Hank Lewis, MA, CFRM – Page 13

May 8, 2012April 7, 2022

What Do They Do With My Contributions??

Some time ago, I got a note from a reader asking, pretty much, that question:

My question to you is — I have donated to a small organization, for a year, in my town to help poor children. I have never received an explanation on how the money is used. Should I expect that and if so how do I gracefully ask for that information?

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I responded:

There are no legal requirements for a nonprofit to provide that information to its donors; but not to do so is just dumb.

It’s bad donor relations, and it’s not the way to keep people interested in the organization, its mission and in ongoing giving !!

The ethics of fundraising (yes, Virginia, there is such a thing!) emphasize the right of donors to know how their contributions are used, and require that donors be kept informed….

You should contact the nonprofit and ask for a copy of their latest annual report. If they don’t do annual reports, you’d be right to wonder whether they are operated in a business-like manner and are worthy of your support.

I don’t know how/if “gracefully” relates to asking for information that should, in any case, be provided to you. If the nonprofit can’t or won’t provide that kind of information to its donors, maybe a local newspaper would be interested in “investigating” what that organization does with its donations.

Obviously, you touched on a sensitive subject. I’d be interested in what you do and in the results of your inquiries.

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To continue … thoughts off the top of my head:

There are lots of ways a nonprofit can keep their donors informed….

By Mail:
o The note thanking the donor for the gift can/should include some discussion about how
the gift will make a difference
o A note from a second person saying thanks and giving more specific information about
how the gift is being used
o A note from a person being served by the NPO discussion how they had been helped
o A “keep in touch” note; more about how the gift is being used
o A (one-page/quarterly) newsletter addressing one or two issues

By Email:
o A note thanking the donor for the gift that can/should include some discussion about
how the gift will make a difference
o A note, “just to let you know how things are going”
o A note, with specific data about the number of people being helped
o A note, referring the donor to your website to get the latest info

By Phone:
o A call just to say thanks, and mention how the gift will help, or that it has made a
difference – and be specific

On Your Website:
o A page (that is regularly updated) discussing current programs, the number of people
being helped, and how those folks are being helped

All of that writing/communication should be in narrative/conversational format. None of it should be lists of facts/numbers. Make it easy to read, and people will read it. Make it too long, include too many statistics, make it preachy, and folks won’t want to read it.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at AskHank@Major-Capital-Giving.com

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If you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting.

April 24, 2012April 7, 2022

Professional Fund Raiser vs. Fundraising Professional

A Professional Fund Raiser shaking hands with a Fundraising Professional

Last week I went off on “professional fund raisers,” and, in passing, referred to Fundraising Professionals. I think I made it clear that I was opposed to the use of the vast majority of those “professional fund raisers” who raise the money for you.

And, now, to clarify the differences between the two, and the reasons you should favor one over the other, I offer the following:

The, so called, “professional” fund raiser
• Has little, if any, background/training/experience in development
• Is interested in dollars, not people
• Usually gives the NPO an unethically-small percentage of the total dollars raised
• Has no commitment to establishing relationships between “donors” and the NPO
• Has no interest in helping the NPO create a donor base
• Doesn’t always provide the NPO with a list of who gave what amount
• Has no interest in helping the NPO create an ongoing funding stream – unless
you hire them on an ongoing basis
• And, most States that require registration by fundraising consultants and professional
fund raisers require (only) the latter to be bonded. Wonder why that is ??

Fundraising Professionals
• Have an understanding of the relationships that must exist between donor and NPO
• Have had mentoring and/or formal training in development
• Have broad experience in development
• Have developed expertise in one-or-more areas of the development process
• Work with you to create a constituency
• Work with you to create a donor base
• Work with you to create relationships between your donors and your NPO
• Work with you to establish realistic fundraising goals
• Who are employees of NPOs, work for a salary, never a commission/percentage
• Who are consultants, work for a fee (agree upon in advance, but not paid in advance)
based on services/expertise to be provided, never a commission/percentage

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April 17, 2012April 11, 2022

Professional Fund Raisers & Up Front Fees

Two fundraisers discussing an up-front- fee

A note from a reader:
Hank, I am a volunteer for a nonprofit organization that has been approached by “professional fund raisers” that are looking for “up-front” fees to raise money for us.

In my experience, and I have paid out thousands of dollars to these individuals that promise you the moon and when it comes time to deliver … the excuses abound.

