I don’t understand this. Paying for someone’s salary at a service organization IS getting the money to the people that need it. If someone needs job training, you need to pay for the organization providing that training. That’s salary and overhead. If someone needs housing counseling, you need to pay for the organization providing that counseling. That’s salary and overhead. If someone needs emergency resources now and doesn’t know who to call, you need to pay for an organization that provides that service. That’s all salary and overhead. If an organization needs capacity building, training and community organization, you need to pay for the organization providing that service. That’s all salary and overhead.
The problem is what proportion of the money raised goes towards merely keeping that charity running. Charities that use only 10% of the raised money for overhead (including the cost of fundraisers, salaries, their facility) are very efficient. Charities that use 50% of the money for overhead are not. Charities with high overhead could be that way for a number of reasons - they suck at raising enough money (thus after base expenses there’s little left to use on their programs), their fundraising is inefficient (lavish galas that bring in few donations, bad mailing/phone lists full of too-old/inappropriately targeted contacts), their executive salaries/perks are outrageous, their budgeting is poor, etc.
That’s not really what I addressed.
But to address your point, there simply aren’t many charities out there that accurately report their fundraising costs (which is not equal to admin costs). I’d be surprised if 10% of organizations give you a number even close to what their real costs are, and the organizations that aren’t lying are the ones that suffer, because they’re reporting higher numbers.
And your cite for that would be…?
I’d love to hear that. I’ve worked in nonprofits for over 10 years in two different countries, taught a fundraising course for the last three years, and I have never heard of systemic lying with regards to fundraising costs. Indeed, most fundraising orgs I’ve worked for WANT to have more accurate overhead numbers, mainly because it’s so darn hard to differentiate between “overhead” and “program costs” when it comes to internal work.
Here (pdf). Looks like it’s more like 15-25% are reporting correctly. It’s not so much systematic lying, it’s just systematic ignorance and responding to pressure from donors/funders.
I don’t think thaat was the point. My reading was that if your money goes through UW to get to another organization, you are paying for two corporate overheads, and so even less of your money gets to the people who actually need it.
And my point was that overhead (on the recipient organization’s part) is part and parcel with the help that people need.
Nice backpedal there: from
to
Actually, you’re still subtly accusing non-profits of lying: yeah, “responding to pressure” from donors. Now what kind of pressure could that possibly be?
I know the IU Center for Donor Philanthropy quite well, and I’m disappointed by the conclusions this paper draws. One of the examples is of a non-profit who reported no fundraising expenses “despite using a part-time grantwriter and issuing one (ONE! ONE!) direct mail campaign”. Way to pick on the little guys: if you don’t even have one full-time employee (and the person working next to me has worked as a part-time grantwriter in the past…she often got paid little to nothing), and you only have one direct mailer a year, you’re going to be very small potatoes. They’re relying on a volunteer accountant who had probably had no previous experience. Let’s see, they contracted one part-timer to write a grant for them, they sent out one direct mailer: they probably only spent $1,000 all year on fundraising expenses. If they raised even only $25,000 last year, their ROI was awesome. IU should be praising these guys to the rafters, not dissing them.
Bottom line is, UW is a huge organization. It’s ludicrous to compare, first of all, their fundraising expenditure percentages to small charities. There’s an economy of scale when it comes to fundraising overhead: if it costs you $0.40 a piece to run 1,000 mailers, it might cost $0.25 a piece to run 10,000, and then there’s the bulk nonprofit mailer route which a lot of the small guys can’t even take advantage of, and you multiply that by every damn thing your shop does, and it’s obvious that the bigger you are, the less you should be proportionally spending on overhead.
Second, and more importantly, as I’ve mentioned time and again UW isn’t a charity. They don’t HAVE any program expenses. Their fundraising VP is not running around trying to help administer programs, as most VPs do. They don’t have marketing and events and everybody else crowding in trying to piggyback on ostensibly “fundraising” events, on the fundraising shop’s dime. They don’t have CEOs leaning on them saying, “As long as you’re having a fundraiser in town X, can you wine and dine this guy who wants to work with one of our professors?”
