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".
Showing posts with label bigger. Show all posts
Showing posts with label bigger. Show all posts
Monday, August 20, 2012
Thursday, November 18, 2010
Charities: Size Does Matter
One of the more common questions for those considering a move from the for-profit world into the philanthropic sector is about the pay, and the nature of the roles. I'm going to share some "truths" about these questions, and expand into some thoughts about the future of the entire sector.
First, it is true that many well-compensated people will make less money working for a charity than they made in the for-profit world. As everyone has heard, part of the reward of working in this sector is knowing you're making a difference, and often the sense that you're following your "calling", and for reasons I'm not entirely clear on this translates into less pay. The best explanation I can come up with is that because charities operate with other people's donated money, and the fact that every dollar spent on salaries is a dollar less for the mission, we tend to undercompensate employees. More on this strategy and the implications to the sector another day...
Second, there is usually a direct correlation between the size of the charity (e.g. top-line gross revenue) and their ability to pay a reasonable wage. Big hospitals, universities and "name" charities (Heart, Cancer, etc.) have the capacity to pay more than the little theatre troupe down the street.
None of this is news, but there has been a trend towards more competitive pay to attract and retain top talent. Senior positions in a charity are incredibly complex and challenging, so ensuring appropriate compensation is a vital factor – something the for-profit world has known for a long time. This has led to occasional mistakes in judgement in terms of just how much donors are willing to support for salaries, but except for these examples there has been a trend upwards in terms of salaries. And it’s the bigger charities that can most afford this cost, so keep that in mind if you’re out looking to make the transition.
This size conversation leads to my final point. The economy is struggling. Government is deep in debt and less eager to make significant investments in the charitable sector. The big charities want to keep growing. All of this puts massive pressure on the thousands of little charities that are struggling to make ends meet across Canada every day. My sense is that a "day of reckoning" is coming, and that charities below a certain size will face enormous pressure to gain critical mass, to merge with other charities, or to find some other synergistic way to reduce costs in the next 3-5 years, or they simply won’t survive. So size matters in another way: in a sector with nearly 100,000 competitors, and with new entrants every day, when the food supply shrinks (e.g. funding) then some tough times are likely ahead. For those considering a move into the philanthropic sector size may be a key consideration.
First, it is true that many well-compensated people will make less money working for a charity than they made in the for-profit world. As everyone has heard, part of the reward of working in this sector is knowing you're making a difference, and often the sense that you're following your "calling", and for reasons I'm not entirely clear on this translates into less pay. The best explanation I can come up with is that because charities operate with other people's donated money, and the fact that every dollar spent on salaries is a dollar less for the mission, we tend to undercompensate employees. More on this strategy and the implications to the sector another day...
Second, there is usually a direct correlation between the size of the charity (e.g. top-line gross revenue) and their ability to pay a reasonable wage. Big hospitals, universities and "name" charities (Heart, Cancer, etc.) have the capacity to pay more than the little theatre troupe down the street.
None of this is news, but there has been a trend towards more competitive pay to attract and retain top talent. Senior positions in a charity are incredibly complex and challenging, so ensuring appropriate compensation is a vital factor – something the for-profit world has known for a long time. This has led to occasional mistakes in judgement in terms of just how much donors are willing to support for salaries, but except for these examples there has been a trend upwards in terms of salaries. And it’s the bigger charities that can most afford this cost, so keep that in mind if you’re out looking to make the transition.
This size conversation leads to my final point. The economy is struggling. Government is deep in debt and less eager to make significant investments in the charitable sector. The big charities want to keep growing. All of this puts massive pressure on the thousands of little charities that are struggling to make ends meet across Canada every day. My sense is that a "day of reckoning" is coming, and that charities below a certain size will face enormous pressure to gain critical mass, to merge with other charities, or to find some other synergistic way to reduce costs in the next 3-5 years, or they simply won’t survive. So size matters in another way: in a sector with nearly 100,000 competitors, and with new entrants every day, when the food supply shrinks (e.g. funding) then some tough times are likely ahead. For those considering a move into the philanthropic sector size may be a key consideration.
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