We’ll Pay You Twice As Much As The Last CEO (*snicker*)

Apropos to my post dealing with doing more with less earlier this week, last week Janet Brown, CEO & President of Grantmakers in the Arts wrote about the problems with non-profit CEOs forgoing pay.

She cites an example where the retiring CEO of a performing arts center had only accepted a nominal salary. The savings that represented meant the different between running a deficit. Now with the CEO retiring, they either needed to find someone else who was willing to do the job for free or find the money to pay someone for the job.

The performing arts center should have been booking the CEO’s non-salary as an in-kind contribution all these years, keeping the reality of the expense in the budget. This, of course, would have shown a loss for some years, which (I’m only guessing here) is probably not what the CEO or the Board wanted. So the cycle of under-capitalization continues.

Brown asserts that every organization should strive to be completely transparent financially, not only for the sake of those who inherit leadership positions, but also to retain the confidence of supporters.

Sound business practices are possible in nonprofits but, as I’ve stated before, this demands transparency and leadership that wants to do more than keep the doors open….Our investors in the nonprofit arts world are community members, governments, foundations and corporations who give money because they believe in our organizations, their missions and the good they are doing for our communities. These investors also deserve (and should demand) returns, which include the best artistic product possible and the strongest balance sheet good management can provide.

I guess the lesson here is not to pay your executive director as well as your interns, erm I mean, pay them both!

Info You Can Use: We Are More Than Just Our Overhead Ratio

Well, the timing could be a little better.

Part of the big news today is that GuideStar, Charity Navigator, and BBB Wise Giving Alliance joined together to sign an open letter to all donors asking them not to use overhead as a primary criteria for giving.

The letter does a pretty good job in a short space of discussing how inaccurate the ratio is and the consequences for non-profits when they feel they have to hobble themselves to maintain a low number.

The letter specific cites Stanford Social Innovation Review‘s article, The Non-Profit Starvation Cycle which does a good job explaining the problem in detail.

The reason why I said the timing could be better is because it comes on the heels of a weekend where CNN has been majorly featuring a story about charities that have been fleecing donors with the causes only getting 4% in some cases.

Now make no mistake, I am not defending a 96% overhead by any means. There are a lot of scams out there and it appears pretty clear that the organizations featured in the story set out to deceive right from the moment they generated names that sound very close to nationally recognized charities.

My concern is that to people unfamiliar with charities, the timing of the letter’s release makes it almost appear to be an apologist for the high overhead ratios these dishonest groups had. Especially since a picture of the website of the one of the groups CNN damns contains a claim that Charity Navigator gave them a 3 star rating.

The proximity of these two announcements aside, the public recognition that charities should not be judged on overhead alone is a real advance in the effort to get non-profits evaluated on less superficial criteria. It will likely still happen for some time to come, but it is an encouraging sign.

Amuse Bouche Fund Drives

So even though I am in a fairly rural area of Ohio, I have discovered that I have an embarrassment of riches when it comes to being able to access public radio broadcast streams. There are two from Ohio universities, one from West Virginia and one from Northern Kentucky. Despite the mountains I can hear each of them fairly clearly since there are repeaters located within a few miles of my workplace.

I tell you this provide some context when I say I heard a fund raising approach I liked but can’t for the life of me figure out which station I heard it on. I have visited each station’s website and Facebook page and still don’t know whom to credit.

In any case, one of these intrepid stations announced that now that the summer had started, they would begin “One Shot Wednesday” fund drives. Instead of having a week long fund drive, they were just going to make appeals on Wednesdays throughout the summer.

I thought this was a great idea because many people will tune away for the week of a fund drive and come back when it is over. Having it once a week repeatedly introduces itself into a person’s habitual listening. Since the disruption is contained to a small period of time, people may tune away for a day, come back again and then be reminded the next Wednesday around.

The station can better retain their listeners and expose them more frequently to the message that the station needs their support before a person chooses to tune away. And who knows, people may stay with the station throughout the Wednesday since the appeal breaks are short relative to other fund drives.

I have been trying to think of what the performing arts organization version of this might look like. Attending performances is not part of most people’s daily routine so there is no week long fund drive people might seek to avoid.

Curtailing the curtain speech appeal might make many audience members happy, but what more palatable alternative do you replace it with?

I know the board of my organization enjoyed calling people up to ask them about how much they liked the past season. The effort was well received all around. It would be possible to insert an appeal at that time, but if done poorly it would probably be a negative experience for all involved.

You might try having board members or volunteers chat casually with people in the lobby before the show and introduce the idea of supporting the organization. There is more of an opportunity to monitor that the process is done well and give notes on improving in the future. The only problem might be if the lobby is too small or if most of the audience rushes in at the last moment leaving little opportunity to speak with them.

I think the real question at the base of all this is- what are we doing now that makes people uncomfortable and what can we do to make it less so. That is what the one radio station did. They took the week long fund drive that everyone groans about and parceled it up across the summer.

I have no idea how successful it is, but from the way they spoke, they have done this before. Once I find the station again, I will try to do some further investigation.

But what ideas do you have to break up the often awkward process of fundraising into something more digestible?

Ben Franklin, Father of Matching Grants

April 17 is the anniversary of Benjamin Franklin’s death. I thought it appropriate then to link back to a post I did titled St. Benjamin, about a man who was in many respects ahead of his time, including in relation to non-profits.

Franklin had the idea for matching grants 200 years before the Ford Foundation did. Back in 1751, he convinced the Pennsylvania Assembly to give $2,000 toward a hospital if $2,000 could be raised privately.

At the time, the idea was consider controversial, even Franklin was a little uneasy about his idea. As I wrote:

Well for one, political opponents felt the move was too conniving. I suppose it was because they didn’t believe he could raise the money and had tricked the Assembly. Franklin noted that knowing that their money would essentially doubled, they gave more.

Franklin himself referred to his innovative idea as a political maneuver so he might have felt a little uneasy about it himself. The success of his plan eased any troubled thoughts he might have had. “…after thinking about it I more easily excused myself for having made use of cunning.”