The Newfoundland and Labrador Division of the Canadian Heart Foundation

Tina Fagan, Executive Director of the Newfoundland and Labrador Division of the Canadian Heart Foundation (CHF) was excited by the challenge of developing a marketing plan for the campaign year from July 1, 1987 to June 30, 1988. Having just completed a marketing course at Memorial University of Newfoundland, she knew such a plan was essential to the growth and efficiency of the provincial division. The plan also would provide direction to solve many of the problems of the division and would be instrumental in helping achieve the major objective of gaining foundation status by July, 1989. In fewer than three weeks Tina would need the plan ready for implementation. As it was already June, there was an urgent need for action.


This case was prepared by Professor Donna Stapleton of Memorial University of Newfoundland for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management.

Copyright 1992, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes, but all such reproductions must acknowledge the copyright. This permission does not include publication.


Background

The Canadian Heart Foundation was a registered, charitable organisation recognised and respected both nationally and provincially. By 1987, it had established foundations in all provinces of Canada except Prince Edward Island and Newfoundland where divisions of the national organisation existed. The provincial foundations were self-sufficient organisations that assumed responsibility for their education, research and administrative costs. The provincial divisions, on the other hand, did not have freedom of action as their operation was monitored and controlled by the national body. The mission of the CHF, to raise funds for the support of research and to develop and promote educational programs directed at the reduction of death and disability due to heart disease, heart attack and stroke, was exhorted at all levels of the organisation.

The Newfoundland Division was formed in 1964, and was originally served by the Atlantic Provinces Executive Director. Since then, the organisation had matured into a single division of the Canadian Heart Foundation with its own executive director and had progressed to the point where foundation status was a feasible and important goal. As a division, the provincial organisation prepared its own budget, but approval had to be granted by the national organisation. As well, all money collected provincially had to be forwarded to the national body. By achieving foundation status, the provincial organisation would control its own budget and improve its public image as a "full partner" in the work of the CHF Tina believed this would eliminate any possible confusion and negative perception. Furthermore, she believed, the morale, public recognition and retention of volunteer workers would greatly improve. As stated, "foundation status is desired to have control over our actions and equality with other provinces." For these reasons, the intent of the proposed marketing plan was to move the organisation toward achieving this goal.

To be awarded foundation status, the provincial division would have to demonstrate its ability to assume responsibility for its research and operating costs and be totally self-sufficient by 1996. This would require the division to assume responsibility for research costs of $30,000 per year, increasing to $270,000 by 1996. Exhibit I shows the total funds required for operation plus the fundraising objectives and achievements in the past. Forecasted operational needs and accrued responsibility for research funds to achieve the foundation objective are also projected.

Since its inception, the CHF, nationally and provincially, had strived to increase support to the research community and had endeavored to respond to the need for expanded educational programs. In fact, throughout the 1980s steady growth occurred nationally in research and education expenditures as shown in Exhibit 2. Within the Newfoundland and Labrador division, growth had been hampered by its unique geographic situation, harsh weather conditions and poor economy The province was difficult to serve as there were hundreds of small coastal communities scattered along more than 17,000 km of coastline, hundreds more inland communities, only two major cities, and a population of approximately 530,000. During heart month, held in February, the door-to-door campaign experienced problems due to inclement weather. Fundraising also was hampered by the poor economic outlook and high unemployment. In spite of these problems, the provincial division increased its revenue by 175% from 1979/80 to 1986/87. Moreover, during the past fiscal year, 1986/87, the division had met its fundraising objective for the first time (see Exhibit 1). Even with this growth in funds raised and research expenditures by the Canadian Heart Foundation, nationally and locally, the requests for research money still far exceeded the funds available for allocation.

The Charitable Donation Market

Tina realised that donations to charity came from two sources -individuals and corporations. From her experience she knew that most individual giving took the form of outright gifts of money; it was direct, uncomplicated and the donor's gift was tax deductible when given to qualifying organisations. In addition, she knew that individuals supported charity balls, fashion shows and other public fundraising functions. From readings, she discovered that experts on charitable giving agreed that status, snob appeal, the desire for self-esteem and social prestige explained the popularity of giving to these events. From additional readings she discovered that, on the other hand, corporations gave through cash donations as well as by purchasing advertising space, contributions in-kind and sponsorship. It was believed that some companies preferred to purchase advertising space or sponsor events since they were not only doing good, they were seen to be doing good. Much to Tina's surprise, both individuals and corporations gave large dollar amounts to charity. The amount donated by both individuals and corporations, for the past four years in both Canada and Newfoundland are shown in Exhibits 3 through 5.

