Q: How can we get trustees to take a longer term view of the financial health of the charity including donor satisfaction instead of focusing on the year on year cash in/out?
Question from Giles Pegram, CBE, record-breaking fundraising director, NSPCC.
Many people give relatively little weight to the long-term consequences of actions and focus on the short-term ones (present bias). At the same time, most of us will try to minimize the cognitive effort required to complete a task (cognitive miser).
Computing the longer-term financial health of a charity is a demanding cognitive task. Compared to that, considering the short-term outcomes is relatively easy and it might be why this is the primary focus of trustees. What is more, a longer-term view might also require access to information that might not be readily available to trustees e.g., number of donors lapsed, donor satisfaction. Instead, yearly financial numbers might be more accessible to them and that’s what they base their judgment on.
In other words, trustees might focus on the short-term only because it’s easier to do so discounting in the process any long-term impact. If that’s the case, their focus might shift if they could:
- Easily see the future. Remove any cognitive or other effort required to imagine long-term financial performance by providing trustees with the big picture. This should take into account all the information that they typically ignore.
- Easily compare the future to the present. Short-term and long-term impact should be presented side-by-side. The long-term risks and benefits need to be evaluated at the same time and with the same measures as the short-term ones.
- Treat the future as the present. Ask them a simple question: If the long-term impact were to happen tomorrow (rather than 3 years later), would you do something different?
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