The professional fundraisers say it is unethical to pay a percentage on the money raised. Is it not unethical to take money from a non profit and not deliver?
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My immediate reaction to the phrase “professional fund raiser” is one of anger and disgust — feelings that are directed at both the “fund raisers” and those who hire them.

It’s okay for an organization to hire a fundraising professional to work with them to create/implement/maintain a productive, cost-effective fundraising program. It is an extremely bad idea for NPOs to hire outsiders to raise money for them.

No outsider can speak with the conviction and passion for an organization’s mission as can board members, staff, volunteers and the people served by the NPO.

Outsiders, if they are asking people for money on a face-to-face basis, can, of course, fake it. So the organization has to decide if that’s who they are … people that hire others to “fake it.”

If outsiders are raising the money, two questions that must be asked are: (1) how much of the money that is raised will actually get to the NPO; and, (2) will the people giving the money or paying to attend an event be informed, as is their right, of how much of their money will go in the “professional’s” pocket and how much to the nonprofit ??

Also, the “fund raiser’s” fee should be agreed upon in advance – based on the time and effort needed to make it happen (not based on dollar goals or dollars raised), and included in a contract that specifies what services will be provided in what timeframe.

No “fund raiser” should have their full fee paid up-front. That’s just bad business, and you’d certainly not want your donors to know that you do that.

If those “professional fund raisers” can guarantee that “X” dollars can/will be raised, then they should have no problem putting that guarantee in a contract. The NPO will then have recourse (with State support) if the goal is not met !!

And, FYI, most States have an office (usually the Secretary of State) that oversees and regulates fundraising, and many require that copies of contracts with “fund raisers” be provided to the State for approval. Many also publish lists of “professional fund raising” companies and their track records in their States.

There are a few “professional fund raisers” that operate ethically, that raise money at a fairly low cost-per-dollar-raised, but the majority of the firms that I’ve seen listed on State reports forward too little of the money raised to the NPOs; and, high fundraising costs raise ethical questions, and suggest that the nonprofit is poorly managed.

Too many nonprofits are created by well-meaning people who have no clue about what’s involved in running/maintaining an organization; and, nonprofit organizations with leaders who won’t take the time to learn what they should be doing, and then won’t do what they should, should probably not survive. Hiring an outside “fund raiser” is the often leadership’s way of not having to do what nonprofit leaders are supposed to do.

As to the last two points in the email….
• You can’t lose money on a fundraising professional. You can ignore their good
advice/direction, but you will have gotten value for the fee you paid.
• If a nonprofit is paying a “fund raiser” in advance, it’s the organization, as much as it is
the “fund raiser,” that is acting unethically.
• Taking money without delivering what was promised sounds to me like “fraud.”
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April 10, 2012April 11, 2022

“Philanthropy,” An Often Misused Term

philanthropist discussing business fundraising

I have a BIG problem with the word/concept of “philanthropy” as it is often misused in the nonprofit/fundraising world.

Too often, people in the nonprofit sector equate the terms fundraising, development, charity and contributions with the concept of philanthropy. They are not synonymous.

Philanthropy, in its literal definition, refers to “love of mankind/humankind. In the broad context of fundraising, it relates to giving that is motivated (primarily) by the desire to help others.

In last Tuesday’s posting, “When I Forgot the Meaning of Philanthropy,” Tony Poderis related a good example of where real philanthropy comes from – that some people’s “desperate need to receive was the perfect balance for [his] need to give.” Truly, in the end, his was an example of philanthropy, of his desire/need to help others.

The thing is, and my focus here is on the definition and use of the word “philanthropy,” not everyone gives for philanthropic reasons. For the most part, people aren’t giving out of their love of humankind. That doesn’t mean that people are not giving to help other people, it just means that many are giving to (primarily) satisfy their own needs.

“People give because giving (in some way) makes them feel good.” I can’t imagine a person making a gift and not getting some good feeling from the act.

Whether a donation is made because the donor wants to be (or feel as if) s/he is part of a particular group, because s/he was brought up to believe that you’re supposed to give, because it looks good to the community, because the solicitor is someone that s/he cannot refuse (for whatever reason), to get one’s name on a donor list or a plaque, or for whatever other reason a person might have for giving, not every gift is philanthropically motivated.

