By Sean Triner
First published by Fundraising and Philanthropy Magazine in September 2011
Fundraising transparency is to be put under the microscope by the Not-for-Profit Sector Reform Council. Sean Triner urges all fundraisers and nonprofit leaders to take action to ensure the council is well informed about the areas it is reviewing.
This is the most important agitator I have ever written. Our ability to fundraise using the most effective techniques available to us could be under threat. A group of 12 people have been appointed by the federal government to review the nonprofit sector and make far-reaching recommendations.
They are the Not-for-Profit Sector Reform Council. I assumed that fundraisers knew about this group, but at a recent meeting of fundraisers I realised how many people simply didn’t know about them.
Why do we fundraise? To help the poor, the disadvantaged, the environment, and the abused. We fundraise to make the world a better place. We fundraisers are facilitators. We give people who care the opportunity to create change.
I am sure that the members of the reform council believe in the same things. But we all need to act together to help make sure they know what is important in the world of fundraising, and to ensure that any changes to legislation do not hamper our ability to serve our beneficiaries.
Transparency on the agenda
Part of the group’s remit is “improved transparency and accountability of the sector.” Few would oppose improved transparency and accountability. But experience shows that when politicians or the media start talking about transparency and accountability, their own lack of understanding can lead to rules which can grind some highly effective fundraising methods to a halt.
Even many professional fundraisers still don’t grasp the complexity of fundraising from all techniques – it is nigh on impossible to understand them all. But the Not-for-Profit Sector Reform Council will have the power to recommend changes to legislation which could damage some of the most effective, but least understood, fundraising techniques such as face-to-face and telemarketing.
Can you imagine the impact on your organisation – now and into the future – if face-to-face, direct mail, telemarketing, lotteries and even online fundraising were restricted?
Within the group, only one, Anne Robinson, directly represents a nonprofit listed in the top 50 fundraising organisations (according to Givewell’s Top 50 report). Robinson is the chair of World Vision, which is great, but she is not a professional fundraiser and will need our help.
The reform council’s remit goes well beyond fundraising, but if these good people are about to review the sector, then we need to make sure that they have all the evidence and knowledge about fundraising that we can give them.
Problem with cost of fundraising ratios
The problem with transparency is in the complexity of fundraising, and in the end it always boils down to ‘cost of fundraising’ ratios, as this is the easiest thing for the layperson to understand. But even that is really difficult to explain, and it is hard to compare different nonprofits and different types of fundraising using this method.
Take face-to-face. It is constantly attacked by the media and politicians, yet is difficult to comprehend.
Ironically, face-to-face’s increased transparency makes it an easy target. Most programs work on a ‘pay per donor’ basis. This reduces risk to nonprofits and makes any face-to-face campaign incredibly transparent. With other forms of acquisition, this ‘cost per donor’ is hidden.
For example, with a direct mail acquisition campaign organisations must produce creative, buy print and lists, then pay for postage. One nonprofit may produce the creative in house, paying for the service within its salary and office overheads budget. Another may outsource to get professional copywriters to do the work. These two organisations’ costs are impossible to compare before they have even mailed the pack.
Once mailed, the nonprofit waits for results. It may then follow up all new, non-regular donors with a phone call or additional mailing to ask for a regular gift. It may use internal resources (again, paid by salary and overhead) or outsource to a specialist phone agency.
At the end of this process, the organisation will have some new regular givers. But trying to compare the performance of these two different processes is next to impossible. Usually, over five years, the direct mail and phone method will get a better return on investment.
But the face-to-face method will get more donors and therefore more net income. Of course, you should be able to do both.
It is not appropriate to judge a nonprofit raising $5 million at a cost of $2 million (delivering $3 million on services) as ‘worse’ than one raising $1 million at a cost of $100,000 ($900,000 on services). Yet, using cost of fundraising as a measure would do just that.
The next problem with measuring cost of fundraising is the unfairness of the measure. Large organisations have a natural advantage, and if they have an established bequest program, already have lots of donors or a nice endowment, then their cost of fundraising will look much better than many smaller organisations that have less resources and no economy of scale.
Finally, even nonprofits with similar resources are impossible to compare. It really is cheaper, for example, to acquire new donors for an animal or kids cause than an organisation dealing with a less ‘palatable’ mission like the rehabilitation of young offenders.
We need to make sure that the Not-for-Profit Sector Reform Council know about these complex issues.
So, what can we do about it?
A group of fundraisers from organisations that engage in face-to-face fundraising have a regular meeting every couple of months. They call themselves the F2F Working Group.
Nonprofits represented in this group include the Heart Foundation, Médecins Sans Frontières, Greenpeace, ACF, Amnesty International, Mission Australia, Childfund and dozens more. They are especially worried about potential legislation regarding face-to-face, but appreciate that the reform council will be looking at many other factors.
At the moment, we don’t even know what is or isn’t on the table as the purpose and remit of the council is very wide. That is why we fundraisers need to pull together.
Please, will you help?
The Fundraising Institute of Australia (FIA) is helping. FIA staff told us at a recent F2F Working Group that they are in touch with the council’s chair. As chairman of the FIA, Leo Orland is leading that liaison and met with the council in early September.
But the FIA can’t do this alone. It doesn’t have access to phone and face-to-face data, FIA staff are not in day-to-day contact with donors and measuring ROIs and CPAs. It has different pressures and needs our help. We are lucky that the FIA chairman is an accomplished fundraiser, but he will need our support.
Please keep abreast of FIA emails and updates and subscribe to updates from the F2F Working Group by emailing Paul Tavatgis (email@example.com). Paul is currently coordinating the group’s communications and will add you to the circulation list.
Maybe there will be no new legislation. Maybe they will just harmonise the regulations – taking a national set of rules from what already exists across our states and territories. We all want harmonisation, so that is something we have in common. But if they pick the toughest rules on each area from the toughest legislation already in existence, then our ability to help our beneficiaries will be stunted.
We fundraisers need to make sure that the council has the facts. We need your help. We need to make sure that we are in dialogue with this influential group, whose recommendations will have such a dramatic effect on our lives.
As well as a potential threat to your organisation, your action or inaction could be the single most important career move you ever make. Please, help now.
What can you do?
There are six actions you can take right now:
- Don’t leave it to someone else. These legislative things tend to be boring for fundraisers, so we are often guilty of leaving it all to people within our organisation who are not fundraisers. Don’t.
- Make sure your boss, your chief executive officer, chief financial officer, chair and board understand the importance of the Not-for-Profit Sector Reform Council. It could be a brilliant government run initiative, but without action and understanding it will not produce what you need for the future of your beneficiaries. You, and your bosses, cannot ignore this.
- Ask your suppliers if they know about this. What are they doing about it?
- When submissions are requested make sure that you get them in.
- Email Paul@cornucopia.com.au to make sure that you are on the mailing list. Although it was originally convened around face-to-face, the implications of inaction go much further.
- Check out more information on the Not-for-Profit Sector Reform Council here:http://www.dpmc.gov.au/nonprofit_reform_council.cfm