One of the Best Ways to Minimize the Pain of Change

At a committee meeting last week of an organization where I volunteer, it was announced that a key part of their Government funding had been cut. It's a wonderful organization that does important work, but that unfortunate impact is not what most struck me.  What leapt out at me was that much of the pain could have been minimized by doing one simple thing: communicating better.

In this particular case better communications would have manifest itself in several ways.

• Better timed communications. Making the announcement about the cuts on a Friday afternoon before a long weekend understandably panicked many people who wanted to know if they were affected and what the plan was. And whether true or not, this timing left the taste in everyone's mouth that this "story" was being buried or timed so as to avoid media scrutiny. Obviously this only heightened the upset of the unexpected news.
• More lead-time in communicating. If key leaders (for example, the Executive Directors of the affected agencies) had been given a bit of lead-time they could have prepared for the phone calls from their staff, who instead found out through the media and their peers.
• Communicating a "message track". Since it fell to the various Executive Directors to communicate this change, it would have helped them to have key points to convey, specific reasons and messages to convey even if all the details weren't quite clear yet.
• Communicating before deadlines. The affected organizations were expecting news on this funding quite a while ago (a March 31 deadline had already passed nearly 2 months ago), and delays in confirmation of these funds has not been unusual over the years. So, rather than shut down their programs, they went ahead and renewed contracts and incurred costs just as they have in the past.  If this communication had happened before the deadline the organizations could have more effectively (and at less cost) wound down these programs.

In brief, having a communications plan that considers who knows what and when, and what details need to be communicated are all critical components of any change. Whether you're in the charitable world or the for-profit world, sweating the small details of communications can save time, money and pain for everyone.

One Hopeful Number for Charities

Many of my posts lately have focused on the challenges the charitable sector faces, and how difficult it's been for many to survive.  Of course, charities have tremendous strengths too.

A short list of these positive attributes include:

• Passionate, motivated and dedicated staff, volunteers and supporters
• A reason for being that stirs true commitment, beyond a simple profit motive
• Generally lean and efficient operations
• Favourable tax and financial supports

And counter-intuitively, I would also include the fact that there is increasing demand for the services that most charities and non-profits provide.  It will be difficult for the sector to truly "collapse" when there is so much demand...

But the one most hopeful number is this: 71.5%.  That the percentage of employees in the "voluntary and non-profit" sector in 2008 who had a college diploma, a university degree, or a post-graduate degree.

In short, the hundreds of thousands of people working in this sector are also highly educated.  I don't think it's too far a reach to suggest this equates to a level of creativity, of thoughtfulness, and simple brainpower that bodes well for our viability.

Yes there are storms ahead, but the number 71.5% may well be one glimmer of light at the end of the tunnel.

Charities and Office Space: New Kinds of “Home”

Not every charity has an office, and some of those that do sometimes don’t incur significant costs. For example, some charities own their space (more often the case for more established or larger organizations). Other charities have agreements with Board members or sponsors / donors who provide space for free, or arrangements with a level of Government to pay nothing or well below market rent.

And of course for many small charities there are no such costs: run out of basements or church halls their spaces are donated as well.

Of course, if you are a charity that owns property and is paying Property Taxes, check and see if you’re eligible for a rebate. For example, in Toronto charities can receive a 40% rebate.

But for many charities, the reality is that rent and associated costs are often the second or third largest line items on any Budget (usually after Salaries and/or Program Costs). So in our world of funding reductions and challenging economic times charities and non-profits of all kinds are thinking about how to better manage this cost.  In addition to ensuring you have the right expert support on the real estate side, here are some themes I'm seeing on this front.

Often the starting place is to see if you can be one of those fortunate organizations that can get free (or inexpensive) space from a Board member or sponsor / donor.  It’s more often requested than recevied, but it's a great place to start, and we all know that you don’t get if you don’t Ask!

Being thrifty by nature, charities have also explored a variety of shared space and “co-location” options over the years. Find the right partner(s) and suddenly your “common” areas like reception space, meeting rooms and kitchenette become a shared cost – not to mention the photocopier and utility bills. Not to be undertaken lightly, this option requires detailed partnership agreements, but has a proven track record.

