The Charity Pipeline: Fund-raising, Transparency and Efficiency

Posted in: Blog, Non-Profits by Anand Chandrasekhar on October 30, 2009

A persistent thorn in the flesh that can adversely affect non-profit transparency is the percentage of overhead spent on fundraising. While it is often true that NGOs need to spend money to make money, it has to be balanced with what donors regard as acceptable and necessary. Charities are constantly juggling with finding innovative ways to raise funds while simultaneously trying to maximise the percentage that goes directly to the cause. Getting the balance wrong could undermine credibility and in the non-profit universe, credibility is everything. In addition, in a competitive environment, spending efficiency is usually a key criterion for determining donor confidence. So how do charities decide on an optimum spending strategy?

Dr Wendy Scaife is a senior research fellow in the Australian Centre for Philanthropy and Non-profit Studies at Queensland University of Technology and conducted the Giving Australia study in 2005.  So she does know a thing or two about donors and charities. In an article for the Australian newspaper The Age, she shares her experiences on striking the right balance. Some key messages are;

• Donors may ask for the impossible: Dr.Scaife acknowledges that donors may have unreasonable expectations from non-profits. Many want charities to be entirely volunteer run and most felt that not more than 10% of their donations should be spent on fund-raising and administration.
• Fund-raising spending is an investment: Dr. Scaife agrees that charities need to spend more to attract more funds. Competition from other charities means only the most innovative proposals/appeals/campaigns have a chance of impressing jaded donors.
• No hidden costs: She warns that donors are “cranky” about not being told the costs of fund-raising.
• Communication is key: She also say that charities turn into “woeful communicators” when it comes to transparency in spending.
• Donors are usually pragmatic: Donors are reconciled to the fact that a part of their donation goes into making their charity financially secure.
• Transparency up front: What donors expect is that non-profits be transparent about where the different parts of their dollar goes.
• Optimise fund-raising strategies: Dr. Scaife believes that charities must grab opportunities to embrace efficient strategies. For example, she states that donors who plan their giving donate four times as much as those who give spontaneously.

Dr. Scaife’s article can be accessed at http://www.theage.com.au/opinion/society-and-culture/in-the-real-world-charities-need-to-spend-money-to-make-it-20091026-hgll.html

Independent verification: Defending non-profit accountability

Posted in: Blog, Non-Profits by Anand Chandrasekhar on October 28, 2009

Most non-profits seldom have anything to hide from donors in terms of financial irregularities. You rarely hear of the sector being accused of corruption of the kind associated within business and government circles. A lack of vested interest is the very cornerstone of the legitimacy that enables non-profits to do what they do. Any hint of corruption is a sure-fire path to self destruction for a sector that is often entrusted with rooting out corruption in the public sphere itself. That is not to say the non-profit sector is without its troubles. Corruption, dishonesty, misinformation, careerism, prejudice, bias and power struggles are found here too. However, unlike other sectors, the penalties far outweigh any potential benefits of indulging in unethical behaviour.

Read more…

UK Conservative Party Calls for Transparent Aid

Posted in: Blog, Government, Video by Marco Puccia on October 26, 2009

Earlier this week, David Cameron of the UK’s Conservative Party laid out plans for a new approach to international aid. Noting “lost” or “misplaced” funding, Cameron called the current system of aid “far too opaque”. Cameron stated that his party’s platform calls for “transparency over what is spent, where; [and] accountability so people know we’re paying for real results.” Read more…

Investment Metrics vs. Storytelling

Posted in: Blog, Non-Profits by Marco Puccia on

I had a great conversation last week with Karim Harji, a Kenyan from Mombassa who now lives in Toronto doing social investment. We got on the topic of social investments and metrics vs. storytelling. Karim made the point that the nonprofit sector has relied heavily on storytelling as a means to advance their cause and raise funds. This morning I was reading this blog post, “Stories Can Change the World”, where the author writes, “Storytelling is the most important tool for any innovator. It is the best way to create emotional connections to your ideas and innovations.” Read more…

Op/Ed: Fighting Corruption Through Transparency and The Internet

Posted in: Blog, CEO Notes by Marco Puccia on

“There ought to be a way to use interactive media, especially the Internet…to report in real time allegations of corruption.” These were the words of Secretary of State Hillary Clinton during a plenary Q&A session at the 8^th Annual Forum on the African Growth and Opportunity Act (AGOA). Secretary Clinton called on youth and civil society to leverage new technologies to combat corruption through increased transparency. Read more…

Transparency in the Non-Profit Sector

Posted in: Blog, Non-Profits by Marco Puccia on

Mario Morino of Venture Philanthropy Partners recently published an article on the growing pressure for transparency in the non-profit sector. He starts off referencing Joel Fleishman’s book, The Foundation: A Great American Secret, where the nonprofit sector’s lack of transparency is cited as its greatest liability. Morino points to a growing force that is holding institutions accountable and demanding increased transparency: Read more…