The cost of fundraising question

Dan Pallotta presented a great, energetic and motivating session today arguing that charities are put on an unfair playing field for competing for people's hearts, minds and wallets. He argues that we pay our people too little, aren't allowed to advertise (fundraise) by spending money, can't take a long term view and must not take a risk, since failure of a campaign in the charity world is not acceptable. None of these restrictions apply to companies.

The issue of most interest to the fundraising conference attendees seems to be cost of fundraising. The simplicity of the question 'how much of my dollar goes straight to the cause?' is tempting and easy for journalists to pick up on. If a lot of thought is not put into it, it is a fair enough question. But it doesn't take emuch thought or information to realize it is practically irrelevant.

A more important question is 'what impact will my donation have?' But the answer to that is not simple. Fundraising is not simple, nor is it fair. It is easier for certain causes to make money than others. Think kids with cancer versus rehabilating young offenders.

Dan was advocating a public program to establish 'overhead' as a good thing - after all, a charity with really low overhead is less likely than one with a higher overhead to have correctly trained and paid staff, proper legal advice, computers, Licences software, accountants, HR policies, outcome measurements etc. Doing things right costs money.

Explaining this to the public will be hard, and maybe we should take it on (despite the huge overhead burden it would add to our costs!) But we need to get our own houses in order first.

Within our own sector, there are many, many board members, finance people and CEOs plus a not insignificant number of fundraisers who buy into the simplicity of the cost of fundraising myth. Dan showed one charity proudly displaying then fact that 100% of your donation goes to the cause.

According to a local radio station, the Lord Mayor of Melbourne recently came out and said F2F should be banned in Melbourne. He is the chair of a large fundraising organisation and he doesn't get it. How can inform the public when our own leaders are so badly informed?

Before we try to explain this issue to the public we need to make sure these non-fundraising bosses of fundraising organisations really understand it.

Sean