The Implications of Donor Advised Funds on the Charity You Love

Donor Advised Funds (DAFs) were created to be a charitable option for those who have or have received a significant influx of funds. They are touted as a way to democratize philanthropy. DAFs have opened up vehicles for giving to midsize donors in a way that family foundations could not. For the first time, donors with sometimes four but more often five-figure gifts to donate could do so, long term.  Of course, they could always do so short term. 

Despite the DAF commercials you may have seen (Wells Fargo wins for the most appalling), it was always possible to donate a significant gift straight to the nonprofit of your choosing.  What wasn’t available was a long-term option, other than a family foundation, which is expensive to start and has significant compliance obligations.

The introduction of DAFs allow a donor to get an immediate tax deduction, while they – in theory – can research where they want to spend their philanthropic dollars, later.

To be clear, it’s called Donor ADVISED Funds for a reason.  The donor can advise the DAF sponsor on where they want the gift to go.  The DAF sponsor usually sends it to the intended destination but reserves the right not to based on the law, the mission of the recipient organization and the sponsor’s internal policies. For example, your local Jewish Foundation will likely grant your recommendation to send a gift to your local Jewish Community Center, but not likely to your local hate group. 

There are a few requirements of the donor.  DAF funds cannot be used to pay a pledge.  In fact, the donor can‘t receive any benefit from the gift – this is standard for any gift you want to deduct. It’s why you can’t deduct the full cost of the gala you went to last weekend but can deduct the cost of the ticket minus the expenses to the charity.  In the case of DAFs, you can’t buy the ticket with those funds at all, since you received a benefit (gala tickets) for your gift.

DAFs can be named for your family, or whatever or whomever you’d like.  You can name it your initials, or for your dog. That makes it difficult for charities to prospect, thank or steward gifts received from those who have DAFs, or even to know from whom their most recent donation arrived. 

Another challenge for our field is that there’s no requirement that money be given out. There’s also no requirement that the name of the donor be released. In fact, there are rules against their names being released. You read that right: a donor can park significant resources in a donor advised fund, which is then owned by the DAF sponsor, to be given out without attribution to the donor, at the donor’s leisure or not at all.  In all cases, the donor gets an immediate tax benefit.

Actual charities may get nothing. The government definitely gets nothing because it goes in and continues to grow tax free. No taxes get paid. The data  suggests that donor-advised funds have a net negative effect.

The only ones who consistently benefit is the donor and the fund owner, which may not actually be a charity at all, and likely will be a for profit company managing a “nonprofit spin off.”  Here’s the Chronicle’s explanation “Much of the criticism is directed at Fidelity Charitable and other sponsors of donor-advised funds that are nonprofit spinoffs of financial-service firms. These organizations typically pay their for-profit parent to manage the money in the funds, which means they have a financial incentive to accumulate assets and hold onto them.”

How it works is this: A donor sets up a donor advised fund, either at a community foundation, or at a for-profit company that manages “a charitable institution.” The word charity is used in the loosest way, meaning under the law it’s a charity, but in reality it provides no services other than as a vehicle to house funds which will be given out at a later date, maybe. It will generate annual fees for the sponsoring institution, often but not exclusively a for profit entity, in perpetuity.

That’s part of the challenge for the nonprofit field, and the government. DAFs take huge amounts of money out of the economy, and out of the charity designation pot each year that actual charities providing real services may never see. Unlike foundations, there’s no distribution rules. Even the DAFs housed in foundations have no distribution requirement.

In other words, you could sell a business for $100 million today and put some portion of that money in a donor advised fund.  You would get an immediate tax deduction and the donation could sit there … in perpetuity.

Those who are fans of Donor Advised Funds will argue that money is given out. They say that even more money is given out because of DAFs. But because most of the giving, the “owning” and the management of donor advised funds is done in secrecy, we don’t really know. The only thing that is reported is the amount of aggregate gifts given to actual charities by the institution. So it’s possible – and even likely – that one DAF giving significant (and actual) gifts is providing cover for the other funds providing no benefit to the community, and only benefit to the donor and the institution managing the DAFs.

A smaller challenge is that many agencies don’t know how to properly thank donors who send gifts from donor-advised funds.  Because they may not understand that the gift came from a DAF, meaning the deduction has already been granted, they may send a letter with tax deductible language. The donor may not notice when the letter comes in but totally notices when they’re trying to figure out their taxes at the end of the year.

To be clear, there is a fairly significant section of nonprofit leaders who like Donor Advised Funds and many leaders do not care from whom the money comes or by what vehicle it arrives, as long as it comes.  Some will say, and they will be right, that if you know your donors, you know who has a DAF and this is not a problem.  Is that true? Sometimes. 

