Editorial: Why animal charities need to learn to pass the hat

[Guest guest]

From ANIMAL PEOPLE, October 2007:

 

 

Editorial feature:

 

Why animal charities need to learn to pass the hat

 

Among the outcomes of sending ANIMAL

PEOPLE to nearly 11,000 animal protection

organizations worldwide, as often as we can

afford the postage, is that we receive constant

inquiries from people who hope we can help fund

proposed projects, or provide introductions to

others who might, or at least publicize a

proposed project in hopes of attracting funders,

even though more than 80% of our readers are

themselves trying to raise funds for their own

worthwhile pro-animal projects.

Probably every reader of ANIMAL PEOPLE

has at least one brilliant idea about things that

could and should be done to help animals, if

only the money was available.

Some of the ideas we hear about are

impractical, ill-conceived, or have already

been tried in other times and places with

disappointing results. Yet many other ideas

presented to us are eminently practical, and

could succeed with adequate investment. The only

obstacle is that the necessary funding is not

easily or immediately available. Someone needs

to go out and raise the funds, by persuading

donors to put their contributions into this

particular project, rather than any of the

myriad others that the typical donor will hear

about between now and the next time the person

has money to give.

Failing to identify and develop a

specific fundraising base is by far the most

frequent reason why worthwhile projects fail, or

do not even get started. People who care about

animals tend to see opportunities for direct

intervention on behalf of suffering animals much

more easily than opportunities for building the

institutional capacity to intervene-or even the

necessity of developing a support base.

This often leads to counterproductive

behavior, both by donors and by struggling

animal charities who hope to court donors through

doing as the donors ask.

Donors, typically, will view the

charities that spend the least on fundraising and

administration, relative to program service, as

the best and most efficient.

Bluntly put, this is just plain wrong.

It is true that charities spending more

than 35% of their revenues on fundraising and

administration tend to be bloated, inefficient,

and sometimes overtly corrupt.

It is also true, however, that the

average cost of operating an animal charity

during the past 18 years has held steady at 28%.

Charities spending less than 20% of their

revenues on fundraising and administration,

especially fundraising, tend to be starving

themselves at the expense of expanding their

program service to meet the needs they are hoping

to fulfill--unless they already have so much

money in the bank that they can coast along on

the interest. A mere dozen or so of the largest

animal charities in the world are mostly coasting

along on old money. All the rest need to learn

to invest from 20% to 30% of their income and

working time, every day, in self-sustenance

and growth--and donors who really care about

animals need to learn to demand that they do.

Unfortunately, a common quirk of animal

charity donor behavior is to demand that all of

the money the donor contributes be spent directly

" on the animals, " usually meaning actual animal

care. This leaves many of the most dedicated

charities feeling unable to invest in attracting

more donors, lest they alienate the donors they

already have, and encourages some charities to

try to camouflage fundraising expense as " program

service. " Certainly a charity should put at

least two thirds to three quarters or more of its

revenue and working time into direct mission

fulfillment. However, a charity that is

dedicating most of its resources to mission

fulfillment is not more virtuous for not also

building the capacity to do more, by putting

more effort into asking the public to support

good works and giving more people the opportunity

to invest in beneficial projects.

Neither is there any virtue in giving

charities an incentive to conceal the actual

costs of raising the wherewithal to do their

work. Every donor who asks charities to spend

less than the normal and reasonable percentage of

income on fundraising and administration is in

effect inviting them to cheat, because if they

fairly and accurately disclose their overhead

costs, they might not get deserved support.

On the contrary, there might be

considerable virtue in large donors and grant

makers making some contributions on a matching

basis, so that if a recipient charity uses a

reasonable percentage of a sum to attract more

support, it will get a bonus. For example, a

large donor or grantmaker might give $10,000 to

help start a good project, with the proviso that

$7,500 is for the project itself, and $2,500 to

seek additional funding, which the funder will

match up to $10,000. If the charity manages to

use the $2,500 to raise $10,000 from other

sources, it will collect a total of $30,000,

netting $27,500.

