Editorial feature: Why animal charities need to learn to pass the hat

From ANIMAL PEOPLE, October 2007:

Among the outcomes of sending ANIMAL
PEOPLE to nearly 11,000 animal protection
organizations worldwide, as often as we can
afford the postage, is that we receive constant
inquiries from people who hope we can help fund
proposed projects, or provide introductions to
others who might, or at least publicize a
proposed project in hopes of attracting funders,
even though more than 80% of our readers are
themselves trying to raise funds for their own
worthwhile pro-animal projects.
Probably every reader of ANIMAL PEOPLE
has at least one brilliant idea about things that
could and should be done to help animals, if
only the money was available.
Some of the ideas we hear about are
impractical, ill-conceived, or have already
been tried in other times and places with
disappointing results. Yet many other ideas
presented to us are eminently practical, and
could succeed with adequate investment. The only
obstacle is that the necessary funding is not
easily or immediately available. Someone needs
to go out and raise the funds, by persuading
donors to put their contributions into this
particular project, rather than any of the
myriad others that the typical donor will hear
about between now and the next time the person
has money to give.

Failing to identify and develop a
specific fundraising base is by far the most
frequent reason why worthwhile projects fail, or
do not even get started. People who care about
animals tend to see opportunities for direct
intervention on behalf of suffering animals much
more easily than opportunities for building the
institutional capacity to intervene-or even the
necessity of developing a support base.
This often leads to counterproductive
behavior, both by donors and by struggling
animal charities who hope to court donors through
doing as the donors ask.
Donors, typically, will view the
charities that spend the least on fundraising and
administration, relative to program service, as
the best and most efficient.
Bluntly put, this is just plain wrong.
It is true that charities spending more
than 35% of their revenues on fundraising and
administration tend to be bloated, inefficient,
and sometimes overtly corrupt.
It is also true, however, that the
average cost of operating an animal charity
during the past 18 years has held steady at 28%.
Charities spending less than 20% of their
revenues on fundraising and administration,
especially fundraising, tend to be starving
themselves at the expense of expanding their
program service to meet the needs they are hoping
to fulfill–unless they already have so much
money in the bank that they can coast along on
the interest. A mere dozen or so of the largest
animal charities in the world are mostly coasting
along on old money. All the rest need to learn
to invest from 20% to 30% of their income and
working time, every day, in self-sustenance
and growth–and donors who really care about
animals need to learn to demand that they do.
Unfortunately, a common quirk of animal
charity donor behavior is to demand that all of
the money the donor contributes be spent directly
“on the animals,” usually meaning actual animal
care. This leaves many of the most dedicated
charities feeling unable to invest in attracting
more donors, lest they alienate the donors they
already have, and encourages some charities to
try to camouflage fundraising expense as “program
service.” Certainly a charity should put at
least two thirds to three quarters or more of its
revenue and working time into direct mission
fulfillment. However, a charity that is
dedicating most of its resources to mission
fulfillment is not more virtuous for not also
building the capacity to do more, by putting
more effort into asking the public to support
good works and giving more people the opportunity
to invest in beneficial projects.
Neither is there any virtue in giving
charities an incentive to conceal the actual
costs of raising the wherewithal to do their
work. Every donor who asks charities to spend
less than the normal and reasonable percentage of
income on fundraising and administration is in
effect inviting them to cheat, because if they
fairly and accurately disclose their overhead
costs, they might not get deserved support.
On the contrary, there might be
considerable virtue in large donors and grant
makers making some contributions on a matching
basis, so that if a recipient charity uses a
reasonable percentage of a sum to attract more
support, it will get a bonus. For example, a
large donor or grantmaker might give $10,000 to
help start a good project, with the proviso that
$7,500 is for the project itself, and $2,500 to
seek additional funding, which the funder will
match up to $10,000. If the charity manages to
use the $2,500 to raise $10,000 from other
sources, it will collect a total of $30,000,
netting $27,500.
Very few donors actually have the
opportunity to give away money that generously,
but those who can are uniquely positioned to help
not just the particular projects they favor, but
the growth of the entire animal cause.

