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Yesterday, I reacted to an article from CTV BC about charity executives salaries and my stance on how and why we need to invest in charities more is quite clear as you read other posts. A colleague passed on two more articles floating around, Where Your Money Goes and Charity begins at… the charities, that are all dealing with essentially the same issue which is this; people want to know what charities are doing with the money they are giving. Why we want to know that and how charities respond to it is what I am calling the “Two Way Street of Charitable Ignorance.

It is a two way street as I believe charities do not do a great job of reporting back to donors how they are using those funds to achieve their goals or mission just as many donors do not do a great job of understanding what charities actually need. Please note, these are general statements. There are some organizations that do a great job of reporting just as there are some donors who do a great job of understanding philanthropy. If donors aren’t told how their money is being used and why, then they are left to look at the knowns such as expenditures and salaries. The flip side is, many donor expectations, such as the entirety of their donation should go to programs or compensation levels should be capped, severely hinder the charities ability to do its job. Okay, I think I’ve covered that enough and if you are still reading this probably isn’t new to you. So…

Three tips for both charities AND donors to try and navigate this two way street.

For Charities

1. Tell your donors what reports to expect from you. An annual report and two other updates are the bare minimum here so tell them. In the thank you letter, on your website or when they sign up for emails are all great times to quickly let them know what they can expect from you reporting wise. It’s like when you are trying to lose weight you should tell someone and post pictures of yourself. There’s accountability built into it.

2. Establish reporting cycles/systems. Figure out what you will report on (measurables, outcomes, stories) and then when you will release them (quarterly, monthly, weekly) the build it into your calendar and work backwards. Report composition takes 3 days, data collection takes another 4, 1 day to make last minute changes and schedule and throw in an extra day because you’re often late so now you know you need to start working on the report 9 business days before you are to send it out.

3. Talk about why you spent what you did on general & administrative and fundraising. A lot of people don’t even know all that is included in that “overhead” number often cited. Don’t shy away from this, embrace it and state how you needed to pay staff salaries to process their donation, create their report, raise more money and attract new donors in addition to delivering on your “programs”.

For Donors

1. Think of yourself as an entrepreneur when you give. Most charities are strapped for cash and in need of capital, like start up or small businesses, so think of what you would need and most charities would need that as well. Generally speaking, small businesses don’t need help with the idea (or the service/mission for nonprofits) but how to build it, sell it, scale it, etc. (build it, raise it, grow it, etc. for charity).

2. Make a list of what you won’t give to… and then don’t. Normally we pick what we do want to give to and seek it out which can be quite meddling and hard to find. If you list the things you don’t want to give to and are truly open to giving to things that are not on that list then you should have more freedom feeling comfortable giving for new and different areas of charity.

3. Think of yourself as an investor buying stock. When you buy stock in a company it is because it fits with you personally (values, risk tolerance, etc.), the business seems solid (leadership, cash flow, past results) and you want to see a return on your investment. You don’t know if your share of the company is helping with the marketing or the CEO’s salary (back to the compensation argument I guess…) as long as the company delivers. Carry that mindset over for giving as well. Find an organization that is doing something that fits with you personally (mission, location, personal connection), seems solid (leadership, trustworthy, past results) and look for it to produce a return on your investment.

What are some other ways charities and donors can navigate this two way street of charitable ignorance?

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  • http://twitter.com/smallcatbigdog Lisa Estrin-Allison

    Your point about “overhead” is excellent.  It’s always been the dirty little secret of nonprofits that it actually requires money to keep the doors open and lights on.  Donors know this on an intellectual level but until they see it in black and white, they don’t realize just what it takes for the day-to-day cultivation and growth of the programs they want the organization to provide.

  • Gena

    Hi Brady;
    Thank you for sharing this. I have put some additional thoughts on this topic on my blog: http://www.dexterityconsulting.ca/content/it-really-about-compensation.

    What I like about your piece is how you laid out the questions that each party should ask.  I would extend this further, and I have in other conversations, around just how our charitable sector has evolved and the metrics (inconsistent at best) that we use to measure the effectiveness of the organizations we support.

    Thank you again. I look forward to reading your other blog posts.

    Gena

  • bradyjosephson

    Hey Gena. Thanks for commenting and expanding on your blog, well done. Totally agree on the evolution of charity and the metrics that need to be part of that moving forward. Also looking forward to your posts.

  • bradyjosephson

    “Dirty little secret”… I like that. Used it over coffee today actually so thanks. It is true though, people in charity know this, for the most part, and donors who get it obviously know this but it has not permeated the “mainstream”. How can we do this? I’ve thought of producing some slick videos with graphics and testimonials about what charity really needs… others?

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