Very few donors actually have the

opportunity to give away money that generously,

but those who can are uniquely positioned to help

not just the particular projects they favor, but

the growth of the entire animal cause.

 

Foundation basics

 

Of course almost every ANIMAL PEOPLE

reader also has opinions about what big donors

and grant makers should be funding, but are not,

including about what the dozen or so charities

and foundations with huge cash reserves and

investment portfolios ought to be doing besides

sitting on their assets.

U.S. law requires tax-exempt foundations

to disburse at least 5% of their net worth each

year toward fulfilling their charitable purposes.

Most, unfortunately, behave as if the 5%

requirement is not only the minimum they should

give out in the form of grants, but also the

maximum. Rarely has ANIMAL PEOPLE examined the

IRS Form 990-PF filing of a pro-animal foundation

and seen grants made that total even as much as

6% of assets. Yet well-managed foundation

investment portfolios often grow at the rate of

10% or more in good years--and ANIMAL PEOPLE has

seldom seen large foundations lose money. The

only year since ANIMAL PEOPLE started in 1992 in

which the largest pro-animal foundations took

significant losses was 2001.

Except in 2001, hundreds of thousands

and perhaps millions more dollars could have been

invested in the animal protection work that the

people whose estates created most of the

foundations meant to assist, without in the

least jeopardizing the perpetuity of the

foundations.

Several other mega-foundations that were

established in part to help animals have actually

granted little or nothing to pro-animal projects

over the years, or at least in recent years. In

each case, the management of the money either

was placed or somehow fell into the control of

bankers, lawyers, accountants, stockbrokers,

and other appointed trustees who have had little

if any interest in educating themselves about

animal issues, seriously reviewing

animal-related grant proposals, and making a

sustained, conscientious effort to realize the

founders' wishes.

Unfortunately, despite occasional noise

made in Congress about the need to reform the

laws governing foundation management, the

likelihood of it happening in a manner that

benefits animals is slim to none.

For that reason, ANIMAL PEOPLE advises

estate planners to avoid creating trusts. The

surest way to ensure that the bulk of an estate

will benefit animals is to disburse it

immediately to active animal charities.

Active animal charities should be

knocking on the doors of foundations created to

help animals as often as possible, making every

reasonable effort to shake loose as much of the

money as possible before it is all diverted to

other purposes, such as making more money for

the portfolio managers. Usually pro-animal

foundations make most of their useful and

significant grants to help animals in their first

years of operation, while under supervision by

at least some people who had a passing

acquaintance with those whose money the

foundations possess. The first years of

operation are also usually the best and only

window of opportunity for grant applicants to

cultivate in the trust managers some

understanding of the work they are supposed to be

assisting.

Yet while ANIMAL PEOPLE strongly

recommends knocking on foundation doors, we also

must point out several disillusioning realities

about what foundations do.

Very rarely, a foundation is created

with a " sunset clause, " requiring the foundation

to disburse all assets and cease operating at a

particular time, such as after the death of the

last original trustee.

Except in the case of a foundation with a

" sunset clause, " foundations are managed for

self-perpetuation, by people for whom

" perpetuity " is a mantra.

Although foundations are typically

oriented toward funding special projects, they

inherently tend to favor projects that will have

material perpetuity, such as building a shelter

or clinic, not projects whose results will

scatter into invisibility, like sterilizing and

vaccinating tens of thousands of street dogs. If

tens of thousands of street dogs are sterilized

and vaccinated, the shelters and clinics might

not be necessary, but money managers rarely

think in such terms. What they want to see is

something that will have the foundation's name on

it in a visible place for decades to come.

Likewise, foundation grant makers tend

to favor the charities that have existed the

longest, under the most stable management.

Dynamic, fast-growing young charities typically

stand very little chance of getting genuinely big

grants. Instead, the biggest grants tend to go

to the applicants whose profiles most nearly

match the grant makers' own perception of good

management--even though good management in relief

of immediate suffering is an entirely different

matter from good management of a bank account.