Information gathered by Tina on the individual market indicated that, as one might expect, giving varied according to the donor's income and wealth, education, age, marital status and other factors. Not surprisingly, the rich gave more than the poor and the old gave more than the young. As well, giving increased with the education level of the giver. Even after adjustments for such factors as the higher income that normally accompanied a higher education, the giving of college graduates was still. significantly higher than that of their less educated counterparts. Other findings showed that married people gave more than singles, small town residents gave more than city dwellers, and religious people gave more than the non-religious.

Corporations, Tina discovered, gave because they wanted to be seen as "good citizens". Management of a company often would tie its donations to similar companies', not wishing to be thought less generous. Corporate -management also liked to support allied causes because it helped the company's image. Some companies continued to give to the same groups year after year. Others supported causes with which the owners or directors of the company were associated, or gave to oblige a particular customer. It had often been assumed by those in the charitable business that large companies gave a proportionately larger amount of their income to charity Surprisingly, researchers in the field have discovered that this is not true. Research did indicate, however, that companies gave more to education and research in areas related to the company's activity regardless of their size. Tina believed that this allowed the company to justify such giving to shareholders as being in the company's best interest.

Tina knew that competition for a share of the donations in each market had been strong and was increasing. In fact, she discovered that there were 50,000 registered charities across Canada in 1987, all vying for support. Her research also identified the breakdown of the causes which individual donations supported, as shown in Exhibit 7. It was believed that lower income people tended to concentrate their charitable giving on the church and other religious groups as well as community drives, whereas the wealthy were more apt to give to hospitals, colleges and cultural institutions. Although the breakdown of causes which corporations supported was unknown, it was believed by individuals in the industry to differ significantly from the individual market. In fact, it had been estimated that corporations gave minimal contributions to religion, substantially larger contributions to health and welfare (45-50% of all donations), significantly larger donations to education (25% of all donations), larger donations to culture (14-15% of all donations), and quantifiable donations to athletics (1% of all donations).

Further information gathered by Tina indicated the major competitors within Newfoundland were: five very active hospital foundations in the St John's area, and other regional hospital foundations across the province; all of the major charities and many of the lesser ones; literally hundreds of church funds; and special drives for specific needs. Moreover, Tina identified that at the national level, health received 6% of total individual donations, while in Newfoundland, health confronted greater competition and received less than 4% ($1.253 million). Furthermore, competition was also experienced within the health area as health foundations only received 27.8% of these donations. Exhibit 8 shows a complete breakdown of how individual contributions to health were shared at the provincial level.

Tina believed that the impact of religion in the development of attitudes and patterns of giving was evident at the provincial level. In Newfoundland, religion played an integral part in family life and, in fact, many of the dollars given to charity were given to religious organisations. Tina believed some of this impact was illustrated by the fact that, in 1986, Newfoundland contributed 1.5% of total donations in Canada, but only 0.5% when non-religious donations were considered.

Tina knew that to compete in this not-for-profit sector, an understanding of the motives, reasons and compulsions attributed to people and corporations who gave and to those who did not was critical. Given the complications of understanding motivation, the difficulty of determining why a person or corporation gives (it was highly unlikely that either gave for only one reason) and identifying the "real" reason for giving, significantly complicated the fundraising task. To be successful at the fundraising effort, Tina and others in the charitable "business" believed it was necessary to: (i) increase both the dollar amount of contributions and the number of those giving; (ii) realise that "People don't give to causes, they give to people"; and (iii) apply external pressure. Experience indicated that only with direct encounters between people who already knew and respected one another, and whose ill-opinion a person feared, could either corporations or individuals be counted on to contribute to satisfactory levels. Moreover, it was highly unlikely that they would give at all if they were not subjected to external pressure of one sort or another.