It’s critical nonprofits know from whom they’re receiving gifts.  There are too many instance of charities taking money from people or companies who later embarrassed them, or publicly compromised their principles or values. If you don’t know, you can’t protect your organization.

Still, some leaders love DAFs.  Of course, leaders of community foundations love them.  Community Foundations are a huge holder of DAFs.  I appreciate that and if you insist on starting one, please consider the community foundation in your area. 

There are even some charities who have started managing DAFs themselves.  Many of the big nonprofits have started their own, often aligned with their organizational values and with a requirement that a portion of the funds go to them. Still, the charities and the community foundations don’t come close to the big companies.

As far as charitable recipients, Fidelity Charitable is at the top, coming in at #1 for the second year running and in the second spot for the five preceding years of charitable data. DAFs are so significantly represented that a full 50% of the top 10 recipients of charitable funds in 2017 are sponsors of funds and not community serving, program providing, (actual) charities.  One is a community foundation. 

The six largest recipients of charitable gifts are housing but not spending that money! That money is only benefiting the holder by accruing interest and fees for the institution. It is not immediately, or possibly ever going to an actual charity doing meaningful work in a community.

I fear Donor Advised Funds will eventually preclude our ability to do our work and affect change for our communities.

The DAF debate is happening at the same time that the field and the world is beginning to challenge status quo of philanthropy. 

The following questions are currently being discussed:

When does being donor focused come at the expense of the mission, clients or community?

Should deductions be tied to community need?

Does the current model of philanthropy promote inequity?

How do nonprofits distinguish themselves in a world of social enterprise?

Does big philanthropy reinforce the inequity it purports to address?

What’s your take on DAFS? Are you asking, and how do you answer the questions listed?  I welcome your feedback, insight and experience.  A rising tide raises all boats.

The Case for Major Donor Cultivation Plans

The Giving USA 2015 numbers are out! $373.3 billion was given to charities in 2015, up 4% from last year. 80 percent of that money was given by individuals or individuals who recently died by way of their bequests. That percentage hasn’t changed as long as I’ve been paying attention to this statistic. “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.” Culture of Philanthropy or Fund Raising

If you do not currently have a robust individual giving program, I hope you will consider these statistics and introduce one. A robust giving program includes an intentional plan to develop donors at all levels of giving. Perhaps you are currently doing an annual appeal letter. If so, consider adding in person asks of your top donors and calls to your mid level donors. Perhaps you accept donations but aren’t sure how to solicit them. Perhaps you do not currently have 100% Board giving. Perhaps you have some large donors but aren’t sure how to engage them. If any of these apply to your organization, opportunity is knocking!

Major gifts are defined as the top 10% of gifts to an organization and often include gifts from several if not all Board members. It doesn’t matter if your top 10% give $50 or $50,000. If you are a 501 (c) 3 and would like to increase the charitable gifts you receive, a major donor cultivation plan for each of your major donors and every Board member could help. Please click over to read more about how to move a prospect to a donor and how to steward that donor.

Please also note that it is very hard to raise money in any community without the financial support of 100% of the Board. If you do not currently have 100% Board giving, that is the place to start. It is critical to your success. Board members should be cultivated and stewarded like the donors they are, or should be.

Major gifts (from major donors) are one part of a robust resource development planning process.  Resource Development, as a term, is a bit broader than fund raising as it encompasses fund raising, plus friend raising, plus in-kind gifts and the need for each of us to have ambassadors in the community helping us move forward our missions.

Your resource development plan may include events, grants (government, corporate and foundation – remember the latter two are only 20% of national giving), planned as well individual giving in all its forms, including annual campaigns in the form of letters, calls and in person asks of Major Donors, Board and Staff.

I recommend a plan for each Major Donor. I like plans. They allow us to do the work, rather than think about the work. So, write a plan for each of your major donors that maps out your giving request for the year. You don’t want to go to them five times to ask for different stuff, or if you do, you want them to know you’re coming. This is most easily accomplished by asking for what you want on whatever schedule is most comfortable for them, which is likely to be (but may not be) an ask meeting once annually and periodic stewardship check in meetings or calls throughout the year. Donorcentric is the goal. It may not be what is most comfortable for you. (If it was, we’d all get all our money in January and then focus on other things all year, but alas……)

Putting together a major donor cultivation plan will, of course, require you to know your donors, their family, history of giving to your agency and possibly other agencies if you can find it; what they’re passionate about; and your aspirations for their giving, which should be based on their level of engagement and capacity as well as who the right person is to send to ask. In other words, just because someone can give you $50,000, if they have a history of giving you $100, it’s unlikely they’re going to give you $50,000 – unless you greatly increase their level of engagement. That’s not to say that it doesn’t happen because of course it does. It’s the difference between a wish and a plan. Both are useful but the latter is more actionable. Bring people into your community, engage them in your work, involve them on a committee, invite them to volunteer in a program: build your relationships! Build a plan for each of them too. Consider this template:

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Name:  Dani Robbins

Spouse/partners and children’s name and salient details:  Dani elected not to share this publicly.