In conclusion, comparing UW’s overhead with charities is futile. Their overhead percentage must be compared with that of other fundraising consortia, and, in that analysis, they don’t do nearly as well.
Fine - I’ll be explicit. Organizations lie. This isn’t news.
As do I - I have a graduate degree from IU where I took extensive courses through the Center on Philanthropy.
I think you came to the wrong conclusion. It’s not to bash the little guy, it’s to bash the casual donor who bases their decision solely on a back-of-the-napkin calculation that they think is meaningful - it’s not.
I’m not sure how many UWs you encounter, but this is false. United Way organizations have TONS of programmatic expenses.
And I think here you’re showing that you didn’t get the point of the article. Organizations don’t have people piggybacking on the fundraising dime - it’s the complete other way around. Fundraising efforts utilize time and resources from other departments that aren’t reported. If a CEO leaned on a fundraiser to slip in some programmatic activities, that would alleviate fundraising costs and whoever’s filling out the 990 would bend over backwards to exress that.
I guess I’ll continue with my policy of contributing cash to the guy collecting cigarette butts. At least there’s no overhead.
Of course they have programmatic expenses…I mis-wrote here. What they don’t have is programs…they fund others’ programs.
And, again, this article is about charities, not fundraising consortia. Secondly, I don’t know if you’ve worked in fundraising, but I can guarantee you in practice it goes both ways. Who pays for the Christmas and end-of-year employee luncheons at our institution? The fundraising department. Who paid for the soiree at launch of the new theatre last fiscal year? A large part of it came from the fundraising department, even though here the theatre is a separate 501(c)(3) that should be paying for its own events.
As for “whoever’s filling out the 990”, do you realize that the new PF-990 rules are killing, literally killing a lot of small nonprofits in the US? Pay article here, but the free part gives you the gist: Non-profits with revenues under $25,000 are being asked to fill out extremely complicated financial forms, with almost no help from the IRS. It’s difficult for them mainly because, while giant orgs like UW or “million-dollar nonprofits” can afford to hire a professional accounting firm, the tiny guys who make up the majority of nonprofits in this country have to rely on “Bill from down the street who can barely balance his checkbook but once helped out with the PTA finance committee.” There’s no way Bill is going to be savvy enough to “bend over backwards to ex(p)ress that” fundraising and programmatical expenses might be intermingled. Even if they could scrape up $250 or so to pay a local accountant to do it, $250 might be half to some small orgs’ fundraising budget for the entire year. $250 can buy you an ad in the local charity mag and maybe enough left over to do a telephone appeal. That’s all a lot of these shops can afford.
Again, it’s economy of scale: You can’t compare UW to a charity, especially the tiny charities that IU is drawing into the report you cited. Even at the local level UW might make 1,000 times in a year what the small shops make. But nobody could possibly claim that their accounting costs are 1,000x greater.
Maybe the UWs around you. Hell - maybe the UWs outside of Indiana. But every UW I’ve worked with has plenty of programs, run by the United Way, serving the community in a variety of ways. Your claims that UW isn’t a charity (in the sense of having direct recipients) is, in my experience, without merit.
Then I hope that you, a fundraising teacher, are informing them that this is hurting their performance numbers. I have worked in fundraising, and that would have been unheard of. I simply would not have allowed it. YMMV.
Those rules just went into effect. If there were bad business practices regarding 990s in the past, I’d imagine they’ll continue into the future.
This is disingenuous. We were talking about an organization sending a fundraising exec on a business trip that the CEO wanted to go wine and dine some professor. Bill’s $500 fundraising budget organization cannot - in any possible, conceivable way - be the same one.
