Giving Donors the Wrong Impression

I see in the latest Michigan Nonprofit Association newsletter "Links" that they have posted a series of what are supposed to be helpful comments for donors about how to choose charities for receiving donations.

One of these tips has to do with fundraising. The headline for this comment is "How much of your donation will go towards programming rather than administrative and fundraising exprenses?"

Under that heading, here's the text:
"Charities use your donations not only to carry out their charitable purposes, but also tio pay for administration costs and fundraising (which may include commissions to companies that solicit using telemarketing or direct mail). You have the right to ask exactly how your funds will be used. Althought there is no magic percentage in terms of how much money an organization should spend on overhead, it is smart to ask a charity what percentage of your donation will directly support programming."

What? You don't like fundraising? I mean, I know you don't like to DO it, but do you want to punish charities that do fundraising by not making your gift to those who engage in soliciting donations from the public? But how in the world do you expect, then, that a nonprofit organization is going to be able to meet the demand for services?

In my view the message that fundraising, or administration, is somehow "bad" or "inappropriate" or is somebody else's responsibility, is not a message we want to send to the donating public. It is just NOT appropriate for a donor to think that his or her gift ALONE out of all the others MUST go to programs, while anybody else's gift is OK to be used in these areas. Whoever thought of this doesn't understand the nature of community or the relationship nonprofits have within their communities to those they are helping.

Charities are scrabbling hard today for every dollar they can get, because the needs for service are drastically increased, the marketplace is overcrowded with underfunded charities, and donors tend to see themselves as limited in what they can give. We don't want to preserve the mis-perception or dis-information about fundraising and charitable giving that is already too prevalent on the Internet and in other media. The so-called charity "watchdogs" have already done too much damage in trying to use cost ratios to advise donors and in making "fundraising" seem like an undesirable activity.

But why do I say this? Let's get real, folks. Charities are not businesses; so ratios are inapplicable. They just don't work when the motivation for giving and volunteering isn't profit, but the satisfaction that comes from helping. The reward system for charitable giving and volunteering isn't efficiency, it's meeting needs of people who need help.

Administration? Salaries? In a nonprofit organization that's how we pay people to deliver the services that accomplish our mission. Without administration and salaries, we can't succeed in our mission; we can't meet peoples' needs; we can't do charitable work. It's as simple as that.

Let's take another issue: Charities have three sources of income: fees, government ontracts/grants and contributions solicited by fundraising from the public. Without fundraising activities, there is very little if any ability to provide services in most nonprofits today, particularly in the small- to mediumsized- nonprofits. If a donor is skittish about giving to a charity's fundrising efforts, they don't have the right understanding, because without those fundraising programs, the charity wouldn't be able to deliver much needed services to their target populations.

Take a look at it another way: the donor who supports charity fundraising effectively leverages their gift many times over, because the charity will use that gift to involve other donors and the number of contributions multiplies geometrically. The gift to fundraising is a gift that really gets a great deal more "bang" for the donor's buck than a donation to any particular program area. In the program area, the donation is used up. In the fundraising arena, the donation enlists hundreds and thousands of gifts from others.

Let's take a larger look. In the nonprofit world today, we exist in an over-crowded, under-funded philanthropic marketplace. This has been the case since the mid-1980s. What's happening is that the needs for the services nonprofits perform have doubled and quadrupled in the last 20 years, while government has been steadfastly getting out of the business of making our society better, having left that to the nonprofits. At the same time, the expectation of the American people has increasingly demanded that more services, more types of services, higher quality of services are made available to the public by nonprofit organizations. That means the costs of providing services are increasing as is the demand.

Now, put in the midst of that equation a "picky" donor or a charity "watchdog." What's the problem here? If you don't trust nonprofits to do the right, the honorable, the charitable thing with your donation, don't give. But, if you want to serve people, help people, help nonprofits meet the terrific need that's out there, then please realize that with nonprofits it's all one package: administration, salaries, fundraising and programs. Without all these parts, nothing can happen, no service can be given.

What's not to like here, if you're a donor? It's all part of the way a charity works.
Administration is people providing services.
Salaries are people providing services.
Programs are people providing services.
And fundraising brings in much needed revenue that helps pay for all the people who are out there providing the services.

Now, if you want to ask a charity how much the CEO gets paid compared to the mailroom clerk? That's a good question, one that can tell you a lot about the organizational culture and management practices of the charity. You want to ask about how much the menbers of the Board of Directors give to the charity each year? That's a REAL good indicator of what's going on. You want to ask about whether the charity uses fundraising consultants or other suppliers in telemarketing and direct mail? Good questions, but you need to go into this knowing more about those industries and their costs than most donors know. But it's still a good question to ask.

But, Please. In terms of trying to advise donors away from "administration" or "fundraising" give the nonprofits a break, OK? Charities need the money, urgently! And they need the latitude to put YOUR money, Mrs. and Mrs. Donor, to work where they know it will do the most to help them accomplish their mission.

The public needs to understand just how different the nonprofit sector is from the typical business organization. They're worlds apart, because the nonprofit is going to care about people, and about helping people, and about giving America a better society in which to live. You can't say the same thing about Bank of America or Lehman Brothers, or Bear Stearns and those financial houses or multi-national corporations, can you?

We urgently need to re-educate the giving public to counter the dis-information that's been put out there by the so-called "watchdogs" and others. Fundraiisng is NOT a bad thing to have happen. That's the way charities have existed for time out of mind. If fundraising doesn't happen, no charitable work can be done. OK?

Now, go make your donation to your favorite charity.