Why Charities Are Doomed

This is a speech I made in February 2012.

I wish I could tell you that charities are doomed because they will no longer be needed. I would love to tell you poverty will be history, unnecessary disease and death will be eliminated, there will be a cure for cancer and AIDS, and that all of the problems charities work so hard to fix will be eradicated.

Unfortunately, that’s not the case. While I do think all these problems can and will be fixed, if we continue down the path we are on charities will not be the ones responsible.

Instead, charities are doomed. They are doomed because of the restrictions we put on them, and because of their competition.

We restrict charities by telling them they cannot operate like a business and this attitude is strangling them. Let’s think about it...

Firstly, we tell charities they can’t spend money on advertising and marketing, or they must rely on free ad space or can only spend minimal amounts. But why? Businesses spend on advertising because it works. Pepsi, Apple, Microsoft, these organisations built their empires through advertising. You might not like to admit it but charities are competing for the money we spend on these products, and yet we tell them they can’t spend money trying to secure it. As a result they lose out.

Secondly, we tell charities they shouldn’t spend money on wages, and certainly not high salaries. Charity sector chief executives earn on average 18% lower than their private sector counterparts. Charities are often not able to attract the best and brightest minds because these people can earn so much more working in the private sector.

The Irish Examiner recently ran an article criticising charities for paying their CEOs more than €100k. Now think of some of the most brilliant business minds of our time - the Bill Gates, the Steve Jobs, the Warren Buffets - would it be unreasonable to pay them more than €100k to run a charity? I don’t think so - they would do amazing things. Steve Jobs was making millions through stock and expenses - the company bought him a $90 million dollar jet. Do you think his board and do you think the public criticised that move as a waste of money? Of course not...look what he did for the company.

I’m not saying paying someone over €100k is acceptable or should be encouraged - but if we’re going to allow it in the private sector we need to allow it in the charity sector. Otherwise we put these amazing charities at a disadvantage.

Finally, we tell charities that they cannot spend more than 10% on overheads. Nonsense. Let’s simplify it - a really basic example. Imagine I work in a small charity and I spend hours every week putting letters in to envelopes. I get paid for this, albeit my wage falls in to that acceptable 10%. Now imagine we wanted to buy a machine that could put all these letters in to envelopes quickly. It’s going to cost me thousands for the machine, but for years afterwards it’s going to save us time and money. A business would look at that and ask how quickly will it pay for itself and if it makes sense it will buy that machine. A charity however will not – because every year they have to deliver a financial report showing their overheads are minimal.

Not only are these restrictions holding charities back, but their competition is gaining ground and eventually will overtake them.

Who is their competition? Profit making corporations.

We are at a point where profitable companies are making numerous donations to charities throughout the world. But these companies are demanding more and more from their donations - more recognition, more involvement, more say in how this money is used. We are at a tipping point where very soon these companies will take full control of the charitable work they pay for by absorbing it fully in to their company.

Think about this - why would someone like Google continue to make donations to a charity that provides computers to schools in developing countries? Why would Google not make a direct connection with these schools? They’ll have full control over how the computers are distributed, full control over how this gesture is marketed - they’ll do it more efficiently and more effectively because they don’t have the restrictions we place on charities.

How about someone like Specsavers? Rather than their charitable work being merely donations it is only a matter of time before they do the ground work themselves. Why would Specsavers continue to make charitable donations when they could instead have a division of their organisation that works to cure unnecessary blindness themselves?

If we continue down the path we’re on it will happen, and the number one reason it will happen is because of the huge benefit these profit making companies will derive.

If Google provides computers to developing schools what browser and search engine will these schools use? Googles - they would have grown their own customer base. If Specsavers cures your blindness (and 80% of blindness is curable) who are you going to buy your glasses from for the rest of your life? Nike will help people to walk so they buy more shoes. SherryFitzgerald will house the homeless until they are in a position to pay rent. Pharmaceutical companies already pump millions in to researching cancer and AIDS - not because they are selfless but because a cure will make them the most successful company in the world.

We will save your life but you will be a loyal customer for the rest of that life. THE most loyal customer.

It makes sense for profit making companies to tackle world issues directly and because of the restrictions we put on charities they will do it better. Charities are doomed. The question you need to ask yourself - is that a bad thing?

We live in a market economy where the most cost-effective businesses survive and thrive. If charities can’t compete then why do we care? If businesses do more good work, do better work and more of the worlds problems are fixed then why do we care?

Or do you believe businesses are greedy and unethical? Do you believe charities do their good work selflessly? If that’s the case then we need charities to survive, and thrive. So let's let them.

Why couldn’t a charity have created Facebook, the iPod, Coke? Imagine! Instead of profits for shareholders these things were funding life changing projects?

