Tuesday, June 06, 2006

From the mailbag... Tzedaka edition

J. writes:
In regards to the Oorah fundraising methods, I should say that I have received the CD in the mail, but never actually heard it. OK so they are spending a lot of money on a CD, and in the process promoting some singers, who cares! Oorah already spends tons of money on marketing and advertising, they are on billboards on the highway, they are on the radio, it seems that when it comes to marketing they have no budget constraints. Now you have to admit that there is a reason that they use these singers, it is probably because of their name recognition So it really goes two ways, the singer may or may not get paid to sing, then Oorah markets the CD, and in the process attaches their brand to the singers public appeal, as well as advertising the singer. Everybody is happy. You're right they got a sweetheart of a deal, but Oorah got what it wanted as well.
Everyone is happy. Except, the donors whose money is spent in this manner. As a charity, I think Oorah has to be cautious with how it spends tzedaka dollars, and also with public perception of how it is spending that money. It's always hard to quantify "brand awareness" promotions since there is no direct link between the campaign and income. That being said, I'm wary of those in general when conducted by charities, and especially when they cost as much as Oorah's appears to have done.

Tzedakah organizations are not private business ventures and have no right risking large sums of money on speculative branding promotions. And make no mistake, this is another in a long string of Oorah's branding promotions with, I suspect, diminishing returns.

When J. writes "it seems that when it comes to marketing they have no budget constraints," he nails the point of the issue. This is exactly what makes this promotion look inappropriate. It is one thing to send out CD's as a promo item akin to other givaways like a calendar, fridge magnet of candle lighting times, or chanukah candles like many other organizations do. When this is sent to a targeted list, with some discrimation as to whom it is sent to, this is often a fair approach for a fundraising organization to take. What is different here is the following:

The scale of distribution. The sheer number of CD's produced is well beyond the numbers any reasonable outside person would find acceptable given the size of the community, the potential appeal of the CD's etc.

The method of distribution. In addition to a mailing campaign, many of these were just left in public areas for people to help themselves to. I've seen that there are still many left in pizza shops and other stores.

The expenses of production. I know enough about music production costs, and have enough inside information, to know that Oorah spent an awful lot of money producing this project. This premium cost them way more than other organizations premiums typically do.

The hype. The CD artwork (and Oorah's explanation about the purpose of the CD) seem unduly focused on the artists. That's good for the artists, but it's simply wrong for Oorah to spend that kind of money essentially promoting artists, in the hope that Oorah will be considered cool (and therefore worthy of support) by association.

Interestingly, here's Oorah's press release about the CD. Here's a quote:
“If five of the most sought-after musicians in the Jewish world felt Oorah’s work was worthy of their support, we’re hoping that everyone who sees this CD will feel the same way,” said an Oorah spokesman. “When you see the joy that Jewish tradition brings to fellow Jews, you want to become a part of it.”
Unfortunately, there appear to be some errors in the press release, but Blog in Dm's diligent investigative team has obtained the corrected honest version. Here it is:
“If five of the most sought-after (by Oorah) musicians in the Jewish world felt that tens of thousands of dollars of Oorah’s money was worth taking in exchange for having hundreds of thousands of CD's featuring them distributed to the Jewish community at no charge, we’re hoping that everyone who sees this CD will feel the same way,” said an Oorah spokesman. “When you see the joy that donations in support of Jewish tradition bring to select Jewish entertainers, you want to become a part of it.”
Just to be clear. I don't fault artists for asking for remuneration for their time and effort. This is what they do for a living. The fault here lies with producers, in this case Oorah --although the same criticism could be leveled at some of the organizations producing charity concerts-- who spend more than would seem viable from a commercial standpoint.

The issue isn't even whether the organization nets money. It's whether the expense to income ratio is justifiable. So, for example, if Charity X produces an annual concert that raises one million dollars, but only nets $200,000 after expenses (musicians, featured entertainers, hall rental, sound companies, advertising, staffing, etc.), then to my mind the event is unjustifiable. Especially if most of the money raised is Tzedaka dollars, meaning it eats up money that people would otherwise have given to tzedaka.

If a donor is willing to give $100 to a charity and ups their donation to $200 to buy tickets to the charity's concert, then, if the charity nets anywhere less than $100 from that donation, the event was a waste of tzedaka money. Furthermore, even if they just break even or make an inconsequential additional amount, there is a strong argument to be made that the event was not worth holding.