We all want our charitable giving to have a big impact on the causes and communities that are close to our hearts.
But how do we decide where to give our charitable dollars? With so many great organizations out there, it can feel overwhelming. The most important thing is to get to know the organizations you are involved with. Where are they in their evolution? Who are the people running the show? What is the organization’s impact?
To help, let’s unearth the truth behind some common social profit sector myths.
MYTH 1: A charity with high administration and/or overhead costs is not effective with donor dollars, while charities with low administration/overhead costs are using donor dollars effectively.
Truth: It’s complicated. Boards and CEOs are tasked with hard decisions about where to invest their limited resources, but to run efficiently/effectively these organizations must employ skilled people and incur overhead costs to deliver their services and create meaningful impact.
In his TED Talk (The way we think about charity is dead wrong), Dan Pallotta points out that donors often don’t like to see charitable donation dollars spent on non-profit compensation, fundraising, advertising and marketing.
But without advertising, how do you spread the word about your fundraising events, or raise awareness about your cause?
What if an organization invested in a rockstar team to work with their staff on diversifying an organization’s revenue stream, bring in more dollars, and subsequently bring more impact to the community?
Would investing in education and/or coaching to make a board more effective be worthwhile?
We also need to consider that low overhead doesn’t always equal high impact. Consider this scenario laid out by Imagine Canada:
Organization A spends 30% of every dollar on administrative expenses, organization B spends 10%, and organization C spends 15%. However, the program at organization A is shown to reduce criminal recidivism rates by 14%, while the program at organization B reduces recidivism rates by 2%; organization C doesn’t know the effectiveness of their program.
Sure, organization B spends 20% less on overhead, but their impact is minimal. Which organization would you rather put your dollars toward?
What’s more, the non-profit sector is in crisis. As CCVO outlines in this call out to the province for support, the sector is struggling to find and keep employees, (while it’s true across the economy, it’s particularly challenging given the lower salaries typically offered by non-profits). In addition, inflation is driving up costs. If we, as donors, are unwilling to support organizations’ operating costs, they—along with their vital programs and services—will sink.
Myth: Charities that have been around for years are more effective than new charities.
Truth: Research indicates neither are ‘best’.
Established charities have stood the test of time, and that is no small feat. As in life, older isn’t always better or wiser.
When researching established organizations, consider how they evolved through the years. Are they responding to the changing world? Has their impact changed?
New charities can be innovative but lack the initial investment needed to scale.
Look at the people behind the organization(s) you are interested in. Who is on the board and executive team at the new charity? Do they have a proven track record? Is the board composed of individuals who have the diverse skills, talents and connections to partner with their executive team to create and guide the strategy.
Do they have a clear strategic direction? What actions have they put behind their aspirations?
Myth: Only big gifts have impact – small gifts don’t matter.
Truth: Small gifts add up to big impact. What’s more, donors who start small may become big donors down the line.
Since Glennon Doyle and her team launched Together Rising in 2012, they have raised more than $45 million, with the most frequent donation landing at $25.
The Stanford Social Innovation Review also busts this myth:
After Hurricane Harvey struck the Texas Gulf Coast of the United States in 2017, more than one million donors gave gifts under $100 to the American Red Cross, which contributed $35 million toward those needing immediate shelter, food, and relief items, and basic health and mental health services.
Small gifts add up.
Not only that, a small gift is a good way for you to get to know an organization.
You never know how small gifts might transform a donor or an organization in the future. The SSIR article cites one couple, the Dornsifes, that started out sponsoring a child for less than $20 per month through World Vision US (WVUS). After they travelled to Africa to see the impact of their sponsorship,
The Dornsifes donated $35 million in matching funds to WVUS funds to expand access to clean water, sanitation, and hygiene (WASH) across 10 African countries, a contribution that catalyzed $256 million in total donations.
Myth: Government funded agencies don’t need charitable donations.
Truth: Government rarely, if ever, provides sufficient operating dollars to support the programs and potential of any one charitable organization. Diverse revenue streams are crucial to an organization’s survival and ability to thrive.