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Phil Cubeta discusses Rich Polt’s call for better storytelling from nonprofits instead of better metrics.
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Rich Polt on why nonprofits should speak to donor’s hearts instead of to their minds.
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Phil Cubeta reports back on his trip to the Hudson Institute. Classic.
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Do voters make rational decisions or emotional ones? What does this tell us about how donors choose nonprofits?
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ABOUT SEAN STANNARD-STOCKTON
Sean Stannard-Stockton is the president and chief investment officer of Ensemble Capital Management, located in Burlingame, CA, midway between San Francisco and Silicon Valley. From 2006 through 2012, Sean authored the Tactical Philanthropy blog and wrote regular philanthropy columns for both the Financial Times and the Chronicle of Philanthropy. In 2012, Sean officially ended the blog to focus on growing Ensemble Capital.
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One Comment
It’s good to see scrutiny of practices that are questionable, as in this excerpt of article in The Vancouver Sun newspaper of January 19, 2008:
http://www.canada.com/vancouversun/news/business/story.html?id=b76ff000-c8e8-4789-9ed8-806df2c2945a
During the year ending Sept. 30, 2006, GiveMeaning received $234,643 in donations for which it gave tax receipts, according to a financial statement filed with Canada Revenue Agency. Tom Williams said these are largely donations from individuals.
It received another $730,350 from other registered charities. Williams said these donations were made specifically to pay GiveMeaning’s overhead.
He refused to identify any of these donors. I found this strange: My sense is that, while some donors request anonymity, most registered charities or foundations publicly report where they are placing their money, not so much for recognition as for transparency.
More generally, I do not understand why certain undisclosed charities would give money to pay overhead for what is essentially a charitable conduit.
In the case of GiveMeaning, that overhead is disproportionately large. Of the $982,705 in total donations it received (and issued tax receipts for), GiveMeaning spent $666,070, or 68 per cent, on administrative expenses.
Those expenses included $199,043 for professional and consulting fees; $153,646 for salaries, wages and benefits; $28,433 for advertising and promotion; and $24,019 for travel.
I asked Williams whether he receives a salary. Well, yes, $90,000 per year. And his wife, country singer Jessie Farrell, who works part-time for the foundation “when she can,” gets $30,000. So together they collect $120,000 per year, plus expenses.
After subtracting overhead costs, just over $300,000 was available for charitable purposes in 2006, but only $172,000 was actually given to charities (the remainder is still on the foundation’s books). That $172,000 represents just 17.5 per cent of total donations.
But that’s not the end of it. Many of the charities that receive money have their own overhead. So the net amount available for true charitable purposes is even less.
Williams insists that, whenever a person gives money for a particular charity, 100 per of that money gets to the named beneficiary. That may be true, but it does not mitigate the fact that the vast majority of the overall money collected during 2006 went to administration.
Williams says this was due largely to start-up costs: “Yes, we have spent more than we have given away. Just like any other start-up business, it takes time to get profitable,” he said.
He said the financial return for the year ending Sept. 30, 2007, which is just now being filed, will show a greater percentage of overall donations going to charity. We shall see.
The Vancouver Sun January 19, 2008