Arcus Consulting Group
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What does it take to innovate in the Non-Profit Sector?

Trends in Innovation and Giving: Charity fundraising and management to drive campaigns and build organizational capacity.


 

An interview with Mr. Chris Kotsopoulos, Chief Executive Officer of Children’s Wish Foundation of Canada

 

Chris Kotsopoulos is a graduate of the University of Toronto and began his career in public accounting. Over the years he obtained his CPA/CMA designation and moved into the not for profit sector.  He served for over a decade in executive leadership roles at UNICEF Canada.  He then joined the Children’s Wish Foundation of Canada as CEO where he has led the operations and revenue development to generate $24 million/year in support of children and families diagnosed with a life threatening illness.  Chris believes deeply in the power of a wish, which has a dramatic effective on mental health and healing.  He has participated in a number of executive education programs including Executive Leadership program at Queens School of Business as well as Strategic Perspectives in Not-for-Profit Management at Harvard Business School.


 

Innovation and Giving

 

Arcus Consulting Group has launched a major initiative to explore growth and change as key elements of corporate and business unit strategy. The majority of executives say it involves achieving technological leadership, a change in organizational culture and a realistic strategy that will enable an organization to define major trends regarding products, systems and services, and to offering its customers important added value. They say such steps reduce costs, increase sales and achieve higher earnings. But how does one come up with new solutions, and can innovations really be part of a strategy plan? Arcus’ multi-industry survey of senior executives found that of all the challenges companies face in this area, the biggest challenge is finding ways to create a “climate for innovation”.

As Arcus research indicates, doing so means that you need to be surrounded by highly talented people. It also means finding a way to transmit your passion to them, so they will buy into your vision of the future, perform at the highest possible levels, and come up with innovative solutions to the challenges of achieving the vision. No surprise, then, that the topic of innovation has been gaining ground as CEOs seek to incorporate concepts like “a culture of innovation” into their assessments of an organizations long-term value.


 

Arcus: What have been the biggest challenges for the non-profit sector over the past year?

Mr. Kotsopoulos: The increased demand for services, we’re seeing would be a top challenge. In terms of the needs from families and children, increasing demand for service and support. The not for profit sector is going through some significant changes. Donors are being a lot more specific about what they want to support and do.  You’ve probably read stats that there are fewer people giving, but they give more.  There’s less of a pie and competition to bring in those dollars through the front door.  Corporations are more specific about what they’re looking for as part of their philanthropic strategy.  Third, is the staff retention issue.  Trying to keep staff staying current, what employees would like to do and have, are a key challenge, especially in the fundraising area.  You tend to have a 3-year horizon before they leave.  HR issues, staff retention, training, development.  Those are the top 3 right now.

 

Arcus: Do you see a rapid increase in the demand for services and support?

Mr. Kotsopoulos: It has been steadily increasing, more so in the last 2 or 3 years.  There’s a large population of children that need our help. With advances in medicine come the most benefits but the most challenge – children are able to survive illnesses they couldn’t a few years ago but we step in because their quality of life is not very good. There’s an increased demand for our services and we’re trying to cope with it.

There are… certain populations of children.  They wouldn’t have survived the illnesses, but they are surviving but their quality of life isn’t good. It could be over 10% [growth] year over year.  We’re trying to support.  It is dependent upon how aware the public is of your services.  We work with children’s hospitals across Canada.  We’re in front of that community.

 

Arcus: Is the demand for services is driven by an increase in awareness of the Children’s Wish Foundation of Canada?

Mr. Kotsopoulos: Absolutely. The more we’re out there, with schools, hospitals, doctors, nurses, social workers – they know we’re out there.

 

Arcus: Our research in the non-profit sector indicates that donors are more sceptical today than they’ve ever been, partially because of media coverage of the high ratio of administration expenses to actual charitable work. Also, donors are more outcome driven. They want to know where the money is going, how it is being used and what the outcomes are.

Mr. Kotsopoulos: I would say it is but it’s somewhat contradictory.  Expense ratios and outcomes, I think both are relevant, but they can’t be contradicting, depending how far you want to take them.  I think the expectation of organizations having to demonstrate their relevance is on the rise and you have to be aware of it.  We launched our own impact study earlier this year, it talks about the impact of wishes on families, the impact on pain management, the impact on the physical and emotional well-being of children and their parents.  It talks about numerous things that we want to be able to articulate to the public.

 

Arcus: How do these challenges impact fundraising strategies?

Mr. Kotsopoulos: On the issue of ratios – that’s a historical measurement and I’m not discounting it – I’m an accountant by trade –  it is one measure and it can be very, very misleading in terms of about how efficient or effective an organisation can be.  I’m going to use extremes here. Let’s say that I have the opportunity to get into a fundraiser that raised 2 million dollars, but it will cost $90 million dollars to generate.  I have a net of a million dollars at the end of the year. But I’ve got a ratio of 90%.  What’s my choice – I don’t do the event because of the public optics?  Or I do the event to grant 100 wishes?

