By Donna Tschiffely, Executive Director, Direct Marketing Association of Washington
News reports of non-profit executives traveling first class or spending lavishly on conferences and retreats get a lot of attention, often rightly so. No one, in or out of the non-profit industry — and especially those of us who regularly donate to our favorite causes and charities — wants to condone wasteful spending or charitable leadership that gets “too big for its britches.”
What, then, to make of the $10 cup of coffee?
That’s what many nonprofit organizations tacitly pay for the brewed beverage served to people attending their meetings or conferences at even a mid-range hotel. A typical example is the nonprofit that wanted to have a fundraising event for 400 people in a downtown Chicago hotel, and not a luxurious one by any means. The price of the coffee was $130 per gallon plus a 24% service charge. (Fortunately, the nonprofit didn’t have to pay the 10.50% sales tax.)
Considering that the total cost of the coffee was $161.20 for a gallon that yielded 16 cups, the per-cup cost was $10! The charity could give away $5.00 Starbucks gift cards instead — their guests would be happier and the organization would come out ahead financially.
This pricing is not unusual. A soft drink in most hotels (with service charge) is over $7.00; the same goes for bottled water. A granola bar will average over $5.00, and a piece of fruit over $4.00.
For-profit entities are much more accepting of these costs as they conduct events for their stockholders, stakeholders or customers. They see them as investments in their future. For a nonprofit, though, these costs raise eyebrows. As donors, our expectations are for charities to spend modestly and do a lot with a little: small budgets…lean staffs…low salaries. Everything, we believe, must go to the mission. Yet without the nonprofit entity, the mission has no place to call home.
According to the National Center for Charitable Statistics (NCCS), there are more than 1.5 million nonprofit organizations registered in the U.S. The goal of each is to do good by curing cancer, saving children’s lives, protecting animals, safeguarding the environment, promoting education, servicing our wounded veterans and much, much more!
Without these organizations, our country and our world would be far worse off. Collectively, nonprofit have tremendous impact on their causes and produce a phenomenal amount of work through the efforts of paid staff, fundraisers, donors and over 62.6 million volunteers giving 7.7 billion hours of service!
In fact, in some instances, nonprofit provide better services than those that offered by our own governments and for by our taxes dollars!
Many people aren’t aware that the nonprofit sector is an enormous contributor to the American economy: It provided 5.4% of the nation’s entire GDP and $887.3 billion to the U.S. economy in 2012 as stated by the NCCS; in that same year, nonprofits provided 11.4 million jobs (for awhile, growing at a rate faster than the overall US economy). The nonprofit sector continues to add jobs and its employees account for 9.2% of wages paid in the U.S.
Ironically, Wikipedia describes nonprofit organizations (NPOs) as a non-business entity! Based on their economic impact, I’d say nonprofits definitely are businesses
We all know the fundamental difference between a for-profit and nonprofit is that for-profit companies offer a product or service to generate income for stakeholders and stockholders, while nonprofits generally serve a humanitarian or environmental need and channel their income into programs and services aimed at meeting un-met or under-met needs; nonprofits have a “higher” purpose.
Yet nonprofit organizations have to operate in the very same capitalistic world as the for-profit, competing for dollars (donors) just as for-profits compete for sales, customers and, above all, profits.
Hence the $10 cup of coffee!
My experience with nonprofits is that the majority of the employees are passionate about their organization’s mission — they believe in the cause for which they are working. The fundraisers I work with are diligent, always trying to improve their skills and ensure they are doing the best possible job to meet the fundraising goals of the organization. They are judicious about their spending and extremely conscious about where the money goes — all to ensure that the majority of funds serve the organization’s purpose. Many fundraisers make sacrifices both personally and professionally for the sake of their organization.
Adam Braun, founder and CEO of Pencils of Promise was a keynote at the 2015 Bridge to Integrated Marketing & Fundraising Conference, and he described his nonprofit organization using the term, “For-Purpose.” He said the word nonprofit had a somewhat negative connotation, and he wanted to convey a positive attitude that came from a position strength versus a position of “not.”
His organization was going to make a difference and meet a specific need. So Braun runs his for-purpose organization like a for-profit firm — making sound business decisions and investing in his organization from programs to staff.
If all nonprofits were able to make sound, for-profit-type business decisions, maybe, just maybe, they could have even a stronger impact on their mission and help vastly more people. And, maybe that $161 gallon of coffee would not be such a hurdle because the leadership would know: invest that amount and receive ten-times the return.
Donna Tschiffely, executive director of the Direct Marketing Association of Washington, is president and owner of Conference Incorporated, which provides association management services to the DMAW as well as conference management services to a variety of other for-purpose and for-profit organizations.
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