We need to allow charities to excel by allowing them to be competitive. We need to stop choking them - allow them to be run like a business, advertise like a business, pay like a business and compete with businesses.

Only then will we eradicate the world’s problems.

Chuggers in the Media

This was originally posted on the Total Fundraising website on 24th February 2012.

I started my professional fundraising career as a chugger a good few years ago in Melbourne, Australia when I was on a working holiday visa and needed the money. I hadn’t been aware that you could work for a charity and get paid and to me it seemed like the best of both worlds.

It was a tough job but I enjoyed it. Everyone I worked with was quirky, friendly and cared passionately about the various causes we worked with. Our Manager was amazing and now runs his own charity. Our Trainer was one of the most inspirational people I’ve ever met – I pretty much fell in love with her and that pretty much went nowhere.

It was possibly the best job I ever had and one of the most difficult and lowest paid jobs I ever had. But it had a big impact on me – I remember many of the people I signed up nearly 10 years ago. The first person I ever signed up was a middle-aged women who had never heard of the charity I represented but wanted to help. I noticed she had pieces of hair around her ears and I guessed (correctly) that she had just gotten a haircut, which I complimented her on. Some might call this an ‘underhanded technique’, but I genuinely meant it and it was a good icebreaker as nobody wants a conversation to start, “Hi, there are over 10 million refugees in the world.”

I worked for, and now own, a fundraising agency because I care for each of the individual causes and do not want to work for one specific charity. I am passionate about international development, unnecessary blindness, children’s rights, dogs and cats, and more – as I know many people are. When I started my career as a chugger nearly 10 years ago I fundraised for refugees, children with disabilities and the conservation of Australian wildlife. I was trained on each of these and desperately wanted to make a difference in all of these.

I was a paid member of staff, and at times I was criticised for being paid. Even now we as fundraisers and other charity workers are criticised for being paid.

But by being paid it allows me to donate 50-60 hours of my week running a business that generates tens of millions of Euro a year to Irish charities. If I was not paid I could not and would not do this and it would be unreasonable for anyone to expect me to do so. It is unreasonable to expect all charity staff to be volunteers. And it’s patronising to charities to say they should not be paying for services or paying competitive salaries to attract decent staff.

A few years ago I volunteered for about a year for the telephone helpline of a children’s charity. I was surprised to see that quite often volunteers did not turn up and sometimes did not even notify their manager that they weren’t going to.

I believe in volunteering, but I also believe in paying full-time and part-time staff. I am happy to pay some of my staff bonuses or ‘performance related pay’. In any business I believe people that excel at their job should be paid more.

One point that is often made is that there is no regulation. It especially scares me when politicians say this. This is incorrect. There is regulation – there is self-regulation and a code of conduct that has been in place for years and there is the 2007 Charities Bill whose implementation has been delayed due to the current economic problems, but we still abide by it. We want this Charities Bill implemented and I’d like to see more politicians pushing this as that is a constructive way to improve the sector. We want better regulation. It’s absolutely necessary, but it will also benefit us all because it will give the public more confidence in charities and in their donations.

It scares me when politicians say there is no regulation on chugging because it shows that they have little knowledge of what their government are doing. It scares me when politicians choose to make ill-informed press releases or go on radio chat shows before even attempting to engage anyone in a dialogue.

Despite regulation and the codes of conduct in place, problems will still occur. Our staff have literally thousands of conversations a day and, like any business, sometimes one of our staff steps out of line or behaves inappropriately. While our management monitors the staff closely and we ‘mystery shop’ and we get feedback from our welcome calls, like any business we still rely on feedback from the public.

What always surprises me is how few complaints we get and how few complaints the charities get. When I tell people what I do they occasionally tell me their own horror story of how a chugger grabbed a phone out of their hands, chased them up the street or told them to “F*** Off”. I always ask what happened when they reported it to the charity or the agency and almost always they tell me they didn’t report it. They tell their friends, but they don’t tell anyone who can do anything about it.

Imagine you were sitting in a restaurant and the waiter told you to “F*** Off”. You would tell the management, of course. But for some reason this doesn’t apply to chuggers. I don’t know why.

We always deal with credible complaints we receive. Where the fundraiser admits misconduct it generally ends in termination of their employment. Where they deny it we respect the rights of our staff and allow them to continue (with permission from the charity) while keeping a close eye on them. If we receive multiple complaints about one individual that can’t be proved we assume there is some truth there and it generally results in a disciplinary or termination of employment. Almost without exception, every complaint we have received has been resolved to the satisfaction of the complainant, the charity and ourselves.

Hugging is not allowed. If someone on the street (or any place of business) tried to hug me I would get their name, phone their employer and complain.

