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.

3 Ways Little Cuts Hurt Charities Most

My last post talked about charities closing their doors not due to a lack of need for their services or offering poor services, but simply due to a lack of funds.  It's also true that seemingly small changes, minor increases in costs, can have a disproportionate impact on charities.  Here are three key ways that "little cuts" can be painful in ways that are different from for profit organizations.

1. Increases in costs, say for example a new fee for garbage pick up, are hard for both charities and for- profit firms to absorb. However, while firms can "pass on" these increased costs to clients, charities have no such option. So for example when the City of Toronto imposes a new garbage collection fee on over 1,000 charities, there's no customer to pay more to offset this cost increase, just a decrease in services to those who can least afford it.
2. Charities have proportionately smaller voice for their size than their for-profit peers (#9 on my Top 10 list of differences). From Boards of Trade to business leaders that have worked within government (and vice-versa), businesses are simply better connected to government. Also, businesses are seen as providing jobs / tax revenue to all levels of government as opposed to perceived as begging from / costing money from all levels of government.  Not the case you say?  Well, in the example of the garbage fee the charities were denied the ability to protest: my bet is that business leaders wouldn't have been treated this way.
3. Another way cuts and increased costs hurt charities most is more philosophical in nature.  By definition charities help those most in need.  So when their revenue is reduced those who suffer from the reduction in services are those who are most at risk. And where charities are providing preventative and proactive supports, keeping people from "costing the system" even more down the road, these extra costs (touted at cost savings) can actually cost the rest of us a lot more in the future.

No doubt that new costs to any organization can be difficult to manage, but the charity and non-profit world is often hurt the most when this happens.

When Charities Fail

Over the last many months I've watched and listened with dismay as many charities have struggled in this economic and political climate.  This isn't a big surprise and clearly many people (including me) forecasted a tough year in 2012. However, like a death in the family, even when you know it's coming it's not easy.

Such is the case with Touchstone Youth Centre here in Toronto. This organization wasn't on my radar as a charity in trouble, but late last month this is what was shared with key partners and stakeholders:

Dear Sir or Madam,

It is with great regret we must inform you that Touchstone Youth Centre will be ending its service as of November 30th, 2012. We are closing due to ongoing financial challenges.

Touchstone Youth Centre has been providing services to youth between the ages of 16 and 24 years old since 1991. We have managed to provide emergency shelter services to over 400 youth each year while providing outreach services to more than 80 youth each month. Unfortunately, as a result of our current financial state, the Board of Directors made the difficult decision of discontinuing service.

The City is seeking a replacement operator for the facility to be in place as soon as possible. It is not possible to have one in place by November 30th. The City and Touchstone Youth Centre will work co-operatively to find safe places for existing clients. Admissions to the shelter will be suspended November 1st to facilitate this process. As soon as the City can choose an appropriate operator, a re-opening date will be announced. This is expected to be late January.

We thank you for your hard work, dedication and commitment to Touchstone Youth Centre. Our partnership with you made us able to make a difference in the lives of homeless youth.

The next few weeks will be extremely difficult for all stakeholders including staff and clients. However, Touchstone Youth Centre will provide quality service up to the last day of service. Any support you can provide us to accomplish this goal would be greatly appreciated. Thank you for all your work and the support you provided us over the past 21 years!

Sincerely,
Susette Clunis
Executive Director


In brief, a vital organization helping homeless youth is effectively going out of business.  I don't know the details or causes behind their "current financial state", but my main concern relates to the similarities and the differences between charities and for-profit organizations.  When a for-profit organization fails and closes its doors, the employees suffer, and in general terms their customers / clients are inconvenienced.  Sort of like the old riddle with a pig and a chicken discussing a bacon and egg breakfast, with a for-profit model the clients are involved but the employees are committed.

Sadly, in the case of charities that fail - for whatever reason - the impact is greater and broader. The employees suffer, but their customers / clients suffer even moreso.  And in most cases these clients are the ones who can least afford the loss.  I appreciate this is an simplification (and for example ignores suppliers to for-profits who suffer as well), but the simple fact is this: a safe and supportive space for homeless youth is discontinuing its services.  By any measure that's not good news.

