The Problem With 'Charity Ratings'

We all want someone to tell us the best way to do things.

What to eat, where to shop, who to listen to, what to drive, what to play. That's why sites like TripAdvisor and magazines like Which? are so popular.

It's also why businesses like Charity Navigator and Guidestar exist (and why we're about to see them start launching in Ireland, a year later than I predicted) - charities are complicated beasts, it's hard to know where to donate. It's a hassle to do research. And so we want someone to tell us this charity is good, this charity is bad, and this charity is better than both of them.

The problem of course is that it's not that simple.

Just because you spend 90% on salaries doesn't mean you're not making a huge difference. Just because 99% of your income goes 'directly to those that need it' doesn't mean you're actually helping. You might have cured cancer, but if you don't have a website to publish your accounts then should you be written off?

You might judge Pepsi on it's taste as opposed to its CEO's salary. You might judge Apple on how cool their stuff is (as opposed to whether their factory staff are killing themselves or not). But the end 'product' of a charity is a bit less tangible and so it's convenient to cling to whatever simple figures we can find.

And the biggest mistake that's always made when 'judging' a charity is looking at last year and last year alone. What about the years before that, and what about the next 10 years? You might not 'waste' any money on fundraising, admin or wages...but then you might not exist next year.

William MacAskill put it best: "What we can learn from one of the worst charities in the world". As he beautifully argues, even if you tick all the boxes and get top ratings, it doesn't mean you're actually making the world a better place. You might even be making it worse.

More than that, these sites can be really damaging to great organisations. Right now we find ourselves trying to unravel the Overhead Myth that was perpetuated and encouraged by the very organisations that are now debunking it.

If we're going to have a charity rating website it needs to cover impact, transparency, finance and more (cue another blog post: The Perfect Rating Website).

But even then it will probably never be complete.

It's the same reason there's no 'best person to date' and no 'best business'. And no website telling you what company to invest in (I've said it before: donating to a charity is like investing in a business).

Would you invest in a business because they made a profit in the only year you looked at? Would you invest in a business because they have the cheapest staff? Would you invest in a business just because they're transparent? Just because it's right for me, is it right for you?

And undermining everything is the simple fact that we're driven by emotion...which is what makes us humans so interesting.

I can't help it - even though it's completely irrational. I'll keep donating to charities that make me cry. And I'll dream of investing in my kitten hotel and restaurant ('The Catz-Rarlton").

Last Thoughts On The Rehab CEO Salary

So there's the figure: €240k plus perks.

I've written about it before on this blog, but decided to do one last summary of thoughts on the subject:

• €240,000 really is too much for anyone to earn, whether you're a charity CEO, private company CEO, football player, movie star, inventor of Facebook, arms dealer or primary school teacher.

• "Anyone that earns more than me is overpaid." - Everyone, including me.

• Private company CEOs use your money to pay their salaries. It's not a donation, but it's still your money. Your food, electricity, medical bills, etc. would be cheaper if the CEO of these private companies earned less. I would argue that it's easier to stop a donation to a charity than to stop buying food and electricity and medicine.

• If we're going to overpay anyone why don't we overpay teachers and aid workers and nurses and cleaners?

• If we're going to compare people's salaries to the Taoiseach or the POTUS then let's remember that they get their accommodation, food, transport, etc. paid for along with lots of benefits, including probably never having to work again.

• CEOs don't choose their own salary - it's determined by their Board. In the case of charities, this is a voluntary board.

• Rehab is a supplier to the Government. Their funding is not a donation...it's outsourcing.
  I believe, without exception, that charities need to be transparent with their salaries, but so should other suppliers to the State, eg. telecoms, transport, catering, stationery, construction, contractors, etc.

• Are you happy with our Government outsourcing health and social care?

• If our Government (that we voted in) take exception to the CEO's salary as one of their suppliers they should...and could...certainly do something about that. Keep in mind they were aware of it in 2011, and probably earlier than that. Have you seen the process you have to go through to secure State funding?

• Rehab are not representative of the charity sector. It's like judging your local corner shop on what Microsoft's CEO earns.

• Again, without exception, charity salaries need to be transparent.

• Again, €240k really is too much for anyone to earn.

Don't Let Your Fundraising Get Jefferson Airplane-d

You remember the feeling.

The passion and emotion that drove you to join this charity - to start fundraising. You can almost picture yourself in a small music club in San Francisco with Paul Kantner and Marty Balin, throwing ideas around...getting excited as you realise you CAN make a difference.

You see a need. There are people who need your help...like in 1964 when anyone looking for the perfect fusion of rock and folk had to make do with the mindless 'golf classic' of Simon & Garfunkel, or the 5k fun run of the Mamas & Papas.

Your mission is reasonably clear. And you survive, albeit struggle, by relying on friends and family. But you struggle with your voice...your message...it all sounds a bit too Signe Anderson-y.

And then one day it hits you...your own personal October 16th 1966.

