Centre On Philanthropy Responds To Criticism

Wednesday, October 8, 2014

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Elaine Butterfield, Executive Director of the Centre on Philanthropy, has responded to recent criticism of non-profit operational costs, saying that the non-profit sector has “an important role to play” in tackling the “unprecedented challenges” that Bermuda is facing.

She also noted that  the non-profit section generates some $70 million in revenue [or 1.1 percent of GDP] and employed approximately 900 people [or 2.3 percent] of the workforce in 2010.

Ms. Butterfield said, “The Centre on Philanthropy has viewed with concern the opinions of many with regard to how charities are spending their funds on operational costs.

“There can be no doubt that Bermuda faces unprecedented challenges, across all sectors of the community. There can also be no doubt that the non-profit sector has an important role to play; by working together with stakeholders including the government, the private sector and the community, we can get far more accomplished and be more effective at it.

“I question what would happen if non-profits were not available to assist the government with its social agenda and our community with our increasing need for human services support? Perhaps the following information can assist.

“Currently there are nearly 400 registered nonprofits in Bermuda. Beyond the critical role that they play in addressing social needs, their significance in the Bermuda economy is reflected in generating approximately $70 million in revenue or 1.1 percent of GDP and employing approximately 900 people or 2.3 percent of the workforce in 2010 [Bermuda Government Department of Statistics, 2011].

“The revenues generated in the form of grants, fees for services, and more are directly reinvested in the community via programmes, salaries and facilities.

“While everyone is indeed entitled to see this subject from their perspective, I challenge you to consider what has been shared and to walk a day in the shoes of Bermuda’s all too often unsung heroes. I am confident that many will be very surprised.

“I urge you to consider the contribution that non-profits make, and whether our real aim is to keep non-profits overhead low, or do we want to change our community for the better?

“Perhaps this is what is referred to as outside-the-box thinking, but consider for a moment the impact of a non-profit sector that is equipped to ‘actually’ make a difference and the effect and change that it would make in our community.

“The current mindset is to reward non-profits for what they spend [or how little they spend] rather than what they have accomplished in the lives of their clients and ultimately the community.

“In order to hire skilled professionals to offer the best possible services, even at a non-profit salary scale which is lower than the private sector, and run the operations of the service is costly. However it is also true that many of us are being paid below our skill-set by choice, because the work that we do is very rewarding and we have a desire to do it.

“Everyone is not willing or able to sacrifice for a non-profit salary and the immense stress of caring for others that is a natural part of the career. Like essential services, many who work in the non-profit sector do not work from 9.00am until 5.00pm and weekends and evenings are all too common and what it actually takes to get the job done.

“Some of the expectations placed on non-profits include:

  • We are expected to conduct our operations according to best practice standards (and many do) while accepting less compensation than the for-profit sector
  • We are expected to raise funds while spending as little as possible on advertising and marketing or not to advertise unless the funds are donated
  • Although we are expected to conduct our operations ‘like a business’ we are frowned upon for overhead costs
  • If we put on too many fundraisers and come up with innovative ideas, we are seen as operating outside of our scope
  • We are expected to respond to the growing need created in our community by socio-economic trends, and increasingly be the first to be cut from donor budgets

“This idea that overhead is something that only for-profit organizations experience is very unrealistic and greatly challenges the effectiveness of non-profit organizations in some cases even more so.

“So the next time you’re looking at a charity, don’t ask about the rate of their overhead before you ask about the scale of need for their services, how they measure their progress, and what resources they need to make them effective regardless of what the overhead is. Consider how important the overhead is if some of our problems are actually getting solved?

“Now I am not suggesting for a moment that this should not come under guidelines. The new Charities’ Act, the Registry General and the Charities’ Commissioners all serve as regulators. The Centre on Philanthropy’s role is to provide support to the non-profit sector by providing them with the tools they need to maximize their overall impact.

“We provide training and education for capacity building, volunteer engagement as well as advocacy and community engagement on their behalf.

“If we can see the benefit to all of us in this thinking, then the non-profit sector can play a massive role in changing our community for all of our citizens most desperately in need of it to change. If we can work together as stakeholders along with the non-profit sector then we are talking about the potential for real change.

“But it will never happen by forcing these organizations to lower their horizons to the demoralizing objective of keeping their overhead low.”