The Plan

When Tina Fagan was appointed Executive Director in November 1984, she faced numerous immediate operational problems. However, by 1987, she had succeeded in stabilising the day-to-day operations and was ready to develop a marketing plan to elevate the division to foundation status. She believed the first step in the planning process was to identify the major areas of concern. A 'brainstorming" workshop for Board members was organised for this purpose. The participants at the workshop concluded that two critical marketing issues confronted the division: the increased need for revenue growth and low public awareness.

Critical Issues

Revenue Growth: It was dear to all members of the Board that revenue growth was essential to maintain the research and educational programs (an operational cost) of the provincial division. The estimated 1987/88 operating costs were $212,000, while the estimated research awards were $285,000. If the province's CHF had foundation status it would have control over how its funds were used, but it would have to cover both its operating and research expenditures. Hence it would need to raise $497,000. As this was unrealistic, the national body proposed that the provincial division assume increasing responsibility for its research awards. This meant that to be on track to achieve foundation status, the division would need to raise $242,000 in 1987/88. It was critical that the organisation meet or exceed the required revenue needed to be self-sufficient by the year 1996 (see Exhibit 1).

Awareness: The participants also concluded that the public was not fully aware of the function and the importance of the Canadian Heart Foundation. The Board wanted to: i) stress that heart and stroke disease caused 47% of all Canadian deaths; ii) promote the role of the provincial division in both research and education; and iii) relate research success stories to the public. They all felt that awareness was necessary in order to improve the public's understanding of the Canadian Heart Foundation and to increase funds raised.

Having explored the critical issues facing the division, Tina was ready to begin to develop the actual plan. She knew that to ensure success she would have to develop action-oriented objectives. This step was important as the objectives were a statement of what the plan was designed to accomplish. After careful review of all the data she outlined the following objectives to be accomplished in each of the problem areas.

Revenue Objectives:

  • to increase revenue by an acceptable, realistic amount on an annual basis

  • to increase revenue to the point where foundation status was attainable

  • to increase per-capita giving to $1.25 in 1988
  • to increase funds given in memory of a person by 15% from 1986/87 contributions of $37,054

  • to increase revenue from corporate donations from just over $8,000 (1986/87) to $12,000 in 1987/88

Awareness Objectives:

  • to ensure that the public is made aware that heart and stroke disease is the Province's/ Nation's #1 killer

  • to ensure that the public is made aware of the success stories related to research

  • to go back to the basics through education to promote the risk factors of heart and stroke in conjunction with new programs

  • to get a personalised. message out to individuals which:
  • shows how risk factors relate to them
  • shows how research benefits them
  • shows how they can benefit from contributing funds/time
  • to show how following CHF guidelines regarding diet, exercise, smoking (lifestyle), can benefit them

Tina wondered whether the objectives were adequately stated and how she was going to accomplish them. She hoped that her understanding of how corporations and individuals gave to charity and the factors which influenced their choice would help target the right markets and help develop innovative and creative ideas to ensure that the division raised sufficient funds. She knew that knowledge of "consumer" behavior was critical in planning the right marketing strategy to ensure that the division attained self-sufficiency and foundation status.


Exhibit 1

CANADIAN HEART FOUNDATION - NF DIVISION

Year Fund-Raising Objectives Research Awards Operating Budget Research Responsibility Total Revenue Needed Funds Raised
65/66 15,000 N/A N/A N/A N/A 10,500
69/70 33,000 N/A N/A N/A N/A 35,496
74/75 85,000 N/A N/A N/A N/A 82,405
79/80 95,000 N/A N/A N/A N/A 92,293
84/85 250,000 225,000 174,000 0 174,000 222,498
85/86 250,000 235,000 185,000 0 185,000 226,140
86/87 250,000 270,000 197,000 0 197,000 254,127
87/88 270,400 285,000* 212,000* 30,000 242,000*
88/89 225,568* 60,000 285,568*
89/90 240,004* 90,000 330,004*
90/91 255,365* 120,000 375,365*
91/92 271,708* 150,000 421,708*
92/93 289,097* 180,000 469,097*
93/94 307,600* 210,000 517,600*
94/95 327,286* 240,000 567,286*
95/96 348,232* 270,000 618,232*
* Indicates forecasted; dotted line denotes the change from past figures to future forecasted figures.
Figures assume a responsibility for research funding increasing from $30,000 to $270,000 between years 87/88 and 95/96.
Operating budget was estimated based on past experience, to be increasing at approximately 6.4%.
Research responsibility plus Operating budget equal funds needed for fiscal year's operation. Figures are for fiscal year ending June 30.

