strategic in how they give.  Questions are being raised as to what makes one organization different from the other organization with the same objectives.  Social mediums like QuantumShift.tv and the Causes on Facebook are adding fuel to the fire of what organizations are doing the best work and pushing those that aren't out of the arena. As all these combined are making the perfect storm for seeing an end to duplicated services in the charitable sector.  

As smart philanthropic investors you also have a responsibility to make donations to organizations that are not only addressing a need, but are doing so in the most effective way possible... that includes not offering a service because someone else is doing it, and doing it well.