Sunday, January 31, 2010

Questions About Wyclef Jean's Foundation, Yele Haiti, Is A Lesson For All Nonprofit Fundraisers

Maybe like you, I've been loosely following fundraising for the Haitian earthquake victims. I've read, here and there, about The Smoking Gun's January 14, 2010 post (including a 1/15 update on the post) which poses a series of questions about the spending pattern of Ye'le Haiti the charitable foundation started by Wyclef Jean, a native Haitian and former member of hip hop group, The Fugees. On January 18, Jean came out in the press and both admitted to mistakes having been made, defended other aspects of the foundation's operations, and said that lessons have been learned. He has since continued fundraising for his foundation so it may provide its programs for the people of Haiti.

While it's great that The Smoking Gun made public concerns about spending and where certain money raised by Ye'le Haiti went and for what (was the money spent for the foundation's charitable work?); it was wise that Mr. Jean considered the concerns, reviewed his organization's spending, and went public to address concerns. That being said, it is always very prudent of anyone considering donating to any nonprofit that they review which nonprofits they could give to (for whichever cause or issue they choose to support) to see how much of every dollar raised is spent on the work of the organization's mission. It is generally accepted, according to American professional nonprofit best practices, that a nonprofit that spends 80% or more of every dollar raised, on the services or products that it exists to provide as a viable, probably well-managed, and 'safe' nonprofit to give to (expecting that you want your dollar contribution to do the most good that it can). Donors can research nonprofits by looking them up and checking how much of each dollar raised is spent on programs or services in Charity Navigator, Guidestar, or with the State Attorney General's Office of the state that the nonprofit is operating in.

Donors have the right to research who they give to, give the amount that they want, to not give if they choose not to, and to expect results from the donation they contribute. Transparent nonprofits help their donors understand what their contributions have done by providing financials when requested by donors or potential donors, these nonprofits report in their annual report and other organizational publications (i.e. newsletters, donor thank you letters, etc.) how much of each dollar raised is spent where, exactly what fund an individual contributor's dollars went to and what it has done or will do (honestly), and provide the donor (or potential donor) with information about the organization's current programs, who is being served, how service is provided, why that service in particular is provided to the community, and quantifiable results of the nonprofit's work. Donors are not simply giving money out willy nilly and they shouldn't. Donors give out of concern or interest in an issue or a cause and they want to see real results that actually provide efficient and practical solutions.

In no way am I admonishing Jean. It's probably fair to assume that Mr. Jean created and began his foundations with the best intentions but perhaps, himself, did not know professional nonprofit best practices: how to operate a nonprofit (its fundraising in tandem with the work of its mission statement) in the most ethical and efficient modes, according to professional nonprofit best practices. It's O.K. to learn on the job. What's more, he's admitted to errors and said that they will not happen again.

For all of you, though, who have the best intentions but perhaps do not understand what motivates donors to give to charities (whether they donate $10, $200, or $25,000), the following posts will help you to understand not just why understanding what motivates donors' giving is powerful to help your organization raise more money more often; these posts also describe professional best practices and why they are the 'best way to operate'. The fact is, these best practices are such because they are not only successful, they work over and over again for all kinds of different nonprofits (different aged organizations, different size organizations, nonprofits in different regions, etc.). The wheel doesn't need to be reinvented if there's an accepted effective standard to learn and apply in practice.

Fundraising...Mission Success, Community Building: It's All the Same

A Shift In Giving: Proactive Philanthropists Instead of Passive Donors

How To Increase the Number of New Donors

Your Nonprofit Needs Cash Flow. That Means Your Nonprofit Needs Your Individual Donors...

How the Everyday Donors Can Become A Major Ally In Your Nonprofit Surviving This Economy

Keep in mind that there are many different types of donors that give to a nonprofit: individual donors, grant donors such as foundations, major donors, sponsors, etc. The basic premises in the above posts (whether they refer to one type of donor or all kinds) applies to all types of donors. Donors are investor partners and in this way interested in the same result: the nonprofit doing for its constituents what it exists to do, efficiently and successfully.

11/28/11 Update:


PJ said...

Thanks for the post, particulary the links to other articles.

I think 'transparency' is increasingly becoming an important buzzword right across the non-profit sector.

In the past, people making applications to grant making foundations would have encountered some level of scrutiny with each application. However, the average member of the public, considering where to donate his 10 or 100 dollars will not have same time nor inclination to apply that level of scrutiny.

At the same time, reading around the web, people are asking questions about where their dollar goes, how much is taken up on administrative costs and how effective is their donation applied. The interesting thing is that this way of thinking seems to be applied regardless of the level of donation being considered.

For those reasons I think we'll be hearing a lot more about transparency for non-profits.

Arlene M. Spencer said...

I agree with you - transparency is a contemporary key issue on all sides of philanthropy (on both the donor's side and the nonprofit organization's side). Donors expect results whether donating $25 or $250,000 by way of the recipient nonprofit's mission (and how it delivers its mission). It's just that simple. The nonprofit then has the duty of making sure its supporters (not just donors but volunteers, potential donors and volunteers, and even community partners) know about the progress, successes, new goals, and where dollars were spent (i.e. overhead costs vs. programs' costs).

Great blog, by the way!

Thanks for the comment,