Offices for Charities - 3 Good Reasons to Ensure Price is NOT the Sole Criteria

It's been an interesting time to live in Toronto over the last few weeks. And today felt like the first real day of summer. So by the time I arrived at my second meeting today I was feeling more than a little cranky about our Mayor and not just a little bit overheated. Imagine my pleasure then to arrive in an oasis of cool bright space, with trees, lovely architecture and carefully designed areas that were both accessible and inviting. I felt calmer (and cooler) immediately...

All this in a space that houses a charity.

I've expressed before my concern over not spending enough on charitable infrastructure and "back of house" support, but clearly this is an organization that has had a great opportunity to afford a lovely space to pursue their Mission.

And then I worried that maybe it was "too rich", that Mission had suffered due to spending too much on the space. Maybe they would have been better off if their sole criteria in creating this space was to find the cheapest place at the cheapest price?

Here's why I don't think that's the case:

1. For-Profit organizations clearly believe that nice spaces help attract and retain talented staff. Charities need to attract and retain talented staff too, so while they may not need to be quite as fancy as Google's new home in Toronto, deciding on price only can't help morale either. And if better space has this positive affect on staff, imagine the value for the clients and patients this charity serves...
2. Productivity goes up when the work/office spaces are flexible, attractive, have the right tools and allow for appropriate privacy and quiet. So if charities are seeking to be as efficient as possible with donated money, increasing productivity makes sense.
3. Nicer space may actually make the Ask easier. Few prospects want to donate to renovate a tired Class C building to a bare minimum standard. But having seen the impact on people I was prospecting when I showed them the drawings of a truly remarkable renovation capital campaign I can attest to the value of dreaming bigger than just about rock bottom pricing!

Price will always be king. But perhaps more charities should take a page from the For Profit world and make aspiring to better working spaces nobility as well.

5 Advantages of Charities Owning Their Offices - and the Risks

We ran a seminar on real estate for charities last week, and a number of Executive Directors, Directors of Finance, and CFOs came out to share best practices, enjoy coffee and muffins, and review “Real Estate for Charities 101”.

If you ignore the largest (e.g. YMCA, etc.) or longest-standing (e.g. settlement houses, etc.) organizations, certainly most charities today are leasing their spaces. So one of the themes that we explored, especially since we have recently completed several projects where charities and foundations have purchased their own buildings and office spaces, was the pros and cons of buying / owning versus leasing / renting.

As I work with charities it’s easy to see the allure of owning your own space.

• Can be leveraged – in difficult financial times or to fund a project the option exists to take out a mortgage / secured line on the property
• Provides cost certainty – other than the fairly predictable cost increases in utilities, the main cost (the mortgage) can be predicted very accurately for years to come
• Potential for “upside” – your payments build equity and not the landlord’s bottom line, plus with no “middleman” owning can save money over time, and  you could even take in tenants or fellow charities to help them / increase your own revenue
• Greater control – while some landlords may not like / or even allow certain charities (or the mission or clients they bring into a building) this is less of an issue when you own
• Profile and pride – having a central location can bring greater confidence to prospective donors, allow for marketing and sponsorship opportunities, and give the staff and stakeholders a central theme to rally behind

However, the challenges and risks with owning a building for charities and non-profits are significant. Obviously a building is not very “liquid” so if cash flow is a concern it might be better to have the funds simply earning interest in a fund, bonds, or even just a bank account. Buildings require upkeep, so a reserve fund and on-going capital costs must be accounted for. For some organizations owning a building can send the wrong message to donors: “I don’t want you to put my gift towards your building, I want it to support your programs” goes the donor’s thinking.

Finally, a purchase of a building is a massive exercise. It can distract you from your Mission. Moreover, since charities are often looking at older “bargain” spaces, issues of hazardous materials and building code violations are more frequently a concern than in newer spaces.

So among many other topics, the bottom line from our Real Estate for Charities 101 seminar was that if purchasing your own office building or office spaces in on your wish list, do make sure you get the best possible professional advice and map out a clear strategy towards this goal.

Bullies Within Charities?

The tragedy of Rehtaeh Parsons has me thinking about bullying. The sad fact is that bullying is not just done by kids, nor only on-line or at school. It is also done by adults at the workplace. What’s particularly interesting to me is that bullying happens even in workplaces where you might not expect it – for example within charitable and philanthropic organizations.

An interesting article in the latest issue of Advancing Philanthropy makes some interesting points on this theme of workplace bullying, and how it differs from the private sector to the charitable world.

