Now, good on them. They have used the dollars that go into a collection box at the airport, and an unspecified supplement that to create the fund. They did not have to do this. But before we cover them in glory, can we just have a wee think about the cost to serve of this money.
This equates to almost $2k per organisation. Now I guess for some, that’s a lot of money. But for most, it’s diddily squat: perhaps a small contribution to someone’s salary. And then let’s consider the costs of applying for the grant. I don’t know how many were turned down, but let’s say it took some 6 hours to fill in the (admittedly very simple) application form, and get it vetted by others in the organisation. Let’s say it costs around $25 / hour for that person’s time (and yes, even volunteers have an opportunity cost of their time: US research suggests $24.14 / hour). That’s a total cost of $150.
Then the application form is received and read by someone at the funder. Let’s say it takes about 2 hours to read the application, make sure that the organisation is a goodie, fills in any gaps in the application and complete packs to those who make decisions (I am totally guessing at their process by the way). And corporate people are paid more than community so let’s put a fully costed per hour cost of $75 – a total cost of $150.
And if we assume that 75% of applications are funded, then that’s a total cost of $9,300.
A committee considers the proposal. So let’s say two two hour meetings (and one hour each of prep) per year of six people, total cost of $2,700.
And there is the obligation. In the 2017 annual report (page 42 and 43 dedicated to the fund, which last financial year seemed to give away $53k to 37 groups) it talks of hosting 12 schools it had given $1k each to for an end of year concert. Not quite sure how much it costs to rent a bus, but let’s say $200 – plus the lost learning time for the grateful kids (and another set of RAMS for the long suffering teachers). Let’s assume for each “lucky” recipient that the obligation cost is around $200. That makes compliance cost of $4,600.
We then have marketing costs. Full page ad in the Mainland section of The Press: $16k. Preparation of said ad… let’s guess at $4k to have a round number.
That means this process has cost around $36,000, for a $45,000 grant pool, meaning a total benefit to the community of $9,000. You will have your views, but I’m thinking it’s not the most productive use of those dollars.
Now, CIAL is actually 75% owned by CCC with the balance by the NZ Government. How’s this for a wacky idea: let’s collaborate. The Community fund can hand over their money to the grants programme at CCC. They have the staff in place to manage that, and certainly have an issue of demand heavily over supply. And sure as eggs that the vast majority of the groups applying here also apply to CCC. This could be done at NO marginal cost. And the recipients of the funds could easily be identified so CIAL can get the photo ops they want.
CIAL are no alone in this: we have Z with their Good in the Hood where groups effectively get around $1k each. We have Grace removers who recently did an online popularity contest to dish out $2k each to six charities out of 12 finalists. All of these will provide great photo ops, and enable the business to launder themselves with the virtues of the Not for Profits.
But let’s be honest. These small dollops of cash will really make very little difference to the NFP receiving the funds. Because of course everyone wants their funds to be used for assets, or specific programmes, rather than the things that are boring but necessary to get the funds in the first place, such as admin salaries. $45k is the cost of one school counsellor (part time). It’s rounding. And the irony of the headline “small change makes a big difference” may have been lost on them.
Corporates: I love that you want to do stuff. But please: I know you all have re-engineered your own processes to get lowest cost service provision. You have optimised your supply chain to ensure its operating as efficiently as possible. Can you please take that thinking into your Corporate Responsibility Team? Can you please treat NFPs as a valued community partner rather than a photo op for your annual review, some sort of power kick, or a tick box for your Employee Value Proposition.
Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.