Are your donations wasted?

You have made cash donations to charities. You have probably thought about how those nonprofits are spending the dollars you give. But you trust them to use your donation wisely (otherwise you probably would not have given).

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In your mind, you might picture the organization using your money to buy cans of soup or bandages or other items to help those in need. How would you feel if your donation was used to buy advertising for the charity, to pay for the nonprofit’s fundraising activities or for other ‘overhead’ costs? Would you feel your donation was wasted?

Overhead Costs

There are two conflicting opinions on the question of overhead. Briefly summarized, they are:

  1. The less a charity spends on overhead costs, the better
  2. A nonprofit’s effectiveness at solving problems is more important than the amount it spends on overhead.

Charity Watchdogs

There are a number of charity watchdog groups that help people decide how to donate their money. Charity Watch is one such group that takes the first position (the less a charity spends on overhead costs, the better). In fact, a nonprofit’s spending is a big factor in the rating Charity Watch gives. If a charity spends 36% or more on overhead costs, that organization will receive an efficiency grade of C+ or lower (all the way down to an F).

Charity Defenders

A number of people and organizations are starting to speak out on the other side of the “overhead” question. The founder of the AIDS Ride and self-described “Charity Defender” Dan Pallotta gave a TED Talk (that garnered over 3.5 million online views) supporting the second opinion (A nonprofit’s effectiveness at solving social problems is more important than the amount it spends on overhead).

In this TED Talk (titled “The way we think about charity is dead wrong”) Pallotta says “…the next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams, their Apple-, Google-, Amazon-scale dreams, how they measure their progress toward those dreams, and what resources they need to make them come true, regardless of what the overhead is.”

Define “a wasted donation”

This is a fascinating debate, and I encourage you to visit Charity Watch’s web site to see how they calculate their ratings and I encourage you to take a look at Dan Pallotta’s TED Talk to hear more about his experiences and thoughts about overhead. Taking a look at these positions may even change your definition of a “wasted donation.”

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My position on this is closer to Pallotta’s than to Charity Watch’s. Although it makes my stomach hurt to watch reports on 60 Minutes about charities that abuse the trust of donors by pocketing donations for the personal benefit of the administrators instead of serving those in need, I think that a Charity Watch-type black and white grading system is not the solution. How a nonprofit achieves its mission is a nuanced road – and as Pallotta points out, there are some “unwritten” rules that need to be rethought. I believe, for example, that one “rule” is that grant funds should not be given for overhead costs. As a grant writer, I have seen this rule backfire. I have seen, too often, a nonprofit decision-maker hope that creating a new (and unneeded) program will somehow obtain a sliver of funding for vital overhead costs. Trying to “game” the system in this way demonstrates that there are many “unwritten” standards constraining the work of nonprofit organizations. And if a nonprofit is constrained, how can it achieve its mission?

Questions: What goes into your decision to make a donation? Have you consulted Charity Watchdog ratings? If so, what did you think?

Images: U.S. National Archives, Internet Archive Book Image

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3 Austin Resources for Strengthening Your Nonprofit Organization

When you think of people who chose to work for nonprofit organizations, what comes to mind? You probably picture someone with a big heart.

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But a big heart is not the only requirement to for helping others. If you fill your brain with tips and specialized nonprofit knowledge, you can help even more people. There are a number of organizations in Austin that provide excellent assistance to community sector professionals. But there are three that I “geek out” at when I visit them or take a class from them – and I think you will too.

Center for Nonprofit Studies at Austin Community College (CNS @ ACC)

Check out CNS @ ACC’s web site for their list of services. But as a nonprofit geek, I’d like to focus here on their learning opportunities. I have enjoyed offerings such as grant writing, social media, and team-building. One thing I like is that they have classes of various lengths and price-ranges. I have seen free brown bag lunchtime offerings and I have seen multi-week classes culminating in a certificate. There is something for every nonprofit professional at CNS @ ACC.

