Articles

THE UNHOLY MESS OF OUR CHARITY APPEALS

The fierce and often selfish competition by hundreds of organizations for the Canadian charity dollar — with the apparent results of unrealized goals and exorbitant expenses — leads many confused and harried givers to echo Henry Ford's ultimatum that the fund raisers "federate or perish"

SIDNEY KATZ November 15 1953
Articles

THE UNHOLY MESS OF OUR CHARITY APPEALS

The fierce and often selfish competition by hundreds of organizations for the Canadian charity dollar — with the apparent results of unrealized goals and exorbitant expenses — leads many confused and harried givers to echo Henry Ford's ultimatum that the fund raisers "federate or perish"

SIDNEY KATZ November 15 1953

THE UNHOLY MESS OF OUR CHARITY APPEALS

SIDNEY KATZ

The fierce and often selfish competition by hundreds of organizations for the Canadian charity dollar — with the apparent results of unrealized goals and exorbitant expenses — leads many confused and harried givers to echo Henry Ford's ultimatum that the fund raisers "federate or perish"

IN OTTAWA recently eight major campaigns to raise money for charitable or philant hropic organizations were under way at the same time. An alarmed Board of Trade looked into the situation and discovered that during the previous year Ottawans had been solicited for funds no fewer than three hundred times. In May and June of this year Montrealers were being asked for donations by twenty charities. Throughout Canada the number of financial drives by national and local groups of varying worthiness runs literally into the thousands.

Pertinent facts about these campaigns are: Many do not reach their objectives; in many cases the money that did come in was raised at a cost for campaign expenses of ten to sixty percent of the total.

Commenting on the state of charity financing in Canada, Carl Reinke, a Montreal.business executive and chairman of the Community Chest Division of the Canadian Welfare Council, declared that “philanthropic fund raising is probably more chaotic and more wasteful than at any time in our memories. It’s an unholy mess.”

Business executives, labor unions, welfare officials and individual citizens are becoming more and more outspoken in criticism of charitable appeals. The specific complaints made are these:

TOO MANY FUND-RAISING DRIVES MEAN THAT TOO MANY CHARITY DOLLARS ARE WASTED ON CAMPAIGN EXPENSES.

The multiplicity of appeals and their failure to attain their objectives are matters of record. In one case, that of the ill-fated Canadian “March of Dimes,” it was revealed that of three hundred and sixty thousand dollars raised in a campaign, two hundred and ten thousand dollars went for “campaign expenses, administration and overhead.”

NO RESPONSIBLE BODY EXISTS TO SCREEN CHARITY APPEALS.

It costs money to raise money. Irving P. Rexford, president of the Crown Trust Company, Montreal, and long active in philanthropic work, points out that “at present any enthusiastic individual even without financial standing or ability, or even a reputation for honesty, may launch an appeal for funds, and no one is responsible for following through to see how the money is collected or spent.”

VOLUNTEER WORKERS ARE BECOMING DISCOURAGED AND FATIGUED. The fund-raising drives are now so numerous that there aren’t enough volunteer canvassers to go around. Some volunteers work on four or five campaigns at the same time. Recently, a Montreal fund raiser became so worried about his volunteers that he enlisted the services of a psychologist to draw up a program that would banish their fatigue and low morale.

DRAMATIC APPEALS SOMETIMES GRAB A DISPROPORTIONATE CHUNK OF THE CHARITY DOLLAR. Purse strings readily open to appeals that can feature photographs of crippled and helpless children. In Canada, it has never been difficult to raise money for poliomyelitis, a disease which is forty-ninth in importance in the fifty principal diseases causing death. Heart disease heads the list— it’s responsible for more then half of all deaths. Yet there is no voluntary agency conducting a money-raising campaign to combat it.

Of all these complaints, the one most frequently voiced concerns the great number of appeals. Yet our large national charity organizations such as Red Cross, Salvation Army, Canadian Cancer Society are firmly opposed to the principle of combining their fund-raising campaigns with the community chest or with other organizations. They believe if they did this they would raise less money and lose their individual identity. In 1951 a committee made up of representatives from the community chests and the voluntary organizations considered the possibilities of combined fund raising. Four or five meetings were held but no progress toward united fund raising was made. The national agencies held firm to their policy of individual campaigns.

Canada’s health-and-welfare program has expanded to the point where federal, provincial and municipal governments now spend more than a billion dollars a year on it, but many people believe there is still a place for voluntary organizations among them Hon. Paul Martin, Minister of National Health and Welfare, who has repeatedly referred to the major charities as the pioneers which by tackling welfare and health problems point the way to their solution.

