Category Archives: General Fundraising

Plus Side of Not Receiving Huge Donations: No Need to Return Huge Donations!

cash_handsIt seems there’s been an epidemic recently of nonprofits either having to, or deciding to, return money to disgraced donors.

On the “having to” list, just this week the Wall Street Journal reported that the College of St. Benedict in Minnesota had agreed to give up one-fifth of a $3 million gift that businessman Tom Petters made way back in 2003. Petters was later convicted of operating a Ponzi scheme that brought him billions of ill-gotten dollars. 

After more than a decade, the college had probably found plenty of uses for that money, and might have been happy to ignore Petters’s later troubles. Enter, however, the bankruptcy court that’s overseeing the collapse of the Petters empire. The court decided to collect any and all stolen funds in order to turn them over to creditors, and the College of St. Benedict was apparently a recipient of such money. (Figuring out which money is tainted and which isn’t sounds like an accounting nightmare, by the way.)

On the “deciding to” give up tainted money list, several groups are reportedly saying “Ptooey” to money that came from “disgraced Clippers owner Donald Sterling.” (It seems that Sterling will never be referred to any other way — sort of like, “Military Strongman Idi Amin” or “Pop Star Madonna.”) The list includes Goodwill Southern California (bye-bye $100,000) and A Place Called Home.

Hmm, maybe A Place Called Home didn’t actually return any money. Its public letter said, “I must decline further funding from your foundation and ask you to immediately remove A Place Called Home and my photo and name from your ads.”

If true, that’s a clever public relations move – denounce the donation loudly and publicly, but keep the cash. I’m not unsympathetic: The money was probably well-spent by now.

But if the Internet and public fascination with infotainment is going to keep producing high-profile scandals like this, more and more nonprofits are going to have to do ethical deep-think around funds that came from the latest “Disgraced So-And-So.”

Meanwhile, grassroots groups whose average donations are $25 checks from local families can hopefully sit back and feel grateful that they’ll rarely have to deal with such huge amounts coming in — and then going back out.

 

 

 

 

 

Do Donation “Discounts” Devalue Nonprofit Brand?

stormThere’s a winter storm coming in, and I’m not talking about the weather. It’s the relentless flurry of emails from both commercial and nonprofit marketers, all wanting to get my attention and hopefully the last of my end-of-year dollars for either gifts to people or gifts to charity.

They’re all starting to sound bizarrely similar, especially when it comes to “discounts.”  Taglines like “Adopt a wild animal for 50% off!” or “Membership half price through 2013!” are not uncommon.

I get it that, in some cases, you’re literally getting something for less, like a regular newsletter reporting on the nonprofit’s doings. But in others, the nonprofit is actually promising to provide the same service for less money. And that’s disturbing, when our whole notion of nonprofits is that when they ask for something, or tell us, “It takes $x to save a wild animal,” they didn’t build in a profit margin. They’re a nonprofit, after all.

I assume that someone out there is testing these supposed discounts, and that they work to get email readers’ attention. But what are the long-term implications of convincing donors that, like a for-profit company, your original “price” was just puffery, and you’re actually willing to do the job for less? I predict some rough sailing ahead.

If Reich Is Right, Should You Forget About Attracting Wealthy Donors?

stairwayNo matter what type of cause you fundraise for, Robert Reich’s recent blog, “When Charity Begins at Home,” is relevant to your work. Reich makes a convincing case that:

  1.  – Wealthy donors are increasingly removed from, and therefore uninterested in, the less fortunate members of society, and
  2.  – Even the purported generosity of affluent Americans is directed mostly at causes that directly serve them in return, such as their colleges, favorite music and arts institutions (for “hobnobbing” with their fellow elites), and so forth.

There’s a certain sense of inevitability about this. We’ve all read the headlines about the social divide between rich and poor increasing. And it doesn’t take a social scientist to tell us that people (potential donors included) have less sympathy for people whose lives seem utterly alien to them.

So, where does this leave nonprofits who do serve the poor, or immigrants, or workers, or the disabled, or any other group that’s not on the radar screen of the 1%?  Other than frustrated, that is.

Simply recognizing the dynamic that’s at work is a good start. That will help avoiding wasting your time courting prospective donors who may never be interested in your cause.

It may also change your language and approach. Think about, for instance, how your cause interests wealthy donors at a personal level. Find tie-ins between the lives of those you serve and those of your prospective donors. If, for instance, you’re working with a particular young immigrant or a youth who has been accepted into an Ivy League college but is hindered by something that you’re trying to help with, that person’s story might be a good one to highlight. Work those points of connection!

New Donor Group Interested in Charitable Deductions: Same-Sex Married Couples

iStock_000000131834XSmallAs explained by Sandra Block in the December, 2013 issue of Kiplinger’s Personal Finance, this is the first year in which same sex couples who have entered into a marriage that’s legal where it occurred are also considered married for federal tax purposes.

(At last count, 16 U.S. states and the District of Columbia offer same-sex marriage.)

