Core Mission Support: What It Really Takes For An Organization To Thrive
Imagine for a moment that animal advocates had all the necessary tools and resources that we needed to fulfill our missions. What thoughts come to mind? Perhaps, like the Faunalytics team, you imagine having unfettered access to research that answers the many questions we have about how to be as effective as possible for animals. Or perhaps you think in more concrete terms, and imagine endless supplies of food for sanctuary and shelter animals, cameras for undercover investigations, or materials for humane education initiatives.
But let’s hit pause for a second, and rewind. Even with all the necessary resources we need to succeed, the movement still needs advocates themselves to achieve our collective mission to end animal suffering. And before advocates can conduct research, care for animals, expose cruelty, or engage in public outreach, there are a few things that generally need to be taken care of first.
Understanding Full Cost
That’s right, I’m talking about administrative expenses. The uncool parent to program expenses, sometimes referred to as operational costs, indirect expenses, or more notoriously, “overhead.” Nonprofit fundraisers have long operated under the restrictive and archaic idea that low overhead is somehow indicative of a successful organization, as if our administrative budgets are inversely proportional to the value of our programs.
Fortunately, this mindset is (slowly) changing. Initiatives like the Full Cost Project and nonprofit professionals themselves are working to change the way people think about nonprofit effectiveness. If you need convincing about why judging an organization based on its administrative expenses is ultimately bad for the nonprofit sector, you can read more about that here, here, here, here, or here.
However, this blog isn’t about why we should stop assessing nonprofits based on their admin/program expense ratios (indeed, nonprofit crusader and racial equity champion Vu Le has made the case that we should stop talking about overhead altogether). Rather, this blog is intended to help explain why core mission support is an essential component to a nonprofit’s success, and to outline how advocates can change the way we talk about our work in order to guide funders toward a deeper understanding of what nonprofits really need to achieve our goals.
Owning These Expenses
While it’s important that we think about organizations holistically (i.e. programs and other aspects of an organization are equally essential to our success), it’s also necessary to be transparent about what makes a nonprofit run smoothly and legally. Without the vital, foundational, behind-the-curtains work, no other aspect of a nonprofit would be possible.
So, what are some examples of core mission support?
Accounting & Taxes. For organizations without a bookkeeper on staff, many use an outside company to handle the intricacies of tracking an organization’s finances (income, assets, and expense details) on a monthly basis. Additionally, just like you have to file your taxes, nonprofits have to file ours. U.S. 501(c)(3) organizations must file a 990 on an annual basis, and most accounting firms charge four figures to prepare a full 990. Organizations also pay employer payroll taxes, such as social security and unemployment.
Administrative Filings. In order to carry out our work from a business perspective, nonprofits need to register as a charitable organization. In order to fundraise, solicitation regulations require filing renewals every year. If an organization has fee-for-service income (called Partner Projects here at Faunalytics), they must also file and renew a business license with the Department of Revenue. These filings come with various fees that can add up, and are necessary in order to be legally compliant.
Insurance. Nonprofits typically need at least two types of insurance: General Liability and Directors and Officers. GL covers against claims for injury and property damage, while D&O protects individuals from personal losses if they are sued as a result of serving on behalf of an organization. Other common insurance policies include Workers’ Compensation, Cyber Liability, and Property Insurance for those with physical offices/establishments. Insurance generally costs at least a few hundred per premium, depending on the organization’s size and scope.
Credit Card Fees. Have you ever been asked to cover the processing fee when you make a charitable donation? That’s because nonprofits and businesses alike must pay a fee of anywhere from 1.5% to 4% for every credit card transaction. That may only be a few cents for each individual donation, but when you think about the big picture, organizations can end up paying thousands of dollars in processing fees every year.
CRM & Communications Software. There are two types of relationship management software that virtually all organizations have: donor software and communications software. Donor software (e.g. Salesforce, Donor Perfect) is what’s used to track donations and donor relationships. Fees can range from $40 per month to a few hundred per month, depending on the brand and service level. Communications software (e.g. MailChimp, Constant Contact) is used to communicate with an external audience. Pricing typically depends on how many contacts are in your database. Faunalytics uses communications software to deliver research alerts and newsletters to our audience of animal advocates.
Office Equipment. For many nonprofits, two major expenses include rent and office supplies. Faunalytics is a completely remote organization, so we’re spared these expenses. However, we do have virtual “equipment” (such as a discounted subscription to HootSuite for social media management), and we provide our employees with a small equipment stipend every year to fund work-related expenses.
Professional Services. Your Faunalysts are experts in animal advocacy research, but we’ll be the first to admit that there’s a lot we don’t know. This is where we use the help of other professionals. For example, last year we had our Employee Handbook reviewed by a professional human resources firm, and I attended Encompass’ DEI Institute to learn how to advance racial equity within our organization and the animal protection movement. These expenses may not be regular costs, but they’re important if we want to truly flourish.
Website. Here at Faunalytics, our website is essentially our “product.” Our programs are virtual and the work we produce (original research, research summaries, and one-on-one support) is housed on our site. But there is so much happening behind the scenes to keep our website running smoothly. We pay for the domain name, hosting services, and other software to make our site look and function the way it does. For example, interactive resources such as our Fundamentals are created through a data visualization platform called Infogram. In a nutshell, there would be no Faunalytics without faunalytics.org, and those expenses cost a few thousand dollars per year.
Personnel. Faunalytics keeps our costs down thanks to nonprofit discounts, operating remotely, and staying pretty frugal. However, the most important piece of the puzzle that makes everything else possible is our people. Nonprofits cannot execute their programs and fulfill their missions without their team members, and those team members deserve to be compensated fairly, with access to competitive benefits and professional development opportunities.
If you would like to view Faunalytics’ expenses in their entirety, we have made our 990s publicly available here.
Transforming Our Approach
An emerging movement called Community-Centric Fundraising is on a mission to evolve how fundraising is done in the nonprofit sector. They’ve established ten core principles to transform philanthropy, which include helping donors see and appreciate that many elements are needed to successfully run an organization. If you’re ready to get real about the true cost of your work, CCF recommends the following:
- Be transparent with financial reporting but, whenever possible, do not segment out which donors paid for what. For instance, instead of saying “Your donation bought food for 10 animals, and none of your money went to overhead,” say things like, “Your donation, combined with funding from grants and other donors, along with support from volunteers and staff, helped us serve 300 animals this year.”
- Avoid language like “We got a funder/donor to underwrite this event, so 100% of your donations go to programs and services.”
- Do not exaggerate how low your core support expenses are.
- Encourage donors to understand and fund core mission support.
These recommendations are just a few of CCF’s many ideas, developed from conversations with fundraisers of the global majority and grounded in racial and economic justice. I cannot take credit for these ideas, and I encourage my fellow fundraisers to check out CCF’s entire fundraising approach. Additionally, advocates may want to reimagine the traditional expense pie chart to better capture core mission support (visit the bottom of Faunalytics’ homepage for an example).
With transparency, truthfulness, and trust, donors and advocates can come together to transform the way we think about charitable giving. So now, when you imagine that animal advocates have all the necessary tools and resources needed to fulfill our missions, what picture comes to mind? For this advocate and fundraiser, it’s a world in which nonprofits are fully funded and unapologetic about what it takes to thrive. It’s a world in which donors give unrestricted gifts, knowing that programs are only possible with full cost support. And in that world, advocates and animals alike are better for it.