1. Bullying not only happens in the philanthropic world, but the impact can actually be more intense: bullying runs counter to the expectation / assumption that people in the sector want to “help others” so when it happens it magnifies the negative / unexpected impact.
2. Since staff at the charity are there to help others and make a difference in the world, they may be more willing to endure or forgive the bullying, rationalizing that it is an expression of the passion the bully has for the cause and a desire to drive it to success at any cost.
3. Many charities are small, tight-knit organizations driven by Mission and collaboration, so standing up to a bully may be seen as risking the cohesion of the team and hurting the effectiveness of the team. Charity staff in particular don’t want to hurt impact.

Finally, since bullies are most often higher up on the organization than the victim, there may be relationships with Board members or donors at stake if it’s a senior staff member who is the bully and they get “called out”. This will make charity organization staff all the less likely to complain or raise the issue.

So not only is the charitable world just as much at risk of bullies, but the impact may even be worse than in the for-profit sector. My commitment, as a Board member and as someone who supports the charitable world, is to be more attentive to this risk and make sure that staff and volunteers I work with know where I stand on the issue – and that I’ll stand with them against any bullying.

Top 3 Charity Trends in 2013

Here are the top three trends to watch for in the charitable world in 2013.

1. Fundraising will see a renewed focus on major gifts and individual donations in 2013.

The last few years have seen (and even demanded that) organizations seek new and innovative funding models.  The phrase "revenue diversification" has become overused as charities have sought more corporate funding, initiated social enterprise and enhanced their on-line campaigns, sometimes all at the same time. But the fact remains that the majority of charities still raise the majority of their funds through individual gifts, including major gifts.  2013 started off with a great example: the biggest-ever private gift for cancer research in Canadian history. My prediction is that we'll see a "return to basics" as charities prune back some the less successful initiatives of the last few years.

2. Fundraising will see significant innovation in terms of leveraging technology and on-line giving in 2013.

I remember the first time I received an e-mail from a friend that had a link to an individualized site where I could donate to support them in climbing the CN Tower. At the time it seems quite remarkable... But that was many years ago. My own Movember campaign raised a bit less this year than last, and others I know had the same experience. Yet the web and on-line giving is nothing if not flexible and innovative. My first prediction notwithstanding, I believe that we'll see memorable and innovative new ways to leverage technology in support of philanthropic efforts in 2013.

3. There will be even more new faces leading charities in 2013.

Partly due to demographics, partly due to the ever-increasing challenges facing charities, and partly due to new and more complex expectations of leaders of charities (ONCA, CNCA, AODA, etc.), I have the sense that new leadership will be a theme this year. This isn't a new trend, just one that I believe will accelerate, and a quick review of the Charity Village and LinkedIn job postings would seem to support this belief. My prediction is that we'll see even more postings and a number of long-standing roles change in 2013.

I’ll keep you updated on examples and stories behind these trends all year, and check back in 12 months to let you know how accurate I was.

Top 3 Charity Trends in 2012 Reviewed

This time last year I predicted the Top 3 Charity Trends in 2012, and it's time to see how I fared.

1. My first prediction was that many small and medium sized charities would disappear in 2012.

Well, sadly I was was right, but I also predicted that others would use this "crunch" to innovate and reinvent themselves, and it turns out that was true too. For example, Touchstone Youth Centre closed its doors in November due to financial challenges. After over 20 years and providing outreach and shelter for thousands of young people, they were gone.  However, the Learning Disabilities Association of Canada (LDAC) took a different tack, and became a national association and plans to fulfill its mandate via a web-based presence. A final example is that of the Ontario Mental Health Foundation. They're still around, but due to a decrease in provincial funding and their own reduced return on investments, they have temporarily suspended a number of research fellowships. Net result? Fewer charities, reduced impact, but less spending. Without any way of assessing impact and value and which charity closes and which survives beforehand, there's no way of knowing whether the "right" charities closed or not. Or whether the right programs / initiatives died on the vine or not either.

2. My second prediction was that big charities would get bigger in 2012.

Many larger organizations celebrated their best year ever in 2012 in terms of revenue. However, in this new Darwinian world of charitable survival it's NOT really about who is most fit (e.g. who has the most impact and who is best equipped to deliver on their Mission) but rather who has the deepest pockets, the best fundraising campaigns, and the best top-of-mind awareness. So in the case of big charities the obverse from the small charities that closed is true: of those that grew, who really had the best impact and delivered the best value per donated dollar?

