Posted on Tuesday, 29th September 2009 by chris wignall
Again this week I’ve had conversations about the need for charities to find new ways to generate revenue. I really believe that if we can’t find our way past being entirely dependant on donors we are putting our future at risk.
During a meeting last night one strong leader referred to the idea that non-profits must pay attention to the business side of the work because that’s what allows us to do the charity side for one more day. He’s exactly right.
There is a time to give things away for free. New initiatives, emergencies, and caring for the truly destitute are examples. When we launched our leadership program we didn’t charge for it, but now that it has proven valuable we do. If a student can’t participate for financial reasons we will work with them to clear that hurdle, but most of them can find a way to chip in towards the cost of what they are receiving.
Today Seth Godin makes a typically strong and related point:
Money creates a sort of friction. In the digital economy, magical things can happen when there is no friction. You can scale to infinity. On the other hand, sometimes you want friction.
If you lead a group that allows anyone to join, for free, your group might be large, but it’s not tight, it’s not organized to make important change. Commitment slows things down in the short run, but ultimately aligns interests.
The limiting factor on the finances for some of the charities that will have to shut down due to currrent economics may not be the poverty of those they serve but the limited imagination of the leadership to charge a manageable fee for service.
Posted in Leadership, Vision | Comments (2)
October 5th, 2009 at 1:57 pm
We are fortunate as a charitable organization that we run some programs that generate some income to offset the expenses related to the program and have other assets that we can charge some rent for, but I am sure that many organizations would find it difficult to find means of income generation. This is the whole premise of social enterprise ventures and while they certainly hold some promise, they are not the be all and end all for funding problems that organizations face. I don’t think we would want to do away with the need to share our vision and have people embrace it through volunteering and supporting our work financially. I have heard of organizations that provide meals for the homeless, like we do, but still charge the clients a dollar, as much to provide a heightened sense of self worth as to assist with financial support. It is an idea that I find interesting and at the same time wonder how our clients would respond if we implemented the same type of system.
October 5th, 2009 at 2:15 pm
Thanks Harry
I agree with all that you have said here. It is a significant challenge to begin charging people for something they’ve previously received for free. There is bound to be push back on every level (donors, board, staff, volunteers, clientele). However, it may be worth the efforts required to educate them all that this multiplies the potential impact of the organization and may say something about dignity.
I’m not advocating for eliminating donors; there is something meaningful about those with means making sacrifices for the benefit of those in need. I am asking (as I know you are at Ray of Hope), are there ways to improve the financial sustainability of our organization within the scope of our core convictions? And is it possible that charging a fee for service when we can actually improves not only our economic bottom line but adds value for our mission also?