Spooktacular giving and understanding the business of nonprofit

Mary Beth Harrington, CVA

I was in a store and noticed that Halloween decorations were merging with the Thanksgiving décor, followed closely by the Christmas onslaught. For the nonprofit sector, the holiday season is known as the giving season, so it only makes sense to offer some thoughts and perhaps dispel some myths about the nonprofit sector.

One of my favorite nonprofit leaders (actually evangelists) is Dan Pallotta. Pallotta is an American entrepreneur, author, and humanitarian activist who teaches nonprofit leaders to not apologize for wanting to make a decent salary, spending on advertising and marketing, and being willing to invest in fundraising efforts. According to Pallotta:

• Compensation: People seem to be against nonprofit workers being well paid. However, some are extremely well qualified: for instance, a CEO of a hunger charity is paid ~$86k a year with similar qualifications to a Stanford MBA graduate with an average $400k annual salary.
• Philanthropy: That same person earning $400k can donate $100k, thus reducing their tax bill by $50k and is seen as a philanthropist but is still $260k better off than the highest-paid person running the charity.
• Advertising: Similarly, people do not like the idea of their donations being spent on advertising. However, the percentage of people’s wages being given to charity has stayed at 2% for 40 years– the only way to gain ‘market share’ in the charity sector is to do marketing against the ‘for profit’ sector.
• Risk: If a charity invests in a fundraising drive and it flops, it ruins its reputation. But if people cannot accept failure, there will be no innovation or improvement
• Time: Companies can take years to develop market share before they gain revenue. However, donors will not accept a six-year wait before any funds reach the needy
• Profit: For-profit companies can use the promise of future profits to attract capital investment. Charities are locked out of this capital stream.
• Since 1970, only 144 charities have passed $50 million in revenue, compared to 46,136 for-profits.
• Too often, donors ask, “How much of my donation goes to overhead compared to ‘the cause’?” which implies ‘the cause’ is not helped by overhead, whereas it is accepted that for-profits continue to reinvest in their business.
• Pallotta describes how a $50,000 investment in an AIDS Ride resulted in $108,000,000 extra revenue for research.  However, when he netted $71 million for breast cancer research one year, he went out of business when the media and his sponsors frowned when 40% of his revenue was spent on growth, customer service, and recruitment overhead.

To conclude, consider that when choosing a nonprofit to support, the focus should not be on overhead but on the scale of the operation. We need to rethink how nonprofit organizations should work, and focus on whether they are achieving their goals rather than their investment to get there.

More education and philanthropic opportunities for local nonprofits

• This Friday, philanthropic leaders from around our region will attend (mostly virtually) the South Sound Philanthropy Summit. Hosted by two volunteer-led organizations, AFP South Sound (AFPSS) and South Sound Planned Giving Council (SSPGC), the goal is to bring together development professionals, allied professionals, and philanthropists for a day of education and networking. For more details, click here.
• The South Sound Community Foundation has opened Give Local 2022 registration for Thurston, Mason, and Lewis County nonprofits. According to their website, Give Local is a two-week online giving campaign that lifts the local nonprofits that serve our tri-county region. 2021 marked the fifth Give Local campaign and raised $795,682, the most raised to date, with 87 participating nonprofits. For more information on registering, click here.

Hope to see you at these upcoming events

• The Olympia Tumwater Foundation and the City of Tumwater Parks and Recreation Department present the first Tumwater Falls Fest this Saturday, October 1, in Brewery Park at Tumwater Falls. According to Marisa Worden, Recreation Marketing Specialist for the City of Tumwater, Parks & Recreation, “We wanted to create an event that draws upon and celebrates the existing natural assets of the Tumwater community while helping meet the Tumwater Metro Park District’s goals and objectives. This event will be a unique combination of art, history, and family fun.” The event will open with a Squaxin Tribal Blessing and Drum Circle. Afterward, attendees can enjoy the transformative effect of water as a place of healing and community by strolling through the park grounds, soaking in the fall color, and watching the salmon as they jump the falls to continue their journey (I am watching them right now). For all the details, click here.
• During the month of October, the Town of Bucoda embraces its haunted history and becomes ‘Boo-coda.’ Throughout the month, it hosts a series of frightfully fun events, including casket races, hearse processions, a Zombie 5K race, Jack-O-Lantern carving contests, Thriller dance lessons, pumpkin pancake feeds, and a haunted house that is not for the faint of heart. Last year, we met Alan Carr, the Mayor of this town of 562 residents, who said “we hope to become one of the best Halloween-themed towns in the Pacific Northwest by offering unique activities that you don’t see at other festivals. Boo-coda is an authentic experience. Inside our haunted house, screams have been heard from the gym and the prison at night. It’s not uncommon for someone to feel a tap on the shoulder, and there’s no one to be seen!” There are events most weekends in October but for more information and a schedule of events, click here.

Soliciting your ideas

If you know of a nonprofit that is doing something great, celebrating a success, needs some outstanding volunteers, or hosting an event, let me know! This column (aside from a little education) celebrates nonprofits!

Mary Beth Harrington, CVA (Certified Volunteer Administrator) lives in Tumwater. She travels the country speaking at conferences and to individual organizations articulating issues facing nonprofits. Send your ideas to her at  MaryBeth@theJOLTnews.com