Category Archives: Recession Strategies

Hopeful news for nonprofits just came out in the Nonprofit Fundraising Study: Covering Charitable Receipts at U.S. and Canadian Nonprofit Organizations in 2012.  According to the study, 58% of the nearly 1,2oo organizations surveyed said their fundraising receipts had gone up in 2012. That’s an improvement over the 53% who saw a rise in 2011 and a paltry 43% in 2010.

The increase was relatively uniform across the four regions of the United States and among different types of organizations (covering issues such as arts, culture, humanities, and religion).

We could attribute the rise to improvements in the economy — but given that this rising tide still didn’t manage to lift 42% of nonprofits, it’s worth taking a closer look at the successful ones. How did they do it?

Most explained their fundraising success in 2012 to such factors as:

• the addition of new staff (10%)
• a jump in receipts from bequests (6%), and
• a successful event (3%).

It’s worth noting that all three of those factors require advance planning and investment, of a sort that’s all too easy to jettison when an organization is underfunded, understaffed, and feeling insecure. Thus it’s not too surprising that larger organizations saw more growth in charitable receipts than smaller ones.

Nevertheless, the overall message is a positive one. In the words of Nancy Raybin, with the Giving USA Foundation, “With a better economy, charities generated results by looking again to the future, not just for meeting day-to-day needs.”

From April 14 through 20, the U.S. is celebrating books and the role that libraries play in people’s lives. Libraries have become many communities’ go-to place to rent a movie, do homework, search for a job, and more. Of course, many remain shuttered or on a reduced schedule, with libraries across the U.S. having become, in the last few years, victims of city and county budget cuts.

As if librarians didn’t wear enough hats already, these budget difficulties have led many librarians to assume a new role: fundraiser. I talked to a number of them for my book, The Volunteers’ Guide to Fundraising: Raise Money for Your School, Team, Library, or Community Group. Many were involved in contacting prospective donors, organizing special events, rounding up donations for an auction or raffle, and so on.

Fortunately, librarians are also a multi-talented bunch, and they’ve got a great theme to work with: reading and literature. Book sales, book awards, and author events are staples of the library fundraising world. But the fundraiser that gets my vote for creative adaptation of the theme is the Edible Book Festival, which started in 2000 and has now spread around the globe.

The idea is that people create cakes or other food items that represent famous books and in some cases, themes and characters from those books, which are displayed and then consumed at a public event.

Check out some of the pictures here and here. And if you’d like to learn how to hold your own such festival, check out the “Eat your words: Tips for hosting an Edible Books Festival in ProgrammingLibrarian.org webinar,” to be held Wednesday, May 1, 2013 at 2 p.m. CST.

Small is powerful, according to the Blackbaud Charitable Giving Report for 2012. The report found that, while charitable giving went up in 2012, the overall 1.7% rise wasn’t evenly distributed among different-sized nonprofits.

Organizations that raise less than $1 million per year saw their contributions jump by an impressive 7.3% in 2012. Compare that with the 2.7% rise in giving to mid-sized groups (those with annual revenues of $1 million to $10 million) and the tepid 0.3% rise in giving to the largest nonprofits (with revenues of $10 million and more).

What accounts for this differential? According to a report in Barron’s Penta Daily, Steve MacLaughlin, director of Blackbaud’s Idea Lab, says that ever since the recession began, the tendency among donors has been to give locally — for example, to a park, arts council, or hospital.  Donors are better able to see both the need for funding and the potential impact of their gift when the group is basically in their own back yard. Another factor may be that smaller nonprofits receive a relatively high percentage of their funding via the Internet, and online giving is growing.

That’s good news for small groups, but how do you capitalize on this? Or, while we’re at it, how can mid-size or larger groups overcome the perception that they’re too big to need help?

Clearly, every group’s communications and marketing materials should be reviewed with an eye to establishing local presence. Donor lists should be segmented to make use of opportunities to gear communications to particular geographical areas or local interests. If your actual offices are physically located near certain donors, that’s worth highlighting. (Sure, they can look at the address line on the letter, but that doesn’t really drive the point home.)

No matter where your main offices are, if your group is serving clients or working on a cause that’s physically near certain donors, make sure they know that, too. Even larger groups can point to their local branch offices or membership groups and opportunities, and explain the important local needs that they serve.

The study also has implications for finding new donors. Has your group fully considered who its neighbors and nearest potential friends are? What about its literal neighbors? Something as simple as holding an open house, to which you invite people from nearby offices and residences, can yield a new list of names for your database, possibly leading to new donors or volunteers.

