Wednesday, 19 March 2014

The not-for-profit trap. 19.03.14

This blog has nothing to do with the stuff I usually write, so don't be put off if you land here first.  It was spurred by a number of conversation I've had with people who believe that if a charity says or does something, then it must be good, because they don't have a vested interest.  After a decade of working with and for non-profit groups, I can't support that belief.  

The last straw, though, was getting volunteered to help at a fundraiser for an organisation that labelled itself a “women’s refuge”.  It wasn't a refuge at all, as it happens.  What it did was put women in danger of domestic violence in touch with the police, for a free assessment of the safety of their homes, and with a maintenance company providing them with free safety equipment.  The equipment was standard and should really be present in any home: window locks, door chains, smoke detectors, fire extinguishers, etc.  The cost of the equipment averaged £80 per client.  They helped on average a woman per week.  Their running costs exceeded £50,000 per year.  So, it cost them approx. £1000 to arrange for third parties to provide £80-worth of generic advice and free equipment to women.

Many if not most people have a very idealistic view of not-for-profit organisations.  Regardless of whether they are large international charities or small community ventures, we tend to see their not-for-profit nature as an indicator of selflessness, honesty and dedication to a cause.  If we share their beliefs, we are happy to donate money to them in the knowledge that it is going to a good cause.  Unfortunately, we are often wrong. 

People who work for and with not-for-profit groups get to see a different and much uglier side of the picture.  Much of the money people donate hoping to further a “cause” does nothing of the sort, for a number of reasons.  In this blog I will attempt to present some of the main issues that cause donations to fail to reach their goal, in the hope that it will assist people in choosing more wisely where and how to donate.[1] 

Money? What money?

A lot of money donated to charities never gets there.  I do not mean by this that all those friendly tin-shakers and badge-sellers are funnelling funds into their own pockets, although I am sure that it does happen.  There are plenty of perfectly legitimate ways in which charity money is lost in the pipeline just because of how the system works.  Essentially, most fundraising activities are not free.  For instance, if you donate via an intermediary, such as a call centre, you are helping to paying for their operation.  If you donate through a fundraising event or one of the increasingly popular holidays, you are helping to pay for the cost of that activity.  Those friendly folk who collar you on the street and shame you into signing up for regular donations are paid to do so, and you are paying some of their wages.  These losses can be sizeable.

In many countries charities are obliged to provide a breakdown of how they spend their money, typically an easy-to-interpret pie chart.  However, this may only include the money they actually receive.  If a third party fundraises on their behalf, the costs may not be shown in the information provided, as they are not incurred directly by the charity.  Hence, these costs may be hidden, even though they may take up a large proportion of your donation.  Essentially, unless you are sending the money directly to the organisation without the involvement of any third parties at all, you have to accept that some of it will never get there.  You may think you’re saving pandas, but actually what may be really doing is helping to pay telemarketers’ wages. 

Even direct marketing carried out by a charity costs money.  Although the costs may be less than those incurred through the use of third parties, every begging letter sent to your address is paid for by donations.  If extra items are added to the letter, that increases the costs.  The bottom line is that by sponsoring an organisation, you are sponsoring its advertising strategy.  You may want to bear that in mind if you are particularly bothered by certain forms of marketing, such as begging calls or junk mail.  You may also want to consider whether the marketing is in line with the alleged goals of the organisations; for instance, should environmental charities carpet bomb the country with non-recyclable, unwanted “gifts”?

                What was the money for, again?

The money you donate may do absolutely nothing to further your cause, for a number of reasons.  First and foremost, you may be simply donating to the wrong people, and it may not be your fault.  A lot of charities describe their goals using language that is very evocative and emotive, yet so fuzzy as to be meaningless.  For instance, most people are against “cruelty” or “abuse”, and in favour of “ethical treatment”.  However, those words mean entirely different things to different people.  Are we talking about the “ethics” of a vegan, or those of a kosher butcher?  Is spanking “strict parenting” or “child abuse”?  Is “cruelty against animals” allowing them to die of starvation or taking them to a show?

