The Problem With Dan Pallotta

I love Dan Pallotta...obviously.

I first read 'Uncharitable' a few years ago and it had a big impact. It didn't change my life or the way I think, but for the first time I had read someone successfully vocalising what a lot of us had been thinking. He says it better than we ever could. I went on to support his Charity Defense (sic of American spelling) Council and I was delighted to see his recent TED Talk get over a million views and counting. He upstaged Bono.

Dan Pallotta's TED Talk should be required viewing for you,

your staff, your board, your donors, your friends...

Whatever you think of Dan Pallotta and his history and his motivations you can't deny that he has brought a fantastic and important argument to the masses.

But...I believe there is one glaring problem with his argument and a single barrier preventing support from the general public.

When he speaks of the salary difference between the private sector and the charity sector he loses people. He loses people because he's talking about a $400,000 salary compared to a $232,658 salary compared to a $84,028 salary.

The average salary in Ireland is less than €40,000 (less than $50,000) but the majority of the people watching this video, supporting your charity, reading the newspapers, browsing the internet earn less than that. Most of the service staff you deal with in your day to day life are probably on about €20,000 per year. He quotes Business Week while people watching read The Daily Mail.

So when you suggest to people that it's unfair that someone only earns $84k and that they should be allowed to earn more you will almost certainly, instantly lose their support.

The correct argument is of course that nobody should be earning $400,000 or $232,000 or anything near that while there are still people suffering for no reason, people still blind because they can't afford a simple operation and children withering away and dying because they can't afford medication that is over there in that room next to them.

But strangely enough, the people who live on minimum or low wages don't seem to have a problem with the private sector earning these huge wages and being charged inflated prices on everything to pay the salaries of these high earners.

Well, hey...that's just the world we live in.

The Opposite Of A Careerist

Recently, someone named Gina Miller called people like me a 'Careerist'. She explained that people like me "are not necessarily passionate about the organisations that they are involved with, but switch casually from charity to charity." More than that, a good salary is what seems to drive people like me.

I started thinking what the opposite of a careerist is, and I think it's:

• Someone who can only care about one cause - you can not possibly care about animal rights, the environment, lifting people out of poverty AND keeping children safe.
• Someone who makes their money through other means, such as drilling for oil, selling fizzy drinks, letting out property or managing other people's funds. They do not devote their full-time to the charity sector.
• Someone who is not driven to succeed, to progress their career, or to earn more money.
• Someone who misleads the public by saying 100% of your donations goes to helping others.

The Telegraph might call someone like this a philanthropist. But I think we can come up with a better name.

Stream of Blog Titles

These would make good fundraising blog titles. You can have them:

• "Why your fundraising should be more like Jefferson Airplane and less like Jefferson Starship"
• "Scratchcards - You're The Only One That Hates Them"
• "Taking the 'Fun' Out Of The Phrase 'Put The Fun In Fundraising'"
• "Forget On-line Fundraising - Be like Kings of Convenience and Get Back To Basics"
• "Why being a donor is like being a gym member"
• "What if Dylan wrote copy"
• "Managing Your Major Donors In The Same Way You Feed A Toddler"
• "Stop Reading Blogs, Start Asking For Money"
• "What You Can Learn About Fundraising From Fundraising Blogs"

A Look Back At Irish Fundraising In 2012

Here's my Top 10 Irish Fundraising News Stories of 2012:

Changes in Charitable Donation Tax Relief
After a very-welcome public consultation, it was announced that 2013 would see a change in how charities claim back tax on donations over €250. Although the increase in relief from self-assessed donors was generally welcome, the sector braced itself for a drop-off of donors. The new composite rate of tax relief was met with mixed feelings dependent on the structure of your own donor base.

Fundraising Ireland Gets a CEO, launches Certificate in Fundraising
Anne Hanniffy joined Fundraising Ireland as its first CEO. The organisation continued to grow, focusing on training, with the launch of Ireland's first Certificate in Fundraising and a high quality annual conference. It will be interesting to see which way they move in 2013 and will they begin to tackle the Irish public's perception of charitable fundraising.

INKEx Goes Into Liquidation
After funding was pulled without notice, INKEx was forced to cease trading. It was the "The first-ever and only comprehensive data repository for the non-profit sector" and the loss meant a step back for Ireland in terms of having real data on the sector. However, organisations such as The Wheel and Fundraising Ireland started to fill the gap by continuing and building upon some pretty good surveys and research, with some great reports published in 2012.

'Chuggers' Go Digital
After an initial trial in 2011, street and door-to-door fundraisers began to make the switch from paper direct debit forms to electronic tablet forms.