ANIMAL PEOPLE has actually met grant

makers who refused to make grants to charities

with less than a year's operating expenses in

reserve, because in the perception of the grant

makers, failure to build reserves--and even an

endowment--indicated that a charity might not be

stable enough to fulfill the terms of a grant,

no matter how urgent the need and how dedicated

the charity personnel.

Foundations, in short, are inherently

conservative. Even when they do make a

sustained, conscientious effort to realize the

intent of the funders, it is unrealistic to look

toward foundations to underwrite anything

innovative or in any other way risky.

Foundations want not only safe bets, but no

bets; investments, not gambles.

 

Appealing to the big groups

 

The other major institutional sources of

funding for pro-animal projects are the handful

of large, well-supported animal charities,

which operate on much the same basis as the

needier charities applying to them for help.

A short and by no means complete list of

some of the most prominent animal charities that

help to fund other animal charities as one of

their high-profile missions includes the Royal

SPCA of Great Britain, the Humane Society of the

U.S. and Humane Society International, the

American SPCA, the Best Friends Animal Society,

PETA, the North Shore Animal League America and

Pet Savers Foundation, Dogs Trust, Vier Pfoten,

the World Society for the Protection of Animals,

the International Fund for Animal Welfare, the

Animals Asia Foundation, In Defense of Animals,

and ANIMAL PEOPLE, which over the past two years

has routed more than half a million dollars to

assist promising humane projects in the

developing world.

This list is considerably longer than it

would have been 15 years ago. Among the most

encouraging trends in animal charity since ANIMAL

PEOPLE started in 1992, beginning immediately to

show the way by example to the extent of our

ability to do so, is that many of the biggest

and most economically successful organizations

have discovered the value of materially assisting

smaller organizations of allied purpose, whose

fundraising capacity is less. Best Friends and

In Defense of Animals began helping other

charities as soon as they gained the capacity to

do it, while the Animals Asia Foundation and

Vier Pfoten made helping other animal charities

an integral component of their own growth.

But big charities help little charities

at a price. The money that any charity grants to

another must be raised, just like all of the

other money a charity obtains to spend or invest.

Rarely does a charity assist another at cost to

its own program or reserves. Indeed, if a

charity does redirect funding at substantial cost

to itself, this may flag the organization to

charity regulators for investigation of a

possible top-level conflict of interest.

Further, it is worth noting that the interest

from cash and investment reserves often is the

source of the funding that big charities use to

raise more funds. Reducing their reserves, from

their perspective, means not only reducing their

institutional stability but also eroding their

fundraising capacity.

When big charities help little charities,

most often it is at the cost of the big charities

claiming credit in their appeals for the work

done by the little charities.

Fifteen years ago there was often a

blatant discrepancy between the prominence with

which some of the biggest and oldest charities

claimed credit and the paltry size of the funding

they gave to the few little charities they

assisted. (The North Shore Animal League was a

significant exception, making more than 30

grants of $10,000 or more to smaller animal

charities before mentioning anywhere except on

IRS Form 990 that it made any.) Many exposés

later, all of the big charities that claim or

imply that they are significantly assisting

smaller charities appear to be genuinely doing

it. Only IFAW appears to be doing less for

animal welfare relative to resources available

than 10 years ago, while shifting its emphasis

from promoting animal welfare toward species

conservation.

In general, small charities helped by

larger charities now appear to be getting a fair

cut of the proceeds from appeals based on their

work. Yet this is still far from an ideal

situation. The work of the funded smaller

charities is often proceeding on an extremely

insecure footing, heavily dependent on the

perceptions of distant grant makers and subject

to pressures or changes within the grant-giving

charities that may have nothing at all to do with

the recipients' missions or mission fulfillment.

Donors are increasingly identifying the

smaller charities' work with the larger charities

that are raising their funds, so that if

anything happens to fracture the fundraising

relationship, the recipient charities will have

an even harder time building a support base than

they did before they attracted big charities'

help. The big charities are expanding their

already considerable capacity to raise funds,

while the small charities are still not learning

how to compete for their share.

