I am a Philanthropist; You May Be Too

I am a philanthropist. I’m a small fry philanthropist but I’m still a philanthropist! If you’ve ever given a gift to a charity, you are too.

Not counting the hundreds of written solicitations I have received, twice in my life I’ve been formally asked for a gift. The first time was when the Women’s Endowment Fund in Akron, Ohio was trying to get the fund to a million dollars. One of their board members, Janet Kendall White, asked me to lunch. She told me that I didn’t have to be a large donor to be a philanthropist; that each of us could be one. She explained that I could be a thousand dollar donor by giving $62.50 a quarter for four years. Well, I could do that! Poof, I became a philanthropist!

The second time I was formally asked for a gift was by Michelle Moskowitz Brown of Local Matters. Local Matters is one of my clients and I’ve been working with them so long that several of their leaders, including Michele, are now also my friends. I consistently support them. They consistently support me. It’s a lovely symbiotic relationship. It’s also the kind of relationship that an agency might take for granted, but they never do.

I get formally solicited. I receive a variety of written communication. I get update calls from Michelle. I get invited to events. I’m not one of their bigger donors, but that doesn’t stop them from treating me like I am. That kind of treatment makes me want to support them even more!

The topic of this month’s nonprofit blog carnival is “You are The Future of Philanthropy.” You are, and the decisions you make as to how to cultivate, engage and steward your donors will separate the good from the great, the funded from the struggling and the successful from the not so much.

You are the future of philanthropy because our field’s success is up to you, and also to me, and to Michelle and to our Boards, our leaders and all of us, individually and collectively.

I facilitated a Resource Development training last week and was struck once again by a statistic I was taught about donor preference when working with Boys & Girls Clubs of America: “65% said exposure, interaction, and face time mattered the most.” 65% of donors when asked about their preferences didn’t mention the mission, the program, or its impact; they mentioned three words that are all synonyms for engagement.

Who ensures engagement? You do. Who is the Future of Philanthropy? You are.

There are millions of nonprofits. There are millions more donors that support them. There is increased competition for donations, staff and resources and also increased needs in our communities. There are increased opportunities for engagement.

There is also cool new technology, spawning new ideas to encourage millions of donors to give millions of dollars. The Columbus Foundation just finished The Big Give, which raised just over $15 Million in 24 hours. If you’re not familiar with this “philanthropic phenomenon,” the Foundation’s donors and partners put up a $1.4 million bonus pool, the community donates and each donation received during The Big Give was “eligible for bonus pool funds on a pro rata basis, giving everyone who participated the opportunity to have their donation(s) amplified. In addition, all credit card fees were covered by The Columbus Foundation, so 100 percent of donations went directly to the nonprofits.” It’s awesome!

Before the internet there was no system on earth that, in 24 hours, could have processed $15 million of gifts from 19,902 individuals from each of the 50 states to support 587 Central Ohio agencies. Technology made it possible; a different kind of thinking made it happen.

How did agencies use the Big Give to build engagement? Many of them sent emails. I got dozens. I also got one request – from Local Matters – to be a twitter ambassador. Michelle then called me and formally asked for my support.

Did I give an additional gift through the Big Give to Local Matters? Of course I did! I also gave gifts to a few of my other favorite charities. And I tweeted about all of it. Why? Because I was asked to! When I was taught that statistic by BGCA, I was also taught another: people give because they’re asked. It’s so obvious and so simple. Engage. Ask. Receive. Thank. Repeat.

I’m the future of philanthropy. You are the future of philanthropy. We have the internet and brilliant minds around our tables. Let’s raise some money! Let’s change the world!

Does your community do something similar to the Big Give? Have you introduced a new fund raising idea that exceeded your wildest expectations? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

Events, Grants and Individual Giving

I was having breakfast this week with a friend and fellow consultant and we were discussing resource development efforts, including events and grants.  As I’m sure you are well aware by now, I’m not a huge fan of organizations hosting multiple events.  Events are expensive, labor intensive and don’t usually generate a lot of income.

I can hear you out there saying “No Dani, they’re fun!”  And they are, at least some of them are.

