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!

Congrats to 2013 “Purpose Prize” Winners!

golfing womanThe best — or the most meaningful — may be yet to come for any of us.

Don’t believe it? Check out the stories of this year’s winners of Encore’s Purpose Prize. They’re all over 60, in the so-called “leftover years” of their life, when they’re supposed to be playing golf and poring over glossy brochures for round-the-world cruises.

Yet they’ve all drawn on their significant experience, professional and otherwise, to throw themself into a cause in an innovative way.

What struck me about the winners’ stories was that each seemed to have identified a truly unique need or approach. Just when you think the U.S. contains every type of nonprofit or charitable program imaginable, you hear about someone like winner Carol Fennelly, who saw how difficult it was for family members to keep in contact with their incarcarated relatives, and created Hope House. It offers programs that arrange video teleconferences between school-age children and their fathers in prison, helps inmates make recordings of themselves reading books aloud for their children, and operates a series of summer camps for children ages 9 to 14 that allows then to spend a week visiting their incarcerated fathers. Wow.

And there are six other winners, all with inspiring stories of their own. After reading them, you’ll be asking yourself the same question as presented on the Encore website: “What’s your encore?”

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.

How to End a Nonprofit Event on Time (Donors Need to Get Home!)

cmsamerica_nightThere’s nothing like the good feeling at a party where no one wants to leave. At an ordinary party, however, the departure time is voluntary.

At a nonprofit annual dinner or similar fundraising event, you hope and assume that everyone who can will stay put right up until the last honoree is honored and the last speaker heard from. (Especially the speaker who’s asking for donations . . . . )

Yet far too many nonprofit events drag on far into the night. This can lead to a flood out the door as attendees realize, “I promised the babysitter I’d be home by now,” or “If I don’t get to sleep soon, tomorrow is going to be Hell.” They run from their chairs feeling half guilty and half resentful. (And guess what they remember next year . . . .)

This time drag is not for lack of good intentions. Recently, I intended an event where the program itself included the exact time at which everything would take place: “7:35, Announcement by E.D.,” “8:00 Choral Presentation,” and so forth. How nice to know exactly what to expect! But keeping to such a schedule is always (and was) a challenge.

So, what can a well-intentioned nonprofit do? Here are some strategies:

  • Don’t try to pack too much into one evening. The more variables you’ve got, with speakers and participants from outside your organization who might revel in their moment in front of the microphone, the higher the possibilities for time to slip away.
  • Set an end time for festivities that’s earlier than when you want everyone to leave. Remember, people will need time for some final chitchat, and your volunteers or event staff will need time to clean up.
  • Give guest speakers strict instructions on how much time they’ll have. A casual, “Oh, we’d love it if you could say a few words” won’t do it. Tell them (graciously, of course) not only what their time limit is, but that you’ll have a timekeeper in the audience holding up signs as the cutoff approaches.
  • Plan for crowd control. There’s nothing that can throw your time calculations off faster than a large group of people who can’t be persuaded to move. How, for instance, will you get people from the silent auction tables to the dinner table? This may take more than just an announcement from the podium. You may need to have volunteers deputized to approach groups of people and invite them to sit down.
  • Enforce the timekeeping rules. It should go without saying, but if you tell speakers they have time limits, you have to make sure they stick to them. Some speakers will ignore the rules, or even ignore the person holding up the sign. Dragging them offstage with a hook is generally considered to be in poor taste, but designating someone to approach the podium clapping can work when all else has failed.

Other strategies tend to depend on the exact nature of the event. At an auction, for instance, you’ll want to focus on developing a seamless procedure for having the winning bidders pick up their items, so that they don’t face a long line before they can get out the door.

Succeeding in having an event end on time isn’t something that will bring in loads of compliments — but you should see the payoff in ticket sales next time around.

 

 

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.”