Your fundraising message has never been clearer...it is the powerful contralto voice of Grace Slick which washes over your supporters like water. It soothes, massages...but stirs. It IS emotion. And it drives people to give.

The pinnacle of your fundraising follows...your Surrealistic Pillow. Yes, there's the success of your Embryonic Journey challenge event. And every conversation seems to find you asking just the right questions - Don't you want somebody to love?

But nothing...NOTHING...compares to your own personal White Rabbit...your DM Christmas appeal.

It's risky, but calculated. It is straight from the heart...but surreal. Your donors can literally feel their minds expanding as they read it - as it oozes through their eyes and skin. They shiver...they're moved. And as they reach for their cheque book they know...in that instant...what the Dormouse said.

But it's downhill from there.

You clutch at celebrities. Too many events. Too big. Your voice becomes diluted by self-centred noise. Appeal after appeal goes unnoticed. You get too clever.

And then someone mentions a rebrand. Goodbye Jefferson Airplane, hello Jefferson Starship. You can almost hear a brand consultant spit, "Because you're moving to the next level!"

And then it happens...

Your sad, sad TV spot....your own personal "We Built This City".

You think it's edgy. You think it's different. You think it's what people want.

But it's not you.

"Marconi plays the mamba" - you don't know what it means but you think it sounds like...something. The truth is it's meaningless. You've lost your voice.

There's one last call to your loyal supporters. You tell yourself Nothing's gonna stop you. But you're wrong. Not even the delightful rom-com Mannequin can save you.

Income declines. Appeals flop. Heads of Fundraising come and go. The Next Generation of consultants cost you money.

You'll keep going...keep touring...keep helping people. But you're not what you could have been.

You've Jefferson Airplained yourself.

The Plumpy'nut Space Dive

A couple of years ago Red Bull put a man in space.

Felix Baumgartner, covered in private-company branding, skydived from the stratosphere. It was epic and historical and it continues to amaze.

It was a marketing department's wet dream. 8 million people (and I) watched it live. Red Bull continue to release YouTube videos of the event with 4 or 5 million views each time. Footage will appear in one of this year's Superbowl commercial.

The value of the event to Red Bull isn't measurable. Some say it was worth tens of millions of dollars, others say hundreds of millions. It will continue to be shared and watched and, presumably, more people will drink that little syrupy energy drink because of it. Felix's doctor undoubtedly told him to stay away from it, but someone out there is obviously buying those 4 billion cans of Red Bulls each year.

So what did it cost? There's no official word, but the rumour is $30 million.

The question very few people are asking is...Was it worth it? Possibly, yes.

So why didn't a charity do it?

Wait...what? A charity waste $30 million on advertising and PR...and fundraising? $30 million that could have been given to the homeless, used to feed starving children or put towards baby pandas?

Well if it increased income then why not? The larger charities of the world could have afforded it and I'm sure we could find a loose connection in the same way Red Bull did...I'm thinking 'The Plumpy'nut Space Dive'.

OK, back to Earth...

Of course a charity would never do it because they would have been crucified. Imagine. How much of my donation was wasted on that? How many kids could we have fed instead? How much did Felix get paid?

It's an "X-treme" example but fundraisers and charity marketing faces the same double standard every day. "Why are you wasting money on marketing and fundraising?" Meanwhile we accept that private companies know what they're doing.

Do we want to pose the same questions to companies like Red Bull? After all, they're still funded by us.

Was the campaign a waste of money? (Everyone says no, but a 1.6:1 ROI isn't that great)
How much do their top execs get paid? (The founders appeared on Forbes' rich list)
What percentage of the cost of my can goes on advertising and wages? (Your weekly shop could have been cheaper)

And...perhaps most importantly...who is swallowing this crap?

Personally I'd rather see the world give their attention and support to an organisation whose vision is a world without poverty, rather than a company whose vision is to "maintain leadership in energy drinks".

8 Questions To Help Improve Your Charity's Board

The CRC scandal and continuing criticisms of Rehab have been (or should be) a rude awakening for many Irish charity boards. Here are 8 questions and action points for your own charity's board to look at for their next meeting:

1) Do you know what your top staff are paid?
If not you need to find out and make sure their pay is justified. Is it benchmarked against HSE or the industry? Who was involved in the decision making process? And can you justify it if/when it gets made public? In light of the downturn is it now too high? Have you made efforts to rectify that?

2) Are all of your decisions documented?
Can you stand by all of them? Can you justify all of them? Do you have, in writing, the thought process and reason for doing what you did? As a charity assume everyone in the world is going to find out everything you are doing and everything you are saying. Would you still do it?

3) Is your Board a good mix?
Are people sitting on your board purely because they are passionate about the cause? That's not good enough. Because of the nature of a charity its board is usually set up with friends, family or people in the same space. They are clicky and they evolve in a strange way. We need to move away from that. You do not want a board who are always going to agree with you - it will make your life easier, but for the good of the cause you need a mix.
Do you have a good representation of legal, finance, fundraising, HR, etc.? And do you have fixed-terms?