One signature event a year is a wonderful way to engage new donors, connect with current donors and showcase your programs while raising significant money. Even signature events that don’t raise significant money may still be a good use of your resources.  However, more than one signature event a year is too much.

More than one event (two, if you must) may be a sign that your leadership, board or executive, is reluctant to raise money in other ways.

Leadership that doesn’t want to embark on an annual appeal or a major donor campaign will often advocate more grants be written or additional events be introduced.  Not only will more events not raise more money, more events will cannibalize your signature event and may yield less income for more work.  Any process that doesn’t get you to your goal is a bad process.

“The Executive Director is the Chief Development Officer” of any non profit that seeks contributed income. (Erik Anderson Donor Dreams blog) Whether they want to or not; whether they’re good at it or not; whether they have a development director whose job it is or not, the Exec is still responsible for fund raising and one of the responsibilities of a governing board is to raise money. Neither is a role that can be abdicated.

Events are often 5-15% of an agency’s budget and generally net 50% of what they cost, sometimes less. Most attendees would be appalled to know that, but it’s true. It’s too high! I recommend events net 75% of what they cost. There are other, better, avenues to raise money.

Grants, which are often 30-50% of an agency’s budget, more if they receive United Way funding, are one way.  Yet, they too come with a cost. Most agencies get somewhere between 50-80% of the grants they submit. That means that the time spent on writing the 20-50% of the grants that don’t get funded is time lost.  For the grants that are secured, there are reports to be written, dollars to be tracked, objectives to reach and programming to introduce. All of which is as it should be, and none of which is without cost.

As I mentioned in the Culture of Philanthropy or Fund Raising post, according to “Fund-Raising: Evaluating and Managing the Fund Development Process” (1999) individual giving offers the highest rate of return for the lowest cost (5-10%) to the organization.  It is also the largest pot of money given in this country and usually only reflective of the percentage of special event income in most agencies’ budgets.  In other words, 80% of the philanthropic dollars in this country are given by individuals yet 10-15% of most agencies budgets are received from individuals. Like the post says, “opportunity is knocking. Get the door!”

Your board, staff and major donors will be the foundation of any individual giving program and the program should be introduced in just that order: Board giving should come first with the Board setting and then meeting a giving goal. Staff should then be asked and then major donors. Individual giving is about one on one relationships that are cultivated – and later, stewarded – and require intentional asks for specific dollar amounts.

Once those asks are made, as mentioned in the Sustainability by Descending Order of Love post, “if you have the time and the volunteers, consider asking your larger mid level donors and prospects in person. Those with the potential to become major donors should also be asked in person as should anyone who is committed to your organization.  While we follow the path of descending order of love in planning, we love all of our donors equally.  If someone would like to see you in person, even if it will be a small gift, go.  It is fun to thank someone in person and is worth keeping a committed donor engaged. When that is not practical, the next best thing is a phone bank or phone calls.”

There are a lot of ways to raise money and some will generate more money in less time than others.  Nonprofit leaders are busy.  Get the best bang for your buck and get on the individual giving path.  It will be scary, and also worth it!

What have you done to increase individual giving?  As always, I welcome your insight, feedback and experience.  Please share your ideas or suggestions for blog topics and consider hitting the follow button to enter your email.  A rising tide raises all boats.

Major Gifts from Major Donors is Major Fun

Philanthropists make the world a better place. They take their own money – money that they could spend on traveling, or eating, or shoe shopping or anything they want – and they invest it to solve the community’s and the world’s problems. How cool is that?!?!

It’s our job to match up their passion with our programs; to demonstrate the need, and later the impact and to well represent both our organization and our profession!

I once got a call from a guy who grew up near the neighborhood in which my organization was located. He wanted to donate $5,000 for a small capital venture – basketball court, outdoor activity – something he could name in honor of his parents. My agency was in a housing development owned by the housing authority. We didn’t have the land to build something – but we needed a new tech center. I shared our needs and submitted a proposal. He and I played phone tag for a while and at some point he called me in the evening while I was driving my 2 year old daughter home from day care. While he and I talked, she screamed. I thought I lost the gift! Not only did I not lose the gift, he funded the entire $13,000 project and gave me a compliment that I still treasure to this day. He said he’d been talking to a variety of nonprofit leaders (news to me!) and I was the most professional (even with a screaming 2 year old!) with the best presentation and follow through. Woo Hoo!