Just don’t get so wrapped up in grassroots efforts that you forget to attend to the other important part of the equation — making your website an attractive draw, where potential donors find it easy to give, as described in the article, “Your Nonprofit’s Website as a Fundraising Tool.”

I thought I was a statistical outlier in absolutely, categorically refusing to sign up for regular, monthly donations to my favorite charities. To me, the idea sounds too similar to various times when I’ve gotten a free or low-cost magazine or newspaper subscription, only to find that turning off the tap was nigh on impossible.

Apparently, however, I’m not alone in my approach. Blackbaud’s November, 2012 “Donor Perspectives” survey found that among U.S. donors, 19% said that “nothing would compel them to become a regular donor to charities to which they currently make one-off donations.”

That’s a useful thing to know, given how many charities are pushing the idea of recurring donations. And why wouldn’t they, given the possibility of an ongoing income stream from donors who might not otherwise be able to afford such a large amount?

But let’s not go overboard chasing the possibility of recurring donations; for example, by failing to offer other methods of contributing. “Who would be silly enough to do that?” you ask. In fact, I was approached on the street by a volunteer for a major environmental organization who spent a long time trying to talk me into a recurring donation plan and then, when I said I was willing to make a one-time donation only, said they couldn’t do that! That was a waste of both our time.

The survey also reminds us that talking someone into a recurring donation isn’t the end of your interaction with them. Between 20% and 30% of those surveyed said that they’d stopped making recurring donations to at least one organization in the last three years. The most common reason was personal finances, which of course nonprofits can’t do anything about.

But the second most common reason was “a feeling that the charity was not making the best use of its financial resources.” That’s something the nonprofit can certainly do something about. I’ll bet those donors weren’t doing a careful analysis of the groups’ financials and Forms 990. More likely they were simply underwhelmed by the reports they were getting back from the group — or, dare I say, were upset by getting continued appeals for more money. It’s also possible that their expectations from the group in question were heightened, given their feeling that, “I’m paying the bills for this place.” How about making sure to regularly thank the recurring donors, give them specific information on how their recurring donation helps maintain and improve your group’s efforts, and hold off on the followup appeals?

The 2012 Fundraising Effectiveness Report from the Association of Fundraising Professionals and the Urban Institute shows that while charities saw reduced donation totals in 2010 – with $105 lost due to departed donors and reduced gifts for every $100 gained in new or increased gifts — 2011 saw a return to flat levels of giving. So, the bleeding has stopped — but has the healing begun?

In one sense, no: Organizations are still losing more donors than they’re gaining (107 per 100 last year).  So nonprofits somehow aren’t heeding the old fundraising lesson, which the report reminds us of, that “Taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains.”

Then again — as if you didn’t have enough to worry about — the numbers do seem to show a surprising amount of energy around new donors. Is it because organizations have been doing more to reach out to new donors, or because a new pool of donors is responding to obvious societal need while others fall? Hard to say, but it looks like groups should continue whatever it is they’re doing right!

Regardless of trends, the key concept that the report tries to convey should be easier for every group to wrap its hands around: Nonprofits should look beyond the final donation numbers to see where they’ve gained ground and where they’ve lost. If your group has been looking only at the bottom line total donation amounts, and hasn’t examined how much of its budget is due to new and increased donations versus lapsed donors or reduced donations, now’s the time to do so. You may spot an instructive trend.

Another news story came out this week about a nonprofit closing operations for lack of funding; in this case an Oakland charter elementary school called Civicorps. The headline in the Oakland Tribune, seemingly inevitably, said, “Families, teachers stunned by sudden closure of Oakland charter school.”

The members are always stunned, it seems. Just a couple of months back, a friend of mine was reeling at the announcement that a trails organization of which she was a loyal member had run out of money and was closing — and doing so almost immediately.

The decision to close a nonprofit is no doubt made after trying virtually everything, sounding alarm bells about the need for funds — hopefully without turning potential donors off by the persistent note of 0h-so-unattractive desperation — and finally giving up.

And yet. Civicorps parents and teachers told Tribune writer Katy Murphy that  “they could have saved the school if they had been given time to do so. ” My friend expressed something similar.

Where is the line between telling donors “We really need the funds, or else” and “This time we mean it?” Especially given that, once the decision to close is made, a group needs to wrap up operations fairly quickly. It may not have the cash reserves to do anything else, especially while winding down income-generating services and fundraising operations.