I have yet to meet anyone willing to tell me that they are in favour of cruelty to children or animals.  Yet, I have met plenty of people with whom I can’t agree on how to raise and train said beasties.  The same applies to most other situations.  Unless you look into the specifics of what your charity of choice believes in, you may end up funding activities entirely against your beliefs. 

This situation seems particularly prevalent in animal protection organisations.  Some “rescue” animals from private ownership just to put them down, even though they are perfectly healthy and could be rehomed.  This is completely in line with their ethics; they are “saving” the animals from an unnatural life of “slavery”.  However, they do not go out of their way to advertise this fact to their donors, who have only glorious yet vague slogans to go by and who may be blissfully unaware of what they are actually sponsoring.

Some charities achieve their goals, which is great.  What isn’t always so great is that rather than packing up and going home, they generally tend to find new goals.  This branching out may mean that their goals may no longer match the donors’ ideals.  The donors may or may not be aware of the fact that the goalposts have been pushed, particularly if they are making automatic donations.

Some organisations are so committed to their beliefs that they are willing to carry out illegal activities in order to turn them into reality.  Again, animal protection organisations are a particular culprit, although environmental organisations have also been found slipping.  Criminal trespassing, vandalism, theft, arson, perjury, blackmail, stalking, threats, assaults, acts of terrorism and even grave-robbing[2]: it is up to you and your conscience to decide how far you are willing to go.  However, bear in mind that any organisation you fund may have very different limits, and may not be willing to volunteer that fact to you.

                You want to do what?

Choosing charities by their manifesto can go dramatically wrong in another way.  While some goals may be very worthy indeed, the way in which the charity goes towards achieving them may be impractical to the point of stupidity. 

Some cases are so obviously idiotic that it’s hard to believe they are real.  I have known a charity working to provide “sanitation for children” that went around installing flush toilets in South American schools.  The slight hitch was that those schools were in a desert and had no running water or sewage facilities.  The toilets could be flushed at most once a week, if there was water to spare, by use of a bucket.  The waste ran out of a short pipe to accumulate directly behind the building.  I swear that I am not making this up; I spent three months using such a toilet, shared with 7 other girls and located right next door to our sleeping quarters.  Instead of squatting out of sight and away from the buildings (how barbaric!), we had the luxury of piddling indoors, so we could enjoy the stench of stale urine at all times.  So much for sanitation.  End of rant.

Most cases are not as clear cut and some can be rather controversial.  For instance, donating goats to Africa is either a way of helping people out of poverty (according to charities such as Oxfam or Save The Children) or a sure way of causing desertification with the resulting long-term environmental damage, human and animal suffering (according to environmental and animal groups).  Without having independent, impartial knowledge about the issue, it may be impossible to make a truly informed judgement.

In some cases the idea per se is fine, yet projects suffer from a lack of follow-up which can render them useless.  For instance, providing equipment to areas where there are no materials or expertise to maintain it can result in a very short-term benefit.  This does not only apply to complicated equipment (e.g. solar panels); even a bicycle, which we would consider basic, will only work while it has two wheels.  One-off projects are often plagued by this lack of foresight.  For instance, there was a rush of projects to plant trees and woodlands to celebrate the millennium.  Unfortunately, there wasn’t a comparable rush to carry out works to maintain them afterwards.  Many young trees were left to die, slowly strangled by the protective sheaths they outgrew.

However impractical some projects may be, there is worse out there.  Some “awareness raising” charities do effectively nothing, and manage to get people to pay them for it.  Some projects cover issues so widely known, or in such a superficial fashion, as to be entirely ludicrous[3].  Other projects seem little more than scams.

Say I ring you up to “raise you awareness” of a certain problem.  You donate towards the cause.  I can use the donation to “raise awareness” of the problem to ten more people.  They also donate.  The money pays for more calls, then for my time to make them.  Eventually I can give up my day job and dedicate myself to the cause.  More people are made aware every day!  I am achieving my stated goal, but what have I actually done?  If I have made you aware of an issue you can do something about – how to diagnose a deadly disease, to perform first aid, to reduce your environmental impact – I may have achieved a great deal.  I could help you save lives.  What if I have made you aware of something over which you have no direct impact, though?  Of starving third-world children, waterborne African diseases, clubbed baby seals?  Your awareness on its own does nothing to solve the problem.  I have taken your money and never even tried to do a thing with it.