Indeed, giving tends to be an activity/action that makes the donor feel good. Even s/he who gives grudgingly, in the end … and for whatever reason, feels good about giving.

My point, with this exercise, is to emphasize for folks at nonprofit organizations that if you want people to give you their money, you must know/understand what motivates your potential donor.

That a nonprofit does wonderful things and helps lots of people may not be the reason that every current and former donor has made their gift, and it may not be the reason that they and others give in the future.

For those who give to causes/organizations like yours for philanthropic reasons, an appeal on that basis is usually sufficient. For those who are motivated by other reasons, you need to appeal to them based on what will make them want to give … and that may not have anything to do with how wonderful your organization might be.

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March 27, 2012April 11, 2022

A New Nonprofit, A New Board, and The Grants Process

A reader wrote:
We are a new non-profit, with a mission to promote health and wellness. We will likely be able to obtain a BCBS grant, but we’re now hearing that we must get board approval prior to its writing so that the board can approve the budget. Is this common practice?

Our response:
The board has authority/responsibility for all fiscal matters, and must approve the organizational budget.

Since it is a fiscal and policy matter, the board must agree to the submission of all grant proposals. They can examine/decide on every proposal, give blanket approval for categories of proposals, or they can be somewhere in between.

Most foundations require/expect/assume that the NPO’s board agrees to what is being committed to by the organization. The assumption is also that the board will accept responsibility for the proper use of the funds and the follow up reporting.

A board, in making policy, must decide whether it will oversee the implementation of all aspects of the program/activity to be financed by a grant (very unusual), or if they will leave that oversight to the executive director (usual). In any case, the board should require that the executive director provide periodic fiscal reports.

A follow up question from the reader:
We’re currently working on writing the BC/BS grant proposal, but we did submit five others previously. Main issues are that there is no policy in place or listed in the by-laws, each board member is trying to state what we should do, and the grant application is due this Friday.

We responded
Individual Board Members, unless specifically given the authority by the board (as noted in the board minutes), have no say about the structure/elements of a grant proposal. Only the Board has grant approval authority … and the board minutes must reflect their approval.

Without that, staff members would be taking “unauthorized” action and would become legally responsible for any claims the grantor might make !!

I can’t conceive of any grantor, especially one the size of BC/BS, accepting a proposal that wasn’t approved by the board of an organization requesting funding.

Be Careful !!

The reader’s final comments:
As said, it’s a green board and they need money, but there are some internal struggles. They’ve just hired a CEO, who wouldn’t be the program coordinator, as she doesn’t have the skill set. There is so much bickering, and the grant is still in proposal-writing mode. Now I understand why so many nonprofit employees just go to work, then go home, and “don’t want to get involved.”

My wording was intended to indicate that the CEO could oversee the financial aspects of a grant-funded program and/or the implementation of such a program. That, too, is up to the board.

What you’ve described sounds very much like so many other new NPOs.

And, a final observation: There may be many employees of (disorganized/unorganized) nonprofits who “don’t want to get involved,” but the majority of NPO staff members have a connection, a commitment, to their organization’s mission and the people being served.

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March 20, 2012April 11, 2022

Fundraising: If You Don’t Ask, You Don’t Get

Person trying to raise funds for her business

A couple of thoughts to start the new year:

The Fundraising Appeal

Donors tend to be (highly) selective in deciding whose name goes on the payee line of their checks. Non-Profit Organizations, therefore, must do all they can to get donors to want to give to them.

At most times, especially in a “less than terrific” economy, donors want to be sure that their gifts are going to support/help people in need. NPOs must be sure, therefore, that their marketing, their literature and their solicitations all focus on the people in need … not on the needs of the NPO.

And, in addition to talking about people and their needs, the best wording should also talk about how the NPO is helping those people, how cost-effective it is in its operations, how a donor’s gift to the NPO can/will help so many people, and how the donor will derive a great deal of satisfaction by making the gift.

Introduction To Major Gifts

A comment made by the executive director of an NPO on the brink of closing its doors suggested to me that many people think of major gifts as those you pursue after you’ve done all of the other fundraising.

The language that the E.D. used was to the effect that, “We have to be sure we can stay in business before we can think about going after major gifts.”

I would hope that I never said anything to any client, or in any of my classes or postings, that would suggest that !! I’ve often mentioned that many (start-up and ongoing) NPOs can (and do) create major gifts programs from scratch, and can (and do) operate quite nicely on that income.