3. My final prediction for 2012 was that charities would increasingly think and in some ways act more like for-profit businesses.

This is a tougher result to review. Certainly I heard a lot at AFP Congress and other events about Social Entrepreneurs and Social Enterprises, but maybe I missed the breakthroughs we all keep expecting.  MaRS and others talked about Social Impact Bonds, but again even with Governments starting to get involved my sense is only modest change has occurred.  I can vouch for charities becoming far more savvy about their back-of-house operations, looking to squeeze already lean budgets to find a few more dollars. For example, the number of calls I get about how charities can partner to save money on rent (hubs, co-locations, etc.) has gone up dramatically. And the number of organizations that are looking to buy their own office and program spaces and grown as well.

Stay tuned for the 2013 predictions shortly!

3 Key Considerations for Last Minute Donors

A last-minute post for last-minute donors.  Whether you're seeking the tax break and the receipt for the year that is ending, or just trying to finish 2012 on a positive note, it's not too late to give. It's also not too late to give wisely.  Here are three key considerations before you make your year end gift.

1. PASSION
   Is this a cause you care passionately about? Has this organization touched your life or helped others you love? Is this a cause you truly believe needs your help?  Sometimes we're swayed by a powerful image, or a great charity marketing campaign, but that impulsive decision may not be the one that will bring you the most happiness. So while making a gift is better than none at all, consider if there isn't a better "fit" for your generousity.
2. RESEARCH
   What other organizations focus on the area(s) you're most passionate about? Is there a better fit, or more direct way, for your gift to work? Websites like Charity Navigator (focused on the USA) or Charity Intelligence (Canadian but with a much smaller database) can be a big help on this front. Even a quick review of these sites may provide you with new insights about how best to direct your charity giving.
3. IMPACT
   Most charities are very efficient with your donated money, but does your intended target really need your gift? How many years of operating funds does the organization have in reserve? More than just cost per dollar raised (e.g. cost of fundraising), it's important to know if you're getting real impact for every dollar donated. For example, if your charity helps students, has their cost per student been going up or going down over the last few years? And if the answer is up, have they been offering new and enhanced programs... Or are their costs going up at a rate faster than inflation? 

My point is that, as I've said before, giving from your heart and from your head is important. Even if you're making a last minute donation, there is still time to do it right! 

5 Reasons Why Charity Mergers Work

Based on the for-profit track record, charities should stay away from mergers. Given that many academic studies find that a large proportion of for-profit mergers actually decrease profits and efficiency why would charitable organizations risk this path?

As discussed previously merging charities has risks, but I'm increasingly of the opinion that the benefits outweigh the challenges. Here are 5 key reasons why merging can and does make sense.

1. Like-minded organizations that come together to focus on a single issue or cause can accomplish far more than each working alone. What's been called "collective impact" is all the buzz right now in the charitable world simply because it works: just ask Advancing Philanthropy!
2. My contention is that there are simply too many charities - think about the number of different organizations that have overlapping Missions or seek to duplicate the work already being done by another group.  With 161,000 charities and non-profits in Canada alone surely there's room for fewer to do better work with reduced confusion and re-work.
3. In the spirit of reduced confusion, clearly mergers would allow precious donor dollars to be more accurately and effectively applied.  And the obverse is that fewer charities would also allow donor dollars to support more impact and less overhead: two charities that merge into one only need one photocopier, one reception area, and one kitchen microwave, not two of each.  Also, with fewer competing messages for donations it would be easier (and more cost effective) for vital charitable messages to break through and be heard.
4. The charitable world is all about passion, but like money there are only so many volunteers and so many donated hours to go around.  A merged organization would (ideally) draw on the strengths that existed in the originals, ensuring that 1+1=3.
5. The best reason to pursue mergers, collaboration and collective impact in the charitable world is that it's very hard to do.  Albeit a simplification, in the for profit world the firm with enough money can buy out the one that's smaller.  In the charitable world that doesn't work (donor backlash, government regulations, volunteer boards, etc.), and organizations that seek to "merge" need to find common ground and shared passion.  The same volunteers and varied stakeholders that can make decision-making within charities so challenging present natural barriers to ill-considered collaborations.  So the fact that it takes so much work and trust to merge mean that it is likely the outcomes will be better in the long run.  Remember, money can't buy you love...

I'm personally aware of several great examples where charity mergers, collaboration and collective impact are already working well, and expect we'll see more examples in this tough economy. It appears that 1+1 does indeed equal 3.