And it begs the question about how to respond.  My response is to ensure that my donations go where they're needed most, that I vote for officials who will seek and support innovative, effective and efficient ways to deliver services to those who need it most, and that I speak out so that others know what's happening in a vital sector that touches us all.

Penny Wise and Pound Foolish: Expensive Spaces for Charities

There has been some press coverage about the impending rate changes to rent space in Toronto District School Board (TDSB) schools and auditoriums, particularly with respect to the impact on religious groups. For example, rates for unsubsidized groups can be from 5 to over 10 times higher per hour than they are for subsidized groups. I believe the implications of this decision are bad today, and will only get worse over time.

While I appreciate TDSB's desire to address their $110 million budget shortfall, there are two significant issues that such massive increases (even if they don't come into effect for several months) present to all sorts of organizations, the TDSB, and ultimately the entire City of Toronto.

1. If organizations can't afford the increase, they won't rent the space, resulting not in a decrease to the budget shortfall, but actually an increase (having some rental income on a property with utility costs is better than no income at all)
2. Even if organizations in the Subsidized Level 2 tier (not to mention the unsubsidized groups) can find the extra funds required, they may be forced to cut back in other areas, reduce hours or staff levels, or cut back on locations (e.g. for some groups there is a maximum of 3 locations before the subsidy does not apply)

In brief, this means fewer services by organizations that in many cases are trying to serve those who need it most.  For example, you can imagine that some of these people being served in TDSB spaces may ultimately face choices around criminal activity, and due to a lack of supports make a bad choice that winds them up in jail, then this is indeed "penny wise and pound foolish".  It costs hundreds of thousands of dollars per year to incarcerate someone, while ensuring robust organizations are in place to help reduce criminality and incarceration only costs (from the point of view of TDSB rents) a few dollars per hour.

It's truly a shame that our way of calculating the "bottom line" only looks at one number - in this case the TDSB's budget shortfall.  This forces short-sighted choices that cost us more as a society in the future.  Surely the better budget is one that includes societal costs and allows groups that save money over time to flourish. Calculating the true value of organizational and program impacts today in years ahead is hard to do, but surely worth doing if we seek maximum value for our donations and tax dollars.

Charities: The Big Get Bigger

That there are economies of scale is no secret to anyone in the charitable or for profit worlds. As I've blogged in the past, what is less well understood is that the positive, self-reinforcing cycle where bigger organizations generally get bigger is far more pronounced in the charitable world than the for profit sector.  For starters, it is estimated that the top one-tenth of 1% (0.12%) of all Canadian Charities receive 37% of all tax-receipted donations made by all Canadian individuals and corporations. So there are a very few very big charities, and many thousands of very little ones.

The news that an Ipsos Reid and TrojanOne study recently concluded that the Canadian Cancer Society and their pan-Canadian fund-raising event, Relay For Life, gained the top ranked ‘Most Valuable Property’ status helps explain one aspect of why this is the case. In the search for donor support, having sponsors for events (particularly corporate sponsors who can pay top dollar for bigger and higher-profile events) is critical. This study surveyed 1,016 Canadians for their impressions of charitable events, measuring:
1. Personal Involvement
2. Creating the Moment
3. Impact on the Cause
4. Sponsor Fit
5. Responsible Management
6. Heritage
7. Uniqueness

That the Canadian Cancer Society runs a memorable, exciting event is not surprising. And, with hard work and solid advertising, given their size and expertise they can attract many participants. So I'm confident that the Canadian Cancer Society absolutely deserves this 'MVP' status for their event.  But when the survey asks about memorable events in a market with thousands of smaller events that may be just as touching, enjoyable, well-managed and so forth, it's virtually a self-fulfilling prophecy that the only the largest will get enough mentions to "win".

Thus, this survey has the potential to drive more corporate sponsors to support the largest and highest profile events, possibly further challenging the smaller less well known events.  Also, while I appreciate that the survey was not intended to measure "hard" metrics such as attendance or viewership, I also wonder if what was also being proven was another variable: most donors give with their heart and less through research. For example, if this survey had included data on Fundraising costs as percent of donations, would the rankings for "Impact on the Cause" have been the same?