Occupation and passions: Consultant with the goal of making nonprofits stronger; passionate about women and kids, the disadvantaged, diversity, inclusion and parity, and all underdogs, everywhere.

Giving History: increasing mid-level donations of $100-200 annually for the past three years; occasional attendance at events; also supports the Boys & Girls Clubs, Local Matters, City Year, Dress for Success, and other social service/social justice agencies.

Recent Touch Points: coffee March 2016, call November 2015, lunch July 2015.

Remainder of 2016 plan to check in: weekly e-blasts, lunch in summer, fall coffee, Thanksgiving card, invitation to Holiday (no ask) VIP party

Communication and ask preferences: Dani prefers to be asked for her gifts once a year and likes quarterly check ins and to receive our mailings.  She also follows us on Twitter, can be counted upon to share our news with her network and is connected to several of our staff and Board on LinkedIn.

2016-2017 Engagement Plan: We are planning to ask Dani to teach one of our team members how to write a grant. We also occasionally call her for advice and may ask if she’d like to serve on a committee.

2017 Gift Request: We plan to ask Dani for $250 as follows:  $125 as a year-end gift for general operating, $125 to support summer programming.

Who is the right person to ask Dani (regardless of ego, you always send the person who will get a yes):  Dani is very close to our CEO and Board Members Q, N and R. Any two are likely to be well received.

Future engagement opportunities: We may ascertain Dani’s interest in Board service, once our current Board governance person rolls off. She is also a prospect for our capital campaign and possibly for a planned gift.  As she continues as a donor we hope to grow her gift as she grows her practice, possibly to a legacy society level.

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This template is one option among many. I made this up. Use mine. Make up your own. There is no right template. There is only right for you.

Whether you’re a seasoned fund raiser or a new Executive Director, creating plans for your donors is a great way to put all the information in one spot, put the plan in the hands of your development staff or volunteers and get to it!

What’s your experience with major donor cultivation plans? Do you have a template you like and can share?  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.

Teachable Moments

This month’s blog carnival is hosted by my friend and colleague Erik Anderson. Its theme: “advice to your younger fund raising self.” As such, and because you know I find most (non-grant related) directions optional, here is both advice I wish someone had given me, and also advice I’d like to give to my students, blog followers and those that I’m privileged to mentor. Please reach out and let me know if any speak to you.

Money is not Dough; It Will Not Raise Itself

If you want to be successful in this field, as either a leader or at any level of a development team, get comfortable asking for things for your organization that you would never request for yourself.

You may be one of those people that other people just give stuff too. I certainly am. Do I want an upgrade on my rental car? “Yes, please.” Would I like an extra scoop of ice cream? “That would be great. Thank you.” If you routinely have people offering you things that you didn’t ask for, or even consider asking for, awesome! This will be a snap!

If you’re not, you will have to cultivate the ability to ask for money and donations to move forward your mission. It’s for the kids, or the dogs, or whom/whatever your agency exists to impact. People who care about your mission will want to be engaged in its success; they may just need the vehicle to get involved. You can offer that entree.

For the CEOs out there: grant writing, event planning and individual giving are different skills sets. You have to know how to do or hire all three. If you go with hire, you will then have to do what the person you hire recommends. Really.

Where to Start is Where You Are

There is no perfect place to start. The first step is just that, one step forward.  Figure out where you want to go. Figure out what it will take to get there.  Plan backwards from your end goal. And start.

Charm is Not Enough, and Neither is Talent

You can be charming for 15 minutes; after that you’d better know something. I love charming people. I also love effective people!  Charm alone is not enough, especially on the development team. Talent alone is not enough for any of our teams. We need both to make our teams work and our organizations successful.

It is not enough to be good, or even great, at your job. You also have to be on the team and moving the organization forward. If you aren’t, I can’t hire you. I can’t train you and you certainly can’t stay.

We are All only as Good as the Stupid Thing we did Yesterday

I’d love to tell you that your life’s work will be a sum total of your accomplishments, but it’s just not true. You can build something great, bring in tons of money and save the day, but if you did something really stupid yesterday, none of those will save you.

Only Write a Policy when you Need One, which will Never be to Avoid a Conversation

I love teachable moments. Tell me a story when something, anything, goes wrong and I’ll ask you the lesson. Teachable moments make us all better and have the added benefit of helping organizations avoid crises. They teach each member of a team to assess every stupid thing that goes wrong, in an effort to not have it repeated.

Crises are where most policies originate. Show me a policy and I can tell you the crisis that created it. Show me a job description and I can sometimes tell you what happened to the person who held that job last. We are all, myself included, much more transparent than we would like to be and when you’re paying attention you can often read what’s not said.