The lesson seems to be that, one way or another, key or loyal members need to hear that an ultimate decision on whether to close is being made. Whether they really can mobilize in time to save the ailing nonprofit is, of course, an open question.

But without an opportunity to try, and to assess the situation for themselves, member frustration, bad feeling, and very likely public statements about the incompetence of those running the nonprofit are a predicable result. (In the Oakland school instance, a teacher/parent said, “It’s just negligence, at a minimum”). And who knows, maybe they really will be able to save the nonprofit.

According to projections by Atlas of Giving, April of 2012 will be the weakest fundraising month for all types of charities except those working on arts and environmental issues. (See their 2011 U.S. Report.)

Why? The report authors don’t say, but I’d bet my tax deductions it has something to do with April 15th. People’s attention will be elsewhere, and many will be bemoaning having to write a certain large check.

The group’s advice is to reschedule your solicitations and events to March. Which, uh, starts tomorrow. Killing yourself to hurry up your solicitations and events probably isn’t such a good idea. For one thing, (as I discussed in The Volunteers’ Guide to Fundraising‘), planning for an event of any significance should start months in advance.

So, maybe you should just kick back, and push your major plans to September . . . which, according to Atlas of Giving, is supposed to be a banner month for U.S. fundraising.

You know how I’m always on the lookout for ways a nonprofit can boost the positive side of its balance sheet by turning existing assets into cash?

That’s why I was intrigued to read this article by well-known real estate writer Broderick Perkins, describing how the website ParkatMyHouse.com — already well-established in England — is coming to America.

The tag line on the website’s home page pretty much says it all:  “Have an empty spot in your driveway? You could be making money by renting it out.”

Perkins further explains that founder Anthony Eskinazi,  inspired by his own difficulty finding (or affording) a parking space when he visited AT&T Park in San Francisco to see a Giants game, went back to England and set up what the website calls a “match-making service for property owners and drivers.” The site continues to manage the relationship, having already helped over 40,000 property owners in England gain extra income from renting their unused parking space by the day, hour, or month.

The church I mentioned in the title is near the busy Kings Cross Station in London and has, according to Perkins’ article, earned some $180,000 from the website in the last three years, comprising more than half its annual income. (These are tough times for tithing.)

Of course, not every nonprofit owns its own property, or has space to let.  (And if you rent, or are part of a homeowners’ association, better check with them before you sign up.)  But hey, pass the word on to your most-likely-underpaid staffers. Maybe their driveway could put a few extra dollars into their pockets while they’re spending long hours at work!

Instead of spreading their gifts widely across multiple program areas, corporations are choosing one or two societal issues to focus on, according to a survey and 2011 “Giving in Numbers” report by the Committee Encouraging Corporate Philanthropy. (The survey included 184 companies, 63 of which were among the top 100 companies in the Fortune 500.)

Which issues were most of these companies choosing to target? Basic health and social service programs topped the list, followed by education and community and economic development. Basic human hardship in their communities appears to be their central concern. That’s bad news is you’re with an arts program, but those whose missions match these targets should take note, and revisit their corporate fundraising strategy and prospects. Perhaps there are some corporations who’ve showed no interest in your organization in the past, but have since changed their tune.

We may soon find out exactly how much the tax deduction for charitable giving prompts people to donate to nonprofits, if President Obama’s proposed jobs bill goes through. As explained in Lisa Chiu’s September 12 article in the Chronicle of Philanthropy, the charitable deduction is just one of the many itemized deductions that would be limited to a 28% writeoff in the higher-income brackets.

For an impassioned (to put it mildly) discussion of the pros and cons of limiting this deduction, see the “Tax the Rich More? Or Less?” article by Jan Masaoka in Blue Avocado and the comments that follow. The crux of the debate seems to be between those who believe that tax deductions either aren’t or shouldn’t be a major motivation for giving among the wealthy, and those who think that it is — and that, with all the struggles nonprofits are already going through, picking on this deduction could just make matters worse.

I put myself in the latter camp, largely because of the following statistic, as covered in my December 2010 blog post: More than 20% of all charitable giving for the ENTIRE YEAR occurs on December 30th and 31st.

Maybe the tax deduction isn’t the main motivation for giving, but the deadline clearly gives potential donors a major nudge. Without that deadline, I’m betting (as a seasoned procrastinator) that all those good intentions will be put off month by month by month.