 

Arcus: What is an appropriate balance between administrative expenses and charitable work?

Mr. Kotsopoulos: There has to be a balance.  Let’s say you have a ratio of 35 or 40% but the impact on the community is enormous.  There has to be some relationship between the impact and the ratio.

 

Arcus: Are donor engagement strategies as effective as they could be in Canada? Is there a gap and s the gap influenced by limited expertise in fundraising in the sector? We know that giving to emotionally connected causes has increased quite significantly over the past decade.  People want to feel an emotional connection to giving.

Mr. Kotsopoulos: I think a couple things.  Not everyone has the ability to market, because of the sheer dollars required.  There are 3 tiers of organisations.  There are the hospitals/universities that have the greatest dollars/biggest budget.  Then the next tier is the largest charities – Red Cross, World Vision, $100 million to $200 million plus and then you have everyone after that.  At that smaller organisation, you can’t have a large marketing budget. It’s how it’s marketing – that’ a part of it. It’s a crowded marketplace right now. People have to, at some point, you hear so many organisations, you just start turning off. You’re bombarded by so many organizations.  So, Marketing is part but the bigger issue is, people are realising you have to establish relationships with your donors, you can’t just be transactional.  In the case of Lloyd Robertson, people set up their expectation of a donor and that this person is  $10 a year, then doing some research on the person’s ability to give. there’s much more movement to building relationships and better identify your potential donors and their ability to give as well.

 

Arcus: Do you think there is a behavioural shift in the market in terms of how different donors at different life stages give? There are stereotypical nuances by age group but also socioeconomic considerations.  Millennials are much more transactional and research does indicated that they give smaller amounts at a higher frequency to event-based causes rather than emotive causes.  Could you please share your insights on that landscape- how donors are evolving and the impact of impeding retirements of Boomers on giving.

Mr. Kotsopoulos: There are trends going on, I think the largest challenge is that stage where they are retiring, what that means, what assets they have, what they want to give… that’s a question mark. The challenging part of the task is the next generations that are coming up; the cost of housing and economics and the other challenges that generation is going through, there are a lot of unknowns and in larger centres, like Vancouver and Toronto, with the housing markets the way they are, people are still trying to understand what that all means.  The challenge is how do you activate people on social media.  Social media and that generation, their way of giving is supporting the cause but they may not necessarily give dollars.  How do you activate those individuals.  You mentioned the millennials, they do get activated into events, but how do you engage them, that is a challenge for many organisations.

 

Arcus: One of the strategies that Facebook has adopted is to look at tiny increments of buying – almost retail buying – where “ease of buying” advertising has played in a big way into Facebook’s growth.  You see this little pop up with a dial that you can increase or decrease the reach of your Facebook post for $1 to $20.  Is “ease of giving” important?  Is that a solution to some of the challenges you talked about?

Mr. Kotsopoulos: Ease of giving, from the starting point, making sure digitally, or in any segment, you want it to be easy to give.  For Facebook and Social Media, you want to get them to your website to give within a quick time span or else they are gone.  The simplicity of giving has to be part of that strategy.

 

Arcus: Has the sector done enough in that space? To adopt new technologies to drive ease of giving?

Mr. Kotsopoulos: Donors are looking at the costs of organisations – there is the mentality in the public domain and that they have a right to – that it costs little to run an organization. Given the complexity of charities and the demands of their clients and stakeholders – you need to have your back office, and your website and analytics that costs money.  There are challenges for every charity, you need to invest.  You have to run the business but aren’t supposed to spend money to get there.

 

Arcus: Is it a combination of higher expectations coupled with limited resources to invest in technology?

Mr. Kotsopoulos: It is a combination – people are investing more in digital technology and raising more money in the digital space than before.  Campaign fundraising is coming in through the digital space, they’re getting there, the need to keep pace with changes is the difficult part.

 

Arcus: Do you think high net worth/major giving is increasingly concentrated with larger charities?

Mr. Kotsopoulos: Good question.  I think it comes back to, initially, what is your mission and how does it tie into the donors.  Health care is very topical right now. Everyone needs healthcare.  It affects you personally, everyone is impacted by healthcare, whether you are on wait lists or have elderly parents waiting for homes for Alzheimer’s care or otherwise impacted, the mission plays a huge role in terms of where people want to give.  Secondly, the opportunity to recognise donors is another piece.  Recognition is also important – how do donors want to be recognized.  Hospitals have bricks and mortar – you can name a wing after someone – it is much more difficult for other, smaller charities to offer the same.

 

Arcus: There appears to be an interest in being recognized publicly for major donations. How significant is the influence of publicity in influencing giving patterns?