Foundation basics

Of course almost every ANIMAL PEOPLE
reader also has opinions about what big donors
and grant makers should be funding, but are not,
including about what the dozen or so charities
and foundations with huge cash reserves and
investment portfolios ought to be doing besides
sitting on their assets.
U.S. law requires tax-exempt foundations
to disburse at least 5% of their net worth each
year toward fulfilling their charitable purposes.
Most, unfortunately, behave as if the 5%
requirement is not only the minimum they should
give out in the form of grants, but also the
maximum. Rarely has ANIMAL PEOPLE examined the
IRS Form 990-PF filing of a pro-animal foundation
and seen grants made that total even as much as
6% of assets. Yet well-managed foundation
investment portfolios often grow at the rate of
10% or more in good years–and ANIMAL PEOPLE has
seldom seen large foundations lose money. The
only year since ANIMAL PEOPLE started in 1992 in
which the largest pro-animal foundations took
significant losses was 2001.
Except in 2001, hundreds of thousands
and perhaps millions more dollars could have been
invested in the animal protection work that the
people whose estates created most of the
foundations meant to assist, without in the
least jeopardizing the perpetuity of the
foundations.
Several other mega-foundations that were
established in part to help animals have actually
granted little or nothing to pro-animal projects
over the years, or at least in recent years. In
each case, the management of the money either
was placed or somehow fell into the control of
bankers, lawyers, accountants, stockbrokers,
and other appointed trustees who have had little
if any interest in educating themselves about
animal issues, seriously reviewing
animal-related grant proposals, and making a
sustained, conscientious effort to realize the
founders’ wishes.
Unfortunately, despite occasional noise
made in Congress about the need to reform the
laws governing foundation management, the
likelihood of it happening in a manner that
benefits animals is slim to none.
For that reason, ANIMAL PEOPLE advises
estate planners to avoid creating trusts. The
surest way to ensure that the bulk of an estate
will benefit animals is to disburse it
immediately to active animal charities.
Active animal charities should be
knocking on the doors of foundations created to
help animals as often as possible, making every
reasonable effort to shake loose as much of the
money as possible before it is all diverted to
other purposes, such as making more money for
the portfolio managers. Usually pro-animal
foundations make most of their useful and
significant grants to help animals in their first
years of operation, while under supervision by
at least some people who had a passing
acquaintance with those whose money the
foundations possess. The first years of
operation are also usually the best and only
window of opportunity for grant applicants to
cultivate in the trust managers some
understanding of the work they are supposed to be
assisting.
Yet while ANIMAL PEOPLE strongly
recommends knocking on foundation doors, we also
must point out several disillusioning realities
about what foundations do.
Very rarely, a foundation is created
with a “sunset clause,” requiring the foundation
to disburse all assets and cease operating at a
particular time, such as after the death of the
last original trustee.
Except in the case of a foundation with a
“sunset clause,” foundations are managed for
self-perpetuation, by people for whom
“perpetuity” is a mantra.
Although foundations are typically
oriented toward funding special projects, they
inherently tend to favor projects that will have
material perpetuity, such as building a shelter
or clinic, not projects whose results will
scatter into invisibility, like sterilizing and
vaccinating tens of thousands of street dogs. If
tens of thousands of street dogs are sterilized
and vaccinated, the shelters and clinics might
not be necessary, but money managers rarely
think in such terms. What they want to see is
something that will have the foundation’s name on
it in a visible place for decades to come.
Likewise, foundation grant makers tend
to favor the charities that have existed the
longest, under the most stable management.
Dynamic, fast-growing young charities typically
stand very little chance of getting genuinely big
grants. Instead, the biggest grants tend to go
to the applicants whose profiles most nearly
match the grant makers’ own perception of good
management–even though good management in relief
of immediate suffering is an entirely different
matter from good management of a bank account.
ANIMAL PEOPLE has actually met grant
makers who refused to make grants to charities
with less than a year’s operating expenses in
reserve, because in the perception of the grant
makers, failure to build reserves–and even an
endowment–indicated that a charity might not be
stable enough to fulfill the terms of a grant,
no matter how urgent the need and how dedicated
the charity personnel.
Foundations, in short, are inherently
conservative. Even when they do make a
sustained, conscientious effort to realize the
intent of the funders, it is unrealistic to look
toward foundations to underwrite anything
innovative or in any other way risky.
Foundations want not only safe bets, but no
bets; investments, not gambles.