Sometimes the calls will come to you. Those will be very good days. Sometimes you will have to work to meet major donors. You will have to figure out who they are and what you need to do to get in front of them; who you know that knows them and what piece of your organization will be interesting and inspiring to them. Then, once you meet them, the real fun begins! You will need to cultivate and engage them in your future plans.

How?

Ask each member of the Board of Directors to identify new people to introduce to the organization. When they do, communicate with every introduction, friend, prospect & donor regarding the impact of your organization. Obviously, a goal of any fund raising program is to build strong relationships with donors that will, over time, lead to increased engagement and increased giving. Trustees and the senior staff should each have cultivation goals based on their spheres of influence. Focus on friend raising as well as fund raising.

Fund raising is an art not a science. At some point, depending on the donor’s level of engagement and your experience, it will be time to request a specific (to their circumstances) donation. The asker should be assigned based on the likelihood of getting a yes. It may be a board officer; it may be a different board member; it may be the executive director; or a member of the development committee. Regardless of ego, you send the person who is most likely to get a yes.

Train askers to thank potential donor for their interest and past support, as appropriate, explain and present the written case for support, and request consideration for a suggested specific donation. Then, train them to be quiet until the potential donor has spoken. At which point, askers should answer questions, and either say “thank you” for the donor’s pledge/gift or their consideration while requesting an appointment to follow up.

Some consultants will tell you to never leave without a pledge form signed but that always felt much too aggressive to me. I prefer the gentler approach to donor engagement.

Once the donor has made a gift, it is imperative that you continue to engage them, which is called stewardship. Stewardship happens after a gift has been made and is an activity in which the donor is not being asked for a contribution, but is being informed/ updated of organizational activities of interest to her.

This should happen 3-4 times after a significant gift is received before another gift is solicited. Donors should not only hear from you when you want money.

I encourage you, at a minimum, to follow the four touch approach after you have received a major gift. Let’s pretend the gift was received in January.

1. Thank the donor for the gift.

The day your organization receives the gift, the CEO or Board member should call to say thank you. Two days later, the donor should have a formal thank you note in their hand that includes the proper IRS language. Within the week, they should receive a personal hand written thank you note from whoever solicited the gift. Whatever else your giving opportunities afford for a gift at that level should happen.

2. Tell them what you did with their gift.

In April, call and tell them about the program that their gift supported, in whole or in part. Share the expected impact of that program.

3. Tell them the impact of their gift.

In August, call and share the actual impact of the program their gift supported.

4. Then- and only then – you can ask for another, slightly larger, gift.

In December, call and ask for a meeting to share the successes of the year and discuss their participation in the current annual campaign.

Throughout the year, donors should also receive newsletters, marketing and email blasts as well as invitations to program events and special events. If you see their name in the paper, send a note. If you see an article in which they might be interested, send a copy. Include them; check in with them; and keep your major donors updated.

Major Donors make the world a better place! Don’t be afraid to meet them, meet with them, engage them and, if there’s match between your mission and their passion, solicit a gift. The worst thing they could say is no and even if they do, they’ll respect you for asking. I once had a philanthropist laugh – out loud for a not insignificant period of time – when a Board member and I asked for $100,000. She gave a major gift but the time between when she laughed and offered her pledge seemed to go on forever.

Do you have a similar story? What’s been your experience with major donors? As always, I welcome your insight, feedback and experience. If you have other ideas or suggestions for blog topics, please share. A rising tide raises all boats.

Culture of Philanthropy or Fund Raising?

There is $300 billion dollars, on average, given to charities each year in this country.  The vast majority of that money is given by individuals. Not corporations. Not foundations. Individuals. Individual gifts and bequests, on average, equal slightly more than 80% of the charitable donations given in this country each year. Just less than 20% is given by corporations and foundations.

