At the end of April, Canadians had the opportunity to recognize and thank the volunteers who support charitable/not for profit organizations. A part of almost every charitable organization are volunteers, those individuals who commit time, energy, their talents ( often also financial contributions ) to supporting the programs and work of a charitable organization. Their support, given without expectation of financial compensation has a significant economic impact.
An Economist's Case for Volunteering
A recent publication by TD Economics provides a commentary on the positive economic impact of volunteer hours. The benefits of volunteering are both tangible in the sense of resources committed on an unpaid basis, and value created in the form of ‘social capital’. This can take the form of productivity from volunteers who return regularly to assist with a NFP program ( they know how to do the work and can offer ideas for improving efficiency ), or helping a person develop skills they can translate into work outside the NFP, or the positive impacts to a community. The bank report illustrates as well, the economic benefits arising from volunteers. In 2010, it is estimated that 13.3 million Canadians volunteered in some capacity. This can be translated as a little over 1 million jobs. If you assume an average hourly wage, the surprising economic contribution from volunteers equates to $50 billion in Canada.
For arts organizations, volunteers are an important resource, please remember to thank them for what they do and don’t hesitate to highlight the value they contribute to your organization’s work and arts mission.
Recycling Capital of Endowments
May 13, 2013
There is no shortage of material to read about the challenge of securing arts funding at a time when government sources are static or facing cutbacks. A recent article in the Toronto Globe and Mail (April 20, 2013) references this in the context of arts organizations winding up, which can be one way of ‘freeing resources’ for younger performing artists.
As I read the article, another reality came to mind – when an arts organization or artistic director decides it is time to close up shop or move on, how is their artistic legacy preserved? We see few solutions or resources allocated to for instance, preserving the choreography and staging of a ballet or archiving music composition. As senior artists or organizations make the decision to retire or are in transition, it is important that resources preserving the best of their art form as a legacy for future artists/arts organizations be part of the funding equation.
We don’t have a perfect solution today to address the question of legacy, but one way the Ontario Arts Foundation is able to continue supporting arts organizations is by ‘recycling capital’. Within the fine print of endowment agreements, is a provision that has turned out to be a quiet blessing to arts groups in Ontario. All endowments contain a provision which states that if an arts organization winds up, or loses its charitable status, the Foundation Board has the responsibility to re-allocate the capital to another arts organization. The endowment capital is not returned to the organization as it winds up, or to the original donors. The capital must continue to be used to support the arts in Ontario through another arts organization. Our Board identifies an arts organization whose arts mission/discipline is comparable to that of the organization winding up. In other words, private capital and government matching dollars (Arts Endowment Fund program) raised to support ‘dance’, will continue to support ‘dance’. The endowment may be added to an existing organizations’ endowment, or we may invite a new arts organization to create an endowment and receive immediate funding. We try, as much as possible, to keep the capital within the same geography/community where private donations were originally raised.
Since the OAF was established in 1991, we have re-cycled over $850,000, money which continues to be invested on behalf of arts organizations across Ontario. The income arising from the endowments is unrestricted and has tangible value to an arts organization.
At a time when arts organizations struggle to secure funding, the security of long term unrestricted annual income becomes quite attractive. Without the burden of lengthy, time consuming annual grant applications, arts organizations gain time to dedicate to their artistic endeavors. This is appealing to young arts groups trying to build a sustainable operation, and at the same time offers comfort to donors, who see their donations continuing to serve their initial purpose.
As the Globe article concludes, nobody thinks there is one solution for all companies. Endowments held by the Foundation are one quiet way that capital is kept at work, supporting Ontario arts organizations as they grow, mature and transition over the long term.
I recently read a report prepared by a group Hope Consulting – “Money for Good II” which researched factors motivating donor preferences for supporting financially a charitable organization. The motivation for the research was to gain a deeper understanding of the ‘voice of the customer’ for charitable giving – what drives an individual, or a granting organization to decide to financially support an organization. What type of information is key to the decision making process?
It is an interesting read – you can delve into detailed research findings, or scroll through the summary findings. I liked the way the report characterized donors into six segments:
¢ Repayer :
“ I give to my alma mater, I support organizations that have had an impact on me or on a loved one” 23% of donors
“ I give to well-known nonprofits because it isn’t very complicated” 18% of donors
“ I support causes that seem overlooked, I give to nonprofits I feel are doing the most good” 16% of donors
“ We give to our church, we only give to organizations that fit with our religious beliefs” 16% of donors
¢See the Difference:
“I think it is important to support local charities, I give to small organizations where I feel I can make a difference” 13% of donors
“ I give where I am familiar with the people who run the organization” 14% of donors
Overall and not a surprise, a key driver for a donation is ‘caring deeply about the cause’ – 35% of donors. Generally donors are not highly motivated by maximizing social impact. Few donors ever research a charity before making an initial donation. When research is undertaken about a not for profit, it is more to confirm the ‘acceptability’ of the organization, and not on finding organizations that are ‘best in class’. Individuals and granting organizations begin to differ in behavior in some respects – individuals want to support organizations which make good use of their dollars. They care about legitimacy, respect and where the funds are going. Granting organizations differ in that they seek to maximize impact and find the most ‘effective’ organizations. A high premium is placed on effectiveness and impact of their grant. Granting organizations research almost every grant and have a high need for comprehensive information about the organization – they are ‘information hungry’. Any arts organization applying for grants know this well….
All groups tend to be loyal with their giving – repeated donations to organizations they develop a relationship with. All donors would like financial information from the organization they support, followed by information on the effectiveness of programs. It appears that information describing effectiveness of programs represents an ‘unmet’ need, or opportunity. This is an opportunity for not-for-profit to enhance their reporting in order to attract additional or increased support. An interesting comment was made on the role of advisors – the report suggests that advisors tend not to advise clients on where to donate. When you consider that most financial advisors want to be involved in every aspect of a client’s financial affairs, it is interesting that this is an area where they are less involved.
The implications of the research suggest that not for profit organizations can be more responsive to donors by:
Improving information, particularly on the impact of programs, charitable activity
Provide information in more detail, following a ‘consumer reports’ style format
‘Push’ information to where people look for it today – people rarely ‘shop’ for a charity – websites/forms of solicitation to build awareness
Adapt constantly – always try new things
The report did not break out the not for profit sector, it would be interesting to see if the general results change at all for arts organizations.
For more detailed information, you can access the report here.