Most polices get written because there wasn’t a policy and that gap either left the agency or its clients open for something bad to happen. That is the perfect time for a new policy!

Having a problem with a staff member? That may be the time for a hard conversation but may not rise to the level of a policy. Never write a policy to avoid having a conversation.

Crisis Management is not Leadership

One my favorite Warren Buffett quotes is “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

It reminds me to be strategic in how I spend my time. There are a lot of leadership lessons that can be taken from this one statement.

Maybe it applies to staff, in which case the message would be to not spend a majority of your time trying to make a bad hire into a good employee. You should try certainly, but at some point, should your efforts prove fruitless, cut your losses, review your process, learn your lessons, and hire better.

Maybe it applies to how you spend your time. Do you spend your day patching leaks or changing vessels? Most leaders I know spend their days patching leaks, and they stare in wonder at those leaders that spend their energy changing vessels.

It’s a paradox. We have to patch the leaks and put out the fires, yet we also have to carve out the time to think strategically…even while the boat is leaking. And it may be leaking. In nonprofit speak that may mean there’s a grant due, a crisis in the program, a problem staff, a disengaged board member, an alienated donor or an angry parent.  Some of those things may very well be happening, and happening simultaneously. There’s also an agency that you are responsible to steward and a mission that you are entrusted to move forward.

Even though it feels like it, You Are Not Alone

You are not alone. For those of us who have spent our lives in social services, it’s a phrase we have each repeated hundreds if not thousands of times. We say it to our clients all the time, but apparently the leaders of our agencies don’t hear the answer for themselves.

The way you feel today, right now, every nonprofit leader feels or has felt. I promise. Every CEO at one time or another has wondered how they’re going to make payroll, keep their job, or keep their sanity. Knowing you’re not alone won’t answer any of those questions but it will remind you that the CEO down the street of that agency you wish yours was as together as, feels the same way sometimes. You just don’t see it.

It All Comes Down to Values

Every day I have conversations with leaders and every day, at least once, I utter the phrase “it all comes down to values” and it does. If you can tell me what you value, I can tell you in what circumstances you’ll be successful, and in what circumstances you’ll be frustrated.

Where you sit determines where you stand. What you value determines how you lead, where you feel comfortable, where you’ll thrive, and where you’re likely to be the odd one out.

Your values have to match your organization’s values, which have to be reflected in their policies. When the three are not aligned, you will struggle. When they are, you will thrive!

We do not, in fact, all bloom where we’re planted. We bloom where we’re cultivated.

 

Do you have advice for your younger self, or for others in our field? Will you share?  Did you find any of my advice instructive? 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.

 

Things that Aren’t Really Free and Don’t Raise Money Anyway

There are three questions that I regularly ask when it comes to fund raising and many other topics as well. The questions are “What is the goal?” “Is this a good use of your time?” and “To what end?”

What is the goal?

When the answer is raising money for an agency, sometimes the goal is not in concert with the actions. I once ran an agency that held a duck race as a fund raiser. I should say I ran an agency that had a duck race in process when I arrived and that once I saw recommended we never do again.

If you’ve never seen a duck race, it really is just that: a race of plastic ducks down a river. People pay $5 each for their ducks and get assigned a number; if their duck wins, they win a prize. Now all of this sounds fine, until you hear the details. The devil is always in the details.

Here are the details: We rented for $1 and then “sold” 8,000 ducks for $5 each.

They – and I’m completely disowning this part- had my Board members selling ducks for $5 a piece at Walmart. My Board members, the pillars of our community whom we (they) should have been treating like gold, honoring and cherishing, and giving meaningful strategic work to do, were at Walmart selling ducks for $5 apiece, and not just them either.

It takes a long time to sell 8,000 ducks, so we also invited service groups to sell ducks on our behalf for which we paid $1 for every duck they sold. If you’re doing the math with me, and I know you are, I’m now down $2 for every $5 we bring in.

8,000 ducks were sold. They came in filthy from whatever river they had most recently been fished out of and needed to be cleaned, stored and have the 8,000 stickers from the prior race removed and 8,000 new stickers added. We borrowed the factory and used volunteers so other than the cost of soliciting and managing those pieces, no additional cost there, but man was it a lot of work!

The prize was a $5,000 cash prize. As you might imagine, it came right off the top and in case you’re wondering was not donated back to the agency. 8,000 ducks at $5 a piece is $40,000, minus the $1 cost per duck, the $1 we paid other groups to sell them, the cash prize and the staff time.

I had two staff, one of whom was an intern (brilliant who I later hired and who we’ll come back to later), that worked nonstop for at least the two months I was there on nothing other than this event, which did not have the agency name in its title. No one even knew the event benefited the agency.

What was the goal?

