Category Archives: Individual Giving

Don’t Let Tax Rules Intimidate When Writing Nonprofit Thank-You’s to Donors

hamsterReading Roger Craver (author of Retention Fundraising: The New Art and Science of Keeping Your Donors for Life) should put a jolt into any fundraiser’s Monday morning, with his analysis of why the nonprofit sector is “hemorrhaging donors and losing millions monthly.”

He’s not just engaging in hyperbole: Apparently, studies by the Association of Fundraising Professionals (AFP) have found that for every $100 brought in from new donors, nonprofits lose another — wait for it — $100, due to donor attrition. Talk about a hamster wheel. 

Number one on Roger’s list of likely reasons is “Failure to properly thank and involve donors.” Really? After all this time? It’s not that I don’t believe him, it’s just that anyone who’s ever written about nonprofit fundraising, me included, has emphasized the crucial importance of thanking donors.

Perhaps this is just another problem that can be chalked up to organizational inexperience, lack of time, or the fact that the entire development department just quit to take a job that pays better. But I wonder also whether nonprofits worry that they might get it “wrong” when writing a thank-you letter, and fail to comply with IRS regulations about thanking donors. (In fact, some nonprofits DO get it wrong, as discussed in my earlier blog, “Fundraising Oops: Thank-You Letter With Backwards Tax Info.”)

There are a few rules worth following — as much for the donors’ sake as the organization’s — but they’re really quite simple. Stephen Fishman discusses them  in his article, “Tax Deductions for Charitable Giving – The Nonprofit’s Responsibilities.” (Also see his book, Every Nonprofit’s Tax Guide.)

But when it comes right down to it, a thank-you letter for a straightforward cash donation can take practically whatever form you like: A letter, a postcard, an email. Just say how much the gift was, and then forget the IRS and get to the heartfelt part of it: gratitude that this person made a gift to help a cause that you all care about.

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.

 

 

 

 

 

Why Billionaires Sign on to Warren Buffett’s Giving Pledge

rain of dollarsA total of 127 people have now added their names to the “Giving Pledge” list  started by Bill Gates and Warren Buffett. It’s no token commitment: The billionaires on this list have agreed to give over half of their wealth to charitable causes. 

Why do they do it? We don’t have to wonder too hard, because each accompanies their pledge with a written statement.

Not surprisingly, many of these statements read like they were written by a marketing person. There’s all the usual language about helping others, giving back, values learned from parents, and so forth.

Still, it’s worth perusing them, to look for clues beyond the obvious. There’s an interesting one right at the top of the list, from Bill and Karen Ackman.

William Ackman’s letter says that he not only gains happiness and optimism from helping others, but that “I am quite sure that I have earned financial returns from giving money away. Not directly by any means, but rather as a result of the people I have met, the ideas I have been exposed to, and the experiences I have had as a result of giving money away. A number of my closest friends, partners, and advisors I met through charitable giving. Their advice, judgment, and partnership have been invaluable in my business and in my life.”

Wow. For anyone who was still thinking about major donors as just regular donors who give a little (okay, a lot) extra, it’s a powerful reminder that truly major giving occupies a whole different universe.

Ackman is talking about up-close, personal contacts with individuals, not just getting a nice thank-you letter and phone call from a development director. I’m willing to bet that many of the people he’s referring to are not the nonprofit staffers themselves and, pardon my cynicism, not the homeless clients, either.

My guess is that he’s talking primarily about fellow people of means with whom he has served on boards, or whom he has met at gala events, conferred with about high-level approaches to problem solving, and so on. And although his letter was one of many on Buffett’s list, Ackman no doubt expresses the (perhaps unspoken) sentiments of others like him.

All of which means that any nonprofit trying to attract the attention of truly major donors needs to give some serious thought to whether it can offer a similar type of return on their investment.

“Just seeing the look on the faces of those kids . . . .”

waterA recent article in the East Bay Monthly, called “In the Philanthropic Swim” contained a powerful reminder of how donors’ giving instincts are fueled not just by knowing that they’ve made a difference, but actually seeing that they’ve made a difference.

The article describes an Oakland couple,  John Bliss and Kim Thompson, who wanted to invest in their local community. They created a fund through which they’ll donate $100,000 to the Oakland Park and Recreation Department in order to pay for swim lesson scholarships for local kids; and also created a program offering rec centers grants of up to $2,500 for special programs or needs.

What struck me about the article was Thompson’s description of how she “knew” that the grant money was well invested. It wasn’t based on dollar metrics or painstakingly written reports. She said, in describing a grantee (deFremery Park) that had used its funding to renovate basketball courts,  “Just seeing the look on the faces of those kids when they saw the beautiful courts and the Warriors players at the grand opening made us know that was money well invested.”

Bliss echoed her sentiment, saying, “The joy of seeing the looks on those young boys’ and girls’ faces . . .  is something we will never forget.”

Because they’d spearheaded and funded this effort, they of course got direct access to the results. But wouldn’t it be wonderful if a wider pool of donors and funders could be brought into direct contact with the recipients or results of their generosity?

 

Gripes About Direct Mail Appeals

2013-Nickel-Unc-obv_D_2000Has anyone yet come up with a replacement for direct mail solicitation as a funding source? No, I didn’t think so. Individual donors still comprise the bulk of nonprofit funding, and direct mail is a tried and true way of reaching them.

(Email? Just a variation on the mail theme. Crowdfunding? Nah, best for small projects of limited duration.)

The trouble is, the tried and true sometimes becomes the tired and annoying. Or is it just me who groans at receiving yet another thick envelope that I have to open up, tear my name off the various contents of, and check for any U.S. currency before preparing the now-ragged pile for its trip to the recyling bin?

It’s apparently not just me. Or at least, not according to the results of my entirely informal, unscientific survey of friends. I asked what aspects of charity mail appeals most got their goat.

There was no shortage of answers, with most falling into one (or more) of four categories: cost, frequency, freebies, and over-the-top entreaties. Here are some of the actual replies:

Cost:

  • “Using all your money to send you more appeal letters.”
  • “Those that come with a nickel glued on – it shows they don’t need mine.”

Frequency:

  • “When the next appeal comes before the thank-you for the previous donation!”

Freebies:

  • “I don’t like when they send address labels or greeting cards — such a waste of paper.”
  • “I hate the mailing labels or small change (“a nickel will do x!”). Feels manipulative.”

Over-the-top entreaties:

  • “Dogs with sad eyes.”
  • “Animal charities that target children (sending progress reports on a particular animal) and then use the kids to pressure their parents to make a larger monthly donation (your ‘own’ animal needs more food, a new bed, etc).”
  • “Membership cards that imply you’ve already committed and they are just following up to get the money.”
  • “The . . . ones where you innocently open them and are confronted with a poor kid with a harelip or no arms . . . .”
  • “I hate the ones that are in a blank envelope that look like reports from a credit bureau or something else that matters so you can’t toss them without opening them.”
  • “I know there’s research behind it — but I HATE letters that end with a p.s. & question (Won’t you help TODAY?)”

Of course, there is research behind nearly everything that a nonprofit puts into a direct mail piece. And for everyone who hates the address labels, there’s probably someone who likes them. (Actually, that would be me. I’m running short. Could some group . . . uh, never mind.) But isn’t it a bit disturbing that people can so readily recite a list of the common strategies?

For more on direct mail and other forms of fundraising, see the 2013 edition of Effective Fundraising for Nonprofits, by Ilona Bray (Nolo).

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!