Thursday, September 23, 2010

Accountability for Non Profits: A cautionary tale

This week the Canadian Broadcasting Corporation (CBC) broke the story that some charitable organizations in Canada were using "professional fundraisers" to raise much-needed cash for their cause. It turns out some charities are paying astronomical sums for little return. In the case of an organization raising money for research into childhood leukaemia, $3.2 million of the 4.2 million raised over the last four years was paid to the telemarketing firm they hired. Read the story.

There are reasons why non profits and donors alike should pay attention to news like this. An organization has to be accountable to its donors. If it is receiving only one quarter of the money raised in its name, it should be re-examining how it chooses to raise those funds. As a donor, I would be appalled to know that my chosen charity was not receiving maximum benefit from my donation.

That said, it does cost money to raise money. The Canada Revenue Agency (CRA) guidelines stipulate that expenditure to revenue ratios should be no more than 35 per cent. If you're spending more than that, you're not spending it on charitable activities, and you should have your charitable status questioned or even revoked.

One additional comment about the CBC's use of the term "professional fundraisers". Those of us who pride ourselves on being part of the profession of fundraisers take umbrage with the negative undertone of the use of the term. We agree to abide by the Ethical Standards set out by the Association of Fundraising Professionals. AFP works hard to inform both its members and the giving public that there are ethical ways to give and raise money. Those that choose to ignore these standards do so at their own peril.

Non profits should continue to use outside consultants if they lack internal expertise or are short on staff. Hiring an expert to guide you through a capital campaign or help plan an event makes good fiscal sense. Finally, it's the relationships you build with your constituents and donors that will increase your bottom line - not farming that job out to the lowly telemarketer on the other end of the phone line.

Laura Mikuska
Fund development & event specialists
Mikuska Group

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