CBC News recently reported that “Charities paid $762M to private fundraisers”. The number struck me as relatively insignificant given the fact that annual fundraising accounts for about $2.8 billion and over the time period that the report covered (5 years) the fundraising dollar value was over $8.2 billion.
The significant facts lay deeper in the story, where cases are outlined where fundraising costs were 75% and more of the funds raised, in fact some cost more than the donations brought in. Our government has rules governing fundraising activities (what don’t they have rules governing?) The rules say that 35% is a good measurement to use when comparing costs to revenue, and quite frankly, I agree. Consider that of 85,000 registered charities in Canada, only 651, less than 1 percent used external fundraisers. The other 99% either used volunteers, internal employees or some variation, usually citing the high cost of external assistance as their reason for not using professionals.
In the world of sales we measure the value of an expert salesperson along the same lines, with revenue generation, potential development, building long term relationships and goodwill as items on the scorecard, all weighted against the cost of his or her services. It is not uncommon for companies to look to sales people to generate 2 or 3 times their cost in returned revenue. Say for instance a salesperson brings in $250,000.00 in revenue, not sales, hard dollars that go to the bank. In doing so they are raising the reputation of the company, which in turn promotes long- term relationships, encourages client referrals and ensures future sales, sustainability. I think you would agree that compensation of $82,000.00 would be fair, considering the company is getting a 66% return for their investment.
The real comparison lies in the numbers of companies that don’t believe a skilled salesperson is worth the money they would have to spend. They scrimp and save, and make do with inadequate sales agents, pay them far below what they are worth, create targets too high and in turn decrease the commissionable compensation, and then are quite surprised when they bolt for the competition.
It is true, money doesn’t grow on trees.
Revenue, whether it is not for profit donations or B2B and B2C, profits has to be earned, and it is the trained professionals that go out and earn it. When I speak to leaders of small and large companies, I hear the same song time and again “we can’t afford to pay a good salesperson”. The “ afford” and “pay” mindset has to be relinquished in favour of viewing the money spent as an investment in generating revenue. If a salesperson is not generating multiple times their compensation then there is either a problem with the territory, the skills of the salesperson or the mix of base and commission to drive performance.
If I told you that an investment of $30.00 right now will return $100.00 by the end of the year, and continue to pay dividends for years to come would you give me the money? (You’d have more money to give to charities then!)