Time to bust the NFP spending myth

On 5 December 2013, Queensland MP Mal Brough called on the government to make charities’ tax-deductible gift status conditional on the disclosure of their marketing and administrative costs.

“The question is, how can those who donate be confident that their contributions will be used for the purpose intended and not be eaten up in bloated administration and marketing expenses?” said Brough.

The use of the word ‘bloated’ suggests that Brough views charities as money wasters – a view that sadly seems to be shared by many other Australians.

While mainstream media continues to report on popular opinion, the silence from the not-for-profit (NFP) sector has been deafening. Does the sector really all agree that keeping overheads low is the way to achieve impact and that spending money on marketing is inherently wasteful? Or is fear of public disapproval the real silence motivator?

According to the report Good charities spend more on administration than less good charities spend published by Giving Evidence in May 2013, high-performing charities spend more on administration costs than weaker ones do.

So why isn’t effective charity marketing seen as valuable and essential, when the evidence shows that it has the potential to create positive impact for society?

One reason may be that until recently, the public had difficulty finding enough information to judge how charities perform. This is now being addressed by independent national charity regulator The Australian Charities and Not-for-profits Commission (ACNC).

On the same day that Brough called for greater transparency and regulation, Federal Social Services Minister Kevin Andrews revealed a plan to wind it back. Andrews intends to abolish the ACNC, with repeal legislation to be introduced into Parliament in 2014.

The rationale for this move is to “empower civil society, and leave charities free to get on doing what they do best, which is to respond to the issues of concern within our communities,” says Andrews. A replacement centre for excellence and a possible national register of charities are planned. So it seems that the public may need to find a different way to get the transparent information it requires.

Dan Pallotta’s book Charity Case: How the Nonprofit Community Can Stand Up For Itself and Really Change the World calls for a national leadership movement to re-invent charity and develop a unifying strategy to change public opinion – in Pallotta’s view it’s the only lever that really matters. He believes this movement’s charter must be to teach the public to think differently about value – the investment in leadership, marketing, fundraising and expansion.

It’s time to start a new conversation. NFPs need to stop apologising for the way they run their organisations and ditch the myth that they are somehow more worthy if they don’t spend money on marketing, branding, staff and infrastructure.

Demonstrating effectiveness and showing that investing in back office administration, systems, and marketing is critical to raising awareness, engaging supporters, and converting engagement into dollars is a must for NFPs. Effective marketing is as important in the NFP sector as it is in the commercial sector. After all, corporates are just making money – NFPs are changing the world.

The NFP sector employs more than one million Australians – eight per cent of the workforce – and has an annual turnover of around $100 billion. The health and community services sector is the nation’s largest employer. It’s time the sector took the lead to have its voice heard.

*This article represents the author’s personal views and does not purport to represent the views of The Benevolent Society.