Certainly, in tough economic times, NPOs should be making every effort to raise funds by whatever (legal/ethical) means possible … keeping in mind that one major gift can (and often does) exceed what is raised via other methods.

Any NPO not actively/vigorously working on obtaining major gifts is doing a disservice to the people it serves … or could serve.

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March 13, 2012April 14, 2022

Major Gift Fundraising – A Three-Legged Stool

An entrepreneur trying to raise funds for her business

To stand, to be effective over the long term, a major gifts program needs all three legs: Leaders, Prospects and Involvement of both in the life of your organization.

Leadership includes the organization’s CEO, Trustees and (often) key volunteers. It’s their role to define the funding need, take their case to the public, and identify, cultivate and evaluate those most likely to make a major gift. It is, of course, also the job of the leadership to set the example and ask others to follow that example.

The most likely Major Gift Prospects are those individuals with the means to make a gift of the appropriate size, who know your organization, believe in its mission and that it is being run effectively, are accessible to your leadership, and have been substantively involved with your organization.

An effective major gifts program requires the active participation of your leadership in getting your prospects actively involved in the life of your organization. Please note, active involvement of prospects does not necessarily refer to attendance at special events.

In the identification and initial evaluation process, involvement by leadership is absolutely essential. It is they who must have access to the wealthy, before the wealthy can be considered prospects. Your leaders must know your prospects and their interests well enough to identify the best means for involving them with your organization.

Involvement is an ongoing process that ranges from asking the prospect for advice, in one-or-more areas, to having that person serve on specific committees — for an event, to help identify/evaluate prospects, to add expertise on a project, etc..

Involvement can also mean working with you to help provide the service that is the mission of your organization. It can also be speaking for you, to community groups, corporations, the press, etc.

There is no time limit for involvement, it depends on the prospect. By definition, you ask for the major gift at the point where the prospect is likely to respond, “Of course. What took you so long to ask?” That’s why, since it’s not always easy to identify that point, the people doing the cultivating/involving must know the prospect well enough to make that determination.

To complete the “three-legged stool” analogy, you must also have someone to hold the legs together, and make all concerned do what’s needed, when needed. That’s your Director of Development … the person who directs your development program.
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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at AskHank@Major-Capital-Giving.com
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Have you seen The Fundraising Series of ebooks ??
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If you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting.

February 28, 2012April 14, 2022

A Future Capital Campaign: A Reader’s Questions

And Some Questions in Response:
We are a small 501(c)(3) arts organization with an annual budget of about $25,000 in a small community of about 4,000. We are looking at mounting a capital campaign to buy a building and make it a community arts center. Most buildings of the needed size are selling for $100,000 to $175,000. Considering remodeling, we think we are looking at having to raise $200,000 to $250,000.

*Does your estimate include what it will cost to run a capital campaign ?
*Do you have or can you “easily” get the funds needed to plan for and
implement a capital campaign ?
*How many people do you estimate will make gifts/commitments of
$10,000, $15,000, $25,000 or more ? That’s what will determine the
success (or failure) of your campaign.
*Who has the respect/credibility/clout to lead a campaign and get the
right people to want to give?

Our membership feels that raising the money is do-able over the course of two years.

*What happens to your organization’s reputation/credibility if you
run a capital campaign and don’t meet your goal ?
*Where have your members gotten their experience/expertise at
designing and implementing a capital campaign ?

We have, however, two very conservative board members. They want to know what happens with the capital fund if an organization does not achieve its goal. Say we raise $89,000 in two years, they ask, and then hit a brick wall and give up. I think such a thing won’t happen, but what do I tell them now, to assuage their concerns? Do the donations have to be returned?

It’s a good thing you have board members who require answers
to the hard questions. If you run a capital campaign, and it’s clear
to your prospects that you are raising the money to buy/renovate
a building, failure means returning every cent to the donors.

No capital campaign should be implemented without first having
a Study (professionally) done to determine the feasibility of attaining
the needed leadership and the likelihood of obtaining the larger gifts
that ensure reaching a goal.

Is there a way to phrase requests so that the funds could be used for other charitable purposes in the community?

When you ask people to support you, you must be clear why the money
is needed, and you must use it for the stated purpose(s).

