I interviewed Mr. Cheng, author of Doing Good Well: What Does (and Does Not) Make Sense in the Nonprofit World, about a number of issues that are hot buttons in the nonprofit arena.
Joanne: With the economic situation around the world, what would you advise someone who has an idea for a new nonprofit to do? Wait, plunge ahead, seek out others?
Cheng: My response would not be different than in regular times - consider all the factors and get what help you can before blindly jumping in.
Passion for the cause is important, but you also need to think and work through all the other aspects of starting up a new organization. These include registration & regulation, resources (financial, staff, volunteers), infrastructure (premises, objectives, goals, organization structure), and implementation requirements and timelines. In the current economic situation, it is just that much more challenging to ensure a viable and sustainable startup.
Taking some time to understand the landscape and the requirements helps in making the decision to work with an existing organization or to start a new one. And if you start a new one, you can learn from the others who have done it.
Joanne: How can donors make sure that they are not contributing to global terrorism when supporting a nonprofit or NGO? Are there resources a donor could seek out when doing due diligence on a charity?
Cheng: If donors give to registered charities, they should not worry too much about the funds going to finance terrorism. In the aftermath of 9/11, many jurisdictions have introduced enhanced anti-terrorism regulations, guidelines and checks for charities.
However, if donors wish to give to unregistered charities especially in foreign countries, I would advise them to do so through community foundations and funds that could conduct the appropriate due diligence on these charities.
Joanne: What are the best ways for a charity to raise funds right now, in this economic climate?
Cheng: The general expectation is that fundraising is more challenging in the current economic climate. So, charities should ensure that they cut their coats according to their cloth.
However, there are some silver linings. First, there are enlightened donors that recognize that as the times get worse, the needs are greater and the supply of donations likely lower. So these donors, including governments, are revving up their support of charities. For example, in Singapore, the government has increased tax deduction for donations from 200% to 250% and increased the government grants available for charities. So have several foundations gone on record to say that they intend to increase the level of their grant expenditure in the coming year in anticipation of the greater needs.
Secondly, there is an area where the supply of resources is increasing for charities – people (staff and volunteers). With the number of people displaced from the corporate world, some of those who are not so financially distressed and now looking for more meaning in life, are finding refuge in the charity world. The increase in number and quality of staff and volunteers can help to get more done in the charity sector and perhaps at an even lower cost.
Joanne: What role in philanthropy do you think the seemingly opposite poles of philanthro-capitalism and micro-philanthropy will play in the next couple of years in supporting charitable causes?
Cheng: Well, I am not sure if I would say that these two terms are polar opposites. Philanthro-capitalism often refers to the practice of applying business methods and measures to philanthropy. In its broader meaning, it encompasses concepts such as venture philanthropy, social enterprises and social entrepreneurship. Micro-philanthropy refers to smaller and often more direct interactions between the givers and those being helped.
Both terms are just part of an increasing diverse charity landscape as the giving community and the charity sector seek to find new ways to be more effective. It is the result of a (second) philanthropic revolution that is taking place as a new generation of donors enters the charity world. These neo-philanthropists want to be actively engaged with their giving, they are more ambitious and they want to try new methods applying the ideas and concepts from their corporate and business backgrounds. Their variations are generating a slew of new terminology which will take a while to settle down. Meanwhile, we can expect more of these innovations.
Joanne: How can a relatively small nonprofit become more entrepreneurial?
Cheng: Small organizations, whether for-profit or nonprofit, already tend to be more entrepreneurial. They are naturally more nimble and innovative.
Hence, they should take advantage of their strengths. They should focus on the innovations and programs which play to their size and capabilities. If they need scale on any particular program, they should seek collaborations and leverage partnerships with other organizations.
Also, they should always remember that in the charity ecosystem, there are a number of support organizations for nonprofits: foundations, venture philanthropists, service providers, capacity builders, etc. And some of them are geared specifically to helping the smaller nonprofits.