disaster recovery funds: which fund should you choose? december 16 th , 2013
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Disaster Recovery Funds: Which Fund Should You Choose? December 16 th , 2013. Alan Chaney Yan Lu Serap Suvari-Guven Vaibhav Thadakamalla Kagan Yaran. Agenda. Objectives. Understand the disaster recovery funding environment Classification into Traditional or Non-Traditional funds - PowerPoint PPT PresentationTRANSCRIPT
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Disaster Recovery Funds: Which Fund Should You
Choose?
December 16th, 2013
Alan ChaneyYan Lu
Serap Suvari-GuvenVaibhav Thadakamalla
Kagan Yaran
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Agenda
Objectives
Fund Classification
Project Process
Methodology
Disasters
Fund Commonalities and Takeaways
Donor Company Interviews and Takeaways
Which Fund Should You Choose?
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Objectives
• Understand the disaster recovery funding environment – Classification into Traditional or Non-Traditional funds– Identify the market opportunity and attractiveness of Non-
Traditional funds
• Examine drivers of corporate motivation to support Non-Traditional funds vis-à-vis Traditional funds
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Fund Classification
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• These are well known disaster recovery organizations that are perpetual in nature with funds raised on an annual or event specific basis.
• Examples: American Red Cross, United Way, Doctors Without Borders
Traditional Funds
• These are funds that are either working outside their primary mission or established in a one-off situation following a disaster. In some cases the funds could close after a period of time.
• Examples: Boston One Fund, Joplin Recovery Fund, Robin Hood Sandy Relief Fund
Non-Traditional Funds
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Project Process
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STEP 1 •Examine the disaster relief efforts for select disasters
STEP 2 •Categorize funds into Traditional or Non-Traditional
STEP 3 •Discover commonalities among fund types
STEP 4 •Identify and interview the universe of corporate donors
STEP 5 •Discover commonalities in donor motivations
STEP 6 •“Which Fund Should You Choose?”
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Fund Research
- Establish a database of information collected from web research and interviews
- Research Focus: - Money raised and
disbursed - Use of proceeds - Operational vs. program
expenditures - Informational disclosure - Major corporate donors,
etc.
Donor Research
- Conduct interviews with select BCLC member companies
- Interview Focus: - Role of disaster relief within
CSR - Corporate relationships with
disaster organizations - Type of donations - Selection criteria for
supporting Traditional vs. Non-Traditional funds
Analysis
- Data Analysis- “Which Funds Should
You Choose?”
Methodology
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Disasters
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• 3 million people affected with up to 316,000 estimated deaths• Examined 10 Funds: Traditional: 5, Non-Traditional: 5• Clinton-Bush Fund: Raised $54 Million, Disbursed: $54M Million• Use of Funds: Shelter, food, sanitation, education, job corps, construction
Haiti Earthquake (January 2010)
• Damages $2.8 billion• Examined 8 Funds: Traditional: 2, Non-Traditional: 6• Joplin Recovery Fund: Raised $9.4 Million, Disbursed $3.8 Million• Use of Funds: Rebuilding homes and schools, counseling, therapy, legal aid
Joplin, MO Tornadoes (May 2011)
• Damages $2-3.5 billion• Examined 2 Funds: Traditional: 1, Non-Traditional: 1 • United Way Tornadoes Relief Fund: Raised: $15.6 Million, Disbursed: $8.4 Million • Use of Funds: Mental health and trauma counseling, debriefing for first responders,
immediate needs
Oklahoma Tornadoes (May 2013)
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Disasters
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• Damages over $68 Billion, 286 people killed in 7 countries• Examined 11 Funds: Traditional: 4, Non-Traditional: 7• Robin Hood: Raised $73 Million, Disbursed $73 Million• Use of Funds: Housing and shelter, medical support, community restoration
Hurricane Sandy (October 2012)
• 3 people lost their lives, 264 people got injured • Examined 14 Funds: Traditional: 3, Non-Traditional: 11• The One Fund: Raised $70.5 Million, Disbursed: $70 Million• Use of Funds: Covers amputation surgery and hospitalization costs of the victims
Boston Bombing (April 2013)
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Fund Commonalities Traditional Funds Non-Traditional Funds
Amount raised 15.6 - 304 Million 4.3 - 73 Million
% Disbursed 76% 88%
Major Program Categories
Immediate Relief,e.g. food, water, shelter, emo. support,
transitional housing, blood etc.
Long-Term Recovery Needs, e.g. Healthcare, microfinance, workforce dev. infrastructure
Program Expenses 85.6 - 97% 95 - 100%
Other Expenses 3 - 14.6% 0 - 5%
Pro-Bono Services Used Rarely In Most Cases
Information Disclosure (out of 10) 10 9.3
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Information Disclosure
Disclosure assessed by:• 990s (2 points out of 10)– mandatory filings (hence lowest weight)
• Event Reports (3 points out of 10)– often used for marketing purposes
• Breakdown of fund disbursements (5 points out of 10)– indicates the highest level of program transparency
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Fund Research-Takeaways
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•Focus on Immediate Relief•Extremely Transparent•Reputational Power •High Capacity
Traditional
•Focus on Long-Term Recovery•Efficient with Donations•Celebrity Power / Political influence•Local Knowledge
Non-Traditional
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Companies Interviewed
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Donor Interviews-Takeaways• Disaster Relief: a subset of CSR programs
– Size of subset based on fit with values/competencies
• Annual Giving more popular than event specific donations
• Reporting requirements vary from company to company
• Donors view Traditional and Non-Traditional Funds as mutually exclusive – Traditional: Capacity to deliver immediate response– Non-Traditional: Ability to support long-term recovery with donations
made on a project-to-project basis
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Donor Interviews-Takeaways• Traditional funds favored over Non-Traditional
– Desire and ability to build long-term partnerships – Trust built through execution history and reputation
• Non-Traditional funds favored over Traditional– Program aligns with the company’s mission focus to support recovery– If there is a perception that the non-traditional fund is uniquely placed
to fill a community need
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Anecdotal Information: Perception of Funds
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"We want to work with organizations who have strong reputation and the capacity to execute a program"
“We donated [to the Boston One Fund] because they were respectable, had the backing of the mayor and there was a perception that it would be well managed."
"Partnerships with funds are built on trust"
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Anecdotal Information: Disaster Relief
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“Our disaster relief efforts look to contribute locally to national organizations."
“We have a dedicated team that focuses on disasters and disaster relief. If an event occurs we want to be appropriately placed to inform and assist both our employees and our customers."
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
Barriers for Non-Traditional Funds• Reputation and Trust
– Difficulty in establishing relationships due to short term existence– Difficulty in assuring donors of the capacity to execute
• Funds Overcome these Barriers by;– Associating themselves with a political or celebrity figure– Associating themselves with a reputable partner such as the BCLC,
NetHope or a traditional fund like the American Red Cross– Committing to rigorous reporting practices as part of program
execution
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University of Maryland - Smith School of Business - BUSI 718 Social Venture Consulting Practicum
“Which Fund Should You Choose?”• Non-Traditional match Traditional in terms of transparency &
accountability• Non-Traditional are complementary to Traditional • Assessing Non-Traditional analogous to assessing a start-up
– Mission statement– Program proposal– Charter detailing– Local knowledge level (expertise)– Partnerships
• Choice ultimately comes down to:– Is community central to donor? Contribute to relief and recovery?– If focus is disaster support/assistance? Contribute to relief?
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QUESTIONS?