You should see how much grief you get when you make your office manager take back the contribution he gave in your name to the United Way in order to achieve the demanded 100% office participation.
Tris
I do the same, but always get hassled over my request for a receipt.
Think anyone listens to me? Snerk. Let me educate you on the differences between “staff” and “faculty” at a large university.
As the article says, fundraisers under $25,000 didn’t have “bad business practices regarding 990s” because they didn’t have 990s in the past.
No, but Bill’s budget might be similarly confused. True situation that I discussed my fundraising class last year: An animal-rescue organization has a weekly animal-adoption clinic at a local pet store. At the clinic they have a donation jar, and their flyers at the event also have the web address of their fundraising site. What were their fundraising expenses for these weekly events? Did they have any at all? Obviously it took time and money to print those flyers, but how much of that was fundraising-related? Can anybody even know? And that, not deliberate misrepresentation, is the real reason it is so damn difficult to identify fundraising expenses.
What you’re doing is pointing to UW’s large overhead and going, “Look, Bill’s Animal Rescue had a large overhead too!” The situations are so different, the economies of scale are so different, that you can’t compare the two, at all. What you’ve got to do is compare UW with organizations like it, and, let me tell you, a 20% overhead simply does not fly. CASE standards are closer to 12.5%. I can’t tell you what our budget is (even if you took away the non-fundraising expenses), but I can tell you we’re being asked to raise over ten times our budget next year.
No, we can’t account for every dime we use on fundraising as opposed to program expenses–but nobody can. But, by the same token, it is disingenuous to just throw up your hands and say, “Hey, nobody’s numbers are right! 20% overheads for everyone!”
How is that not illegal?
WAG: At-will employment. They’re not forcing you to donate, just forcing you to fill out the form one way or the other.
UW used to be a big thing here where I work; while it did not ‘absolutely require’ you to give, the pressure was there. I never gave, cheapskate that I am and a co-worker gave 4.00 per payday which was the minimum. The ‘form’ was given to us every year and we had to sign it whether we gave or not. One thing I noticed early on with the form was there was no way to state you didn’t want to give (opt out, so to speak), no checkmark box, no comment section, no way.
A few years ago when one of the big wigs of UW flew his lover to Europe with the UW paying for it was all my co-worker could stand; he opted out by making his own check box with a $0.00 attached to it. He also refused to sign it. He actually got out of paying, and I think that was the beginning of the end of UW here.
Used to be there was ‘the meeting’ and ‘everyone had to attend’; now no meeting, barely a mention once a year that if you want to give to UW you have to go to personnel and sign up for it. Large large change in the thinking around here, thank goodness.
Everything here now is voluntary as it should be. We collect for the Gleaners (a Food Bank organization) and we also have a Canned Food Drive once a year but it is strictly voluntary as it should be. Finally the ‘dick measuring’ madness stopped.
Believe me, they harangue you. I worked for one place that went nuts for the UW. Apparently, filling out the form, even if you don’t donate a dime counts as “participation” towards the golden 100%.
At this place they called a All-Hands meeting and once the captive audience was there, people from the UW talked at the beginning. I happened to be on travel when that happened so I missed it. Lucky for them because I would have objected loudly. Everyone got a blue card. They bribed people to fill it out by a raffle of some kind.
When I got back there was a blue card in my mail box which I dropped in the trash. For the next couple of weeks while the drive was going on I got daily emails and voice mails “reminding” me that I need to fill out the card. The lady running the drive even call the person who sat next to me to get her to remind me about the card.
On the last day of the drive, she found me and thrust the card in my face. I told her that I wasn’t going to fill it out and to leave. She said that it was required by pay roll. I called bull shit. She offered to fill it out for me. I stood up and said, “you and I are going to have a meeting with the head of HR.” She finally backed down.
I did formally complain to HR and the head of HR apologized and told me that things would be done differently the next year.
Ah, since he no longer beats his wife, I guess that makes him OK.