Do organizations take advantage of that knowledge? Some do better than others.

I serve on a committee that just this week was discussing the difference between having a culture of philanthropy and a culture of fund raising.  The two are pretty different, even as most people use the words synonymously.

Fund raising is about raising money. Philanthropy, or what I usually refer to as resource development, is about ensuring resources. They’ll both raise money and require time but the latter will raise more money in less time.

Cultures of fund raising raise money through membership fees, grants or sponsorships, direct mail, and multiple small events that generally raise less than $30,000 (often less than $5,000), all of which is usually viewed as “begging for money.”  You often hear board members and volunteers say “I give my time” or “I’ll serve on the committee but I don’t want to ask my friends for money.” That philosophy is pervasive: staff don’t generally support the agency financially and a portion of the board doesn’t either. There is not usually a fund raising plan or an expectation of board giving; donors are not usually asked for specific dollar amounts and everyone is a little ashamed of having to raise money at all, even as they fiercely believe in their organization and the work it does in the community.

According to “Fund-Raising: Evaluating and Managing the Fund Development Process” (1999) special events, on average, cost 50% of the amount they raise.  That is way too much!  I recommend my clients do not run any event that cost more than 25% of what it nets, and that organizations include staff time in the count.  As you might imagine, multiple small events cost much more than 25% to run and they take an enormous amount of time. That time could be better spent.

Grant writing generally costs 20% of what is awarded. You should never pay a grant writer a percentage of the amount requested; it is unethical and against the fund raising principles as advocated by the Association of Fundraising Professionals, but that’s not why it costs 20%. Organizations only get a percentage of the grants they write. That means they spend a lot of time writing grants they are never awarded. We all do. I recommend you do not write foundation or corporate grants without checking the published funding priorities and – if there is a match – speaking to a program officer about your project and getting the go-ahead to submit.  You’re never going to get all the grants you write, but you can at least avoid totally wasting your time.

There are, for any organization, a finite number of grants that can be written.  There are an infinitive number of individuals to be cultivated.

Individual giving offers the highest rate on return for the lowest cost (5-10%) to the organization. Individual giving is about one on one relationships that are cultivated – and later stewarded – and require intentional asks for specific dollar amounts.

Cultures of philanthropy raise money through individual giving, one (maybe two) signature event that raises upwards of 10% of the organization budget, and also write grants, and may have membership fees as well. You often hear board members and volunteers talk about returns on investment, impact and sustaining their organization. There is usually a resource development plan, a board process that includes the expectation that board members will significantly (to their circumstances) financially support the organization and also assist in raising additional resources.  They operate on the premise that their organization fills a critical need in the community and are proud to introduce their circle of influence to the organizations’ mission.

As mentioned in The Role of the Nonprofit CEO “Resource development functions most effectively in a culture of servant leadership and philanthropy among the board and leadership team, as well as an agency-wide commitment.  A community cannot and will not invest in an agency without the investment of the board and staff.  Development staff cannot raise money without the support of the CEO. CEOs cannot raise money without the support of the board. Resource development is a group effort, with everyone giving, and everyone moving toward the goal of a sustainable organization.”

Cultures of Philanthropy have a Director of Development who coordinate the asks, manage the information and the event, write the grants and work with the board and senior staff to ensure the resource development plan is implemented, the money is raised and the organization is sustained.

Cultures of fund raising have a Director of Development who is expected to do it all alone in an environment where fund raising is a dirty word. It’s why they end up with so many special events and grants and so few individual donors.  Those are the pieces they can impact and they try to do just that.

It’s up to the Board and leadership to change the equation, expand the reach and change the culture. How?

Start with the board and create expectations – to which everyone commits – to financially give and also to ask, as appropriate. Move to the staff. Do the same.  Take a look at your events and see what they really cost your organization to run, including staff time, and decide if it’s worth it. Take a look at your infrastructure and see if it can take you forward.  Are there things you need to add or delete? Can you current staff accomplish your goals or do you need to make some changes?

