The Trudeau Affair: What are the implications for Canadian Non-Profits?

Fundraising is a big business. It is a significant way that non-profit organizations obtain money for their operations. These operations can involve a very broad array of concerns such as religious or philanthropic groups, research organizations, health and environmental issues etc.

Special events are one of the most popular methods of raising funds. Events are used to increase visibility and support for an organization as well as raising funds. Events can feature activities for the group such as well-known speakers to encourage group participation and most important charitable giving. These speakers can come from the world of entertainment, sports, community leaders, and yes in some cases politicians.  For some non-profits, this is there major way of fundraising and in most cases these activities are successful. However some do fail, particularly if the event is not managed properly.

Recently in Canada there has been a flurry of criticism over Justin Trudeau’s decision to accept a $20,000 speaking engagement for a charitable organization while he was a sitting MP. Months later, the charity says it lost money on the event and asked him to return the fee.

There are questions whether parliamentarians should or should not be disqualified from earning extra income, but I will leave that question to others who blog on politics.

So what has happened in the past few weeks, well for starters a  chorus of politicians from other political parties and their supporters , including some in the media suggest  that Trudeau should not take money for speaking to charities; that Trudeau is rich (because he inherited $1.2 million) and, by extension, greedy.

Here is some background on the story. One of Mr. Trudeau’s past clients, the Grace Foundation in New Brunswick, hired him to speak at an event to raise money for a seniors’ home, which apparently did not go well. In fact, the event lost $21,000. Disappointed with the results, a Foundation board member asked Mr. Trudeau to reimburse the speaking fee.

fees

His initial refusal to do so generated plenty of controversy. But consider this: Since a speaker’s bureau was involved, asking Mr. Trudeau to reimburse the full amount would have meant that he is on the hook for not only his fee, but also the bureau’s commission – on a transaction that is more than a year old. Moreover, if the Foundation had in fact found a sponsor to cover the fee which seems to have happened according to sources, any refund might not go directly to the charity, but to that third party.

Experts in fundraising are now asking why Trudeau should return the money. Charities routinely pay high-priced speakers to draw crowds. That Trudeau didn’t do so that day wasn’t his fault. (That’s the job of the organizer). Another concern is why did the charity come back to him months later? Is it because he is now vulnerable as Liberal leader and they feel they can embarrass him to give back the money.

Is this the way to operate a charitable organization i.e.by using black mail? Also, what is the message to other potential speakers who charge a fee to speak at  fund raisers in Canada … if we don’t make any money from your appearance at our fundraiser we may ask you for a refund? Will the charity also ask the caterer, the band, the hotel, and many other suppliers to also turn back the money they paid, if not why not?

Also imagine if you are a well-known actor, singer, sports personality etc. who also get paid to speak at events, would you now think twice about doing a fund raising event when there is a possibility that the charity may blackmail you in the media and tarnish your name if they are unsuccessful in their charitable event.

W. Brett Wilson, a well-known Canadian business leader, philanthropist, and former panelist on CBC’s “Dragons’ Den” states the following in a recent Op Ed piece

“What I would like to address is the controversy over how that extra income was earned — specifically the suggestion that it was somehow wrong for Mr. Trudeau to accept a reasonable fee to attempt to help a charity raise awareness and support for its cause. This notion is misguided. Indeed, it is precisely the kind of limited thinking that is hurting our philanthropic sector.”

I believe that creating a relationship of mutual benefit is far more advantageous to the charity in the long run, because it forces them to think and act with an entrepreneurial mindset. Effective charities will lever the popularity of a given speaker to multiply interest and generate greater revenue. At least that’s how it’s supposed to work.

This bigger issue is the failure by the Foundation to acknowledge its own obvious incompetence. This Foundation failed to do what it needed to do to make the event a success, and now they turn around and ask Mr. Trudeau to bear the economic cost. My impression is that this Foundation deserves to go under (or endure a wholesale change of management), rather than be propped up by Mr. Trudeau’s repayment.

Nevertheless, I understand that Mr. Trudeau has now promised to do another event for the Foundation — at no cost, of course — in order to right his alleged wrong. While I applaud his gracious response, I would suggest he is killing the Foundation with kindness. It clearly has bigger problems to deal with, and Mr. Trudeau’s efforts at life support are not likely to save it. Nor should they.

This politically motivated circus and related backlash may now have the effect of eliminating some great speakers from the rubber-chicken charity circuit — including Senators Roméo Dallaire and Jacques Demers — speakers who deliver great value to forward-thinking charities.”

I would suggest we use this lesson as a rather important opportunity to rethink the way we coddle inefficiencies and ineptitude in the philanthropic sector. Then, we might be debating something useful.

I think Mr. Wilson is “on the money” with his comments. I have worked for many years with the non-profit/charitable sector and was very saddened by the events of the past few weeks. Clearly this so called scandal may have given a “black eye’ to charitable organizations involved in fund raising and may result in unattended consequences … the reluctance of well-known personalities to speak at fund raisers. Now I fully appreciate and understand that many personalities including politicians give freely of their time for fund raising but there are many personalities who earn money as a professional speaker and this recent event may do long lasting damage to fund raising in Canada.

Let me know what you think.

About jimmintz

Managing Partner, CEPSM Jim Mintz is a veteran marketing professional with many years of experience as a practioner and academic. He is presently Managing Partner at CEPSM and Program Director of the “Professional Certificate in Public Sector and Non-Profit Marketing” at Sprott School ... Specialty Areas: Social Marketing, Integrated Marketing Communications, Public Sector and Non Profit Marketing
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