Barnardos Closes For A Week
Some cynics called it a clever marketing ploy, but Barnardos was forced to shut up shop for a week in 2012 in an effort to cut costs. It later emerged they would be doing the same in 2013.

Ulster Bank enables charitable donations at ATMs
ATM giving finally came to Ireland, but you had to be an Ulster Bank customer at an Ulster Bank machine. The roll-out will be slow, but other banks will follow suit and this will become a noticeable source of income for the big 10.

John O'Shea Leaves GOAL
After a bit of a kerfuffle, John O'Shea stepped down as CEO of GOAL. Renowned for their low investment in fundraising due to O'Shea's personal dislike of it, the change paved the way to a potential shake up of how they run things.

2into3 Begin Recruiting For 6 Fundraising Staff At €70k
2into3 began to recruit for "seven new high level fundraising roles" as part of the RAISE pilot. At a salary of €70,000 per year, the fundraising community collectively spat out their tea and scrambled to hide the ad from their own staff.

Irish Charities Expo Flops
The first ever Charity Expo left a number of charities unhappy, feeling it was a waste of money and time. You can read my thoughts here.

Legacies Get Big
Irish Cancer Society and Barretstown both received huge legacy gifts in 2012. With the help of these and others, as well as the growth of MyLegacy, leaving money to charity in your will began to get some real media coverage.


What am I missing?

The People Vs. Angela Kerins

Criticism

Angela Kerins is getting a rough time, isn't she?

Every once in a while certain newspapers and social media kick off condemning the Rehab CEO's salary. The criticisms are based on her salary being deemed too high for a charity, and out of control for an organisation that is partly funded by the State.

I always take great interest in this recycled story because I think it highlights some of the hypocrisy the charity sector experiences every day and it reaffirms for me that charities are in trouble.

Now, Angela Kerins is an impressive person. She started her career as a midwife and worked her way in to the position of CEO at the multinational Rehab, as well as sitting on boards such as the Equality Authority, the National Learning Network, the National Disability Authority, and the Broadcasting Commission of Ireland. She commands an impressive fee, she works hard and she is powerful. Whatever you think about her policies and politics I hope you will agree that it is positive to see an Irish female hold these positions. Remember, Ireland is still a country where women's earnings are not yet comparable to men's, and the level of women in managerial positions still pales in comparison to many countries.

Science

But let's look at some of the figures being thrown around:

Ms Kerins is primarily criticised for earning €234,000 from her role as CEO of Rehab. But I'm going to go out on a limb here and say that isn't a whole lot of money. Remember Rehab employs over 3,300 people internationally[1] - this is a seriously big organisation with Ms Kerins shouldering a lot of responsibility. Compare this to the 'private' sector: A simple search for similar size companies brought me to XL Group, a private company employing a similar number of people. The CEOs pay? Approximately €7.5 million annually. That is some difference. But because Rehab is a 'charity' a salary at even a fraction of this is considered too high.

But what should she be on then? The people who usually pipe up to complain about charity wages usually cite €100,000 as the cut-off - anything beyond that is unnecessarily high. This doesn't make sense to me for a number of reasons, but even on a practical level you have to acknowledge that a manager needs to earn more than her subordinates. An organisation of the size of Rehab is probably going to have at least 8 levels...that doesn't leave much room to go down. Or maybe it does? What's your suggestion?

Now, let me be clear here...I do not condone a €200k salary or a €7.5 million salary. Frankly, the sooner we get rid of money altogether the better. I'm fine with that, but it's not going to happen anytime soon. My point is that if we're going to allow something in the private sector we need to allow it in the charity sector or we're just going to end of strangling and destroying it.

The most recent media coverage on the subject was lead by Cormac McQuinn who ran four articles on the subject over two days.[2][3][4][5] These were pure entertainment.

Audi Q5

The article derided Ms Kerins for driving an Audi. I can't really argue this - if someone cuts me up in traffic they're generally driving an Audi. But if you're implying that she is doing something wrong by spending money on this car, which starts at €40,395, then I'm going to take exception to that. For a start I bought a brand new Kia Sportage last year - pricey enough, and potentially frowned upon since I work in the charity sector. But hey, I bought it with the inheritance I got when my Dad died. Incidentally, he was a banker.

I know what you're thinking - the organisation pays for this car. But remember Ms Kerins pays BIK on it. And it's part of her package, so if you're not going to give her a car you're just going to end up paying her more cash.