This has some important implications for such couples’ interest in tax matters. As with any married couple, says Block, dual-income same-sex couples “who earn about the same amount will likely end up paying a marriage penalty.”

But nonprofits should be happy to hear one of Block’s suggested ways to avoid or reduce the penalty:

Increase contributions to charity, and take a tax deduction.

If you’re with a nonprofit that promotes LGBT marriage and other rights, you’re particularly well-placed to remind potential donors about the importance of this deduction. But, as society is finally figuring out, gay and lesbian folks come from all walks of life, and may have multiple interests.

Therefore, any charity should be thinking about how to reach out to newly married donors (of the same or opposite sex, come to think of it) who are seeing, for the first time, some significant tax benefits to giving to their favorite cause.

Forbes Publishes List of U.S. Nonprofits With Most Individual Donations in 2013

cash_handsIf you’re with a small or struggling nonprofit, get ready for some pangs of jealousy: Alth0ugh Forbes calls them the “largest” U.S. charities, its top-50 list for 2013 actually uses “private donations received” as its “main metric” for inclusion.

Together, the listed nonprofits pulled in $30 billion worth of donations this past year.

Not surprisingly, you will have heard of many of these: United Way, Salvation Army, and . . . Task Force for Global Health?

Okay, I hadn’t actually heard of them. But as a newcomer to the list, they’re clearly a group to watch. What are they doing right, to have rocketed to the third spot on the list? It looks like most of their giving (to the tune of $1.7 billion) was not in the form of cash, but donated medicines.

Still, one has to admire a couple of fundraising-related aspects of the Task Force’s website: They post their annual report quite visibly (thus emphasizing financial transparency); and when you click the “Donate” tab on the home page, you’re given interesting background information on where your dollars go before being presented with the form to fill out.

For tips on achieving results with your group’s own website, see Nolo’s article, “Your Nonprofit’s Website as a Fundraising Tool.”

Is Public Speaking Part of Your Job at a Nonprofit?

radio_mikeAmong the many skills required of nonprofit executive directors, development directors, and board members, public speaking is one that doesn’t receive much discussion.

It is, however, a skill that people in the above roles may have to call on for various reasons: to give a welcoming or fundraising speech at a gala dinner or other event, to address a group of decision-makers at a foundation, to represent your nonprofit at a community fair or other public event, to speak with a radio or television reporter on air, and so on.

So, does public speaking make you nervous? (Or, I should ask, do you suffer from “glossophobia?”) Around three quarters of Americans reportedly do.

If you’re among them, you’ll find no lack of advice on dealing with the topic — everything from breathing exercises to picturing your audience in their underwear. For a simple, straightforward message, however, check out marketing guru Seth Godin’s blog today, titled, “Speaking in public: two errors that lead to fear.”

Godin doesn’t single out nonprofits, but his points couldn’t be more relevant to them. When you focus on the cause, not yourself, and “realize that you have a chance to be generous in this moment, to teach and to lead,” your fears will recede into the background.

Shoutout to All the Nonprofits Providing Thanksgiving Services

CAKEThe degree to which nonprofits have become a backbone of American society is never clearer than on holidays such as Thanksgiving — for those who realize what a nonprofit is, at least.

Many people forget how many organizations are run based purely on love, donations, and volunteer labor. Such organizations may not get to fold up their tents while others enjoy a vacation. In fact, their services may be more important than ever, as they provide:

  • medical treatment to people in need
  • Thanksgiving meals to the hungry and the incarcerated
  • shelter for those needing a break from the ever-colder weather or from domestic violence
  • care for animals awaiting adoption
  • hotlines and support groups for people in difficult straits, and
  • much more.

They’re during it during a tough year economically, too, with donations down, and headlines announcing things like, “Nonprofits face turkey-free Thanksgiving.

I’m taking a moment to be truly thankful for the open hearts and determined spirits of the people who join together on such projects. (And I’ll be putting in a couple of hours at my local animal shelter, too.) Happy Thanksgiving!

So, Should Donors Check Charities’ Financial Percentages or Not?

brainReading the recent New York Times “Giving” section, I wasn’t sure whether I was watching change in the making or an example of cognitive dissonance. The subject in question was how much weight donors should give a charity’s financial percentages — that supposedly key ratio of expenses spent on programs and services versus overhead (admin and fundraising) — when deciding whether the charity is effectively carrying out its mission.

On the one hand, David Wallis devotes an entire article to Dan Pallotta, founder of the Charity Defense Council, and his argument that nonprofit organizations “worry too much about keeping overhead low and pay too little to attract the most talented executives.” Pallotta describes the dramatic turn of events when “the Better Business Bureau, Charity Navigator and Guidestar issued a joint news release called The Overhead Myth. It’s an aggressive campaign to really backtrack on this history of teaching the general public to ask about overhead. And now they are saying, ‘Charities don’t need low overhead; they need high performance.’”