It was intended to be a fund raiser. Because it didn’t really raise funds, especially once you added in staff time; because no one knew it benefited the agency so we couldn’t even call it a friend raiser; because my BOARD MEMBERS WERE AT WALMART SELLING DUCKS; I recommended we never do the event again.

That is my favorite illustration of “things don’t raise money anyway.’” Now, let’s move on to things that “aren’t really free.” Our intern, later promoted to event planner who was amazing – and also ornery – insisted she stay and physically put together 300 program books for our gala. She printed, copied, hole punched and bound each book by hand. It took forever. It possibly would have been justifiable but it didn’t even save us money. She spent hours on something we could have paid a printer to do for less money in less time.

I cajoled. I teased. I encouraged her to make a different decision. Finally, I insisted, sent her to the printer and then home. If the goal is raising money, spending 10 hours to do something I could pay someone else to do for a fraction of the cost is counter-productive. Had I asked, the answer to my next question would have been no.

“Is this a good use of your time?”

I am consistently amazed at the things people do that are not only not a good use of their time, but are actually other people’s jobs. Weekly, someone tells me about a situation in which they, as the executive, do the work of the board; they, as the board, do the work of the executive. Worse, sometimes they, the executive, do the work of the staff. If you are doing the work of someone who you pay, what are they doing? Also, what are you not doing?

I totally get that it’s easier for you to do it. Here’s the problem with that logic: you will always be the one that does it. If you don’t want to be the one that does it, and if you want to be the kind of leader that develops others, you will have to teach other people how to do it and then allow them to do so.

Boards that are trained to their role and allowed to fulfill their role, do. Ditto for staff. Let them.

Doing other people’s jobs isn’t the only way to “not really free.” When you have a small agency and the CEO is doing basic admin work, such as coding or data entry, there is an opportunity cost. It’s not only the highest paid admin work in town; it’s the actual CEO work that is not getting done. It’s every donor that is not getting cultivated; every public event at which your leader is not being seen; every strategy that is not being considered. This brings me to my last question:

“To what end?”

If the end game is a strong sustainable agency, and your CEO is doing work that you could pay someone else a fraction of the cost to do, that not only isn’t really free, it’s costing you money and opportunity.

If you want to go down a path, it is important to know where it will lead. Sometimes, it’s staff that are doing things that are not within their charts of work, and way below their hourly rate. Sometime it’s volunteers. If the cost of free is high, maybe it’s time to pay someone to do what needs to be done.

I know of agencies that get a variety of things done for free, which is awesome when it works and totally frustrating and disengaging for all involved when it doesn’t. If you can’t get done what you need done, free isn’t working for you and it’s time to do something different.

Free is only free when it gets you what you need. If the cost of free is frustration and disengagement, your actions aren’t aligned with your goal. It’s time for a new decision. Life is about making new mistakes.

What price have you paid for free? Will you share your stories? 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.

Wise Words from Influential Donors

I had the opportunity to moderate the Working with Influential Volunteers forum for the Central Ohio Association of Fundraising Professionals this week. Three prominent Columbus philanthropists- Roger Sugarman, Cindy Hilsheimer and Mary Lazarus – agreed to share their experience. They were incredibly grateful and gracious to and about fund raisers and executive directors. In fact, each credited our field with helping them to contribute.

Their experience and advice was so powerful; I wanted to share what I perceived as the big take aways. I welcome your feedback and reaction to any and all:

“Be sensitive to the idea that yours is not the only organization that donor supports.”

The volunteer told a story about being solicited for a large gift and asking where the agency came up with that number. The asker responded by saying it was based on their home value. My take away (after I winced) was that a gift assessment is just one piece of information about a donor’s capacity. It still matters how engaged they are in your organization, who is asking and what else that donor supports.

“Have a plan.”

Donors like to see that a formal cultivation and stewardship process, a fund raising goal and a database management system is in place. They can tell when one (or more) is missing.

“There is a gentle balance between their relationship with the organization and their relationship with you.”

This was in reference to the 24 month tenure of development directors. If development staff are not going to stick around, it is imperative that a relationship is built with other leaders and with the organization. I also got the impression this was a gentle reminder that donors buy into missions not development directors.

“Ask what the donor is interested in.”

Development is about relationships; a good fund raiser starts with the donor, what they care about and want to impact. Once you learn each, you can offer suggestions as to what might be a match between their goals and your organization’s mission.

“Provide structured mentoring between new board members and tenured members specifically to teach fund raising.”

Brilliant! Asking others for money is an art more than a science and the art is best learned by watching others, being personally solicited, making your own gift and then doing it yourself. How do you train new board members to become fund raisers?

“People like being asked. They can always say no.” “It is empowering to be asked and to give.”

No one has to be afraid of fund raising. Inviting someone to invest in moving forward a mission and improving a community is empowering – for people on both sides of the table.

