THE FUTURE OF PHILANTHROPY AND FUNDRAISING: THE NONPROFIT NARRATIVE THAT SHOULD BE TOLD
THE FUTURE OF PHILANTHROPY AND FUNDRAISING:
THE NONPROFIT NARRATIVE THAT SHOULD BE TOLD DURING COVID AND BEYOND
My hopes for Coronavirus-induced charitable sector change
Andrea McManus, ViTreo Group Inc
June 02 2020
This is the third and final blog in our series on The Future of Philanthropy and Fundraising. Check out the first two blogs in this series here - Coronavirus Impact-Future Proof Your Nonprofit and Nonprofit Organizational Extinction?
Infographic: Canada’s Charities & Nonprofits by Imagine Canada (Click image to make bigger).
Out of past crises and recessions significant change and innovation have risen. There are many stories about how hugely successful organizations such as Apple, Microsoft, Netflix, Airbnb and more all transformed themselves or were created during those challenging times. What if, out of the destruction the Coronavirus has wrought in our sector and others, a new nonprofit narrative could be built? Can we leverage this crisis to write a new chapter for the charitable world and its beneficiaries?
COVID-19 has changed the world. If we view what has happened as an opportunity and a challenge to be solved, we could consider this time as a gift. I don’t mean to minimize the physical, emotional and financial suffering of many — not at all. But if we separate ourselves from that for a moment, and focus on what we can do, there’s the potential to write new and different chapters in the future story of the charitable world.
We’ve established that little, if anything, will be the same going forward. Instead of resisting the change, let’s work with it to let go of old (and in some cases, past their best buy date) methods of fundraising, creating value for our donors and helping the world’s vulnerable populations.
What if we could, like Apple, Netflix and so on, transform how we work and alter how we are perceived?
“Apple: 1975, 2001
While Apple has been around since the 1970’s, it transformed itself during the dot-com crash of the early 2000’s, and in the wake of 9/11. This was during a time when Steve Jobs had returned to Apple and launched the iconic iPod. Tim Cook, Apple's former COO and current CEO, no doubt inspired by Apple's resilience during previous economic downturns, has said, ‘We believe in investing during downturns.’Netflix: 1997
Netflix was founded in the years leading up to the dot-com bubble. It nearly succumbed to economic hardship in 2000 when it put itself up for sale, only for the $50 million offer to be rebuffed by Blockbuster. Netflix was able to weather the storm and harness its innovation and creativity prowess to transform itself into a pioneer in streaming on-demand consumer video.”- Inc, 6 Iconic Companies that Succeeded During a Recession, Anne Gherini, April 02 2020
What if, like those companies, we could change our organizational narratives? What if one of the silver linings of the COVID-19 pandemic could be a sea change shift in the charitable world story? Or at least in the way the average person views the sector?
This is the current story being told (and it’s not a new one, the numbers have just exploded compared to past times of crisis):
“The Chief Economist for the Charitable and Nonprofit Sector has taken emerging data, and using reasonable assumptions, has projected significant disruption for our sector. We estimate that registered charities will see financial losses this year of between $9.5 billion and $15.7 billion and layoffs of between 118,000 and 194,000 people. The scale of loss will depend on how long and how strictly social distancing principles are implemented.”
- Imagine Canada, Proposal to PM and Ministers, Bruce MacDonald, March 23 2020
What if the COVID-19 crisis and current economic downturn could be the impetus for creating a different, better, positive story for nonprofit organizations and those they serve?
“Never let a good crisis go to waste.” Attributed to Winston Churchill and at times to others, a topic of much debate amongst the public and the ViTreo team.
Imagine Canada recently reported:
“When asking organizations about the challenges they’re currently facing, falling revenues are a dominant concern. Most charities, nonprofits and social enterprises are financed through some combination of fundraising, grants, and earned income. Unfortunately, all three revenue streams have taken a massive hit due to a combination of social distancing measures and an economic downturn.”