Blocking paths is not allowed, but sometimes happens accidentally – if you stand still in Dublin city centre eventually you get in someone’s way. If you take a photo of someone on crutches walking near a fundraiser it might appear as someone blocking the path of someone using crutches (although I don’t really see the relevance of the crutches?).

Shaking hands is allowed. Whenever I meet someone new I shake their hand. If they didn’t want to shake my hand then presumably they wouldn’t shake it.

There are restrictions on where we work, and we work closely with other organisations and charities to ensure we don’t work on the same streets and that areas are properly rested. We have been doing this for years – some areas of the UK are only just starting these rest periods and this story has gained a bit of attention. But Ireland has been doing it for years.

I think the Twitter account @Chuggerwatch is a great idea, albeit a little unnecessary. Where we work is not a secret – we try to tweet it ourselves each morning. Where each charity is booked to work each day should be information that is easily accessible to the public. If we ever forget to tweet where we are then please just ask me.

As an agency we also get criticised for ‘profiting’ from charity. We generated tens of millions of Euro for charity last year and we made about €5000 profit (to be finalised).

But by being a profitable company we can also build new and innovative ways for charities to raise money. For example, we used some of our income to develop and launch the website Sponsor.ie, which allows members of the public to fundraise in a cool way and allows small charities to accept donations on-line and get a webpage with no set-up costs. We also used some of our income to develop GiftCall, an alternative landline telephone service where a percentage of your call costs goes to charity at no extra cost to you or the charity.

Currently Sponsor.ie and GiftCall are losing money. It will be years until they’re profitable, and when they are we’ll probably put that money back in to developing the next way for charities to generate funds.

I love fundraising for charities. And I love each and every charity we work with. I’m currently working against the government’s proposed cuts in charity donation tax relief (which has received almost zero media coverage). I voluntarily give seminars on recruiting and retaining regular donors. I will continue to personally fundraise for Leukaemia related charities. I work hard to improve charitable fundraising and improve the sector. I believe anyone I have dealt with on a professional level will account for that. The only time I’m aware of falling out with a charity was when I insisted they take part in the voluntary site regulations and they refused.

You need to be aware that many, many people are ‘profiting’ from charity. When a charity buys their stationery, pays their rent, buys their tea and coffee and makes a phone call someone is profiting. But that someone is also paying wages and providing jobs. And their profit? They spend that money on all sorts of things, pumping money back in to the Irish economy.

Charity fundraising is the fairest tax there is.

You choose if you donate or not. You choose where your money goes.

The Irish government has already shown that they cannot or will not implement a fair tax system. And within the taxes you and I pay we are funding projects and payments that we do not wish to fund.

That’s why I love charity. I choose how much I give and I choose who I give to and the projects I care about in Ireland and abroad get funded. If I can’t afford it or I don’t want to I just say no. Charity fundraising is the fairest tax there is.

I don’t like being asked for money. I don’t like TV ads. I don’t like junk mail. I hate how every day I get about 3 delivery menus in my letterbox. Except when I want a menu – when I want to order take-away then I want a delivery menu in my letterbox and it’s extremely convenient.

And that’s why chugging works – because it’s extremely convenient. The majority of people you speak to have been ‘meaning to do something like this for ages’. Or they have a reason that they didn’t do it in the past, eg. Because the charity’s CEO allegedly earns too much, because of some alleged scandal in the past, because they don’t want to give out their bank details, because they’ve never heard of the charity, etc. The beauty of chugging, and its advantage over advertising and mailings, is that it’s a two-way conversation. We can talk through your concerns, we can answer your questions, we can help you make a decision. If you decide you don’t want to do it then you walk away.

Chugging, or Street Fundraising, is one of the most cost-effective forms of fundraising that exists. To say you will not donate to a charity because they use Street Fundraising is a shame because essentially you are saying you will not donate to a charity that is using your donation wisely.

I understand the criticisms of chugging. I think they can be addressed through simply ignoring chuggers or saying ‘No’ or complaining to the appropriate bodies. Chugging will continue to be criticised but what I never hear is a practical alternative.

I wonder sometimes will chugging one day be banned. Or, more likely, will there one day no longer be a need for it. Instead our children will look back and wonder why there weren't more people out on streets campaigning, looking for support, and asking for money towards ending poverty and delivering basic human rights. History will absolve them.

If chugging was banned tomorrow you would see the number of new, regular donors to charities diminish by much more than half. Charities’ incomes would decrease accordingly. The services they can provide would decrease. The number of staff they can employ would decrease. Nobody would step in to fill that void.