But there is widespread alarm and annoyance at the frequency with which these private charities are appealing for funds. These campaigns break down into three types. Perhaps the best known is the community chest drive conducted in sixty communities each fall. Then there are about thirty major campaigns each year staged by national groups like the Canadian Cancer Society, the Canadian National Institute for the Blind, the Salvation Army and so on. Finally, there is a flood of appeals—both local and national in scope -conducted by a variety of cultural, religious and educational groups for money to provide operating expenses or for building purposes.

The danger signals that too many appeals are threatening our entire system of voluntary welfare services are only too evident. Twenty-nine of Canada’s sixty community chests failed to reach their objectives last year. Victoria succeeded in raising only seventy-nine percent of its goal, Vancouver ninety percent, Toronto eighty-six percent and Winnipeg ninety-one percent. Last year, the Red Cross—the largest national agency—had to extend its campaign by four weeks. Several months after the closing date it was still soliciting. The United Nations International Children’s Emergency Fund, which was endorsed by the federal government, succeeded in getting only four hundred thousand of the three million dollars it went after. The Canadian Child Health Association realized less than ten percent of the hundred thousand ^tbtlars it asked for. The Canadian Arthritis and Rheumatism Society, in a recent drive, ran smack into a half dozen other appeals and realized only a half of an eight-hundred-thousanddollar objective. In the opinion of Carl Reinke, who has been active in many community chest and hospital campaigns, such fiascoes can often be attributed to charity executives and leaders who “are guilty of rivalry, jealousy, plain selfishness, suicidal shortsightedness and a lack of teamwork ... In the interests of the general welfare, it is time we stopped pussyfooting about this problem for fear of offending somebody.”

In seeking reasons for the present crisis in philanthropy three developments must be considered:

The first is that charity—nourished by a long period of economic prosperity —has become big business. According to the most recently published income tax statistics (1951), as individuals we have contributed one hundred and twenty-seven millions to philanthropy; as corporations, twenty-six millions. Add to that the charitable giving that is not recorded in income tax exemptions and the annual grand total is probably two hundred millions.

The second development is that the number of national charitable organizations has steadily increased until now there are at least thirty. In recent years a host of new agencies have entered the scene, particularly in the health field. There are now societies which solicit funds to combat cancer, arthritis, poliomyelitis, deafness, multiple sclerosis and paraplegia. Each year thirty organizations—both old and new—recruit their own private army of volunteers and embark on whirlwind fund-raising drives, costing millions of dollars, to try to raise their total goal of twenty-five million dollars.

And lastly, many religious, educational and welfare groups have only recently been able to embark on building programs which had been postponed by the war. In the Toronto area alone, during the past few years, four hospitals have campaigned for almost forty million dollars.

Can the Canadian people afford to support so many appeals? Or have we scraped the bottom of the charity barrel?

Precise answers are not available to these questions and a certain amount of guessing is necessary. Informed observers like Irving Rexford believe that we have only begun to realize our full giving potential. Our income tax laws permit a corporation to donate as much as five percent of its net profit to charity without paying income tax on it. Since taxes on net corporation incomes are roughly fifty percent, Rexford estimates that if corporations took full advantage of the exemption they could donate an extra sixty-eight millions a year to charity at half that cost to themselves. Individuals are allowed to deduct donations to philanthropy amounting to ten percent of their net incomes, and Rexford concludes that we could contribute millions extra at a cost to ourselves much below the total given. Naturally, one has to accept this estimate with several modifications and reservations. For one thing, if the government is not to get this revenue in the form of income tax, it might impose a tax of another kind.

But what we can afford to give and what we are willing to give are two different things. The flood of appeals has antagonized many leading business executives and corporations. This is serious because no major fund-raising campaign can succeed without the cooperation of the big business executive. He occupies a key position as a corporation official, as a large individual donor and as an employer of men. Take the 1950 Montreal Joint Hospital Fund appeal, for example. Twenty-seven thousand people gave almost nineteen million dollars to it. Ten million of that came from eighty-nine individuals and corporations. In the 1952 Toronto community chest campaign which collected contributions from a quarter of a million people, half the money came from a handful of corporate and individual givers. Of all money given to community chests across Canada, forty percent comes from corporations, another thirty percent from employees at their place of work.

The problem of multiple appeals was recognized in Canada as far back as 1917. In that year, a number of local Montreal welfare agencies combined to form the first Canadian community chest. The idea was to conduct a single, united fund-raising drive instead of several campaigns, thus making it possible to spend on actual charity the money saved on paid campaign employees, printing, postage and advertising. The soundness of the community chest idea was soon recognized and spread all over the country. There are now sixty community chests in Canada representing eight hundred and seventy Red Feather agencies. Currently, they are engaged in raising fourteen and a half million dollars—in sixty campaigns instead of eight hundred and seventy. Campaign expenses for community chest drives sometimes run as low as three percent.