How about Imagine Canada reporting this instead in the next crisis or recession?
“When asking organizations about the challenges they’re currently facing in the XXX crisis, XX% reported they are weathering the storm and continuing to provide services due to sufficient reserves. Arts and culture organizations, which people often turn to in difficult times, have been sufficiently funded in past years to be able to operate at near capacity. Etc.”
The coronavirus is going to be around for some time. There will be other crises and downturns. Because of the enormity of the impact caused by the virus, combined with a recession in many countries, everyone has taken notice — governments, donors, funders, foundations, businesses, the general public. No one has escaped unscathed.
So… we have an opportunity here:
FINANCIAL RESERVES
Historically, reserve funds have always been considered to be ‘inappropriate’ for charities to divert revenue from services. Which is in direct contrast to sound financial steps businesses and individuals take. This makes no sense to me.
Charity watchdog organizations are major contributors to this belief and even though Charity Intelligence now reports positively on reserve status their early stance and the perspectives of others such as MoneySense’s annual ranking, have driven this into the psyche of Canadian donors. This is further promoted by various governments. In British Columbia charities that have reserves or surpluses are not eligible to receive revenues from provincially operated or licensed gaming resources. Canada Revenue Agency actually discourages reserves. Shouldn’t having operated your charitable organization in a way that allows for reserves be a positive, not a negative, when applying for accreditation?
From the Prime Minister’s Letter, reported by Imagine Canada:
“Most organizations do not carry significant cash reserves; for those that do, those reserves for the most part represent less than three months of operating capital.
Most organizations are not able to access emergency capital through lines of credit or bridging loans.
Fundraising, as well as fee-for-service programs, are at a virtual standstill, with programs, major events and canvasses cancelled across the country. Demand for charities’ and nonprofits’ services is countercyclical and as economic uncertainty and dislocation increase, organizations are facing increased demand for their essential services. Particularly affected are food banks, social service agencies, shelters, and organizations assisting seniors…
The result is a severe cash crisis that jeopardizes organizations’ ability to provide vital services. Should community-based organizations be unable to provide these essential services, it will increase the strain on already-stretched public service providers. The government recognized this last week, providing emergency support to shelters assisting the homeless and those fleeing domestic abuse situations.’
- Imagine Canada, Proposal to PM and Ministers, Bruce MacDonald, March 23 2020
To me, this is a structural deficit that leaves organizations unnecessarily vulnerable and is a no-brainer. Nonprofits should be allowed, and in fact, should be mandated to have reserves. End of.
From Impact Conversations - The Canadian Charitable Sector in COVID-19 and beyond:
“In this podcast, we connect with the Advisory Committee on the Charitable Sector, through its charitable sector co-chairs, Bruce MacDonald, President & CEO of Imagine Canada, and Hilary Pearson, former President of Philanthropic Foundations of Canada.
At 12:12 Hilary Pearson says (abbreviated):
‘We can see a number of structural weaknesses in the sector that have been exposed by the pandemic and by the lockdown and economic consequences. You can take not only the question of vulnerability to certain revenue streams, fundraising streams for example, but also the fact that in general a lot of organizations do not have reserves, and that is an ongoing structural problem in the sector both because donors think that charities should be spending every dollar they have on their programming and don’t like charities to put money into reserves. And because the government has also said that nonprofits should in general not be organizations that build up any kind of surplus. That is really problematic … because in an emergency there is no flexibility but long term … in the period after the emergency we will be in recession and will take a long time economically for us to recover and charities will be particularly vulnerable because of the lack of reserves...’”
- Impact Conversations Podcast, The Canadian Charitable Sector in Covd-19 and Beyond, May 28 2020
ROI / OVERHEAD
As my 92 year-old Dad likes to say “If I had a nickel for every time…” Well, Dad, if I had a nickel (maybe a loonie these days) for every time I heard someone say “I want to give you a donation but I don’t want any of it to go to salaries / admin / overhead…” I’d be retired by now. Just who do people think does the work? Provides the services? Physically take care of the sick, the indigent, the vulnerable, the children, the elderly?