So let's not be so quick to judge. In addition, I don't spend my money on drink or drugs or cigarettes or clothes or jewellery or any of the other vices that I think are pointless. I spend my money on signed first edition books and ridiculous Kickstarter projects and getting an extension and all sorts of other stuff that you probably think is pointless. Each to their own.

Leafiness

The other flippant remark was that Ms Kerins lives in a leafy suburb. I live in a leafy suburb too: East Wall. Cleaning up leaves wrecks my head. Someone got shot there a few years ago.

Disaster

The other laughable element was the sub-headline 'Disaster' dropped casually in to the article as if to give a real sinister undertone. The full quote, which they plucked this word from, was "More than 12 causes benefited in areas such as disaster relief, disability and suicide prevention." A bit misleading, isn't it?

Politicians

As I write this the 'scandal' is beginning to get picked up and piggybacked by politicians. Senator Fidelma Healy Eames issued a press release[6] suggesting Ms Kerins and the Board of Rehab be summoned before the Oireachtas Public Accounts Committee to justify this salary. Given what we know about the salary compared to other organisations of a comparable size I think this would be an embarrassing exercise. But sure, yeh let's get them in and see what happens.

The good Senator goes on to point out that "20 disabled people" were made redundant this year and that the State gives Rehab €36 million per year.

What the press release omits is that Rehab also announced they're creating 400 jobs in Ireland over the next 3 years.[7][8] It also fails to mention that Rehab's turnover is nearly €200 million, the majority of which came from private fundraising and commercial ventures. The State contribute to the organisation because they provide such massive employment and amazing services to the community - services the government are unable to provide. In the process of this they, and Ms Kerins, pay huge amounts of tax which go towards paying for my healthcare, my roads, my community centre and more. If you cut this funding then Rehab cuts it services and the government are forced to step in and replace their services - probably less efficiently.

This all just strikes me as another case where a politicians 'outrage' is dealt with by issuing press releases and calling radio stations as opposed to attempting to engage with the people involved to understand and address the situation. It's easy to criticise and lash out at something without investigating the facts. Senator Healy Eames was a victim of this recently with the 'train fare scandal'. It's not fair. It's lazy churnalism. Let's stop doing that.

On a side note, here's details of what Irish Senators and other policiticans are entitled to: http://namawinelake.wordpress.com/2012/02/18/how-much-do-irish-politicians-get-paid-part-1-of-2/

Upsetting

I was engaged with another charity who expressed their sadness at her salary as their own overall income was less than this. But let's remember that this is a much smaller charity who employ 4 people, compared to 3300 people in Rehab.

I wanted to compare the two organisations' finances further, but the smaller charity doesn't make their numbers public and there are no finances or accounts published on their website. And it struck me that Rehab are being penalised for being more transparent[9], which is a sad, sad thing. This is the problem, and this is why I hate the concept of admin costs and why more charities need to be more transparent.

Charity

When you weigh this all up I find it hard to find fault with Rehab or Angela Kerins. The truth is that the argument simply falls back on the perception that charities should not pay their staff a comparable amount to the private sector. But I don't buy that. Instead, it all boils down to this word 'charity' which holds back an amazing organisation like Rehab. We find ourselves wasting newspaper space, our politicians' time and our own time writing and reading stupid blogs.

But I've said it before and I'll say it again: Charity is the fairest tax there is. You choose whether you donate or not, you choose how much and you choose who benefits. If you don't agree with how an organisation is run then don't contribute or stipulate exactly what area your donation is spent on. But we need to spend money on salaries. We need to invest in the people who run these amazing organisations. We have to invest in these charities.

If I told you Rehab was a Social Enterprise and not a Charity would that change things? Yes, I think it would.

You would have a successful Social Enterprise that employs 3,300+ people (many with disabilities), that is profitable even in times of recession, that is growing and providing more jobs in Ireland at a time when we badly need it. You would have Angela Kerins, a successful Irish business woman who is willing to work well for a salary well below the industry standard because what she is doing is good. She offers her time to many boards and bodies and donates her fees back to worthwhile causes. She would be applauded.

And the charities of the world?

Well, they would be extinct.