On the other hand, the title of this article is, “Gadfly Urges a Corporate Model for Charity,” and Wallis takes pains to point out that Pallotta is a controversial figure with some major failures in his fundraising past.

And then there was an article called, “How to Choose a Charity Wisely,” by John Wasik. It lists the various organizations that evaluate charities (mostly using the standard financial ratios), quotes a Charity Navigator spokesperson saying, “a good benchmark for a worthwhile charity is having at least 75 percent of income spent on programs, or the nonprofit’s mission,” and in the section on “Getting Granular,” advises that charities whose accounting practices include “lumping in fund-raising or solicitation with the charity’s program expenses” are “muddy[ing] the waters” when it comes to “gauging how much is really being spent on the charity’s mission.”

Oh, but the article also warns that: “Like GuideStar and Charity Navigator, the [BBB Wise Giving Alliance] cautions against paying too much attention to the percentage spent on nonprogram expenses, also known as the ‘overhead ratio.’”

Okay, so are we supposed to pay attention to these percentages or not? According to Merriam-Webster, the definition of cognitive dissonance is “psychological conflict resulting from incongruous beliefs and attitudes held simultaneously.” I think we’re seeing some of that here.

A few years from now, perhaps everyone will laugh at how attached we once were to those magical fundraising versus overhead percentages. In the meantime, for the sake of clearheadedness, it might help if everyone took a closer look at the assumption that you can divide program expenses and overhead expenses in the first place. Where’s the bright line when a development director meets with a major donor, gets that person excited about the organization’s mission, and invites him or her to participate in the organization’s work more deeply? Or when the Executive Director goes out to speak at a public event, increasing awareness of the issue the organization is concerned with?

The people and tasks that are commonly called “overhead” are, in many cases, integral to the nonprofit’s mission. This isn’t “muddying the waters,” it’s practical reality.

Nonprofits Shouldn’t Give Up Too Soon on Grant Funding

waterFor too many nonprofits, fundraising feels like exercising in one of those “swim-in-place” pools. You huff, puff, and struggle, yet never move forward – while a single pause for breath can send you back to the starting wall.

Receiving a “no” answer to a grant proposal can be one of those moments that make you feel like you’ve lost ground. All the time you spent planning, preparing, and even dreaming about the outcome, for zip, zero, nada. But according to Diana Compoamor, President of Hispanics in Philanthropy (which works to support and strengthen Latino organizations and leaders), this is also a moment of opportunity.

“As discouraging as a rejection from a funder can be,” says Diana, “I see too many nonprofits viewing this as a door that has closed forever. The nonprofit’s list of possible funding sources thus gets shorter and shorter with each ‘No’ answer.”

What should nonprofits do instead? “Contact the funder after a rejection,” says Diana. “I know it’s hard, but all you have to do is politely say, ‘I understand that you had many proposals to choose among, and am sorry we didn’t meet your criteria this year; could you share with me your thoughts on what we could do to improve our chances of success next time?’”

The answer might surprise you. Perhaps the funder liked everything about your proposal, but your program was too similar to one from another nonprofit that it had already committed to funding. Then again, perhaps an embarrassing, fatal flaw emerged in your proposal – in which case, wouldn’t you want to know about it before sending a similar proposal to another funder? By adjusting to the responses you receive, you increase the odds that the next answer you receive from a funder will be a “Yes.”

But does this really happen? Do foundations ever change their minds about a group that they’ve rejected? Jim Lynch of TechSoup Global tells the following story (excerpted from my book, Effective Fundraising for Nonprofits): “I had developed a phone contact with an officer at the Crocker Foundation. Every year, I called to ask what they had going, and every year, the officer told me that it wasn’t a good fit. Finally, one year I called, and something did fit—and we got the grant! I think the officer was partly relieved to be able to give me some good news for once.”

Jewish Culture Laying the Groundwork for Charitable Legacy Giving?

Vintage bronze Siddur cover useful for backgroundOkay, let’s not all start going through donor lists and chasing after everyone with “stein” or “berg” in their name; but nonprofit fundraisers should definitely read the article by Alex Daniels in the recent Chronicle of Philanthropy entitled “Jews Are Twice as Likely to Leave Bequests Than Non-Jews.”

It cites a Connected to Give study called “Jewish Legacies,” which found that 23% of  U.S. Jews age 40 and over with household incomes of at least $100,000 have provided for charities in their wills. If that doesn’t sound impressive, realize that it’s double the number of non-Jews who have done the same. Another impressive percentage is the 74% of U.S. Jews who have prepared wills in the first place; well ahead of the 60% of non-Jews to have done so.

If you’re with an organization that directly serves a Jewish population or cause, the lesson is clear: If you don’t already have a planned or legacy giving program in place, it’s time to start developing one. You’re working with a population that apparently acts with above-average maturity in planning for the end of their life and deciding what mark they will make on the world.

There’s good news in here for non-Jewish organizations, as well; the 23% includes 6% whose legacy gifts were intended for non-Jewish causes. Providing for basic needs, health care, and the environment ranked high on the list.