However, because of the steady arrival of numerous new national philanthropic agencies—each conducting its own campaign in every community —the community chest idea has not solved the problem of multiple appeals. One solution offered by the advocates of unified appeals is for the local branches of the national agencies which now campaign independently to join the local community chest. Most community chests have adopted an “open door” policy and invited the local affiliates of the national groups to enter their fold. In some communities, some local chapters have responded but by and large the invitation has been spurned. Canadian Red Cross Society units, for example, have been advised by their headquarters that combining their fund-raising efforts with other groups would “result in a loss of prestige to Red Cross and the weakening of its whole position.”

The dissatisfaction of business with multiple appeals is such that one hundred and five Canadian corporations have financed a research project to shed some light on the subject of business and charitable giving. Almost nine hundred business firms were questioned. The resulting report, Corporate Giving in Canada, edited by Albert A. Shea for the Committee on Corporate Giving in Canada, and to be published soon by Clarke, Irwin and Co. Ltd., shows that “the attitude of the business executive is a mixture of distress and concern.” One executive states, “There lias been so much racketeering in donations that we have been giving them all the go-by.” Another observed, “We find it easier to say ‘no’ to all rather than give to a few and invite criticism.” Still another stated, “In view of the increased number of appeals we plan to limit our contributions to a few agencies.” Almost one half of the corporations did not permit their employees to be solicited at their place of work, while two thirds refused to allow charitable contributions by payroll deduction.

I discovered, in my own research, corporations that had been approached for charitable funds no fewer than a thousand times a year.' One official of an important manufacturing firm slates that the scramble for the charity Hollar has become so desperate that refusal to contribute when the solici-

tation is made by an important customer might well lead to social and economic reprisals. “It’s blackmail —straight and simple,” he says.

Many corporations do not oppose multiple campaigns because of a desire to avoid giving. Indeed, they strongly support the principle of leaving as much health and welfare activity as possible in the hands of private organizations instead of having it carried out by government agencies. What they do deplore is the fact that numerous fund-raising drives have become a serious administrative burden. Some corporations have had to assign highlypaid executives, full time, to consider anywhere from fifty to fourteen hundred appeals every year.

But business is not only asked to contribute money. It is also asked for the loan of competent executive officers to assist in organizing fund-raising campaigns. One business makes sucb loans thirty or forty times a year. One advertising firm stated it always has one or two of its key men assisting in appeals. “You can’t refuse when the request comes from an important customer,” it explains.

Indeed, securing a sufficient number of volunteer workers is becoming an increasing problem as the number of charitable appeals grows. In every community there are now hundreds of volunteers who go from one campaign to another. I found that some volunteers have solicitation cards for as many as six charities at the same time. A spokesman for the Toronto community chest told me, “We need ten thousand workers, but we can only get eight thousand.” A Montreal professional fund raiser told me, “Our greatest problem is worker fatigue. Our workers are tired from working on other campaigns.” If goals are to be met, the volunteer has to impress the prospective donor by enthusiasti-

cally presenting the worthiness of the charity. “But how can he do it when he has already spent two or three months trying to sell six other charities as well?” There is little wonder that a serious shortage of volunteers exists: the community chests across Canada alone require one hundred and twelve thousand workers; in the Toronto area, five thousand men and women solicit for the Red Cross.

No aspect of charitable appeals has received as much public attention as campaign expenses. Every donor wants to see bis money spent on charity—not on unnecessary campaign expenses. Probably the Red Feather agencies, by combining their fund-raising appeals through the com-* munity chests, have succeeded in raising the most money at the least cost in Canada. Last year, their actual campaign expenses were about three percent.

Other national voluntary agencies, in spite of honest administration and the wide use of volunteer help, were not nearly as economical. The Canadian Tuberculosis Association, excluding government grants, raised one million four hundred thousand dollars. This was done at a cost of two hundred and eighty-seven thousand dollars or approximately twenty percent. The various provincial branches of the Canadian Council for Crippled Children collected nine hundred thousand dollars. The province with the best record showed that campaign expenses were twelve percent.