The Regional Foundation Library (RFL) at the University of Texas at Austin

Do you ever wonder what the secret to obtaining grant funding is? Stopping by the RFL is the first step toward finding out. For more than 50 years, the RFL has served as a bridge between the grant-seeking and the grant-making communities. The staff at the RFL can answer your questions about ways to approach grant giving organizations. But this geek’s favorite tool at the RFL is the Foundation Directory Online Database. You can use it to search for the foundations that are most likely to give you grants. The RFL staff can coach you on the best way to use the Foundation Directory Online and their other free tools.

Greenlights

Greenlights’ mission is to strengthen nonprofits for extraordinary performance and impact. This 501(c)3 organization provides management consulting services, professional development, customized training, in-depth research and more. Visit their site for examples of what you can learn; but one example of a recent Greenlights research report is On the Verge: Value and Vulnerability of Austin’s Nonprofit Sector. This study reports the surprising facts that: Austin is home to nearly 6,000 nonprofits – but 72% have less than $100K in income – and less than 15% have ANY paid staff.

If you start building your knowledge of how to help a nonprofit organization succeed, then visit any or all of these resources – and tell them the Greater Good Geek sent you.

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Fill your brain with information about nonprofit organizations Resources:

Center for Nonprofit Studies at Austin Community College (formerly known as Center for Community Based and Nonprofit Organizations – CCBNO): 5930 Middle Fiskville Rd, #414, Austin, TX 78752, (512) 223-7051; http://sites.austincc.edu/npo/

The Regional Foundation Library: At UT’s Community Engagement Center, 1009 East 11th St., Austin, TX. A call is recommended before visiting: (512) 475-7373′ http://ddce.utexas.edu/foundationlibrary/

Greenlights (formerly known as Greenlights for Nonprofit Success): 8303 N MoPac Expy Suite A201, Austin, Texas 78759, (512) 477-5955; http://www.greenlights.org/

Questions:

Have you used any of these resources? If so, what did you think? Are there other resources that you have found helpful?

Image Credits: S. Erler (first image); Internet Archive Book Images (second image).

Independence – what this word can teach you about nonprofit organizations

Independence. This weekend, as the U.S. celebrates our independence, is a great time to examine this word. It can mean different things to different groups of people. Many senior citizens, for example, value the independence that living at home brings. There is a high loss of independence if health and mobility require someone to move away from home to an assisted living facility.

Focus on Nonprofit Organizations: Capital City Village

The Greater Good Geek blog will occasionally feature a nonprofit organization and “geek out” with a food for thought “case study.” Today’s edition focuses on an organization called Capital City Village. Capital City Village is an Austin, Texas-based nonprofit organization dedicated to helping seniors stay in their homes and communities for as long as possible (a concept called aging in place and community). In other words, the organization supports the independence of senior citizens.

What Nonprofit Leaders Can Learn

This Independence-based nonprofit organization teaches us is how important it is for nonprofit leaders to be in tune with changing demographics. There will be cases when new nonprofit options need to be created to address population trends – and this is one of them.

The Growing Needs of Baby Boomers

The Baby Boom is one of those population trends that cannot be ignored by the community sector. The influence of Baby Boomers stems in part by the size of the group: there are currently 78 million boomers in the U.S. and 8,000 boomers are turning 65 every day (Source: How Baby Boomers Are Changing Retirement Living, Washingtonian, March 13, 2014).

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Seniors Value Their Independence

The “traditional” retirement options (assisted living, retirement communities) are not fitting the needs of today’s senior citizens. Many want to age at home, retaining independence and saving money. This is where nonprofit leaders saw a trend and Capital City Village (CCV) was created. Founded in 2010, CCV gives seniors access to volunteers, service providers and social and educational programs – helping them age in place.

This Geek’s Case Study

So the Geek’s “case study” lessons for nonprofit leaders are: keep your finger on the pulse of demographic trends, notice needs in your community, shift the focus of your organization (or start a new organization) to address a need that has not been addressed yet.

Population Trends

Questions:

What are some of the recent trends in your community? Do you see a population growth that needs services? Is there a recent community need that a nonprofit organization could better address? Do you have ideas about how those needs could be addressed? Do you have experience with a nonprofit organization that started a new program for the purpose of addressing a new population trend? If so, please share details.

Image credits: Flip Schulke, The U.S. National Archives (first image). Thomas Abercrombie, Internet Archive Book Images (second image).