But I have the solution…

If everyone went and set up Standing Orders donating monthly directly to their favourite charities then these amazing organisations will have all the funding they need. They will no longer need to spend money on fundraising, on advertising or on agencies. Chuggers won’t be needed. You will never be asked for money again. Total Fundraising won’t be needed. We’ll terminate the employment of our nearly 100 staff. I will go home to my fiancé and my baby and I will start looking for another job. And I’ll be happy, because I live in a country where every charity is fully funded.

Proposed Amendments to the Tax Relief for Donations to Charities

This was originally posted on Sponsor.ie on February 9th 2012.

I read via Fundraising Ireland yesterday that the ICTR has made a major breakthrough on charitable donations tax relief. The government proposal would see a blanket rate of tax relief of “around 30%” and that the benefit of all tax reliefs would now go to the charity, i.e. self-assessed individuals would no longer receive the benefit themselves.

So far the reaction to this news has been positive but, ever the cynic, I feel it’s important to look at both sides of it and make sure we know what we’re getting ourselves in to. You have to remember that the government are trying to increase tax revenue in all areas and have been making some pretty harsh cuts recently…so why this act of benevolence?

The current rules require individuals to donate over €250 in a calendar year before their donation can even be considered for tax relief. The charity must then ensure the individual signs a CHY2 Cert giving their permission for the charity to claim their tax back. The number of individuals who meet the criteria and also sign and return their form is disappointingly low due to a lack of understanding by many donors, a lack of resources by charities, and simple inertia of donors.

The Irish government has successfully set up a tax relief scheme that ensures the amounts paid out to charities are far lower than it could or should be. Compare it to the UK where ‘GiftAid’ allows a charity to claim relief on every single pound and permission can be sought from donors at the time of their donation. That’s a huge difference.

So let’s look at the proposed changes and the possible issues…

Firstly, the proposed composite rate: at the moment it’s said to be a delightfully vague “around 30%”. The Report of the Commission on Taxation proposed 20%!

20%?!

This doesn’t sound like the proposal of someone that is attempting to “support fundraising initiatives”.

Last year our tax relief campaigns saw 45% of people who return their CHY2 Certs at the higher rate of tax. If we assumed this was the current rate across the board and always will be then we would need to see a composite rate of between 31% and 32% to be fair.

The ICTR are proposing 33%. Fantastic. Love the ICTR. They know what they’re doing – this would be an improvement for all of our charity partners.

But anything less than 31% and essentially what we’re doing is reducing the amount of tax relief charities can claim. Not good, is it?

Suddenly the words “around 30%” are significantly more important. Our definition of “around 30%” and the government’s definition of “around 30%” are very different. It reminds me of the time a tour guide told me there was around a 20% chance of rain…while it was raining.

Secondly, charities receiving all tax relief from self-assessed individuals’ donations would be amazing and a huge injection…I think.

But what about the other side?

Let’s look at one of our fundraising campaigns from last year where we recruited just over 2000 donors for one charity. 5% of those donors were self-assessed for tax purposes (this campaign was slightly lower than our overall average).

Now, the average gift of self-assessed donors was €16.50 per month while the average gift of everyone else was only €15.39.

And what about attrition? A PAYE donor is much more likely to cancel than a self-assessed donor, because in real terms their donation is costing them more. Where 35% of your donors might cancel in the next year, you might find only 20% of your self-assessed donors cancel.

The tax relief these self-assessed donors receive personally is an incentive to keep donating and to donate more. By removing that incentive we will see donor retention decrease and average donations decrease.

But surely the benefit will outweigh the cost?

Perhaps not when you consider that a number of charities receive less than 30% of the CHY2 Certs that they send out (due to poor data, no resources for follow-ups, etc. – we can help! Sales pitch!). A number of smaller charities don’t even send out CHY2 Certs. So it’s not a huge stretch of the imagination to think that, actually, perhaps we need to keep this incentive to the self-assessed so they will continue to support us.

But the ICTR are a smart organisation. They have undoubtedly looked at the stats and know what they’re doing. The problem is that there aren’t that many stats out there. So it’s important you look at your own organisation’s figures and that you do it before May 2012 – the closing date for the receipt of submissions.

Let’s be sure this is what we want.

Regardless of what happens it’s fantastic to see the government talking about it and the ICTR continuing to do great work. Only through this united front will the regulations on charitable donation tax relief continue to change until the point that charities receive the full relief on every single donation.

Change Fundraising

With the changes in fundraising (and sometimes the lack of changes in fundraising) there are more and more instances where I feel the need to respond.

As one of the Directors of Total Fundraising my responses have so far been through the company, but sometimes that's not entirely appropriate. Being only one of four Directors my views do not necessarily reflect the views of the company.

So here we go.

My views.