Don’t Share the Cost Detail

Imagine going into a store to buy a pair of shoes. This is the dialogue between you and the customer service person (CSP) helping you, after he’s brought you the shoes you requested.

CSP: Would you like to try them on?

You: In a second; I have some questions.

CSP: Sure, go ahead.

You: I’d like to know the source of the leather and rubber used in making these shoes. Further, I’d like to know the cost basis of each, so I can feel comfortable that the cost basis of the leather and rubber is what I expect.

CSP: (surprised and dumbfounded) Oh. Well, I don’t have that information. I don’t think my manager does, either.

You: Well, I need to talk to someone who knows these details, or I won’t be able to consider purchasing these shoes. Oh, before I forget – I know the shoelaces have a polyester-cotton blend, and I want to know the cost basis of those, as well as the manufacturing cost of the shoe itself and what’s included in the total cost, like distribution, sales, promotion and marketing costs.

CSP: Sorry, I really can’t help you. I thought you might just want a good pair of shoes that look good on you, are comfortable, and will last a long time.
You: I do, but I need to know all this other stuff before I buy.

OK, how ridiculous is that conversation? Beyond ridiculous. Utterly unbelievable.
But this is the very conversation many MGOs get into with their donors about all the cost and process details of the program or project they support. And, unwittingly, the MGO is actually causing this by sharing that kind of detail, even when they aren’t asked.

Now, hold on. I’m not saying here that the MGO or anyone in the organization should cover up or hide the financial or process details of a program or project. All I’m saying is don’t do it if you don’t have to.

Instead, focus on the problem being addressed and the outcome sought. That’s what is important.

Think about this. Why does an individual donor want all this kind of information?

There are several reasons. They are curious, and they’d just love to know. They don’t trust the organization. They have beliefs about how much should be spent by category, and they want to be assured that what you are proposing matches those beliefs. It could be any of these reasons OR something else.

But many (if not all) of those donors wouldn’t tolerate this kind of scrutiny or deposition on their business. No, they wouldn’t. They would say: “Hey, buy the product or service; don’t bother me with all of your questions.”

But this dynamic exists because through the years we, the non-profit sector, have trained donors to value information of this nature instead of worrying as much about the outcome. So then you have a situation where a non-profit is securing incredible outcomes, but they get penalized for a couple of percentage points of overhead – or a process the donor doesn’t like, or a cost detail that doesn’t suit them.

This isn’t right. MGOs and fundraisers should be alert to this dynamic and not get themselves into trouble by offering the information in the first place. Instead, talk about what the need is and how the donor’s gift will provide the solution.
I do understand that most grants-givers (foundations, corporations, government) require this detail, so you must provide it in your application for a grant.
But for the individual donor, make sure you don’t fall into the trap of leading with all the cost and process detail in your presentation(s). Instead, keep your focus and your narrative on the need, and all the good that the donor can make happen through their giving.

Richard