4) Are your service users represented?
Where possible it is amazing to have your service users,one of their family members or other key stakeholders represented. They will only be one person on the board but their influence is huge, as suddenly there is the face of a beneficiary in front of the decision makers. Do you think the CRC board would have agreed a €700k golden handshake while cutting staff if they had to vote for it in front of the father of a child with a disability?

5) Are you trying to cut costs?
Right now (and always) your organisation needs to be making efforts to cut costs. That is probably the role of your executive team if you have one, but you need to ensure appropriate reviews are happening.

6) Are you signed up to The Governance Code, the Statement of Guiding Principles for Fundraising, and other Codes of Conduct relevant to your organisation?
It should go without saying, but you should be. It's time to urgently make the time to do so. And if you're not going to sign up, why not?

7) Do you need advice?
There are some great organisations and individuals out there to help you improve what you do and the impact your organisation is having. Good starting points are the likes of Boardmatch Ireland, Fundraising Ireland, The Wheel and Dóchas.

8) Why are you on the board?
Really...honestly...why are you on the board?

The Real Numbers Behind Irish Charity Scratchcards

Tonight Minister for Justice Alan Shatter revealed that Rehab lottery scratch card sales of almost €4m in 2010 yielded profits of only €9,452.

Obviously the press and the Internet reacted with shock and horror. But the story is essentially not true. There are a few key facts missing:

1. Charity scratchcards make their actual money from the Charitable Lotteries Fund - the government pays compensation to the charities based on how much they sell.
2. Rehab brought in an additional €4 million a year because of their sales, so their actual profit was way higher than €9,452.
   For example, my charity might spend €1 to sell a €1 scratchcard. But the Government gives me an extra €1 compensation. So I've actually got a 2:1 ROI even though the actual 'sale' didn't make a profit. To me that's a sound investment.
3. The Fund is being wound down, so this will no longer be the case, and so what you'll see is charities not bothering to sell scratchcards anymore.
4. The Fund was never really a great idea. But something had to be done because charity scratchcard prizes are capped at €20k. Nobody buys them because the prizes on the National Lottery scratchcards are so much higher. Theoretically, charities could make much more profit themselves if they could offer higher prizes and be competitive.
5. The fair thing to do would be to remove the cap, but the Government won't do this.
6. If you were really cynical you might speculate the facts have been presented in this way because Rehab is suing the State.

For the record, I'm not a big fan of charity scratchcards. It's hardly altruistic, is it? And do certain charities not see the hypocrisy of encouraging people to gamble so that they can fight addiction?

[I wrote this very quickly so please excuse any initial errors.]

Why I Don't Donate To Charity: Water

[This article has been published previously on 101fundraising – Crowdblog on Fundraising]

Charity: Water are amazing.

They've funded about 10,000 water projects, providing clean water to about three and a half million people. They're ambitious, they take risks. They share their successes and their failures. They're transparent. Their website and their use of social media are cool. They are simple and beautiful and lovable. They are an ongoing joke at fundraising conferences because everyone wishes they could do on-line like Charity: Water do on-line. I love them.

But I will never donate to them. Not as long as they continue the '100% model' where they guarantee that 100% of my donation will go directly to the field.

It's unnecessary, it's gratuitous...the Miley Cyrus of non-profit marketing. It's irresponsible, and it's not sustainable.

Even in the simplest of terms a donation from me would almost certainly incur 'credit card' fees. They "reimburse" these. They "find another way" to cover these. But what if they can't find another way? What if they're faced with bank and credit card fees that are not allowed to pay because of the restrictions they've placed on themselves? It's unlikely...but if enough people suddenly donated on-line they'd have a debt they couldn't pay.

And what if they can't pay their wages? Their rent? Their electricity bill? Supplies? What if they can't find enough 'private donors, foundations and sponsors' to pay these? Does my donation just sit in account, unable to be used because of their own restrictions?

And really, shouldn't some of my donation be spent on auditing the finances behind my donation? Shouldn't some be spent on measuring the impact of my donation? Shouldn't some be spent on assessing how next year's donation can be used better than this year's?

As much as I respect Charity: Water I get the sense that perhaps they don't respect me, the donor. You see, they say their private donors and sponsors are "some of our most dedicated: their investment fuels our long-term mission, our ability to scale as an organization and our mission to continue using 100% of public donations for water projects." Am I - a member of the public - not capable of understanding these needs?

Most of all, the 100% Model is damaging to nearly every other charity because it gives the public unrealistic expectations. It implies that '100% to the field' is desirable, truthful and even possible. It's not.

Instead, another charity - a smaller one, that doesn't have the backing of private donors and sponsors - will have to say that No, sorry, the 100% model is impossible. They will lose donations and lose support through the misconception that anything less than 100% is wasteful.

Charity: Water...please...for the sake of fundraising and charity and everyone's future...please lose the 100% model.