In the end, if this survey drives new donors and fresh perspectives to the charitable world then it has more than served its purpose from my point of view. But it may also serve to further cement the pre-eminence of the biggest, most established event properties: the big will only get bigger. To make it even better next time around perhaps a winner can also be celebrated in categories such as "Best New Property", "Best Small Property" and "Best Value to Sponsor".

Offensive Charity Advertising?

Given my blog entry just last week it's timely to see some research on this front.  A report on offensive advertising issued just this month in the UK by ASA and Ipsos MORI provides the hard numbers behind the sense that charities need to "break through" the media noise, but can sometimes go too far.

The key stat for me?  Only 16 per cent of adult respondents said they had been offended by an advertisement in the previous year.  Perhaps that's too high, but when balanced against the need to ensure vital charitable messages get heard it seems a fair price to pay from my point of view.

Top 5 Reasons Why Charity Marketing Is Different

When the same questions come up several times in a short span of time it usually means it's time to write about the topic. In this case both with clients and friends the topic of charity advertising came up, particularly with respect to why it looks like it does, and why in particular it can be so "edgy", so provocative and (for better or for worse) so memorable?

In no particular order here are the top 5 reasons why charity marketing can be so different:

1. Charities want to break through the other "noise" of all the other advertisers but don't have the financial resources to do so with the purchase of large media weights. And even if they did have the funds for large media buys it might not be advisable to do so. So charities need to be innovative, "edgy" and perhaps a little provocative just to stand out and break through.
2. Charities are passionate about their cause. This creates a sense of urgency and almost a feeling of "we've got nothing to lose" in terms of inspiring new donors and prospects to respond and share the sense of urgency. Obviously this creates a willingness to consider more provocative messaging.
3. Charities are often not as bound by a particular "brand image" than traditional advertisers. Tide, Cheerios or Pampers would take a long time to consider significant changes to their media messages, but charities are less locked-in and willing to try a new direction after one campaign has ended.
4. For charities that can afford (or have donated) advertising agency / professional creative support, charity ad campaigns present a great opportunity to showcase new thinking for that team. The same sense of mission that motivates the charity often infuses the creative team and results in truly memorable work.
5. The corollary of the first reason (breaking through the "noise") is that with limited resources charities are forced to be creative in the ways they communicate.  If you don't have much money then by definition you will seek new ways to market your message - after all, necessity is the mother of innovation.

So in the end, charity advertising looks often looks so different simply because it has to!

Charities: The Model of Efficiency?

As governments at all levels decrease support of the charities and non-profits I see both risk and some potential for positive impact on these sectors. However, for the record I believe that strategically guided government funding provides unique efficiencies that no other amount of individual or corporate giving can match.  By its very nature the gifts of individuals and corporations are guided by their unique scope, which is unlikely to be as encompassing as that of government.  For the same reason that schools and roads are deemed public goods and thus funded through taxes, I argue that some degree of government / tax funded support is required to support the public good delivered by way of charities and non-profits. The real debate is how much of these good works should be funded by - if you will - forced donations through the use of taxes.

This debate is informed at least in part by the argument that for-profit businesses are more efficient than charities and non-profits. Certainly that was the case made recently page 9 of the Globe and Mail’s Report on Small Business by Catherine Swift of the CFIB. Her suggestions that reduced government support to charities will result in greater small and medium size business donations is plausible and may actually prove true.  While this doesn't mitigate my concern over sufficient funding for the best organizations guided by a broad strategic view, she also highlights the “more efficient” private sector.

