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You Have to Spend Money to Make Change

Last week, my colleagues Rosanne Tollenaar, Jann Beeston and I attended CCVO’s second annual Connections Conference in Calgary. Many of the speakers at the conference, as well as the participants, spoke with frustration about a common misconception about the nonprofit/voluntary  sector:  that putting money towards administration and overhead costs somehow takes money away from the work nonprofits do, rather than make their work possible. Those in the sector know that this isn’t a new problem – organizations have long been trying to offer successful programs and services, while struggling to find money for the organizational infrastructure necessary to do so.

Sue Tomney, CEO of the YWCA of Calgary, a panelist at the conference, made a strong case for why funders should want to see administration fees in their contracts and grants to nonprofits by reframing this issue from funders’ perspectives. She described her dream funder as someone who insisted on 15% of a contract budget dedicated to administration and 10% assigned to advocacy work.

A realistic cost for administration shows the funder that the organization has the governance, policy, and financial oversight to properly manage a contract or grant. While this may sometimes be available in-kind through a board and volunteers, most organizations have costs associated with bookkeepers and financial controllers, leadership and management positions, and knowledgeable staff familiar with the specifics of internal policies and legal requirements. As well, a substantial administration budget line shows funders that staff at the organization are being paid and managed fairly, and that the organization has the appropriate people, infrastructure, and capacity to communicate with the funder, internally, and externally throughout the project. Without these things in place, a funder should be concerned about how their contract will be carried out.

Tomney included 10% advocacy as well on the basis that most funders want to make an impact on an issue or cause through their contracts and grants. For example, a funder choosing to support the YWCA on an initiative to help homeless women is likely concerned about homelessness, domestic violence, or mental illness. By requiring an organization to do advocacy work around these issues, the funder can ensure that the contract works toward eliminating the problem, rather than providing short term band-aid solutions. Eventually the funder won’t have to give money to the organization and instead will have invested in the solution(s).

Understanding Tomney’s perspective puts nonprofits in a better position to make our case to funders for why these costs are necessary. Hopefully it can open funders’ eyes to why we should all be on the same page when it comes to paying for the work required to improve our communities and change our world.

Here’s more reading on why it’s necessary to spend on administration.

 

Sam Kriviak, Program Coordinator

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