Beginning February 26, 2020, RC Forward will be allocating 4% of all donations made through our platform to our operations (with several notable exceptions listed below). This includes recurring/monthly donations, but does not include any donations made prior to February 26 (online, postmarked, or e-transferred). Below we outline our reasoning for this adjustment.
This will likely last through the 2020 calendar year; however, we will be reassessing this policy on a quarterly basis to determine whether to maintain this allocation, reduce the percentage, institute allocation tiers, or do away with it altogether.
Exceptions include:
Donations made directly to our partner charities that are registered in Canada (Against Malaria Foundation, Schistosomiasis Control Initiative, Rethink Priorities, and Iodine Global Network, as of February 2020). 0% of these donations will be allocated to our operations unless indicated otherwise by the donor. (Note that this exception does not include donations to RC Forward Funds.)
Large donations made by donors who have provided significant support for our operations in the past. These exceptions will be determined on a case-by-case basis through correspondence with the donor. If you feel this applies to you, please inquire at the time of donation for more information.
Donations made to charities that are not official partner charities (i.e., listed on our website). It is possible that a proportion of the donation larger than 4% will be allocated to our operations in these cases, to be determined on a case-by-case basis through correspondence with the individual donor.
Our Reasoning
RC Forward is in a period of transition after our operations fundraising push fell short, leaving our runway for 2020 down to just a few months. As a result, we’re taking action to make the project more sustainable and working more closely with major donors with hopes of keeping this project operational.
We are taking two major steps in converting to a more sustainable funding model:
First, we have reduced staff to the bare essentials in order to minimize our in-house expenses. This should save us quite a bit of money every month. It has left us in a position where we won’t be able to put much focus on expansion, but we hope the change will be temporary.
Second, we have reluctantly decided to allocate a proportion of donations passed through our platform to our operations as outlined above. We aim for this to be temporary, or to reduce the allocation percentage over time, but ultimately, this will depend on whether or not we can engage donors in monthly support or procure steady revenue by other means.
We think that these two major steps, along with our appeals to major donors, will bring the project to the point of being sustainable. We need funding to bridge the gap between spring and giving season 2020. This means we are working to raise the remainder of our 2020 budget over the next few months.
Feedback and Evidence
We did not arrive at this decision lightly. Some evidence suggests that in the nonprofit industry, donors tend to give larger donations on average to charities that allocate 100% of their donations to programs (as opposed to operations and administration). However, we want to make sure our donors understand that this allocation to our operations will increase our impact over time by making RC Forward a sustainable and long-lasting project. In other words, after three giving seasons and $6M CAD moved to effective charities, we are extremely confident that a mandatory allocation to our operations is likely far better for the world than RC Forward ceasing to exist.
In January, we polled more than 70 RC Forward donors on their subjective sense of what would feel like an appropriate allocation and how this allocation may affect their giving habits. Here’s what we concluded based on the results:
The vast majority of our donors signaled their support for an allocation to our operations, and many found it surprising that we had no such designation before now.
We don’t expect donations to decrease significantly as a result of instituting this allocation.
4% appears to be a happy medium for an allocation to our operations, though a tiered system may be better for larger donations.
Donors would like more transparency around our operations funding and methods. This would make donors more comfortable with the allocation.
Taking a moment to respond to the final bullet point: we agree that we could be more transparent about our organizational costs and will strive to do better with this in the future. In short, our operational costs include (from the most significant portion of our budget to the least):
Salaries for our team of four;
Third-party cross-border and fund transfer fee coverage;
Technology, accounting, and legal costs; and
Conference attendance for our staff.
Our budget for 2020 is $223,000 USD, which we consider very lean for an organization that has recently reached $6M CAD cumulatively (since giving season 2017) passed through to effective charities. See our cost-effectiveness analysis for more information, and stay tuned for an updated version (using 2019 donation data) to be released in March.
In addition to surveying our donors, we have received wide support from partner charities that would be affected by this allocation. They overwhelmingly agree with the value and impact that RC Forward provides, and understand that an allocation to our operations may be necessary for the project to remain sustainable. Like many of our donors, our partner charities were surprised that we didn’t need to implement an allocation like this earlier.
It is our hope that by taking these steps, RC Forward will continue to thrive as a tool that provides Canadian donors with the opportunity to give to the best charities in the world.
Please feel free to reach out to our Executive Director, Baxter Bullock ([email protected]), or our RC Forward Manager Siobhan Brenton ([email protected]) with any questions, comments, feedback or concerns.