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Outsourcing

Taking a Closer Look at Outsourcing Your Charitable Giving Campaign

For many years companies and pubic employers have worked in concert with one or more charitable federations to produce popular and effective workplace giving campaigns. Employers strive to maximize the impact their campaign has on employee morale and on the communities in which they operate, while keeping costs to a minimum. In an effort to improve the cost effectiveness of running a workplace giving campaign, many organizations are looking to outside contractors to manage their annual campaign. Let's take a closer look.

  1. What is the goal behind your campaign?
  2. What are you looking for?
  3. What's working or not working right now?
  4. What is the impact on your employees?
  5. What is the Impact on the Charitable Organizations?
  6. What is the Impact on Other Federations?
  7. What type of timesaving can be expected?
  8. Is Service Improved?
  9. What are appropriate administrative management charges?
  10. Finding the Balance

What is the Goal behind Your Campaign?

Why does your company host a campaign? What role does it play in meeting your community and employee relations objectives? What elements of the campaign are most important? Some goals may include:

  • Increased employee participation in their community.
  • Improved corporate status within the community in which it is located or that it serves.
  • Improved employee morale.
  • Expanded employee benefits through convenient vehicle for philanthropic giving.

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What Are You Looking For?

What is your motivation for seeking outside assistance? Is your campaign not meeting your goals? Has employee participation leveled or begun to drop? Are expenses associated with the campaign running too high? Typical desired outcomes when considering new approaches to a campaign include:

  • Improved campaign participation - greater percentage of employees choosing to participate.
  • Increased campaign dollars raised - expanded gifts from participating employees.
  • Greater impact in the community - keeping the not-for-profit sector strong.
  • Time savings - fewer staff hours devoted to organizing, coordinating and processing the results from the campaign.
  • Financial savings - fewer dollars spent on campaign support expenses.

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What's Working or Not Working Right Now?

Identify what you value and what works well in your campaign. Then list what areas you wish to focus on for assistance. Examples of the positive elements may be:

  • When conducted internally, the campaign takes on the look and feel of the company and its particular workplace culture.
  • Personal contact between employees builds morale and a sense of shared accomplishment.
  • Being a part of a generous campaign builds pride in the association with other employees and the company.
  • It's fun, plain and simple.

Examples of areas were you're looking for improvement may be:

  • Time is tight so fewer employee resources can be directed at the campaign.
  • Processing employee pledge data has become too cumbersome.
  • Campaign support materials (pledge forms, brochures, posters, giveaways, etc.) have gotten too expensive to produce.

Consider the Pros and Cons of Outsourcing Each Element Separately

Not all difficulties are best resolved by an outsider. Generally speaking, administrative functions like data processing can be done by an outside contractor without much negative impact on your campaign, but the more personal aspects of motivating employees to commit a donation to a community program are best done between colleagues.

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What Is the Impact on Your Employees?

  • Shrinking to one federation managing the campaign may strike employees as a narrowing of the campaign. By now it has been established in the industry that a greater diversity of federations participating makes for an improved campaign overall. Employees appreciate that the diversity of charitable organizations represented in the campaign reflect their own diversity of background, beliefs and giving priorities. In practice, an outside-managed campaign comes to reflect the perspective of the manager. Occasional appearances by independent federation representatives at kick-offs, speaking opportunities or at the finale do not remedy the lopsided experience of employees that the campaign is being driven by a more narrow vision.
  • Quality representation promotes employee giving. No surrogate can represent the variety of programs within a particular federation and their impact better than a representative of that federation. Employees want to be inspired and called to action. This kind of enthusiasm in a campaign comes only from representatives speaking about what they know best and feel most deeply. To lose this chorus of voices is to reduce the possible impact a campaign can have.
  • Employees scorn fees against their donation. Using an outside contractor usually means the introduction of additional overhead fees. This means a smaller portion of an employee's contribution will make it out into the community.

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What is the Impact on the Charitable Organizations?

  • Community nonprofits make careful decisions regarding which federation to associate with during workplace campaigns. Most choose to join federations that offer important value-added services above and beyond simple inclusion in workplace campaign brochures. Community nonprofits rely on their trusted allies at the federation to present their case to the public.
  • There are often financial consequences to the community nonprofit when a management contract is introduced. The contract usually calls for an administrative fee charged against all contributions, whether or not the charity is a member of the federation managing the campaign. The campaign manager agreement typically interrupts the contractual relationship the community group has with a particular federation for these services.
  • Offers by campaign managers to eliminate "double overhead" costs by simply routing the contribution directly to the community agency ignores the collateral damage to nonprofit communities. The valued relationship between the agency and the federation of their choosing is being undermined. These so-called "direct payments" sap resources away from independent federations and the communities of nonprofits they nurture and support.
  • Efficient nonprofits succeed in stretching every dollar by working together, sharing expertise and building valued networks. Independent federations are the direct manifestation of these organizing efforts by nonprofits. To see the federation as simply an added level of "overhead costs" is to miss an important aspect of their contribution to the community. Care should be taken to support the nonprofit community and not unwittingly weaken it.

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What is the Impact on Other Federations?

