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Why Ethical Fundraising Matters

Why Ethical Fundraising Matters. Karen Alebon October 23, 2008. Overview. Public Opinion on Charities & Fundraising Government Regulation Overview of the Ethical Code Question & Answer. Public Opinion on Charities & Fundraising. Public Trust in Charities Remains High.

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Why Ethical Fundraising Matters

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  1. Why Ethical Fundraising Matters Karen Alebon October 23, 2008

  2. Overview • Public Opinion on Charities & Fundraising • Government Regulation • Overview of the Ethical Code • Question & Answer

  3. Public Opinion on Charities & Fundraising

  4. Public Trust in Charities Remains High Source: Talking About Charities 2008, The Muttart Foundation

  5. Trust Varies by Type of Charity Source: Talking About Charities 2008, The Muttart Foundation

  6. Donations & Donors: 1984 - 2005 Source: Research Bulletin: Trends in Individual Donations: 1984 – 2005

  7. Opinions on Raising Money Source: Talking About Charities 2008, The Muttart Foundation

  8. The Public Wants Information Source: Talking About Charities 2008, The Muttart Foundation

  9. …And More Scrutiny Source: Talking About Charities 2008, The Muttart Foundation

  10. High Expectations around Use of Donations Source: Talking About Charities 2008, The Muttart Foundation

  11. High Expectations around Disclosure Source: Talking About Charities 2008, The Muttart Foundation

  12. More People Believe There Should be a Legal Limit on the Amount of Money Spent on Fundraising Source: Talking About Charities 2008, The Muttart Foundation

  13. Charities Sixth Most Trusted British Institution Source: Charity Awareness Monitor, 2007

  14. Trust and Performance of Charities, UK Source: Charity Commission survey of public trust and confidence in charities, 2008

  15. 16% of Americans have a Great Deal of Trust in Charities Source: How Americans View Charities, 2008

  16. Only 30% of Americans Believe Nonprofit Sector on the Right Track Source: Harris Interactive Poll, April 2006

  17. Over 25% of Americans do not Think Charities are Honest and Ethical in Use of Funds Source: Harris Interactive Poll, April 2006

  18. Negative Media Attention • More than 200 articles published in the last six years with negative coverage of the sector. • Focus of media attention related to Code over the last six years has been: • high costs of fundraising, • transparency, • fraud, • misleading donors, • etc.

  19. Some Headlines… • “Murky books leave donors with questions” • The Globe and Mail, December 18, 2006 • “Finding out where your charity dollar is going” • Vancouver Sun, December 22, 2006 • “Charity scams bust public trust” • Toronto Star, June 7, 2007 • “Charitable empire has high costs” • Toronto Star, November 4, 2007 • “Charity’s licence revoked over inflated tax slips” • Toronto Star, August 12, 2008

  20. CRA – Proposed Fundraising Guidelines • In July 2008 the Canada Revenue Agency (CRA) released a “Proposed Policy on Fundraising by Registered Charities” for consultation. • This 35-page document provides guidance on a number of issues including the evaluation of fundraising activities and the appropriate allocation of expenses.

  21. CRA – Evaluation Grid • Most controversial is an evaluation grid that provides a ratio of acceptable fundraising costs to fundraising revenue in a fiscal period. • Less than 20% costs: acceptable; • 20 - 35%: generally acceptable; • 35 – 50% potentially not acceptable; • 50 - 70% generally not acceptable; • more than 70%: rarely acceptable.

  22. Fundraising Guidelines – Sector Response • Imagine Canada, the Association of Fundraising Professionals (AFP) and Health Charities Coalition of Canada (HCCC) convened charities to discuss the impact of these changes. • Concerns: • Evaluation grid does not take into account the variation in the sector – assumes one size fits all. • Cost allocation methodology remains subjective and is very complex. • Positive role of fundraising not reflected. • Coalition submitted joint response with over 80 signatories. • Informal consultations now taking place between the CRA and charity representatives to discuss some of these issues.

  23. Conclusions • Public expectations around accountability and transparency are increasing – Donors are asking more questions. • Charities need to play a leadership role in responding to these issues before they become a problem. • It’s the right thing to do – Charities have a responsibility to manage fundraising and finances ethically. • Trust in the sector remains but there are reasons to be concerned.

  24. The Ethical Fundraising and Financial Accountability Code – An Overview

  25. Ethical Code - Introduction • The Ethical Fundraising and Financial Accountability Code was first developed by the Canadian Centre for Philanthropy (now Imagine Canada) approximately 10 years ago. • The Ethical Code sets out standards or guidelines on donor relations, fundraising practices and financial reporting for charitable organizations. • In 2006, a research and consultation process was undertaken to update and revise the Ethical Code. • A revised Ethical Code was released in October 2007

  26. Content of the Ethical Code • Ethical Code includes information related to donor protection such as privacy, disclosure related to who is soliciting, and limiting solicitations. • Guidelines related to fundraising practices include misleading marketing, online fundraising, and transparency about costs of fundraising. • Financial accountability guidelines touch on the treatment of restricted gifts, content of financial reports and requirements for financial statements. • Imagine Canada’s Ethical Code is complementary to the Code of Ethics created by the Association of Fundraising Professionals.

  27. Ethical Code Program • Ethical Code is a donor assurance program aimed at helping to maintain public trust in the sector. • It is also a movement of charities committed to ethical fundraising and financial accountability. • Revised Ethical Code Program launched in January 2008 with a greater focus on accountability. • Program participants are eligible to use the Ethical Code ‘trustmark’ or logo that signals to donors that they comply with the Code.

  28. Ethical Code Program – Current Status • More than 150 applications received since January 2008 launch of program. • Marketing & Outreach • Supplement in Maclean’s focused on Ethical Fundraising in June 2008 • News Release resulting in several newspaper articles including coverage in the Toronto Star. • Thanks & Giving supplement planned for late-September – focus on the importance of giving and what donors should look for when making a donation.

  29. Promoting Compliance • Compliance is monitored through a complaints-based process. • There is no accreditation process but donors or the public can file complaints. • Charities are encouraged to settle complaints directly with donors. • If this is not possible the complaint will ultimately be sent to the Ethical Code Committee.

  30. Question & Answer

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