Get your best fund raisers and your most engaged board members and volunteers in a room and start putting the pieces down to create a resource development plan.

80% of all giving in this country is from individuals. Unless your income reflects that percentage, you have opportunity knocking. Get the door!

As always, I welcome your experience and insight.

Forks and Funding Streams

I once heard a local Executive Director say that fund raising in a non profit was like a new restaurant looking for investors by asking people to pay for forks. That’s exactly right!  It’s illogical, yet it’s exactly right.

Nonprofits raise money through a myriad of sources, often one part of a program, project or piece of equipment a time.  Then once a year, or more often, we submit reports on the use of those funds.

Grants, which used to fund general operating, are now far more often restricted to the priorities areas of the funding institution.  Major donors fund in a similar way, with fewer restrictions usually, but still often to support a specific program or project and for a specific purpose.

It’s how it’s done, both on the side of the giving, and also on the side of the asking.

Granting intuitions – which for the purpose of this post includes corporate, community and family foundations as well as government awards – fund portions (and occasionally all) of projects, programs and staff; some fund only supplies, capital expenses or materials.

Donors and funding institutions absolutely and unequivocally have the right to support whatever they want in whatever method they choose.

It’s the nonprofit leader’s role to decline to accept funding that doesn’t meet their mission or make sense for their agency.  The caveat to all this, of course, is that those restrictions are not just that one foundation; they’re most foundations and other funding sources too.

Everyone funds like that and we all fund raise like that too- to support forks.  Forks – or in the nonprofit world, programs, projects or things – are important, and so are utilities, rent, staff, and programming.

Please let me be clear -this post is not intended to insult or be in any way disrespectful of the many, many institutions and people that support local organizations.  We are grateful to you!

This post is intended to question the efficacy of the status quo.

I am not naïve; I’ve been in this field for 20 years. I know that part of how we got here was a lack of accountability.  There was a lot of good feeling and a minimal amount of impact. I know there are still nonprofits out there not tracking their programs, not measuring outcomes and spinning their wheels but not advancing their missions.

I also know there are many more non profits that are running good programs, measuring the impact of those programs and being excellent stewards of the community’s resources.  They’re also spending a lot of time and energy to raise money and report on that money; time and energy that is taken away from programs.

When I ran the Boys & Girl Clubs of the Western Reserve, we wrote and usually received (and reported on) around 50 grants a year, we asked many more donors each year for financial support; we received money from the United Way, Boys & Girls Clubs of America, the Ohio Alliance of Boys & Girls Clubs; we had events and we had an endowment.  A large portion of the money we received was restricted.  We tracked every restricted dollar to ensure we spent it the way the donor intended.  We were transparent in our business practices and followed best practices for finical management.  That is good financial stewardship.  It’s also expensive and time consuming.  It is critically important, and it is not free.

Someone has to track, coordinate and manage all the pots and agencies can usually only charge a percentage of such costs to the grant.  It’s labor intensive.  It’s expensive.  It’s how it’s done. The current nonprofit funding model works. It’s not unacceptable but it is illogical.

I can’t imagine anyone planned it to be like this.  There is no version of a past that I will believe that has donors, foundation, corporate and government leaders sitting around a table envisioning a funding system that has one program being supported by three different grants each paying for a different percentage of the program staff salaries, and a much smaller percentage of the program leadership’s salary, with yet another grant paying for the materials and special event income making up the difference.

There’s got to be a better way.  The nonprofit service delivery system has been greatly improved through technology, professional and leadership development opportunities, improved tracking and a lens that is focused on impact.  Income generating efforts have similarly evolved, with the introduction of social enterprise, expanded efforts to embrace major donors and mergers when appropriate.

It’s time to re-imagine the funding model.  What else is out there?  How else can we ensure financial stewardship, maintain donor confidence and demonstrate our impact?  What else can we do to ensure the nonprofits in our communities have the resources they need to impact their corner of the world?

Let’s come up with a new plan: I’d rather do that than raise money for forks any day of the week.

As always, I welcome your experience, insight and ideas.