  • It is always the first priority of a federation to participate equally in a workplace campaign. The use of a campaign manager often results in changes that reduce the exposure and participation of independent federations, resulting in lost support to their member charities.
  • When campaign planning, coordinator training and the scheduling of campaign events or speaking opportunities are housed within one organization, each participating federation loses the chance to build relationships with employees. It is through these relationships that a federation makes the type of impact necessary for success.
  • The introduction of a second layer of overhead fees creates a bias in the system. Seen from the perspective of the independent federations, it is a tax on donors who choose to give to a charity represented by a group other than the contracted campaign manager. That is, if a contribution is made to an agency affiliated with the manager, only one overhead charge is applied. If the contribution is made to an "unaffiliated" agency, then two overhead charges are applied. This is a very powerful disincentive to employees to stray outside of the now "preferred" list of agencies.
  • Direct payment of contributions to community agencies, as described above, is appreciated as a threat to the very mission of the federation. This short-sighted "solution" as a way to reduce costs ignores the important community-building functions described above found in independent federations. The federation is more to the community agency than a simple fundraising strategy.

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What type of timesaving can be expected?

  • Planning - The contractor cannot run a campaign to your specifications and liking without working with your staff. Campaign planning meetings, coordinator training sessions, and developing strategies for reaching and motivating all employees are necessary activities for a successful campaign, with or without a contractor. Little time saved.
  • Logistics - Producing the campaign time line, coordinating speakers to visit employee groups, planning kick-off events and a campaign finale are areas where some staff time may be gained. It's worth noting, however, in cooperative combined campaigns, these activities are often shared (free of charge) by the participating federations, coordinated by the "liaison" federation.
  • The Campaign Itself - Campaign trainings and pledge material distribution and return is not well suited to an outsider. It is best, by far, for employees to receive inspiration and their campaign materials from their colleagues. Careful prompts to review the materials and complete the pledge form can be made among friends and acquaintances. Materials are then returned by employees without the experience of coercion on the part of a professional fundraiser. Little time saved.
  • Pledge Processing - Processing pledge results data is the single activity well-suited to an outside contractor. Decisions to outsource the entire campaign generally begin with a desire to lessen the annual burden on the payroll department.

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Is Service Improved?

  • To employers - Getting assistance conducting the campaign is generally seen as helpful and appreciated. There is, however, likely to be a period of negotiating during which company representatives seek to get the proper look and feel and follow-up for the campaign from the contractor at the appropriate cost, rejecting the cookie-cutter approach.
  • To employees - If independent federation participation is limited, employees lose important contact with representatives who can speak with authority about the myriad nonprofits included in the campaign. Long delays are common between when the campaign ends and when the manager completes their data processing, forwarding final campaign data to the independent federations. This frustrates employees who wish to be thanked promptly and receive confirmation that their donation has been received and routed appropriately.
  • To charitable organizations - A well run, employee-based campaign with opportunities for meaningful visibility and representation is the hallmark of service to participating charities. Decisions made to limit any of these elements will reduce the service to community nonprofits.
  • To federations - The campaign management contract is between the employer and the managing group. Frankly, service to independent federations is not a priority. Unfortunately, numerous issues have characterized these relationships in the past resulting in unnecessary donor resources being spent to resolve them.

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What Are Appropriate Administrative Management Charges?

  • In many cases a campaign management service will charge a fee equal to a simple percentage of the overall campaign dollars raised. The logic here is attractive: no out of pocket expenses on the part of the employer. The campaign is essentially self-supporting by the donors themselves. On closer inspection this system burdens the most generous donors and is not related to the actual costs of conducting the campaign.
    An example of the above using 14% as the fee charged: If an employee makes a $5 per pay period contribution, or $130 total (26 pay periods), they are charged $18.20 for their share of campaign management. If, on the other hand, an employee makes a $50 per pay period contribution, or $1,300 total, they are charged $182.00 for their share of campaign management. And yet, practically speaking, the campaign materials and data processing for these two contributors are virtually identical.
  • More and more employers, if they pursue campaign mangers at all, are asking for clear campaign budgets, including a per-transaction fee, not a percentage charge.
  • Fees associated with the production of campaign materials vary widely. The rub often comes when these expenses are shared with other participating federations (each paying for their share of combined materials). In this situation you have federations sharing the costs of materials they did not have a hand in designing, or may specifically contrary in design to their best interests. Combined print materials are regularly produced among the federations for dozens of multi-federation campaigns annually and, in many cases, would have been made available to the employer free of charge.
  • The campaign management service may speak of offering a "cost-recovery" refund to participating federations as a way to lessen the double overhead phenomenon. The explanation to employers often goes something like: "Since we will be doing the planning, management, materials production and the data processing, the independent federations will not have to do this and will thus save money. In fact, the experience of independent federations is that their costs are not reduced at all by the activities of the campaign manager, plus some aspects of these federations' service to their donors is corrupted. Regardless of the pledge processing activities of the manager, independent federations will need to do their own in-house data processing to ensure accurate distribution of funds raised.

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Finding the Balance

  • Employers are looking for assistance with their annual workplace charitable giving campaigns and are likely to be considering some degree of outsourcing for this help. Here are a few items to consider when thinking about getting the help you need:
  • Identify your cost centers. Can these specific activities be contracted for without negative impact to the campaign?
  • Given the particular culture in your workplace(s), what elements of the campaign are best conducted by in-house staff, federation representatives or an outside contractor?
  • What aspects of a diverse, personal, employee-centered campaign are you not willing to lose when considering a contractor?
  • What can be done in partnership with the federations that could achieve your goal for less money.
  • Require a full description of services to be provided, including time tables and follow-up activities.
  • Run the budget by a colleague from another federation to get a sense of cost variables. Are they realistic and necessary?
  • What systems are being created to evaluate the success of the contract?

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For more information, or to ask additional questions, contact the business development office at EarthShare California.