To their credit, most of the big

charities that financially help little charities

today are investing heavily in teaching

fundraising technique. Some make grants in

support of projects meant to help little

charities increase their fundraising capacity.

 

Paying staff is a start

 

ANIMAL PEOPLE has gone a step beyond

that. While most donors and funders focus on

special projects, we believe that the most

urgent need of animal welfare organizations in

the developing world is to for honest and sincere

animal advocates to become able to work for

animals full-time, instead of being limited to

doing what they can do on the side while holding

other jobs to support themselves and their

families. ANIMAL PEOPLE at present pays salaries

to three persons doing animal welfare work in

Africa. We would like to expand this program

when funding becomes available.

Being able to work for animals full-time

is a critical first step toward self-sufficiency

for animal advocates in the developing world,

since effective fundraising requires not only

fulfilling an inspiring program but also finding

the time to publicize it, promote it, and go

out to seek support for it--all not as easily

done in odd hours as feeding dogs and cats and

intercepting poachers.

Ultimately, no matter what the big

foundations and big animal charities do in

support of the more than 10,000 small charities

who handle most of the animals and most of the

local crisis situations, and no matter what

ANIMAL PEOPLE is able to do by way of

demonstration, the small charities each have a

need and obligation to develop their own

independent bases of support, so that their work

can grow to meet the need, without having to

depend on miracles.

Each local animal charity, even in the

poorest parts of the world, has unique and

specific access to two potential sources of

support that are not readily accessible to anyone

else. One is the local community. The other is

the people who have left the local community,

gone elsewhere, become economically successful,

and now may be persuaded to do something to help

the animals back home.

These may not appear to be particularly

lucrative support bases, but looks can be

deceiving. The history of humane work is full of

instances of seemingly impoverished small donors

bequeathing property that turned out to be worth

a fortune to humane societies that befriended

them and helped their animals. People who have

had nothing at all to donate have often become

extremely helpful volunteers. Volunteers who

worked in the most menial occupations have

occasionally introduced their wealthy and

influential employers to humane societies, with

extremely beneficial results.

Prudent fundraisers learn to never

dismiss a potential source of help based on

superficial appearance.

The emigré community in particular is of

fast-growing economic significance to all strata

of the developing world. The labor outsourcing

industry, for instance, was built by people who

left poor nations, found fortune abroad, and

figured out how to take some of it back home.

The best way to get help from émigrés

making good abroad is to develop positive

relationships with their families and friends who

are still at home. Even if those people can

barely donate a dog biscuit, their influence can

prove invaluable when the successful son,

daughter, cousin, or friend returns to visit,

and looks for ways to assist those left behind.

Raising enough money locally to fulfill

all local humane needs remains an elusive goal

even in many of the most affluent communities.

Raising enough to sterilize and vaccinate every

street dog and feral cat in the developing world

may seem impossible, even tapping international

resources to the maximum available.

For the time being, doing much of

anything at all in poorer communities may require

attracting as much outside help as local

charities can find.

In the long run, however, success

depends on developing independent fundraising

capacity. Addressing a local crisis may still

require e-mailing urgent appeals to foreign

donors, as well as passing the hat locally, but

local animal charities should not be having to

e-mail urgent appeals to foreign donors just to

ensure their continued institutional survival.

Neither should their continued survival be

dependent upon a slow-moving foreign grant making

process.

Developing basic day-to-day support

locally should be a priority of every charity,

recognizing that while building a sound local

fundraising base takes much hope and patience to

accomplish, it is essential to sustaining

progress.

Only with a firm local footing, for

example, can a charity consistently accomplish

the special projects that outside donors most

readily support. And, wish though we do that

foundation grant makers had more vision,

especially in considering projects in the

developing world, reality is that the charities

in the developing world which attract the most

local support are also the most likely to win

foundation support.

 

 

 

--

Merritt Clifton

Editor, ANIMAL PEOPLE

P.O. Box 960

Clinton, WA 98236

 

Telephone: 360-579-2505

Fax: 360-579-2575

E-mail: anmlpepl

Web: www.animalpeoplenews.org

 

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coverage of animal protection worldwide, founded

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