Is it really about compensation?...?

Earlier this month the charitable sector has once again been under scrutiny... First with the CBC Marketplace Report - Canadian Cancer Society Spends more on Fundraising than on Research then the CTV report on charity CEO compensation.  What these two stories have in common is perceived lack of trasparency around how money is being raised, spent, and social issues addressed.

When I was deciding what approach I wanted to take to this topic I came across a blog post that sums things up quite nicely.  Brady Josephson of ReCharity writes that charitable ignorance is a two-way street.  By donors not asking the right questions and charities not communicating effectively we enter into a vortex of misinformation, lack of accountabilities and unarticulated expectations for delivery.

Janet Gadeski focuses in on some of those expectations and questions in her blog post Marketplace misses the mark on the Canada Cancer Society.  Donors should have a clear understanding the mandate of the organization before donating.  Charities have an obligation to share with donors what their deliverables are, and how resources are used to achieve those deliverables.

I recently reviewed an umbrella organization (agency that funds other agencies and also provides front-line work) for some background research on how community infrastructures are built.  I learned that this organization (and others around North America, it turns out) classify fundraising as a program, because that is their mandate.  Even though a significant percentage is used internally for their organization the fundraising costs are spread out as a program cost.  As a donor, unless you know to ask how programs and services are financed within an agency, something like this can be misunderstood.

CEO compensation should be considered. But let's look at the compensation package in its entirety of the operations of the organization.  If you are the CEO managing a multi-million dollar charity, and you have the skill-set and acumen to manage this type of organization, and you are meeting the deliverables effectively and efficiently, one could argue that your salary should match the intended and achieved outcomes and impacts.  In the for-profit sector we talk about organizational optimization and efficiencies being good - i.e. spend money on overhead and deliver your product to market quicker in order to generate revenue and an ROI for investors.  In the non-profit sector this same approach is seen as taking away from resources going directly into the program/service being provided.  Perhaps we should move away from operational efficiencies and start looking at operational EFFECTIVENESS.  If paying a higher compensation of top executive means that more kids are going to bed with a roof over their head and food in their bellies - is that not meeting the interests of the donors who are funding the shelter and food program for those youth?

I work with all types of donors, and the number one thing that we stress when entering into a relationship with an organization is understanding what are they committing to deliver on and what is it that the donor is "paying" for.  For some, the donation is a reflection of who they are within a segment of society (work related donation to support a client, for example); for others it is a response to personal experience (funding cancer research) or reaction to a social imbalance (drought relief).  Understanding your motivation is the cornerstone to any donation.  It provides the groundwork for the conversation around what the philanthropic expectations are.

Charitable organizations play a vital role in our society.  These agencies pick up where government and corporations fall off.  What would our society look like if we didn't have these types of agencies? Are we prepared to start changing the way that we build these types of organizations?  As donors and community investors, will we start pushing, engaging, pulling and directing our resources, not based on the cost of raising a dollar or by the CEO compensation, but rather by the proven results of the organizations we support? 

How are you going to articulate your expectations of the charities you support?

At the end of the day, as a donor can you say for certainty that you know what society would look like if you did not fund one of the agencies you currently support?  As a charity, can you articulate what gap, niche, void, your organization plays (i.e. what would society look like if we didn't exist)? 

These are tough questions that challenge how our whole social system is built, how policies are set, how corporate giving programs are established and how fundraising campaigns are marketed.  Are we, as a social system, prepared to ask some of these tough questions AND act on the answers that we hear?