Thane Stenner is founder of Stenner Investment Partners within Richardson GMP Ltd., as well as Managing Director, Private Client. He is also bestselling author of True Wealth: An expert guide for high-net-worth individuals (and their advisors).
Of all the losses incurred during the Great Recession, the most keenly felt must surely be those suffered by charities and not-for-profit organizations.
Community Foundations Canada, an Ottawa-based research and advocacy group whose 170 members hold more than $2.5-billion in charitable assets, reported that donations fell 37 per cent between 2008 and 2009.
South of the border, the situation seems even more serious. According to the U.S. Nonprofit Finance Fund, only 16 per cent of surveyed charities expected to be able to cover operating expenses in both 2009 and 2010. Fully 52 per cent of respondents expect the current recession to have long-term (defined as longer than two years) or permanent financial repercussions for their organizations.
Despite such sobering statistics, I've noted a kind of renaissance in volunteerism and philanthropy in the past several years. While tough times have certainly forced many to cut back on or become selective about their giving, more and more people seem to be tuned in to making a difference with either their time or their money.
A new generation of "philanthropreneurs" are less content with "chequebook charity" or simply engraving their names on a plaque at a building's entrance. Instead, they're taking a businesslike or investor-like approach to giving, insisting on accountability, setting up quantifiable goals to measure the success of their donor efforts, and trimming the fat when it comes to charitable administration.
Case in point: Chip and Shannon Wilson. As the founders of Vancouver-based Lululemon Athletica Inc., the Wilsons have a long history of community and charitable involvement, sponsoring events such as the Chip's Not Dead Yet Memorial Mile charitable run for the B.C. Children's Hospital, and lending their support to other health-related programs.
With their latest charitable venture, they combine their philanthropic tendencies and their business acumen in an intriguing way. "We wanted to be operators, not just donors," Mr. Wilson told me recently. "We wanted to create something fantastic, then wait for people who are aligned with our passion to partner with us."
This result is a charity known as Imagine1day, which is financing a number of primary education projects in Ethiopia. Mr. Wilson is so enthusiastic about the project that he now divides his time between the charity and Lululemon, where he remains chief product designer and chairman.
"We wanted to put [our money] where it had the best return on investment," he said, using the language of the boardroom director or portfolio manager to make his point. "We determined it was northern Ethiopia, because the government was putting 50 per cent of their own budget toward education."
From the start, the Wilsons made it their goal to use their business know-how to make their charity the best it could be. Unlike many other charities, donors can target money toward specific items within a larger project: a student's desk, for example; a science kit for the classroom; a single sheet of a school's corrugated metal roof. Not only does this encourage people of modest means to give, it also makes it easy to track charitable progress. This in turn shows donors that they are indeed making a difference. "People can see their donation develop in real time on our website," Mr. Wilson said.
To me, the most innovative feature of Imagine1day - an organization that I actively support - is the rigorous pursuit of operational efficiency. Instead of seeing staff salaries and expense accounts diluting the power of donations, the Wilsons recruited a board of experienced executives and business owners to keep a lid on costs. "These people are highly successful managers who are used to controlling costs at their own businesses," he explains. "They do the same at Imagine1day."
But even that wasn't enough, he said. "We intuitively knew from talking to friends that overhead was the main deterrent to donating." So the Wilsons "prepaid" administration expenses through a $10-million, lump-sum donation. The interest is used to cover administration costs, allowing 100 per cent of donated money to flow directly to the charitable project.
By applying the same pragmatic, cost-conscious approach to charity as they have to their wildly successful business, the Wilsons created a charity that extracts maximum bang out of every charitable buck.
I expect we'll be hearing a lot more about Imagine1day, and about the businesslike approach it uses. If the Wilsons can inspire others to adopt the same approach, they've created a legacy that extends far beyond their chosen cause.
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