To be effective, charities need to invest in themselves
TheGlobeandMail.com – ROB/Commentary
Dec. 24, 2015. Bruce Dewar and Scott Cameron
Bruce Dewar is president and CEO Of LIFT Philanthropy Partners. Scott Cameron is principal at McKinsey & Co.
Imagine the impact we could have if instead of treating charities like charity cases, we thought of them, and invested in them, as businesses – helping them scale, become more efficient and deliver a better return on investment? It’s counterintuitive by most people’s thinking, but charities are actually more effective if they aren’t expected to spend all their money on program delivery. When they invest in themselves, they can help more people.
It’s part of our culture of philanthropy to think charities should spend all their money directly on programs, that “administrative” spending is bad. A recent Imagine Canada survey found that almost two-thirds of Canadians who plan to donate over the holiday season believe that charities spend far too much on their administration and overhead costs. In fact, only 7 per cent of those polled disagreed with the view that charities overspend on administration.
This survey also found that the amount spent internally is one of the most important factors used by donors when deciding on where they will and will not give.
The only consideration that ranked higher in people’s minds was their “interest in the cause.”
It’s understandable that donors want their dollars to go directly to the cause that moved them, but this short-sighted thinking ultimately undermines charities’ ability to have the type of impact that both they and their donors expect on the people, communities or cause they want to support.
Here’s why: Charities know that donors fixate on overhead costs, so to attract financial support, they underinvest in staff, tools, internal systems and strategic planning.
In doing so, charities starve themselves of much-needed technology and training. The impact of this donor-imposed self-sacrifice is they actually can’t deliver the most positive impact possible with the dollars donated. Don’t get me wrong; charities do the best they can and are making an incredible difference. But imagine what they could do with proper training, technology and business systems.
“Administration and overhead costs” sounds dry, as if it refers to mere office supplies, but it’s actually the opposite.
This catch-all phrase applies to the amount charities can invest in systems and structures that will define their ability to be successful and impactful.
It includes what they spend on technology, training, recruitment, financial controls and governance.
The challenge is the misperception by donors that any dollar not seen as going directly to the stated cause is “wasteful” and “outrageous.” We need to put an end to this old-school thinking and encourage charities to invest in business resources.
We need to spread the message that to be effective, charities, like the private sector, need to actively invest in themselves in order to best help those they serve.
The private sector knows the ROI of this type of investment – and that’s why successful brands and companies actively invest in all of the above.
The 2014 Forbes Corporate Learning Factbook found that U.S. spending on corporate training grew by more than 15 per cent last year, to more than $70-billion. The number one area for spending was management and leadership training. The Forbes survey also found that companies ranked as “high impact” in their industry also spent significantly more on training than their competitors. That’s the thinking behind venture philanthropy. And it’s the kind of thinking that should be the future of funding for non-profits in Canada.
Instead of simply providing cash grants to charities, non-profits and social enterprises, venture philanthropy invests in the expertise and resources required to help them grow and function most effectively.
It’s an approach with proven results and high potential, but it requires a cultural shift. Donors need to give implicit permission for charities to invest in “administration and overhead.”
< http://www.theglobeandmail.com/report-on-business/rob-commentary/to-be-effective-charities-need-to-invest-in-themselves/article27929589/
>
Tags: ideology, participation, philanthropy, standard of living
This entry was posted on Thursday, December 24th, 2015 at 9:37 am and is filed under Inclusion Delivery System. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
308 Responses to “To be effective, charities need to invest in themselves”
« Older Comments | Newer Comments »
Leave a Reply
Recent Comments
Glad to be one of many visitants on this amazing site : D.
Hi, I just hopped over to your web-site through StumbleUpon. Not somthing I might typically browse, but I liked your views none the less. Thanks for making something worthy of reading through.
You write Formidable articles, keep up good work.
I don’t normally comment on blogs.. But nice post! I just bookmarked your site
Thanks a bunch for sharing this with all people you really recognize what you are talking about! Bookmarked. Kindly also seek advice from my web site =). We can have a link alternate contract between us!
I had fun reading this post. I want to see more on this subject.. Gives Thanks for writing this nice article.. Anyway, I’m going to subscribe to your rss and I wish you write great articles again soon.
Simply want to say your article is as amazing. The clarity in your post is just great and i can assume you’re an expert on this subject. Fine with your permission allow me to grab your feed to keep up to date with forthcoming post. Thanks a million and please keep up the gratifying work.
Amazing content on your website.
I think it is a nice point of view. I most often meet people who rather say what they suppose others want to hear. Good and well written! I will come back to your site for sure!
It sounds like you’re creating problems yourself by defining this as such a comprehensive, almost unknowable problem. Isn’t that self-defeating?
How come you do not have your website viewable in mobile format? cant see anything in my Droid.
Like the way you’ve outlined things. Easy to follow. Not cluttered.
I think this is among the so much vital info for me. And i’m happy reading your article. But wanna remark on few common issues, The site style is wonderful, the articles is really excellent : D. Just right job, cheers
I like meeting utile info, this post has got me even more info!
Have you always been concerned about these issues?
it is a really nice point of view. I usually meet people who rather say what they suppose others want to hear. Good and well written! I will come back to your site for sure!
My coder is trying to convince me to move to .net from PHP. I have always disliked the idea because of the expenses. But he’s tryiong none the less. I’ve been using WordPress on numerous websites for about a year and am nervous about switching to another platform. I have heard great things about blogengine.net. Is there a way I can import all my wordpress posts into it? Any help would be really appreciated!
you’re in reality a just right webmaster. The web site loading velocity is incredible. It sort of feels that you’re doing any distinctive trick. In addition, The contents are masterpiece. you’ve performed a great process on this topic!
I am very happy to look your post. Thanks a lot and i am taking a look ahead to touch you.
I’ve been surfing online more than 3 hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. In my view, if all web owners and bloggers made good content as you did, the net will be much more useful than ever before.