Not For Profit Dilemma (Michael St. Amant)
Brantford’s not-for-profit industry will be facing many key challenges over the next few years as they compete for dollars and volunteer time. Whether social, cultural or spiritual in their focus, they share common problems of raising funds, declining government support, rising costs and fewer dollars to support an ever increasing number of worthy causes.
I don’t know whether it’s just me but I have found that fundraising approaches from not-for-profit organizations were unusually high in December. Within a two week period, we received over sixteen telephone calls, four letters and three e-mails from organizations seeking support for worthy causes. I suspect that, in the coming years, there is going to be even greater pressure from the not-for-profit sector seeking support for a diversity of funding requirements and volunteer support to support their agendas. While the desire to meet community needs is commendable, the reality is that there are only so many dollars available whether the source is government, corporations or individuals.
A recent report from the Deloitte not-for-profit Group examined the state of the not-for-profit industry in Australia, which is not dissimilar to Canada. Declining government funding and increasing costs associated with regulatory and compliance requirements are factors affecting the industry here in Ontario. The negative impact of fundraising for not-for-profits due to the global economic challenges is also a factor affecting local not-for-profits and certainly one cannot discount the impact of global catastrophes that draw dollars from every local community. At the same time, for agencies providing client services, demand is on the increase as a result of the economic downturn. Service delivery is further impacted by a shortage of skilled staff in the sector and increasing wage demands.
Deloitte’s study examined institutionalized not-for-profits like, for example, the Cancer Society and the Heart and Stroke Foundation, as well as community-based organizations. Government accounted for 43% of the funds raised, 36% from commercial activity, 15% from public campaigns, and 5% from the corporate sector. Interestingly, 45% relied on annual campaigns to raise funds, 40% utilized direct mail, 37% used major events such as charity auctions, and only 12% relied on call centers or door-to-door campaigns. On the cost side, they generally spent between 11-15% of their revenue on fundraising. When asked what their priorities would be for the coming year, not surprisingly, the respondents said that raising more money and reducing operating costs were major priorities.
A study in Britain that examined fundraising challenges found that there was overdependence in targeting the elderly population, those between 70 and 80 which made up 11.8% of the population because they match the Dorothy Donor profile. They also found that people under 40 tended to support specific causes, particularly if they were accessed with the right technology. The study noted that there was a decline in legacy donations, donor fatigue, declining corporate support, and a tendency to provide support based on impulse, not a lasting relationship, particularly among the under-40 group. Although there is some tax advantage to assisting not-for-profits, the dollar value of the contribution has to be fairly high to gain meaning tax benefit, though it all helps.
The problem is that in difficult economic times and unemployment of 8.2% in Brant, it is difficult for many to find the cash needed to make that contribution.
There is an active community out fundraising here in Brantford, and that extends beyond the call centers. There are hundreds of local volunteers out raising money for not-for-profits. The United Way and Catholic Charities are a great way to consolidate assistance and ensure that a diversity of causes get support, though the demand for assistance is clearly exceeding the supply of capital. Moreover, many organizations do not fall under their corporate umbrella. One can also look at the Brant Community Foundation which assists many not-for-profits with project specific financing. Unfortunately, most grant financing does not cover operating costs and, in fact, requires that the beneficiary provide proportional financing in support of the project. Service organizations such as the Rotary Club, Knights of Columbus, and Optimists Club all help by running programs to raise money for a variety of projects. Friends of the not-for-profits may run auctions, bingos, draws, and walk-a-thons. Corporations such as Tim Horton’s, Shopper’s Drug Mart, or Metro Foods may use their retail power to raise funds for specific projects.
Having said all this, the reality is we have only so many dollars to give and limited hours available to work on projects.
In speaking to a few of my friends who are adept at raising funds for charities, most agree that fundraising is not about raising money, but it is about raising friends. People want to know that their dollars will be well managed and achieve intended results. They want a relationship and want to be informed, though not bombarded. They also explained that it takes time, planning and effort to achieve the desired results, and it requires donor maintenance to sustain those results. What this suggests to me is that financial support is likely to become more focused and more targeted. So those not-for-profits with the best track record, best management practices, most sophisticated donor support program, and a clear sense of community are likely to be the most successful at raising funds and attracting volunteers. Unfortunately, this may be at the peril of those who are not.
The adage that there is enough to go around is no longer true. We should be preparing ourselves for the fact that some not-for-profits may not be able to sustain operations. The reality may be that it is better to have fewer but stronger not-for-profits than to have many that are continuously struggling. I don’t know. Certainly those that are struggling are hopefully filling a need. If that service disappears, will it be absorbed elsewhere? What will happen to the committed volunteers who support these causes? Is there a better paradigm or model that we can use help those that continuously struggle? Should funding organizations be shifting their model from project financing to operational assistance? Does the tax system needed to reform to incent people to increase not-for-profit contributions?
These questions will be a matter for debate. That debate is not far off.