Appealing to the big groups

The other major institutional sources of
funding for pro-animal projects are the handful
of large, well-supported animal charities,
which operate on much the same basis as the
needier charities applying to them for help.
A short and by no means complete list of
some of the most prominent animal charities that
help to fund other animal charities as one of
their high-profile missions includes the Royal
SPCA of Great Britain, the Humane Society of the
U.S. and Humane Society International, the
American SPCA, the Best Friends Animal Society,
PETA, the North Shore Animal League America and
Pet Savers Foundation, Dogs Trust, Vier Pfoten,
the World Society for the Protection of Animals,
the International Fund for Animal Welfare, the
Animals Asia Foundation, In Defense of Animals,
and ANIMAL PEOPLE, which over the past two years
has routed more than half a million dollars to
assist promising humane projects in the
developing world.
This list is considerably longer than it
would have been 15 years ago. Among the most
encouraging trends in animal charity since ANIMAL
PEOPLE started in 1992, beginning immediately to
show the way by example to the extent of our
ability to do so, is that many of the biggest
and most economically successful organizations
have discovered the value of materially assisting
smaller organizations of allied purpose, whose
fundraising capacity is less. Best Friends and
In Defense of Animals began helping other
charities as soon as they gained the capacity to
do it, while the Animals Asia Foundation and
Vier Pfoten made helping other animal charities
an integral component of their own growth.
But big charities help little charities
at a price. The money that any charity grants to
another must be raised, just like all of the
other money a charity obtains to spend or invest.
Rarely does a charity assist another at cost to
its own program or reserves. Indeed, if a
charity does redirect funding at substantial cost
to itself, this may flag the organization to
charity regulators for investigation of a
possible top-level conflict of interest.
Further, it is worth noting that the interest
from cash and investment reserves often is the
source of the funding that big charities use to
raise more funds. Reducing their reserves, from
their perspective, means not only reducing their
institutional stability but also eroding their
fundraising capacity.
When big charities help little charities,
most often it is at the cost of the big charities
claiming credit in their appeals for the work
done by the little charities.
Fifteen years ago there was often a
blatant discrepancy between the prominence with
which some of the biggest and oldest charities
claimed credit and the paltry size of the funding
they gave to the few little charities they
assisted. (The North Shore Animal League was a
significant exception, making more than 30
grants of $10,000 or more to smaller animal
charities before mentioning anywhere except on
IRS Form 990 that it made any.) Many exposés
later, all of the big charities that claim or
imply that they are significantly assisting
smaller charities appear to be genuinely doing
it. Only IFAW appears to be doing less for
animal welfare relative to resources available
than 10 years ago, while shifting its emphasis
from promoting animal welfare toward species
conservation.
In general, small charities helped by
larger charities now appear to be getting a fair
cut of the proceeds from appeals based on their
work. Yet this is still far from an ideal
situation. The work of the funded smaller
charities is often proceeding on an extremely
insecure footing, heavily dependent on the
perceptions of distant grant makers and subject
to pressures or changes within the grant-giving
charities that may have nothing at all to do with
the recipients’ missions or mission fulfillment.
Donors are increasingly identifying the
smaller charities’ work with the larger charities
that are raising their funds, so that if
anything happens to fracture the fundraising
relationship, the recipient charities will have
an even harder time building a support base than
they did before they attracted big charities’
help. The big charities are expanding their
already considerable capacity to raise funds,
while the small charities are still not learning
how to compete for their share.
To their credit, most of the big
charities that financially help little charities
today are investing heavily in teaching
fundraising technique. Some make grants in
support of projects meant to help little
charities increase their fundraising capacity.

