On October 28, the front page of the Globe and Mail read “Ottawa looks to rewrite rules on giving.” In it, Diane Finley, the Minister for Human Resources and Skills Development, unveiled the government’s plan to put in place a sweeping set of tax reforms that will shift responsibility for the nation’s social services away from government and into the hands of individuals and business.
The changes are said to be “inspired by British Prime Minister David Cameron’s Big Society experiment, in which social responsibilities that traditionally fell to the state are put in the hands of the citizenry and private sector.”
There has been a lot of controversy about the “experiment”. While Mr. Cameron says it will empower communities, critics call it a “public-relations effort to put a positive spin on deep cuts.” Whether it’s good or bad, right or wrong, non-profits need to be prepared for the changes ahead.
What kinds of changes can you expect to see? Ms. Finley was vague, but she did say that that “the government plans to start off small with a few pilot projects. The most likely would be to replace some traditional grants with a hybrid version – a defined amount that recipients could increase by meeting agreed-upon targets.” So there will still be financing, but it will “come with more strings attached in an effort to ensure that organizations deliver promised social gains.”
In the end, it looks as though non-profits will have to look to the public to shoulder more of the responsibility. Luckily it also sounds like the government plans to give donors bigger tax cuts for charitable donations, which is critical if this is where the majority of funding for non-profits is going to come from.
So, what do you do with this information; this vague description of changes that may happen? Well, the best thing you can do right now is take a good look at your organization. How does it spend money? To what extent does it achieve the objectives set out? Do you gather the information needed to show that you are achieving your objectives? How does your efficiency compare with similar organizations? Government cuts are going to mean greater competition for funds, so it’s time to do a little self-evaluation to see how you measure up, and take any actions you think are necessary to increase efficiency and effectiveness.
How is efficiency measured? Often efficiency is measured by ratios: for example, administrative cost per dollar raised . Here is some information on how charities are rated from The American Institute of Philanthropy and a guide on how to calculate ratios from Guidestar.
Efficiency is important for the public as well. They have become increasingly critical of non-profit spending over the years and are more careful than ever before about who they donate to. They want to see that a non-profit uses funds wisely, that they deliver services as promised and that they are accountable. If this group is going to become the primary source of funding then, non-profits need to start winning back their trust. The best way to do that is to be accountable and transparent about how funds are spent.
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