Another similar option to co-location spaces is a Hub. These shared spaces are differentiated by providing a “one stop shop” for participants and clients, where the organizations co-locating find further synergy due to their joint focus on a particular cause, issue or geography. Some are led by one larger organization (e.g. a United Way), others by ad-hoc groups who can more effectively address issues by operating together.

The last office concept I’ll mention for in post is virtual offices for charities. Based on the for-profit model used by Regus, Telsec and others, charities are now setting up virtual office spaces for other charities. One of the earliest versions I’m aware of (founded in 1998) is CAN (Community Action Network) Mezzanine in London England which proudly advertises on their website that for £93 per week you can rent a fully serviced desk.

More on Canadian innovations on this front in the near future.

Avoiding an Expensive Road to Nowhere

During a meeting with a relatively new charity and prospective client last week the question was asked if we could help them craft and deliver a number of Foundation and grant proposals.  The answer was yes, but first I wanted to understand several things. For example,

1. What were they hoping to achieve (e.g. how were the funds planned to be used)?
2. Was the rest of the organization prepared / supportive of this (e.g. back of house receipting, recognition plans, Board support, etc.)?
3. How had they determined that Foundations and grant proposals were the best possible means of achieving these goals (as opposed to major gifts, an annual campaign, events, or any other revenue stream)?

The point I was making with these questions seemed to become very clear when I mentioned a favourite phrase, “if you don’t know where you’re going, then any road will do”.  There are many good reasons why a solid and well thought out Vision and Mission and associated Strategic Plan are helpful, not the least of which is that it forces the organization to critically assess what they want to achieve and how they want to do so.

For newer charities (and new businesses) this is particularly important.  Most don’t have deep financial reserves, or (in the case of charities) Board members who have extensive backgrounds in fundraising or other non-profit work.  For example, as I’ve discussed before your Director with the great sales background may not be well qualified to guide your fundraising efforts.

However, this is not to suggest that every new organization rush out and pay for “outside help” to develop your strategies.  First, no one knows your organization better than you do.  Second, new organizations may be better served in the short-term by using your limited resources to build up your Program and Outcomes (so that when you’re finally ready to start making Asks you have brilliant outcomes to discuss).  And finally, not everyone who provides “outside help” will first ask you where you want to go and how you’re planning to get there… And this could prove to end up being an expensive road to nowhere.

So in case you’re wondering, in the example of the prospective client I mentioned at the beginning, we’re not going to start writing grant proposals.  We’re going to meet next week with some Board members and ask questions about what they want to achieve and how they want to do so.  And that's a good start.

The Drummond Report: Thoughts on Charitable Impacts

The recent publication of the Commission on the Reform of Ontario's Public Services' (Chaired by Don Drummond) report, "Public Services for Ontarians: A Path to Sustainability and Excellence" has generated a lot of press.  Having reviewed the full report, here are few thoughts on implications to the charitable sector.

There are 3 Chapters that have the most relevance to charities and non-profits.

Chapter 3 discusses the Commission's Mandate and Approach.  The recommendations in this section suggest that the provincial government not make across-the-board cuts, and seek to preserve investments where good value for money is being achieved.  The trick here will be determining what metrics are used, and who determines what "value" is important. The Report also clearly supports "privatizing assets and moving to the private delivery of services wherever feasible", but also suggests that this not be done "for ideological reasons".  While it is Federal government example, the track record with respect to Bill C10 (for example) suggests this may be easier said than done.  Regardless, charities should be aware that this paradigm of privatization is now firmly established as the model going forward.

Chapter 8 is all about Social Programs. Since many charities and non-profits operate in this arena the recommendations are of particular interest. My perspective is that most of these recommendations seem reasonable and align with current initiatives / themes already under discussion in our sector.

• Reform funding practices in the non-profit sector... reduce administrative costs by focusing on measuring outcomes rather than inputs. My only concern here is that measuring only outcomes can have unintended consequences!
• Improve the responsiveness of the government to the non-profit sector by creating one "window" through which all non-profits can engage all provincial ministries. This seems desirable so long as we don't create another huge ministry that actually adds costs and inefficiencies!
• Explore the use of Social Impact Bonds. They're all the rage right now, so we might as well jump on the bandwagon... And maybe they'll be a truly valuable addition to our funding toolbox.