“Don’t just talk to donors when you want something.”

Relationships have to be built. Relationships with donors are just like other relationships, they require an investment of time and some version of reciprocity. In this case, the reciprocity is in information. The take away was share to the gift’s impact, the agency or program’s successes and, as necessary, your struggles. Relationships of all kinds require honesty, communication and cultivation. When was the last time you reached out to your donors?

“If you can’t write a check, you shouldn’t take up a seat at the (board) table.”

Yup, this was my favorite. I cheered when it was said. If you do not care enough about the mission of an organization to financially support it, giving of your time in not enough; you should not be at the table. The goal for any board is not usually huge gifts from every board member, though that would be lovely. The goal is a gift – of any amount- from every board member.

100% board giving is critical to any agency that is asking the community to invest in its mission.

“The CEO needs to be partners with the development director.”

Development directors cannot raise money alone. The CEO needs to be a partner with the development director. When they are not, not only does fund raising suffer, but your donors can tell.

What have you learned from influential donors? If you are an influential donors, what do you wish we knew? 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.

 

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.

Get Rid of Your Give or Get Policy

In case you’re not familiar with them, Give or Get policies require individual board members to donate or solicit a minimum amount of money each year. It’s intended to be a one size fits all way to deal with board giving: Board members can write a check themselves, ask others for it or some combination therein. The idea is that you can engage board members who hate fund raising because they can write a check to cover the minimum gift and you can engage people who may not have disposable income because they can solicit others to cover their gift. It’s a win win, right? Wrong!

Give or Get policies get in the way of good governance. They get in the way of 100% board giving. They get in the way of your ability to steward your board members as donors, or thank them for their gift or ask for a larger gift. They get in the way of building a culture of philanthropy. They’re bad policies.

Any policy that is in conflict with your goal is a bad policy.

Give or Get policies allows for members to just “get” and not give at all, which precludes the possibility of reaching 100% board giving.

Most communities have an expectation of 100% Board giving. That means there is an expectation that every single member of the board of directors has personally financially supported their agency. It matters.

Foundation officers ask if there if 100% board giving at meetings to discuss grant submissions. Major donors ask at solicitation meetings. Sometimes there are forms agencies must complete that ask. The answer has to be yes.

If it’s no, you are inviting the question of why someone else would support an agency that its own leaders don’t support. That is a question you really don’t want to have to answer, because there is no good answer.

That’s not the only reason not to do it. Give or Get policies take what is intended to be a minimum gift and make it “the gift” thus minimizing the amount that could be raised and the potential investment of board members. Having such a policy leaves money on the table. It’s possible that every member of your board has the same capacity, but it’s unlikely.

Minimum gifts invariably become maximum gifts by anyone other than the Chair, and sometimes them too. Such policies also works as a disincentive for potential board members who can’t give at the minimum level and limit the gift amount for seated board members that can.

Finally, such policies eliminate the agency’s ability to steward their board members. Board members should each be asked by the appropriate person (defined as the person most likely to get a yes, which is often another board members but may be the executive or a volunteer) for a specific gift that is reflective of their capacity and level of engagement.

Board members should be treated like the donors they are. They should be thanked. They should be appreciated. They should be cultivated, solicited and stewarded. They are not one size fits all and shouldn’t be treated as such.

Some policies don’t stop there. I saw a board member contract the other day that included among its requirements that each board member is expected to “present a check to the agency without having to be asked.” I’m guessing that whoever wrote that policy doesn’t like to ask or be asked for money. I’m guessing that they’re also not satisfied with the amount they receive in contributed income.

Our board members should be our advocates, our ambassadors, our cheerleaders, our leaders, and – yes – our donors. Allow yours to fulfill all their roles and create a plan to ask each one individually for a significant (to them) gift that reflects their capacity and level of engagement. You, your community and your coffers will be glad you did!

What’s your experience with give or get policies? 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.

Is this Chair Taken? Musical Chairs in the Development Department

There are more development positions open right now than I ever remember being open before. The field has always had a musical chairs component to it, yet it seems to be getting worse. Of course, when one thing shifts, other things shift, but it’s much more than that. Let’s talk about why that might be the case.

All too often, development staff are brought into to save an agency that is failing. By then, it’s too late. You can’t create a robust development department on a sinking ship. Development is based on relationships and relationship building takes time; time is a luxury that sinking ships rarely have.

The other reason it doesn’t work is that development directors, even the best ones, are not saviors. They cannot save an agency by themselves. If there is no culture of philanthropy and if there isn’t even really a culture of fund raising your development director is bailing water out of your sinking ship with a teaspoon. (Please click here to learn more about building a culture of philanthropy.)

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.”