However, many informed observers believe that the published financial statements of many philanthropic organizations do not clearly set forth the amount of money actually expended on fund raising. The competition for the charity dollar is now so fierce that many agencies solicit for funds months before and months after their annual campaign. This involves the time of salaried employees as well as other expenses which may not be shown as “campaign expenses.” The 1952 financial statement of the St. John Ambulance, for example (provincial and national branches), shows that campaign expenditures were fort y thousand dollars. But other expenditures listed include “publications and publicity,” thirteen thousand; staff, two hundred and two thousand; miscellaneous office administration, forty thousand; travel and organization, thirty-three thousand; miscellaneous, seventeen thousand dollars.

Similarly, the Canadian Red Cross 1952 statement shows campaign expenses to be three hundred and seventytwo thousand dollars. But three other items of expenditure—publicity and information service, general operational and administrative expenses, and administrative salaries—total seven hundred and eighty-one thousand dollars.

As in the case of the St. John Ambulance, there is no doubt that most of the money shown in these categories was necessary overhead to carry out a diverse program of activity. But competent observers are also certain that some of this money must necessarily include, although not intentionally, “hidden” campaign expenses.

Another criticism aimed at our charitable organizations is that their campaign goals are not subject to any kind of review. Thus, the amount of publicgiving is often determined by the dramatic nature of the campaign rather than by the actual need of the community. The Canadian Arthritis and Rheumatism Society, referred to as having reached only half its objective largely because of other simultaneous campaigns, deals with a health problem which affects an estimated seven hundred thousand Canadians. A few years ago, when the Canadian “March of Dimes” spoke of raising one million dollars for polio, many doctors were quick to point out that many other childhood diseases were more important. Ina recent five-year period when there were seventy thousand cases of whooping cough resulting in eighteen hundred deaths, there were only seven thousand five hundred cases of polio with four hundred and twenty-seven deaths. Dr. Alan Brown, the distinguished Canadian pediatrician, has pointed out, “Money could be better spent on research into the more impor-

tant diseases of childhood, namely, cancer, leukemia, spastica, accidents and nutrition.” As the result of such criticism, the polio agency completely reorganized and revised their campaign goals downwards.

An even more lopsided situation exists in the United States. Cancer and heart disease are responsible for thirty-eight percent of all deaths; polio for .01 percent. Yet the cancer and heart societies can raise only twentythree million dollars compared to fortyone millions for polio.

Again, in the matter of campaign

goals matching need, during 1952, the Canadian Red Cross raised seven million three hundred thousand dollars, compared to the community chests’ twelve million. The humanitarian activities of the Red Cross in times of peace and disaster are well known, but the community chests represent almost nine hundred local welfare agencies across the country which each year directly assist an estimated two out of every five Canadian families. The answer probably lies in the fact that the Red Cross is not getting too much but that the community chests are

not getting enough for their needs.

Is there any way of bringing increased order into the presently unregulated arena of fund-raising appeals? Here are some of the suggestions made by philanthropists, fund raisers and government and welfare officials:

1. SET UP A NATIONAL REVIEW BOARD TO SCREEN ALL CHARITABLE APPEALS. This request has been repeatedly made by the Health League of Canada, the Canadian Welfare Council and numerous local boards of trade. The task of this group would be to examine all appeals in order to prevent fraud and to collect information on program, organization, and appeal plans for use by the public in gauging its donations.

At present, any group can launch a national appeal for any purpose which is not contrary to the Criminal Code. Many people feel that the possession of a federal charter is a certificate of sound purpose and administration. This is not so. Any three reasonably reputable people can affix their signature to an application to the secretary of state, pay a few dollars, and establish a charitable organization as a corporation. Such an arrangement merely exempts the people involved from personal liability for debts incurred; it in no way indicates that the govern.ment endorses the aims of the organization or supervises its administration.

It is true that in response to public pressure the secretary of state has recently begun to seek the advice of the Department of National Health and Welfare when a charter is sought by any charitable group, but no federal government department is presently in a position to conduct a careful or continuing examination of the aims, purposes or the management of any philanthropic group.

The presence of such a body might have prevented recent incidents which had an adverse effect on all charities —most of which are conducted with scrupulous honesty. The United Emergency P’und for Britain, for example, collected six hundred thousand dollars from the public. Practically all of this amount was spent to ship overseas a million dollars worth of goods contributed by others. The fund itself contributed only eight hundred and eighty dollars worth of food, clothing and supplies.

Proof that a voluntary review board can be effective is proved by the thirtythree-year-old National Information Bureau in the United States. Supported by memberships from individuals, corporations, charitable foundations and others, the bureau carefully examines the purposes and operational methods of more than six hundred national and international charities each year. Philanthropies which are found to be sound are included in a “giver’s guide” which goes out to the bureau’s subscribers. The prestige of the bureau is such that no major appeal will succeed without its endorsation. It has thus prevented many campaigns for doubtful causes.

