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.

3 comments:

  1. A lot of talk is on about the money made by non-profits, especially big ones like AOL. No matter how much one explains, questions do come up about where the funds go and what happens to them after they enter non-profits. There are people out there who could be skeptical about usage of the 'donations'. I know it may not be possible to show up a balance sheet, but lets publish free projects that AOL does the world over, with details and some experiences, in a centralized website/blog. This must support our stand on 'the money AOL makes'.

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    Replies
    1. Well said. Your statements really make sense.

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  2. During the Art of Living drive, part of an ongoing campaign called 'Meri Dilli Meri Yamuna', over 200 truckloads of garbage were removed by citizens. "Over 75,000 children from 432 schools and 6000 students from 30 colleges took part in it," said Rahul Gautam, 'Clean Delhi NCR' campaign coordinator.

    http://www.dnaindia.com/sport/report_ahead-of-c-wealth-games-delhi-civic-body-outsourcing-cleaning-of-delhi_1436920

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