Part of why there may be so many positions open is because we may finally be paying the price of not giving recommendations. It is very hard to be on either side of a call for a reference with an agency that has a policy of not giving them. Like every other field, there are more than a few development directors who are not particularly good, and some that are really bad. I have seen development staff that are all glitz no substance; they talk a good game but can’t follow through, close the deal or raise the money. I have seen some that steal lists, or steal money, take advantage of unwilling or unsuspecting donors and some who flat out lie. If we can’t give references for fear of being sued, then we are allowing in another agency what is unacceptable in our own.

There are also quite a few Execs who hire for one thing when they need another. Grant writing, event planning and individual giving are different skills sets, as are marketing, advertising and sales. Grant writing requires knowledge of the program and the grantor’s expectations coupled with excellent writing skills and the ability to follow directions. Event planning is all about the goal and the details. Individual giving is about engagement, impact and relationships. All are dependent on reputation. Most people are good at one, sometimes two. Not very many people are good at all three. For the execs out there: which one did you need? Is that the one you hired?

Development is one of the few positions in the nonprofit field where metrics are really easy to measure. Is there more money? Is there enough money to cover the cost of the staff member plus? Or is there not?

Now, it’s possible that the way you are counting the “more money” may not necessarily be fair. Does your development team do all the back office and foundational work? Who makes the ask? To whose goal does that gift get credited?

Accountability is what separates the wheat from the chaff. What are the metrics for your development team members? What are you measuring and is that the right thing?

I always counted any new contributed income that could even remotely be attributed to the development department toward their goals. Even if I made the ask, they were the ones that made that ask possible. The development team did the leg work. They gave me list of who to call and notes on what to say. They wrote the letters. They entered the data. They reminded me what the donor cared about, the name of their partners and kids and at what level they had previously gifted. I remembered a lot on my own, but team confirmed (or corrected) what I thought I knew. They did the heavy lifting.

My board, volunteers, the development director or I ate the lunches, built the relationships and closed the deals. The development team made us look good, and I credited them for all new money that came into our coffers. The director assigned metrics based on the roles her team members were fulfilling. She held them accountable, I held her accountable and the board held me accountable. Of course, we each held each other and our selves accountable as well.

Some organizations only count the money that specific fund raisers raise, and I’m sure that makes sense for their agency. For mine, whether I made the ask, my DD made the ask or a board member made the ask – other than an ‘atta boy, a high five and a happy dance for the “asker” – the development department got the credit toward their goal and their goal got rolled up under my goals. We weren’t working at cross purposes. We were aligned and are goals were as well. Are yours?

There is also one more wrinkle: This year, for the first time in many years, there is money available for capital projects. That hasn’t happened since 2008, when many foundations stopped funding capital projects in an effort to shore up agency operations during a time of rampant fear, when money that had previously been available began disappearing across the board and across funding streams. New money and new possibilities creates new needs for organizations and new opportunities for fund raisers. That’s good. That’s progress. Or it could be…

The tenure of development directors is short. From what I’ve seen, it’s usually a two year run. I’ve read some studies that suggest it’s even shorter. Two years is long enough to learn the agency and know its donors and begin to get some traction. That’s about it. It’s not enough time to raise significant money. It’s not enough time to get the job done. It’s certainly not enough time to thrive.

There’s a lot of movement in the development field and while there are some positives, at the end of the day it ends up being a detriment to us all. We, as nonprofit leaders, need to make sure we are hiring the right people in the right roles to help us move our agency forward. We also need to create the right culture and enough opportunities for growth and professional development for them to stay. Turnover has a cost, financial and otherwise. It’s also a distraction, and we have work to do.

Why do you think there are so many jobs open? What can we do about it? 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.

Considering Adopting a Family for the Holidays?

It’s the Holiday season and agencies across the country, and maybe the world, are putting together programs to make sure their clients don’t go without. They are also fielding calls from donors who want to know how they can help. The world is better because of these programs, those donors and their generosity.

I am hopeful that the ways they can help do not include Adopt a Family programs where the donor family meets the family in need. It’s a lose-lose proposition and I have been advocating against such programs for twenty years.

Adopt a Family programs where the agency acts as a middle-man, and neither side meets the other, is a great way to support a family during the holidays! When the agency doesn’t act as the middle-man things tend to go south.

I can totally see why meeting the family is attractive to both sides. It can be a feel good moment when the family in need can express gratitude and the donor family can feel like they are making a difference they can see in the life of a family in need.

The problem is it doesn’t always go like that.

The family in need may not meet the gratitude expectations of the donor family. They may be embarrassed – or resentful – to have someone of means come to their home which may not have heat, may not have furniture and may not have food. They may not be grateful. They may not be even be pleasant.

That’s why I don’t like the program; it’s not a trip to the zoo. It’s not respectful; it’s exploitative. We don’t get to go to the other side of the tracks to see how the other half lives. We visitors from the other side in our nice clothes get out of our nice cars and go back to our nice homes. It’s someone’s life and someone’s family and we don’t have that right.