Paying staff is a start

ANIMAL PEOPLE has gone a step beyond
that. While most donors and funders focus on
special projects, we believe that the most
urgent need of animal welfare organizations in
the developing world is to for honest and sincere
animal advocates to become able to work for
animals full-time, instead of being limited to
doing what they can do on the side while holding
other jobs to support themselves and their
families. ANIMAL PEOPLE at present pays salaries
to three persons doing animal welfare work in
Africa. We would like to expand this program
when funding becomes available.
Being able to work for animals full-time
is a critical first step toward self-sufficiency
for animal advocates in the developing world,
since effective fundraising requires not only
fulfilling an inspiring program but also finding
the time to publicize it, promote it, and go
out to seek support for it–all not as easily
done in odd hours as feeding dogs and cats and
intercepting poachers.
Ultimately, no matter what the big
foundations and big animal charities do in
support of the more than 10,000 small charities
who handle most of the animals and most of the
local crisis situations, and no matter what
ANIMAL PEOPLE is able to do by way of
demonstration, the small charities each have a
need and obligation to develop their own
independent bases of support, so that their work
can grow to meet the need, without having to
depend on miracles.
Each local animal charity, even in the
poorest parts of the world, has unique and
specific access to two potential sources of
support that are not readily accessible to anyone
else. One is the local community. The other is
the people who have left the local community,
gone elsewhere, become economically successful,
and now may be persuaded to do something to help
the animals back home.
These may not appear to be particularly
lucrative support bases, but looks can be
deceiving. The history of humane work is full of
instances of seemingly impoverished small donors
bequeathing property that turned out to be worth
a fortune to humane societies that befriended
them and helped their animals. People who have
had nothing at all to donate have often become
extremely helpful volunteers. Volunteers who
worked in the most menial occupations have
occasionally introduced their wealthy and
influential employers to humane societies, with
extremely beneficial results.
Prudent fundraisers learn to never
dismiss a potential source of help based on
superficial appearance.
The emigré community in particular is of
fast-growing economic significance to all strata
of the developing world. The labor outsourcing
industry, for instance, was built by people who
left poor nations, found fortune abroad, and
figured out how to take some of it back home.
The best way to get help from émigrés
making good abroad is to develop positive
relationships with their families and friends who
are still at home. Even if those people can
barely donate a dog biscuit, their influence can
prove invaluable when the successful son,
daughter, cousin, or friend returns to visit,
and looks for ways to assist those left behind.
Raising enough money locally to fulfill
all local humane needs remains an elusive goal
even in many of the most affluent communities.
Raising enough to sterilize and vaccinate every
street dog and feral cat in the developing world
may seem impossible, even tapping international
resources to the maximum available.
For the time being, doing much of
anything at all in poorer communities may require
attracting as much outside help as local
charities can find.
In the long run, however, success
depends on developing independent fundraising
capacity. Addressing a local crisis may still
require e-mailing urgent appeals to foreign
donors, as well as passing the hat locally, but
local animal charities should not be having to
e-mail urgent appeals to foreign donors just to
ensure their continued institutional survival.
Neither should their continued survival be
dependent upon a slow-moving foreign grant making
process.
Developing basic day-to-day support
locally should be a priority of every charity,
recognizing that while building a sound local
fundraising base takes much hope and patience to
accomplish, it is essential to sustaining
progress.
Only with a firm local footing, for
example, can a charity consistently accomplish
the special projects that outside donors most
readily support. And, wish though we do that
foundation grant makers had more vision,
especially in considering projects in the
developing world, reality is that the charities
in the developing world which attract the most
local support are also the most likely to win
foundation support.