If you run a major fundraising campaign and don’t tell your donors the
money is to buy and renovate a building … if you give the impression
that the money is to be used for something else … that’s fraud !!

If the “other charitable purposes” relate to your mission, you have to be
clear what all of those “purposes” might be.

Bottom line is that you don’t even think about doing a capital campaign
until you KNOW (not believe) it will be successful !!

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact me at Hank@Major-Capital-Giving.com With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions.

February 21, 2012April 14, 2022

Looking Forward: Major Gifts In The New Year

Responsible planning, in any economy, involves identifying sources of funding sufficient to ensure continuation/survival of the programs that satisfy the needs of the people and the communities you serve.

Ensuring the funding of your programs requires that you minimize the risk of (again?) losing a large percentage of your income.

According to “Giving USA 2011,” in 2010, over 80% of the non-governmental dollars that went to Non-Profit Organizations came from individual donors or their estates. And, common wisdom is that at least 80% of that amount — or 65% of all non-government dollars — came from major gifts from individuals.

And even though everybody, including the wealthy, have been impacted by the economy, major donors are still a reliable source of funding.

Their gifts may be smaller than before the “recession,” but if they still have the means, if you still have a relationship with them and if they have a need you can satisfy by getting them to give to you, then they are still major gift prospects.

For an NPO without a major gifts program, now is the time to look seriously at creating one. Indicators (including the increase in spending over the holidays) are that people’s attitudes/outlooks about the economy have turned positive, and the people that are spending are (or should be) your prospects.

A major gift program is no more than the step-by-step identification, cultivation, involvement and solicitation of a number of individuals … each in their own timeframe. (See: Who Is A Major Gift Prospect)

The difference between successful and unsuccessful major gift programs is the effort placed on identifying and cultivating prospective major gift prospects. It is the determination of who has access to people with wealth, who is the best person to guide the cultivation process for each individual, and who is the best person to know when the time is right to ask … and then do the “asking.”

A Major Gifts Program is easier to design and implement, and more cost effective than direct mail and the vast majority of events. Major gifts are also a more reliable source of long-term funding than are corporate and foundation grants.

The big question is whether your organization is getting your share of the major gifts money that has been and is still supporting so many nonprofits !!

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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at AskHank@Major-Capital-Giving.com
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Have you seen The Fundraising Series of ebooks ??
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If you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting.

February 14, 2012April 14, 2022

Strategic & Development Planning: Love and Marriage

persons trying to set attainable goals in a strategic meeting

Strategic Planning

Every nonprofit must periodically assess its success in pursuing its mission, and must evaluate its progress toward achieving its long-term goals and objectives.

Those assessments and evaluations can only proceed if an organization has clearly established (and periodically) confirms its reason for being, and has established benchmarks by which it can judge its success and achievements.

On an annual basis, part of the strategic planning process is the analysis of income and expenses for the year ending, and the creation of a budget for the coming year. Budget creation must be based on “real” numbers, numbers that are based on need and the likelihood of income being at levels that will satisfy the need.

It directly follows that a budget cannot (should not) be adopted unless there will be sufficient income to fund all planned/desired activities.

Strategic Planning, therefore, cannot proceed without a parallel process of Development Planning that indicates/reveals what an organization’s (realistic) fundraising potential is for the coming year.

Development Planning

So many (immature) nonprofits set their fundraising goals based on what they’d like to raise, as opposed to what they can raise.

Goal setting is not the arbitrary choice of a dollar target. Goal Setting must be based on an organization’s knowledge of their past fundraising achievements and what they know, from that experience and their fundraising expertise, that they will be able to raise for the coming year.

An NPO cannot risk setting a fundraising goal that they don’t reach. Failure to reach a fundraising goal sends the wrong messages to the community, to the constituency and to (potential) donors. It says that the NPO doesn’t plan well, isn’t broadly supported by the community, and doesn’t have the dollar support they need for the activities in their budget.

So, when an organization is doing its Strategic Planning, it must take the results of the Development Planning process into consideration when setting short- and long-term goals and objectives. You can’t include activities/expenses in the Strategic Plan that projected income won’t support, and income projections must be based on reality, not wishful thinking.

The Development Plan is the large dose of reality that places limits on the Strategic Plan, and the Strategic Plan is the “justification” for setting fundraising goals. It’s like love and marriage, you can’t have one without the other !!

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