It’s not always the client either. It works the other way too. The donor family may be disrespectful, judgmental or just plain disdainful.

Why set up either side to fail?

I have given gifts to kids who didn’t say thank you. I have received large checks from donors who called the kids we served “those black kids.” I have had conversations with donors who have no idea the challenges and the sheer willpower it takes to be poor and conversations with clients who feel they deserve whatever it is someone gives them.

I have also, and thankfully far more often, accepted gifts from donors who are so grateful for the world they were born into or created for themselves that they felt they had an obligation to give back. I have also had multiple conversations with clients who were eternally grateful that someone they didn’t know would care enough to make sure their kids had food, clothes and gifts.

I have one other issue with Adopt a Family programs – they eliminate the recipient parent’s ability to receive their own children’s appreciation and see their joy. When you constantly go without, and your children constantly go without, having a day of plenty is an even larger gift than the food or the gifts. Instead of allowing recipient parents to be the gift givers, even the pretend gift givers, to their own children at the holidays, Adopt a Family programs force parents to be in the position of being the gift recipient. They are, but do we always have to remind them of that?

It’s our job as leaders to set people up to fulfill their capacity as healthy, respected, productive members of our community. We can ask the clients who receive gifts to write thank you notes. We can ask our donors to trust us to choose the right family for their giving. We can make sure that everyone who comes into our programs, regardless of where they come from, feels valued, safe and honored by our polices, programs and processes.  We can, and we should.

What’s your take on Adopt a Family Programs?  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.

 

Unappealing Annual Appeal Letters

The annual year end appeal time is upon us! Development staff are sharpening their pencils (keyboards?) so they can craft a letter that will engage donors and encourage gifts to support the programs their agencies provide. This seems like a good time to list out the unappealing and unsupportable things I have seen mentioned in letters over the years.

Last year, I got a letter that said the task in front of us was “insurmountable” and asked for a donation. There is no point in me (or you) sending money to an organization that is facing an insurmountable task. If the task is really insurmountable, how will my donation impact it?  If my donation will not impact it– and obviously it will not since that is the definition of insurmountable- why would I give?

I want to impact issues I care about with my donation. I want surmountable tasks that the agencies I support have a plan to address. Tell me that plan and I am far more likely to write a check. Tell me that you are not up to the challenge and I am far less likely.

I have received requests from agencies asking for money to fill a budget gap. Please do not write in your annual appeal that you have a budget gap and need my donation to fill the gap. I don’t want to fill the gap. There are donors that you can go to in your hour of need to help you meet your budget or stay out of the red but most of them will not be asks you make in writing.

Donating to a sinking ship feels like throwing good money after bad. Only your most dedicated donors will consider doing that. Saying your ship is sinking encourages people to question your leadership. Why have you not met your budget? Are there issues of fiscal impropriety? There may not be, but why open the door and invite those questions? Some agencies have shortfalls for good reasons. In those cases, illustrate the reasons and build your case for support – in person. Donors that you need to save your sinking ship should always be asked in person.

Annual appeal letters are intended to request support from potentially new donors and smaller yet consistent investors who you know and love but who may not have the capacity or the level of engagement required to meet your individual ask threshold, which will vary by agency.

People give to people. Often, they give based on who asked them. Annual appeal letters are a great opportunity to ask a respected community leader to chair the committee and sign the letter and also to have board members, as possible, write notes in the margin.

Donors will support your agency for a variety of reasons but the ones most paramount are gifts given to make the world a better place and to impact the issues the donor cares about. Please frame your letter accordingly; make it about the world and the issues not your agency and its needs.

In closing, I will share that the most recent unappealing annual appeal letter I have received was from a university I did not attend. The letter, based on wholly inaccurate information, ended with snide remark. It said “Don’t you want to help someone the way someone helped you?” Now you might have noticed that I did not attend that university so it’s also safe for you to assume that I did not get a scholarship to not attend that university.  So I wondered “help me do what, exactly?

I use the story to illustrate two points. The first point is this: don’t guilt. Guilt is a terrible way to raise money. It may get you a onetime minimal donation but will not build engagement and will certainly not build multiple gifts at increasing levels over the years. If the initial engagement method is flawed, you are building a foundation in the sand.

The second point is this: get your facts straight. It’s unlikely that every person they sent that letter to actually received a scholarship from that university. Unless you’re going to crosscheck every letter you send against every scholarship you’ve given, it’s better to come up with a broad message that will encourage people to support your organization, without assuming that they got something in return.

The moral of the story is this: know your donors. If the university had, they would know I didn’t go to their school on scholarship … or at all.

What is your best advice for annual appeal letters?  What’s the letter you still remember shaking your head when you received? 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.