In the time of COVID-19 the world’s attention is on front line workers. We laud them, we applaud them, we respect them and we see how important they are to society. Yet, consider this. A local human services organization keeps hitting a wall with its requests for additional funds reporting that…
“after much effort to complete COVID Emergency funder applications, only tangible items in support of clients and staff such as PPE, additional cleaning supplies, food service, digital equipment and recreational materials etc. were approved for funding. Additional salary for new staff was denied with the exception of one FTE. Only one funder has agreed to fund a wage top up for front line workers. We have also tried to embed an administrative cost to recover staffing resources for reporting, finance, fundraising and facilities with limited success. One government grant specified that the maximum rate for an administrative cost could be 1%!”
How does this possibly make sense? It simply doesn’t and needs to change.
How about a new ROI? Instead of a financial return on investment (donations), let’s change the narrative to discussing a social return on investment. I have always said that ROI stands for results, outcomes, impact. Using and talking about a social return on investment is an opportunity to align charitable purpose with business purpose.
Where social return is especially high is in the impact of mental health services, COVID-19 or not:
“A new study of Canadians highlights the negative mental health impact of the COVID-19 pandemic and underscores the need for continued awareness, education and support of mental health care in the workplace, especially during the current public health crisis. It also indicates that a growing number of employers are offering proactive mental health support, mirroring employees’ interest and comfort in virtual care options as part of their mental health and wellness. The study of 1,558 employees or those recently employed in Canada and the U.S. was conducted by Leger and commissioned by Teladoc Health (NYSE: TDOC) as a follow-up to the company’s 2019 international mental health study conducted last fall.
As a result of COVID-19, one in two respondents indicate their mental health has been negatively affected by the COVID-19 pandemic. The breakdown of this data shows:
• The negative impact on female respondents (57%) is far greater than male respondents (43%)
• 52% of respondents between the ages of 18-34 were negatively impacted
• This trend is similar to the U.S. where 49% of the same age group reported being negatively impacted. It is also consistent with findings from the fall study that revealed a greater need of support for this demographic
• Respondents over the age of 65, an age group that has been deemed most at risk for the virus, experienced the lowest reported negative impact in both Canada (37%) and the United States (38%).”
What if we could reduce those numbers through increased funding and support for organizations who work in the mental health arena? The cost to society (families, relationships, workplace, economic) is staggering. The historical lack of funding for these supports is being exacerbated by the current crisis.
The economic burden of mental illness in Canada is estimated at $51 billion per year. This includes health care costs, lost productivity, and reductions in health-related quality of life.
- CAMH, Mental Illness and Addiction: Facts and Statistics, as of May 11 2020
In 2014, Imagine Canada published a report Narrative Core Resource - The beginnings of a new discussion with Canadians about the charitable and nonprofit sector:
‘As the next step in our National Engagement Strategy, Imagine Canada is working with a broad cross section of organizations to create a new narrative about our role and contributions. The narrative will be foundational — consistent messaging that is relevant and adaptable to all our subsectors. A new narrative is also about finding ways to attract talent (paid staff and highly-skilled volunteers) and financial resources to serve Canadians in communities here and around the world.’
Our language of impact and return has not historically aligned with funders. The funder measures aren’t consistent with many of our measures. This crisis may be an opportunity to improve the synergy towards a New ROI!
Although 2014 is not that far behind us in the big picture, the new narrative is clearly still mostly undeveloped. Or we would not be where we are today. However, we are where we are — so let’s change the future, let’s shift the narrative at this critical juncture.
APPRECIATION
Appreciation for the role charities play in our society and making the world a livable place.
Let’s just consider the role of the arts. Who hasn’t turned to various online cultural offerings to brighten our days in the past 12 weeks? Yet, even in good times the arts are very underfunded across the board.
