Friday, July 31, 2015

Designated Giving, Loss Leaders, and Planned Parenthood

(Often there are intersections between politics, economics, faith, and church. This is one of those cases so I am posting this on both blogs.)

Encouragement of designated giving can be an effective fundraising tool but, except in the case of major capital campaigns for specific projects, has little or no effect on programs of non-profits using the method to raise money. I am reminded of the confession of a police department that, although their fund raising campaign was focused on bullet proof vests for officers, they were going to buy the same number of bullet proof vests regardless of the fund raising result. It was just that bullet proof vests support an effective emotional appeal for money. 

As a young adult, I was a member of a Southern Baptist Church that taught tithing and essentially forbade designated giving, unless pre-approved by the Board of Deacons, because it was seen as a way for church members to vote with their money and personally impact church priorities, a clear responsibility of the Board of Deacons. It was also a nuisance for the church treasurer to keep up with the various designated funds and make sure they went to the right place.

About that same time, the local Community Chest was raising a million dollars or so each year to fund locally popular non-profits serving the community. Over the next couple of decades, the Community Chest gave way to United Way, and some of the agencies being funded under the new regime were extremely unpopular with some of the donors pressured to give to the annual drive. To assuage their concerns, donors were allowed to designate their gifts to one or more agencies and leave the others out. It made no difference of course in the distribution of the funds except in the very rare case that designations to a particular agency exceeded the budgeted amount for that agency. I doubt that ever happened. And money of course is fungible, making it impossible for a designator to track his or her hundred dollars and make sure it went to the Boy Scouts or whatever other agency he or she might have designated and not to some organization with goals perceived by him or her as suspicious.

Loss leaders of course are those products sold in groceries and other retail outlets at a "loss," less than their fully allocated cost of acquisition, selling, and distribution, because they are known to increase store traffic and total sales revenue and thus result in greater profits even if showing losses as individual items. It has been a long standing tradition, for example, for groceries to feature Coca Cola products one week as loss leaders and Pepsi Cola the next. (Both soft drink companies were rumored to require the stores to feature their products at least fifty percent of the time if they were to have the privilege of selling them at all, and that was judged by smaller soft drink companies as a grossly unfair trade practice.) The point is that revenue is revenue and always contributes to the bottom line profits whether the particular product generating the revenue, based on the accounting system in place, shows a profit or not.

What are the points of this rambling? There are two: 

  1. Whether the $500M in federal funding going to Planned Parenthood is designated for services other than abortions is absolutely immaterial because money is fungible and enables the organization to grow and increase impact on society while directing whatever other income it has to expansion of abortion services. So long as the books show spending on services other than abortion is equal to or greater than the federal funding, the organization can claim that none of the federal $500M went to abortion services. Accounting is a wonderful art.
  2. Whether the collection of revenue from transfer of fetal tissue, in the form of body parts, shows a profit based on the accounting system in place is absolutely immaterial. The claims of Planned Parenthood that they are only offsetting cost with the revenue collected would be like Publix Supermarkets claiming that it is not profitable for them to sell soft drinks as loss leaders. It obviously is profitable or they would not do it.

So, here is my recommendation for Planned Parenthood. Spin off whichever is the smaller of the two major parts of the organization, Abortion Services or Women's Health, and then let the Federal Government contract with the Women's Health part to provide Women's Health Services on a cost plus basis just as they pay through Medicare for elderly health services. If funds were to be transferred from the Women’s Health entity to the Abortion Services entity, that would be very difficult to hide with accounting manipulations. Then the Abortion Services part of the organization could look elsewhere than the US Congress for funding. I suspect there will be plenty of it, probably largely from organizations much more interested in preventing births than in Women's Health. PP Abortion Services might even become the larger of the two. 

And, to Congress, until Planned Parenthood engineers that divorce, there should be no federal funding of it.

No comments:

Post a Comment