Source: Canadian Heart Foundation - Newfoundland Division

Exhibit 2

CANADIAN HEART FOUNDATION RECORD OF GROWTH NATIONAL
(in thousands of dollars)

Source: Canadian Heart Foundation

Exhibit 3

TOTAL DOLLARS DONATED TO CHARITY BY INDIVIDUALS IN CANADA
1983-1986

1983 1984 1985 1986
Dollars Donated (000) $ 1,514,050 $1,696,424 $1,993,692 $2,172,933
Total # of Returns 15,302,940 15,552,181 15,864,486 16,538,060
Total # of Taxable Returns 10,201,400 10,650,238 11,247,093 12,537,620
Total # of Contributors 1,848,068 3,652,565 4,357,020 4,671,150
Average $ Donation(Contributor) 819 464 458 465
Average $ Donation(Total Returns) 99 109 126 131
Average $ Donation
(Taxable Returns) 783 364 350 357
Source: Taxation Statistics, Revenue Canada Taxation, Ministry of Supply and Services Canada.

Exhibit 4

TOTAL DOLLARS DONATED TO CHARITY BY CORPORATIONS IN CANADA
1983-1986

1983 1984 1985 1986
Dollars Donated $347,976,000 $357,887,000 $419,452,000 $476,318,000
# of Companies Donating 46,832 47,499 49,011 50,182
Average $ Donation 743 753 856 949
Source: Taxation Statistics, Revenue Canada Taxation, Ministry of Supply and Services, Canada.

Exhibit 5

TOTAL DOLLARS DONATED TO CHARITY BY INDIVIDUALS IN
NEWFOUNDLAND

1983-1986

1983 1984 1985 1986
Dollars Donated $22,260,000 $28,244,000 $28,174,000 $32,385,000
Total # of Taxable Returns 200,055 205,387 212,385 223,230
Total # of Non-Taxable Returns 98,743 94,456 97,915 108,240
Total # of Contributors 40,077 68,691 74,664 78,510
Average $ Donation (Contributor) 555 411 377 412
Average $ Donation (Total # Taxable Returns) ill 138 133 145
Average $ Donation (Total Returns) 75 94 91 98
Source: Taxation Statistics, Revenue Canada Taxation, Ministry of Supply and Services, Canada.

Exhibit 6

TOTAL DOLLARS DONATED TO CHARITY BY CORPORATIONS IN
NEWFOUNDLAND
1983-1986

1983 1984 1985 1986
Dollars Donated N/A N/A 1,762,000 1,325,000
Total # of Corporations N/A N/A 7,739 8,219
Total # of Corporations that reported charitable donations (included in above figure) N/A N/A 757 715
Total # of Taxable Corporations N/A N/A 2,090 2,335
Average $ Donation (Contributor) N/A N/A 2,328 1,853
Average $ Donation (Total # Taxable Corporations) N/A N/A 843 567
Average $ Donation (Total Corporations) N/A N/A 228 161
Source: Taxation Statistics, Revenue Canada Taxation, Ministry of Supply and Services, Canada.

Exhibit 7

SHARING OF THE INDIVIDUAL CHARITABLE DONATIONS IN CANADA
(1986)

Breakdown of Charitable Donations in Categories

Source: Voluntary Action Directorate, Donations to Registered charities (1986). Published by the Department of the Secretary of State of Canada.

Exhibit 8

SHARING OF THE CONTRIBUTIONS TO HEALTH, NEWFOUNDLAND
(1986)

Donations to Dollars Donated
Hospitals $160,000
Services other than hospitals 742,000
Health foundations 349,000
Health organisations 2,000
TOTAL $1,253,000
Source: Voluntary Action Directorate, Donations to Registered Charities (1986). Published by the Department of the Secretary of State of Canada.