And on that front I argue that the most efficient model is often already found in the charitable and non-profit world.  I’m not suggesting that learnings can’t be found in the for profit world, but here’s why many charities already win on the efficiency front:

1. Charities and non-profits leverage volunteers – this keeps costs down and multiplies the effectiveness of the organization
2. Charities and non-profits generally pay less for talent and staff than their for profit peers, and have a reputation for passion and commitment from these same staffers
3. Charities and non-profits by their very definition don’t seek profit – this eliminates a “middleman” who desires maximum profit as opposed to maximum impact, which increases efficiency

So while I would welcome increased support by small and medium sized business with or without decreased government support, I also hope we won’t confuse this with a sign that these same generous donors are by their nature more efficient than the recipients. The learnings around efficiency can actually flow both ways.

Insights Into the Charitable World: A Primer

According to Imagine Canada the non-profit and voluntary sector in Canada generates 7.8% of our GDP. So not only is the sector interesting for people who want to make a difference in our world, it's big enough to garner the attention of those who want to help by offering services and making a profit while doing so.  But it's big enough, complex enough and has enough unique aspects to make it frustrating to understand or even impenetrable to those who don't already know it well.

So following from a presentation last week to one of Canada's largest banks and their "Not For Profit & Public Sector" team, I thought you might want to have at least a few of the sources and links that I provided them.  Here is a short list of the resources, thought provoking reads and issues on our mind that you could use to sharpen your understanding of the non-profit and voluntary sector in Canada and abroad.

• There's really only one national "voice" for the charitable and non-profit world in Canada, and Imagine Canada's website is the place to go for all of their links, tools and resources.
• In a sector challenged by limitless demand and (in many cases) diminishing resources, doing more with less is a good idea. Stanford's Social Innovation Review's article on Collective Impact is a great place to delve into this concept.
• Fundraising is the engine that fuels the good works that charities do, and the best research I know of about retaining donors and what makes donors give is done by Cygnus Applied Research.  Penelope Burk is the founder, and her website is a great resource.
• As charities seek innovative new ways to raise funds, "revenue diversification" has been a common phrase. If Social Enterprise is one of the diversification options on your radar, or if you've never heard the phrase, the Social Finance Census 2010 is a good place to learn more.
• For a thought-provoking look at the charitable world and to quickly get up to speed on some of the hot-button issues we face today, I recommend Dan Pallotta's Uncharitable as a good resource.  Not specific to Canada, he nevertheless asks questions that apply just as much here as south of the border.

Finally, I'd like to highlight the willingness to learn and desire to help the Not For Profit and Public Sector that drives the team I met from Royal Bank of Canada (RBC) last week.  Good for you, and thanks for furthering the important work that our sector strives to effect!

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.

Top Three Charity Trends in 2012

Here are the top three trends to watch for in the charitable world in 2012.

1. Many small and medium sized charities will disappear in 2012.

As all three levels of government reduce spending, charities that have relied for much (or even all) of their funding from government will feel the pinch.  Sadly, some will actually go "out of business", but others will come up with creative solutions to continue their Mission. I'm already seeing (and have been part of) mergers, innovative funding models, partnerships, co-location, hubs, cost sharing, virtual offices, restructuring and other concepts. So your favourite small or medium sized charity might disappear, but actually still exist in some new form within a new organization or space.

2. Big Charities will get bigger in 2012.

The obverse of the first trend is that larger, better-funded and more media-savvy charities will continue to find ways to grow and fill social needs. The good news is that as the big charities get bigger their ability to weather economic turmoil usually gets stronger, and as they see service needs that are related to funding opportunities they generally seek to fill them.  The bad news is that larger charities often struggle with the balance of healthy reserves and program funding, and that their very marketing and fundraising strength can help force the demise of fledgling, smaller charities.

3. Charities will continue to think and in some ways act more like for-profit businesses in 2012.

As you’ve read in my posts, charities for years have tried to imbue themselves with the best practices of the for-profit world (often with mixed results).  This trend will accelerate in 2012 as two influences come to the forefront.  First, increasing numbers of for-profit talent joining charities will soon reach a critical mass, and second charities will increasing desire to show “impact”.  Charities are already starting to “sell” their impact, moving beyond merely quantifying results, to now pitching their value in creating a better society in a very direct way.  It’s worked in the for-profit world for generations, and now with staff that think this way already charities are increasingly giving this mindset a try as well.

I’ll keep you updated on examples and stories behind these trends all year.