Give with your head more than your heart

Beware the rise of the 'Chugger' - (aka the dreaded 'Charity Mugger')

It’s official: Australians are the world’s most generous people.

A study by Pro Bono Australia showed we’re the most generous people in the world followed by Ireland, then Canada and then New Zealand. Overall, 76% of Australians had given money to a good cause in the past month, 67% had helped a stranger, and more than a third had volunteered their time to a cause.

Our approach to generosity is even enshrined in one of our favourite idioms, ‘Everyone deserves a fair go’.

Anything else would be, well, un-Australian.

In this article

Sadly, being the most generous doesn’t automatically result in the most amount of good being done.

Generous people have a responsibility too. In the same way, teaching your children to pursue wealth without character will cripple them, so giving mindlessly to charities without an interest in their governance and knowing who you’re supporting, could be equally irresponsible.

It's time to take a better business approach to your charity

Many Modern Small Businesses give their time and money freely to many good causes because it’s part of who they are and what they believe in.

Small Business owners know the effort value of every dollar we earn, so is it any wonder we’re constantly looking for greater efficiencies and costs savings everywhere we look. Those efficiencies are now rightfully required of our charities.

So how much money are we talking about?

In 2013, the Australian Charities and Not-for-Profits Commission (ACNC) began an operation to find and remove ‘dud charities’ and help protect the public from fraudulent and questionably run charity operations.

• Two years later it deregistered 5,500 charities from across Australia leaving about 54,150 remaining.

But aren't we just talking small change?

The startling figures from the Australian Bureau of Statistics show

• the charitable not-for-profit (NFP) sector has annual revenues in excesses of $100 billion (according to ACNC’s Australian Charities Report 2014),
• holds assets of roughly twice that number whilst employing 8% (or about 1.27 million people) of the Australian workforce (according to ACNC Commissioner Susan Pascoe AM).

To put that in perspective the income of the NFP sector is larger than our Agriculture and Fishing industries combined.

Do we actually know where the money goes?

The Australian consumer magazine, CHOICE, ran a survey of Australian charitable giving finding:

• Four out of five of the respondents (81%), didn’t know how much of their donation would reach the beneficiary.
• That it is hard to compare between charities to learn how much of a donation was lost to the charity’s overheads and fundraising costs.

How much does it cost to employ a 'Chugger'?

Many charities supplement their direct-from-donor giving by outsourcing collections and solicitation to a few very large charity collection companies known for their preference in contracting international backpackers to do their work.

These smiling personalities are easily recognisable as they usually end up loitering near the doors of shopping centres or trying to catch your gaze on the street with a cheeky smile, plunging neckline, a click-bait-worthy question or simply standing in your way.

These personalities for hire have quickly earned a rightful place in the Australian colloquial vocabulary as 'Chugger' derived from the job description, Charity Mugger.

So how much does it cost to employ a Chugger? Let’s start with what is publicly available information:

• ‘Chuggers’ (charity muggers who insist on shaking your hand and ambushing people on street corners), are the face-to-face commission-only collectors who can receive up to 70% of a typical donation.
• Charity collection companies can take 95% of the initial donation and receive ongoing recurring revenue from recurring donations, with the average recurring contribution lasting about four years.

The honest question every charitably minded person now needs to ask is this;

'Is this how you want your donation money spent?'

“If you want to make an impact, sprinkling small change across multiple charities is the best way to avoid this eventuality.” Drew Browne.

It's time to take a better business approach to charity

There are many challenges in the NFP sector around managing donor compassion fatigue, transparency and reporting accurate beneficiary delivery.

• Many charities have also failed to build their own capacity and evolve to keep pace with the growing community expectations of transparency around a charity’s mission, overheads and how much of a donation actually reaches the intended beneficiary.

Perhaps this shorter-term focus is in part due to the charity ‘disaster relief’ outlook and less about the longer-term ‘capacity building’ approach of their estranged cousins the philanthropists.

“If you want the get the biggest amount of benefit for your buck, you’re probably thinking like a philanthropist.” Drew Browne

Give with your head if you want to have an impact

For those charitably minded small business owners frustrated by the lack of observable efficiency and transparency in the charity sector, the solution may include:

• Give directly to your charity of choice, not via a ‘chugger’ or telemarketer.
• Be selective and choose what’s important to you.
• Try and know how much of your money reaches the beneficiary.
• Expect greater transparency from your charity and reward those that speak your language and share your outlook.

Also, consider the longer-term value of building long-term capacity and infrastructure as part of your good work.

Improve transparency and show me the stars

Starting with solutions

In the same way, a new washing machine purchase has an energy efficiency star rating label attached, perhaps charities could benefit from a similar independently verifiable comparison;

• Thus a charity that delivers 0.62 cents in every dollar raised to the beneficiary would earn the right to a 6.2 star out of 10-star rating.
• Those that deliver 0.24 cents in every dollar raised to the beneficiary would rate 2.4 stars.
• Those that failed to disclose how many cents per dollar raised made it to the beneficiary, well they would be shown as having a no-star rating.

That way people would know they were supporting a no-star charity, in the same way, consumers today have the choice to buy a no-energy star washing machine.

Sidenote: Before the hate mail arrivers declaring, 'this is an overly simplistic approach that doesn't address issues of funding infrastructure and administration costs', perhaps those issues could be addressed as part of new transparency measures for five-star and above rated charities; those delivering what the customer donor wants, those competing in this very competitive space for the hearts, minds and the eventual dollars of the donors. 

Simply put this could be part of helping donors develop a better business approach to giving with their head more than their heart.

Controversial? Perhaps.

Impactful? Yes.

The last word

To be successful, you must be ahead of public opinion and not behind it. Take a better business approach to your charity.

Anything else would be, well, un-Australian.

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