“With billions of people either in lockdown or on the front lines battling the COVID-19 pandemic, this first celebration of World Art Day is a timely reminder that ‘art has the power to unite and connect in times of crisis’, the head of the UN Educational, Scientific and Cultural Organization (UNESCO) said on Wednesday.
‘Bringing people together, inspiring, soothing and sharing: these are the powers of art, the importance of which has been made emphatically obvious during the COVID-19 pandemic’, Audrey Azoulay said in her message.”
“During the Spanish flu pandemic of 1918, New York theatres and cinemas stayed open but created a rotating schedule to spread out evening audiences. ….he also prioritized New York’s arts and entertainment. As he later wrote, keeping theatres open prevented citizens from “going mad on the subject of influenza.” He brought in regulations requiring theatres to regularly ventilate during off-hours. He closed smaller spaces and those deemed unsanitary, but worked hard to keep many of the city’s venues open throughout the crisis.” - the Globe and Mail.
Photo Credit: The New York Times.
“Amid the constant updates on the COVID-19 pandemic, Steven Soderbergh’s 2011 Contagion has become one of the most popular films streaming on Netflix. Soderbergh’s film eerily predicts the current situation and offers not only vivid descriptions of how a pandemic might happen, but also the comfort of a resolution. It’s no wonder that people turn to fictional stories to make sense of what is happening around them and to imagine a peaceful conclusion.
Historically, the arts have always played this role. From Indigenous storytelling traditions across the world to contemporary media, humans rely on artistic representations to make sense of life’s constant changes. This is especially true in challenging times.”
And yet, it’s the arts and culture organizations, especially the smaller ones, which are often underfunded and which have been decimated, that we are turning to right now. Some of them will never recover. There’s an enormous cost for this — to the artists and to society.
This could be the time to change that — to ensure that our arts organizations and our artists, many of whom live financially challenging lives because of a lack of appreciation and funding, are rightly rewarded for the work they do. I’ve heard in Canada it’s nigh impossible to make a living as a writer. Sales of 5,000 is considered a “bestseller” — at a few dollars on the shelf price in royalties, clearly no one is in it for the money.
Why shouldn’t they have the same opportunity for quality of life that the rest of us do?
This is an important one for me — I love ballet, opera, musicals and jazz. As advocates for these organizations and their people, we need to keep the story of the arts and their importance during this time alive and take advantage of it.
Please share your ideas for how to implement change in the nonprofit world. What ideas do you have? What would you like to see change?
At ViTreo Group, we are here to help. We would be happy to discuss solutions for your organizational goals. Contact us by email info@vitreogroup.ca or call us at 403-210-3157.
At the end of a three-part series on philanthropy and fundraising in this new landscape we now inhabit, let’s consider this is an opportune time to effect change. Let’s do this, together (at a distance of six feet, of course)! We must band together to achieve these outcomes.
Next week’s blog will focus on the Role of the Board during this time. As part of ViTreo’s Fundraising Ask Anything ongoing Zoom call series, I presented on this topic to about 70 people from around 50 organizations. We also had invited a few guests such as
Eva Friesen, President and CEO, Calgary Foundation
Sharilyn Hale, President, Watermark Philanthropic Counsel
Jeff Loomis, Executive Director, Momentum
Sue Tomney, CEO, YW Calgary
to add their thoughts before we went on to answer questions and further discussion.
Stay safe and stay healthy!
We are hosting a series of Fundraising Ask Anything Events where you can connect and ask questions of your peers and the ViTreo team. Learn more and register here.
ABOUT THE AUTHOR
Andrea McManus, Chair, Board of Directors, Partner
ViTreo Group Inc
Andrea McManus is a Partner with ViTreo with over 30 years’ experience in fund development, marketing, sponsorship and nonprofit management. A highly strategic thinker and change maker, Andrea has worked with organizations that span the nonprofit sector with particular focus on building long-term and sustainable capacity.