2. SOME CONTROL OF CHARITABLE APPEALS IS NEEDED AT A LOCAL LEVEL. Since many appeals are purely local in character, machinery should exist for their regulation. In some of these appeals, the chief beneficiary is the man who promotes them. One such man recently was engaged by a Toronto church to raise funds for a welfare project. He raised eighty-five hundred dollars by staging a public concert. But after deducting his own wages, commissions and expenses, the church’s portion was only eighteen hundred dollars.

Such a project would have never been permitted in Winnipeg, where, since 1913, the Civic Charities Endorsenient Bureau has kept a watchful eye on all local fund-raising activities. A nine-man board, appointed by the city council, carefully examines applications from all groups who want to appeal to the public for funds. No appeal is permitted—whether by personal solicitation, press, mail, or radio—without a permit from the bureau. Any appeal in which the operating expenses are high in relation to the amount spent on actual welfare work, is prohibited.

3. MULTIPLE APPEALS COULD BE ABOLISHED IF THE NATIONAL VOLUNTARY AGENCIES WERE UNITED WITH THE COMMUNITY CHESTS. There is an abundance of evidence in the United States that everybody gains and nobody loses by such a step*. Detroit provides a dramatic example. In 1948, private philanthropy in Detroit came to the crossroads. The community chest drive fell three hundred thousand dollars short of reaching its objective. The autoniabile manufacturers were in open rebellion; so were the labor unions: their plants had been solicited no fewer than one hundred and thirty-four times that year. Finally a committee headed by Henry Ford II emphatically told the charities, “Federate or perish. We’ll contribute to charity once a year or not at all.” This led to the formation of the Torch Drive—a single appeal representing one hundred and fifty local and national agencies. Under the banner, “give once for all” fifty thousand volunteer workers stage a spirited three-week fund-raising drive each fall.

The results have been impressive. Campaign expenses have dwindled to four and a half percent —some of the participating agencies used to spend as high as thirty-five percent. This saving alone has made millions of extra dollars available for actual welfare work. There is no (difficulty in recruiting top-notch volunteers. The amount of money raised in the single campaign is greater than the total previously raised from dozens of single campaigns; business executives encourage their employees to give, because they know it will only happen once a year The result is that of the two million people in the Detroit area, over a million are contributors to the Torch Drive. A central budget committee allocates the amount of money to he given to each participating agency on the basis of need; the degree to which the agency is active in the region; and the agency’s past record of fund raising.

There is no doubt that Detroit’s task of allocating funds to the individual agencies has been made easier by the existence of the National Budget Committee. This body—a creation of the United States community chests and national philanthropic organizations —meets regularly and decides on fair campaign goals for each of its members.

The “one big campaign,” introduced in Columbus, Ohio, in 1952, has also achieved impressive results. The business firms allowing payroll deductions jumped from two hundred and seventynine to more than six hundred. The total number of contributors rose from one hundred and fourteen thousand to one hundred and forty-two thousand. Average contributions climbed from $3.70 to $4.52.

There are many prominent individuals who are opposed to the principle of one combined appeal. Marshall Stearns, for instance, a Toronto stockbroker who has led several Red Cross campaigns, fears that the individual charity would lose out financially, and what’s just as important, would lose their individual identity.

The American experience in united 'fund raising tends to prove that such a view is unduly pessimistic. A survey

covering thirty-one cities where the Red Cross chapters were participants in federated fund raising showed that the local chapters realized 98.8 percent of their goal. In their last independent campaigns they had only collected 95.1 percent of the amount they went after.

Nor is there evidence that a national voluntary agency loses its identity when it goes in for combined fund raising. In Detroit, campaign literature of the Torch Drive constantly publicizes the work of the participating agencies. In addition, a year-round

program of education and public relations is conducted on their behalf. Furthermore, since united fund raising requires fewer doorbell ringers, volunteers belonging to individual organizations can spend more of their time constructively furthering the purpose for which their group was established. These are the reasons why Dr. Harry Nelson, president of the American Cancer Society, recently observed, “Our society has never been more visible to the public than it is today.” There is a valuable lesson in United States’ experience with the one big

campaign. Rut at present a deadlock exists in Canada. On the one hand the community chests, many of the largest corporations and a large section of the public demand an end to the waste and disorder brought about by multiple appeals. On the other hand, the large voluntary organizations— such as the Red Cross and Salvation Army—are opposed to co-operative action. Many observers feel that if this deadlock continues, the ranks of the weary volunteer workers will thin out and t he rich flow of charity dollars will dwindle to a thin trickle, if