References
[1] http://www.rehab.ie/about/index.aspx
[2] http://www.independent.ie/national-news/audidriving-charity-chief-executive-on-a-salary-of-234000-3282210.html
[3] http://www.independent.ie/national-news/charity-boss-paid-220000-in-fees-for-sitting-on-state-quangos-3282190.html
[4] http://www.independent.ie/national-news/fees-angela-kerins-got-from-boards-3282217.html
[5] http://www.independent.ie/national-news/call-for-dail-to-quiz-boss-of-charity-on-234000-pay-3285219.html
[6] http://fidelmahealyeames.ie/2012/11/05/healy-eames-calls-for-rehab-to-appear-before-pac-to-discuss-ceo-salary/
[7] http://www.rte.ie/news/2012/0516/400-jobs-promised-in-rehab-group-recruitment-drive.html
[8] http://www.independent.ie/national-news/rehab-to-take-on-400-staff-in-expansion-of-disability-services-3110833.html
[9] http://www.rehab.ie/about/annualreport.aspx

Predictions for Irish Fundraising in 2013

2013 is going to be great. Here are some of the changes I think we're going to see:


Mobile Donations Become More Accessible
Mobile donations are not growing in Ireland because they are expensive to set up and only 40%-60% is getting to the charity. There are other problems, such as donor data not being passed on to the charities (which could then be used to greatly increase return).

We've tried to change this by reducing the upfront costs to charities and by eliminating monthly fees, but the real problem is still the amount the mobile providers are taking. This will be reduced massively in 2013 and more and more charities will begin to accept SMS donations. It will be slow, but 2013 will pave the way to huge growth in 2014.


Charity Review Websites
Websites which allow the public to review charities in the style of TripAdvisor and Yelp will begin to appear internationally, with someone launching an Irish one in 2013. Who launches the first one will make a huge difference to how this affects Irish charities.

If it is launched by a random member of the public it will be terrible, with a focus on what percentage of donations goes on 'admin'. (Read this blog post for why that's useless). Here's another reason why they will suck: http://youtu.be/QEdXhH97Z7E

If it is launched by an individual or organisation within the sector it will give useful information on where they get their income, what results they deliver, if they are signed up to Governance Codes and Codes of Practice, as well as public reviews. If you want to have a chat about how we can set this up then please e-mail me.


Changes in Tax Relief Rules
The proposed changes in tax relief will come in to effect for donors giving more than €250 in the calendar year. This won't have any impact on relief claimed next year as none of the pre-2012 donations will be eligible.

However, the changes will have a negative impact on charity income. Because self-assessed donors will no longer be able to claim back tax relief themselves it means the amount they donate will decrease. This should be more than compensated for in 2014 and beyond (as we begin to claim the relief) but I'm afraid in 2013 it means a decline in income.


Competiveness of On-Line Fundraising Sites Benefits Everyone
The introduction of our public fundraising website Sponsor.ie changed on-line donations in Ireland.

Firstly, it removed all financial barriers for charities to begin taking donations on-line. With no registration or annual fee it meant that the smallest charities could now accept credit card donations with no investment, and their supporters could now fundraise for them on-line.

Secondly, it increased competitiveness. More sites followed the model and now charities and fundraisers have a choice of which on-line giving site they use. It means everyone had to decrease their prices and up their game, benefiting both the public and the charities. Sponsor.ie and the other sites will roll out more and more features while continuing to decrease cost in an effort to gain market share.


Growth of Telephone Fundraising
The Wheel recently reported only 2% of charities fundraise in Ireland using Telephone. This is embarrassingly low, especially since telephone campaigns provide some of the best returns. This has begun to change in the second half of this year and telephone fundraising will continue to grow faster than other forms in 2013, including cold-calling.


Negative Media Coverage
Fundraising/chugging/salaries will receive huge negative, misinformed, one-sided media coverage in February, June and November.


Slow Regulation Adoption
Let's face it - there's going to be very little implementation of the Charities Act 2009. In 2013 a number of TDs will excalim that "There is no regulation!" and they will mistakenly blame the charities. However, hopefully, we'll see the IFFDR see a bit more action and the sector will make a concerted effort to try and build upon this. Paid staff actually implementing it is a good bit away...maybe 2014 or even 2015?


What else do you think we're going to see in 2013?

The Death of Pie

I have grown to dislike and distrust these pie charts. Charities often display them prominently and they're often the first thing potential donors look for. But I'd like them - in their current form - banished.

Firstly, they completely oversimplify what we do. They are all about input with no mention of output. Why should we care if you spend 90% on services? What does that get you? What does it mean?

Secondly, what are you putting in those little slices of pie? Donors are drawing conclusions and making comparisons based on these percentages, but look at the pie charts. They are all different. They are not all equal. What's a support cost? What's admin? Why do some charities have governance and some don't? [Also see this blog post]

If we keep providing this information in such a lazy format then potential donors will continue to judge us lazily.

For the time being donors will continue to look for it, so for the time being let's keep providing it but with a massive disclaimer explaining why more questions need to be asked. Let's get a unified disclaimer all charities can use. Let's get a shared microsite: www.makepiechartshistory.com