Tuesday, September 28, 2010

Keeping Perspective on Fundraising Costs

The issue of fundraising costs is always a tough one for the profession. It’s a very emotional issue, as we’re talking about dollars that donors have given away freely of their own will with the expectation that they’re supporting a charitable cause.

It’s also a very nuanced issue. As the old saying goes, it takes money to make money, and that adage is proven time and time again in charitable fundraising. Given all of the various factors that affect fundraising, it’s impossible to devise one universal, set-in-stone fundraising cost limit that would apply to all organizations.

Fortunately, governments are starting to realize this. For example, the Canada Revenue Agency, in its fundraising cost guidelines that were developed last year, specifically acknowledges that fundraising costs can vary dramatically annually and that organizations with higher costs aren’t necessarily unworthy organizations.

Unfortunately, some media outlets still don’t do the research or simply don’t have the interest to understand the nuances of fundraising costs. A good example is a recent article by the CBC on fundraising contracts by for-profit solicitors, or as the article terms them, third-party fundraisers.

There’s SO much to not like about this article—inaccurate comparisons between costs and funds raised, complete misunderstanding of the difference between fundraisers and solicitors, lack of discussion about telemarketing fundraising costs, and key information about the scope of telemarketing by solicitors buried in the middle of the article. AFP responded to the CBC with this letter, and has also developed some talking points that fundraisers can use for their own responses or when speaking with donors and members of the public.

High fundraising costs are definitely an issue, and I have no problem with the CBC investigating them. In fact, I think it would be interesting to find out how many of these high-cost contracts involved percentage-based compensation, which AFP finds unethical. But it would also be nice to have some discussion of the role of telemarketing and the costs associated with it.

AFP is committed to educating the media, governments and the public about all aspects of fundraising, and especially fundraising costs. Our pro-active work has helped result in positive regulations like the CRA fundraising cost guidelines that acknowledge variations in costs. But we must also continue to respond aggressively to articles like the CBC’s that paint an inaccurate and misleading picture of the fundraising environment.

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