Mr. Kotsopoulos: I think you have to look at ads in the newspapers.  The credits are widespread and prominent: a full-page ad recognizing a donation to CAMH- a picture of the donor family and the research department named after them.  It is an example of what is happening. So how important it is?  It is important.

 

Arcus: It appears to be a strategy to deepen relationships with major donors and also engage potential donors.

Mr. Kotsopoulos: I think it is one element, but not the only element but it is more that you need to build the relationship with a donor and the connection to the work that you are doing. It’s going to take time. It’s not going to happen overnight.  In this case I mentioned, you would talk with them about what is going on in your organisation and how they could make a difference in your organisation.  Many of us are doing that. It is an investment of time to connect with donors and start building those relationships.  The challenge with that piece is, it has a much longer turnaround period to seeing those dollars come in the door as opposed to having an event. Again, the question is what is the ROI of spending a year or two of building that relationship and getting a gift 2 year from now that could be $100,000 or could be more as opposed to working on an event with a quicker ROI.

 

Arcus: Is the challenge a shortage of talent or a paucity of ideas?

Mr. Kotsopoulos: In terms of fundraising ideas, it is definitely an issue.  My sense is that the market for fundraising is so strong that you have the bad fundraisers on board right now.  It’s quality, right?  The good fundraisers that attract high dollars are paid a competitive wage. They attract the top fundraisers.

 

Arcus: Is this trend restricted to larger organizations?

Mr. Kotsopoulos: It is a fact that hospitals and universities offer better packages year after year. Unless they are drawn strongly to the mission, there’s only so much you can do to offset the cost of living in Toronto or Vancouver.  I talk to my colleagues and consultants in the field and they all say the same thing, that the top people might stay 2 or 3 years, get their experience and move on.

 

Arcus: Is the problem a lack of innovation in fundraising?

Mr. Kotsopoulos: Your first comment is accurate, that there is a challenge to find the next best thing in fundraising.  People are innovating, people are changing events and ways of doing things, digitally, social media is what you were looking for but social media, it has to be acted out and tied around a mega-event to be successful. If you don’t have that event that is going to attract people on social media, it’s not going to go anywhere.

 

Arcus: Does the sector need to be looking outward, become less insular and welcome talent from other sectors such as technology and services?

Mr. Kotsopoulos: I think there’s innovation in ideas but the culture of Canada, Canada tends to lag behind Europe and the U.S., in terms of fundraising techniques and reaching out to the public.  Culturally we’re more conservative. There are good ideas out there. An exchange of ideas with fundraising associations and internationally with conferences would be useful. Canada is just more conservative around giving so it takes longer for those ideas to percolate down.


 

About Arcus

Our experience, qualifications & resources

 

Integrated research and strategy offering: Arcus is a leading research and strategy consulting firm whose mission is to help senior management solve their most challenging problems related to growth, organization and operations. We combine the research and strategy functions into one seamless process with one client management team at Arcus, unlike research agencies and marketing firms who manage sub-components of the marketing process.

 

The Project Lead and Facilitator, Mr. Merril Mascarenhas, is a Certified Management Consultant and has led several innovative projects to define best practices to improve board performance. Integrating the components of the oversight process into a seamless work-stream and maintaining a consistent team throughout an engagement are important to our clients.

 

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Clients tend to engage Arcus on multiple projects over several years. As a result, Arcus becomes a repository of knowledge about companies, markets, innovation, competitive intelligence, media and creative strategies.  The approach delivers superior business results and client satisfaction because it frees up client time to manage businesses at a strategic level and hence add incremental value, instead of being drawn into operations at each stage of the marketing process.

 

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A senior partner is hands-on throughout each client engagements and is the primary client contact. So clients have access to a senior resource at all times on a project. Our client service team has an average of over 21 years’ experience and have often served in VP and CEO positions at companies on the client side. Arcus understands that clients want small, nimble consulting teams of seasoned people who have years of knowledge and experience. And they want practical, highly targeted information and insights to address their needs.

 

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Our clients tend to be in diverse industries and functional areas. The key to our consulting services for private, public sectors is our ability to integrate our know-how in functional areas with our deep industry knowledge. All our lead consultants have client-side experience in senior positions.

 

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We are privileged to be involved in a high percentage of the most challenging consulting engagements and is routinely called on to assist clients in their most difficult and critical matters. We enjoy a reputation as one of the most prominent business consulting firms.

 

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We operate with a ratio of partners to associates far above that of our major competitors, and matters undertaken by our firm are afforded the direct personal attention of partners having expertise and sophistication with respect to the issues. We specialize in matters that require special attention, extensive experience and a high level of sophistication. Our strength is in our approach of matching functional expertise with industry knowledge.

 

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Unlike most consulting firms, we are deeply involved in the implementation of our recommendations. The approach ensures we share in the risk and success of our recommendations. Strategic outcomes are most predictable and effective when companies develop a portfolio of initiatives that are aligned with core competencies and aligned activities enable the company to offer a superior value proposition.