Can a Bean Counter Save Lives?
A CFO’s perspective on the cost of fundraising
I’m taking some time to reflect on my many years of service as a Chief Financial Officer (CFO) of charities at home and abroad. On reflection, it seems that the never ending question of how much a charity can or should spend on fundraising is still begging for an answer.
What I believe is central to understanding the issue, are the questions of what is driving our decision on whether or how much to spend on fundraising.
If I had to create a list of these key questions, they would always include:
1. Is a regulatory body’s imposed ‘correct’ amount of spending in relationship to funds raised what needs to be done (eg. government adherence to the Pareto Principle of 80/20 spends)?
2. Has the level of spending been mandated by a well-meaning board or other governance body?
3. Is fundraising expenditure an administrative afterthought, often spoken like this in offices everywhere: “Well, we only spent a small amount on fundraising administration last year, so I think we can send out an additional letter to our donors”?
4. Is fear of not being able to compete with the ‘big’ charities ability to keep fundraising costs low driving smaller organizations to being resigned to inaction? (eg. unwilling to have a 70/30 or 60/40 ratio which may be appropriate to smaller agencies unable to leverage larger economies of scale).
5. Is the belief that there is a finite amount of money that can be raised a hindrance in the thinking of non-profit fundraising?
6. And finally, are we truly being guided and motivated by the ultimate impact of our investments in fundraising?
When I speak of impact here, I am not referring to a calculation of return on investment (ROI) when comparing different ways and methods of connecting with prospective donors. In a world of limited resources, we do need to make wise decisions regarding where and how fundraising dollars are invested and what vehicles are most promising at generating funds for the fulfillment of the mission. No, the impact referred to here, is the improvement of the world.
Take the Syrian refugee crisis as an example. Should we be sitting in an office and calculating the cost of overhead and whether we can afford to send out that email blast or mass mailing asking Canadians to help Syrians in need. What then is the real value of a person’s life? Is that person only worth saving if we have an 80 or 90% Return on Investment (ROI). What if the 10% net of a campaign still saves a 1,000 Syrian lives. Do we not do it because we don’t reach our government or culturally imposed Pareto’s Principle?
If we don’t then we have decided to put an arbitrary administrative price on a life.
As a veteran non-profit CFO, I can’t count the number of ‘good deeds’ that never happened because charities are not being empowered to make ‘right’ decisions, but instead, were ‘regulated’ (either by government or cultural norms) and thereby obligated to make decisions based on fundraising ratios and sadly not by the discussion of the true value of saving a life.
Ample food for thought …
Walter Kurz, CPA, CMA, CIA
CFO – Results Focused Finance Executive
Building Teams – Creating Excellence