Chapter 16 is focused on Operating and Back-Office Expenditures. The report gets a bit technical here and yet from my point of view misses a key opportunity.  While the Report is not focused on the charitable and non-profit sector, a clearer message that provincial funding would be looking to support organizations that were seeking "back of house" efficiencies through mergers, "hubs" and formal partnerships with other like-minded organizations would have been a big step.  Recommendation 16-9 does say that "consideration should be given to rationalizing and consolidating programs that regulate inter-related sectors or that could otherwise gain efficiencies from greater integration", but does not speak specifically to our sector nor to these sorts of efficiency opportunities.

The main message? That for better and for worse cut-backs and change are coming to the charitable world.  But then, you already knew that!

Everyone on the Charity Bandwagon

Having spent many years in the Consumer Packaged Goods (CPG) world I'm always interested in what happens in that sector. So I make a habit of filling out a survey once in a while as which companies are asking what questions can tell you a lot - and I'm not adverse to a coupon for free stuff once in a while.

I was particularly intrigued last week however when I noticed a question at the bottom of the multi-page survey: a detailed query on which types of charities I liked to support. So clearly the folks at the survey company are either getting interest from the CPG firms in this kind of data, or they believe there's money to be made in having this sort of info available for the CPG firms.  Either way it's another sign of how pervasive the links between corporate giving (and more broadly Corporate Social Responsibility [CSR]) and corporate business plans are becoming.

Whether this is actually good news for the charitable world is being hotly debated, but I believe the debate on the value of greatly increased direct corporate-to-charity giving boils down to simple question of motivation and leadership.  If corporations jump on the bandwagon because it's the "flavour of the month" this will distort charities as they seek to access these funds, and hurt them when the next new marketing vehicle is found. Worse yet, there is the risk that other donors will see through this thin facade of corporate largesse (e.g. "pink-washing" backlash) and begin to believe that all corporate-charitable partnerships are selfishly motivated, which is thankfully and clearly not the case.

But if this is part of a broader move to deeper and broader partnerships between corporations and charities then we all benefit.  In the long run the leadership of the CPG firms, and the CSR values that they infuse into their organizations, will determine the nature of this relationship for better or for worse.

5 Benefits to Government Cutbacks

Government cutbacks to charities and non-profits will likely do a lot of harm and undermine many aspects of what makes Canada such a special place.  However, in a contrarian way I can argue there will be some benefits.

1. While it won't happen overnight, eventually the pendulum will swing the other way.  As valued charitable services and societal supports erode and disappear, the problems they currently address will get worse. Ultimately there will be a clamour to support (either through donations or "forced donations" via government financing) the highly cost-efficient solutions that charities bring to problems.  And when this happens we'll be less likely to forget their value again so soon.
2. There are too many charities. The bad news is that due to cutbacks some fabulous and innovative new organizations won't survive (or ever see the light of day), but without the fertilizer of government funding at least some portion of the over-abundance of charities will diminish.  Think of it as a very haphazard and unwieldy pruning if  you will.
3. Lean times will force innovation. Fact is, charities by their nature are driven by passion, and that same passion to help others and make the world a better place won't be stopped for long by fewer dollars.  Volunteers, Board members, staff and supporters will (like they always do) step in to help pick up the slack. In so doing they'll all learn new skills, and the organizations still standing will be that much more resilient.
4. Cutbacks will actually allow for greater freedom of opinion and unfettered voices for change. We all know the expression "don't bite the hand that feeds you", and very few organizations that receive government funding are eager to risk offending this funder.  Some do and have clearly been targeted for cutbacks (e.g. women's advocacy groups). However, for organizations that can survive they will less constrained in their ability to speak.  Greenpeace certainly is a good example of this freedom provided by how they're funded.
5. Diversified revenue streams will have a positive effect in the long-term.  Once a donor (or company) is engaged in giving, in my experience they generally enjoy the experience and continue to be philanthropic.  So if the cutbacks encourage entirely new donors to ultimately step in, then we'll see new faces at the funding table once government does come back.

Painful? Yes, and likely hurting a lot of people who most need the help in the first place.  But not without some benefits.