                How much?!

Some projects are inherently inefficient.  The basic idea may be sound, but the way they go about it means that the cost of achieving their goal is unreasonably high.  The problem with this issue is that, unlike most of the ones already mentioned, it can require some investigation to become apparent. 

Some inefficiencies are very easily spotted.  For instance, “working holidays” make sense when trained specialists (doctors, engineers, etc.) are sent to an area where their expertise is lacking, to work at their trade.  When you are sending people to do menial tasks for which they are not even trained, and the cost of their flights alone would be enough to keep a local employed for a year, getting the job done to a much higher standard – well, it just doesn’t add up.  If your stated goal is to increase awareness, that may not be a problem.  However, if your stated goal is to solve the issue, then you are being rather extravagant with your donors’ money.

Unfortunately, most charities, particularly those who are least efficient, can present a lot of figures in ways that leave you completely uninformed.  Unless you know the ins-and-outs of an organisation, it can be hard to even just work out the unit of measurement that should be used to calculate their efficiency: is it the cost per project, per client, or per hour?  You can be pretty much guaranteed that organisations will not volunteer any numbers that make them look bad.

Not-for-profit does not mean not-self-serving.

There is a very solid reason for this secrecy.  Many charities are, essentially, self-serving.  Not-for-profit does not mean that all people involved in the organisation do not get a return from their involvement, be it in the form of wages, status or a specific goal achieved.  There can be money and power to be gained even from good works carried out in a perfectly legal manner. 

A not-for-profit organisation is defined as “an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends.  While not-for-profit organizations are permitted to generate surplus revenues, they must be retained by the organization for its self-preservation, expansion, or plans.”[4]  This does not mean that everyone working for that organisation does so for free.  Many charity workers are paid, and some are paid a good wage.  Working for a non-profit organisation is, in fact, a perfectly legitimate career path.  Furthermore, those workers need equipment, materials, a work place and so on.  Successful charities can become very large concerns indeed, controlling vast assets.

Regardless of size, however, once people are drawing a wage out of an organisation its focus can subtly change.  Rather than focusing on the most efficient manner of reaching the final goal, hence the most effective use of donated funds, keeping the business afloat can end up becoming the unspoken priority of the organisation.  This can result in organisations that drag themselves on when they are so grossly, demonstrably inefficient that the only decent thing they could do for their alleged cause is to hand over their money to almost anyone else and commit hara-kiri[5]

Tiny charities can suffer from a different disease.  A lot of community and small interest groups are led by a very small yet very vocal minority.  This minority may be entirely disconnected from the will of the majority.  The majority may in fact not support their programmes, but be too busy going about their business to get involved.  There may be much better ways of achieving the same results; it may be better for the community at large if they were not achieved at all, in fact.  When strong personalities get at the helm, however, this can be completely overlooked.  These groups can become a way for a few people to gain status or to achieve their dreams, regardless of how unpractical or unpopular they are. 

                So what?

Do I think all charities are scams or terrorist organisations in disguise?  No.  Am I against charitable donations?  Definitely not.  However, I have seen enough utterly unreasonable projects get funded to feel very jaded.  I do believe that it’s important to ask the difficult questions, to get informed, to truly find out what our money is supporting.  There are tons of good causes, ran by good people in efficient ways, that could do so much to change this world for the better if only they had enough funding.  To allow ourselves to be taken in by catchy mottoes and a bit of emotional blackmail and throw our money down a well is a real shame.

[1] I will use “charity” instead of “not-for-profit” from this point onwards, even though it’s imprecise, purely because it’s less of a mouthful.

[3] I received a call last week asking me to donate to raise awareness of cancer.  Not a specific cancer (I asked), but cancer in general.  I suggested to them that if they gave me the phone numbers of anyone in this country who was not aware of the existence of this disease I’d gladly ring them myself on their behalf, at no cost, and hung up.

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