Monday, September 13, 2010

Making Good Use of Donations - Haiti Project

In one of the comments to an earlier post, someone wondered how much money we made on our Haiti project. For a reference point, below is some information on the project, provided to me by the program director, Uma Viswanathan. For those of you that don't know, IAHV is the International Association for Human Values, a sister organization to the Art of Living Foundation, which plans and executes most of our service projects in the U.S.

With all that's happened in the U.S. with highly publicized cases where non-profits haven't made the best use of donations, it's not surprising that people can be doubtful. To get a broader sense of how the Art of Living has made use of funds, I'll invite Uma and others to share some of their experiences with service projects they have organized and run.


IAHV gets audited every year, and is an accredited charity of the Better Business Bureau and Best in America by Independent Charities of America. This means that donating to us gives people maximum bang for their buck.

  • Donations collected to date: $165,000
  • Donations spent to date: $54,000
  • Remaining donation $ to be spent on TTC and operating expenses (mostly in-country)
  • 96% of donations go directly into the service work and training of the youth leaders. (This is actually a conservative estimate)
  • Number of team members giving 50% or more of their time to this project: 23
  • Number of full-time (40+ hours/week) team members paid stipends: 3 (Stipend amount: $1000-$2000/month

Successes to date (since January 12 earthquake)2,332 AoL course graduates
  • 5,130 Breath Water Sound course graduates
  • 605 orphans and families trained to develop home gardens through permaculture
  • Contract through the Food and Agriculture Organization of the UN for 3 month pilot of our permaculture programs (who definitely did their due diligence on our organization before awarding the contract)
  • 16 youth leaders undergoing training prep in: project management, budgeting, media and communications, community organizing

Wednesday, September 1, 2010

The Art of Living and Money

I want to share some thoughts with you about money and the Art of Living. First, let’s look at some basic concepts. I work for a for-profit company that makes financial software for not-for-profit (nfp) organizations and I can assure you, money is a big topic in all organizations both nfp and for-profit. Why is money necessary? In a for-profit company it’s obvious – money is needed for rent, salaries, capital expenditures and, of course, profit. In an nfp, it’s less obvious. Of course the expenses are still there, salary, rent, etc., but money is not the goal. Rather, it’s an enabler; it helps organizations accomplish their mission.

In the west, it’s very difficult to do anything without money. Cash flow is the financial heart of any organization and when income falls below expenses, it’s only a matter of time before the doors close. Nfp’s can ‘go out of business’ just as easily as for-profit companies, and their officers and board need to manage finances just as carefully as for-profit organizations.

There are many types of non-profit organizations and all require money to operate. Depending on the organization and its members and/or benefactors, funds may come from many sources, such as membership dues, donations, fees, endowments and grants. Organizations like churches pass the collection plate on Sunday. Some organizations have fundraising events such as telethons or walkathons. Others rely on grants or endowments. The YMCA is a fee-based membership organization. The United Way solicits donations and major grants. Most education nonprofits like schools, colleges and universities charge course fees (tuition) for their programs. Like other educational organizations, the Art of Living foundation is primarily funded via course fees with added support from donations for specific programs. The common theme of course is that organizations depend on income from one or more sources in order to accomplish their missions.

The Art of Living has very low overhead compared to most other nfp’s. Except for a few full time staff members, all the work done by the foundation is done by volunteers. I would say that the foundation is one of the lowest overhead organizations in the world.

So why charge at all for courses? First, as mentioned above, the organization needs money to operate. It’s a fact of life. Second, from my experience (and that of many other Art of Living teachers), is that people tend to value something more if they have invested in it. Finally, on a subtler level, it’s important to give for something where you have received.

So why not just rely on donations? First, operational costs tend to track with the number and variety of courses that we offer and a course-fee approach to revenue works well to make sure that costs are covered. Second, donations tend to be seasonal at best and highly variable at worst and this makes it very difficult to forecast revenue and plan expenditures. Finally, there is a bit of a catch-22 with donations – if you don’t ask for them, they tend to not be given. If you do ask, people can feel some pressure from it.

Sri Sri and the foundation have always placed strong emphasis on keeping expenses low and making good use of the funds we do collect. Every approach to funding an nfp organization has advantages and disadvantages. Fees have generally worked well for the Art of Living in balancing the needs of the organization for covering expenses with the needs of participants for affordable access to the foundation’s programs. In my experience with the foundation, we’ve always put more emphasis on availability. In the 10 years I’ve been teaching in the Prison SMART program in a federal prison in Denver, I’ve donated my time and travel expenses and we’ve never collected any fees.