Hank Lewis, MA, CFRM – Page 15

October 18, 2011April 16, 2022

Creating An Advisory Council

A recent email posed the question:

I am the Director of Philanthropy for a small nonprofit foundation. Our Board of Directors and committees are all comprised of physicians. I am beginning to build a lay component and am working on developing a Development Advisory Council – made up of lay members. I am looking to create a job description for this group the purpose of which is to expand our lay base and raise money. We are also having discussions on whether the Foundation should pay for travel and expenses. I am having difficulty with the advisory council description. Can you help guide me in the right direction?

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1. Since it’s all about perception, a director of philanthropy is seen as the person whose job it is to raise money; a director of advancement is understood to be working to help advance the mission of the organization.. (In addition, the D.O.P. title is more than a little pretentious !!)

2. An Advisory Council is created to provide advice. If you ask people to join such a group, you’d better be prepared to take their advice. If the primary purposes are to broaden the base of non-physicians and raise money, then call it just a Development Council or Advancement Council.

3. An essential question you must be able to answer is: Why would any non-physician want to be part of such a “council”? And the answer should probably not have anything to do with your Foundation.

4. If this volunteer group you’re assembling will be constituted to raise money, then one can assume that they have the money to set an example. With that as a given, they should also pay their own expenses.

5. I don’t know the difference between your development committee and the soon-to-be-created council. So I can’t offer a lot in the way of suggestions regarding a job description. I would say, however, keep it simple — i.e., The mission of this “council” is to help provide the resources needed to pursue the Foundation’s mission by providing direct support to the Foundation and encouraging others to do the same.

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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.

October 11, 2011January 31, 2022

Questions From A New Executive Director/Founder

Businessman looking at question marks on a black board

I do know at least one person who has been the chair of a board for over 20 years (a big organization). Is that unusual?

It is an extremely unhealthy situation, but is not unusual for an NPO that never grew up. I’d expect that the same people are doing the same things they’ve done, and where the organization is not providing much more service now than it did a decade (or more) ago.

Besides the fact that the laws of many states prohibit officers from holding posts indefinitely (many require specific terms of office), there should be board turnover on a regular basis … for the health of an organization. The usual is three-year terms, with a six year concurrent total.

Board members of a 501(c)(3) are the representatives of the community. They are responsible for seeing that the NPO is operated in a responsible manner, and that it meets the needs of the community. As a community changes, so do its needs, and NPO boards should change commensurately. A non-changing board (especially where the leadership is entrenched) cannot adequately respond to the changing needs of the community.

I used to say [tongue in cheek, that] I’d like to show up once a quarter, like some of [our board members], make decisions, then come back in 3 months to see how it went….

Boards should, for the most part, only meet once a quarter. Most of the work of a board should be done in committees. The board assigns the tasks; the committees investigate, plan and take any authorized action, then report back to the board.

If an organization functions as ours does, where the VP has most responsibility for admin and/or operations, is he the VP Executive Director? [Are] the ED and the CEO always the same? My role will not be primarily staff management, etc. Am I the CEO, since he is under me?

It sounds as if you and your associate are in the roles most suited to your abilities and preferences, and that the only question is what your titles should be.

You’re the visionary and the decision maker — so you’re the chief executive officer (CEO). Your associate is the nuts-and-bolts type and functions as the chief operating officer (COO). But don’t get hung up on titles.

Executive Director and Deputy Director would work. So would President and Executive Vice President. As long as you have the job descriptions clear — the titles are only as important as you want them to be.

But, there is one more consideration: Typically an organization’s bylaws define the title/job description of the CEO; and, typically, that person is responsible for hiring and firing of all other staff, their periodic evaluations and salary recommendations.

If you’re going to distance yourself from the day-to-day, and if your associate will be responsible for staff oversight, maybe both positions – CEO and COO – should be defined in the bylaws. Ask your attorney to check on your state laws.

We’re in that gray in-between area, as I’m sure you guessed. The mission of the organization is strong, the development role of the board has not been, as is a result of our youth and my gradual recruiting of people who fit that role.

At this stage in the life of your organization, it’s important that you have a board that can share and help shape the vision, as well as provide various kinds of expertise needed by a growing NPO. It is also important that every board member be a donor, and that they give at an appropriate level — based on their ability to give.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact 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, he’ll be pleased to answer your questions.

October 11, 2011April 21, 2022

Fundraising Consultants & Credibility: Some Thoughts

A fundraiser consultant meeting with a client

This is a follow-up to an earlier posting – see: Who/What is a Fundraising Consultant?

Sometimes a client will accept as gospel every bit of advice/direction that a fundraising consultant provides. Sometimes everything the consultant advises/suggests is questioned.

I’ve worked with organizations/institutions that fit each category, and of course I prefer working with the former type. [In fact, if/when I can identify the latter type during pre-contract discussions, those conversations terminate early.]

The best client to work with, however, is the one that asks questions so they can learn. Working with a client that wants to learn is better than working with NPOs that never question or question everything.

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Often, when working with a client, I have found that the advice/direction I was providing duplicated what their (development) staff person had already suggested. They’re willing to take advice from a stranger, but not a person they’ve hired….

The old phrase, “Familiarity breeds contempt,” may be a partial explanation for why that happens so often, but it’s probably not the only explanation.

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Sometimes I find that organizations view fundraising consultants with a jaundiced eye. They just feel uncomfortable about talking with/hiring/using consultants.

I imagine that they’ve had and/or have heard of other NPOs that have had bad experiences with consultants. After all, not every consultant can be highly rated !!

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I recently met with an executive director who said that she called me because all of the other fundraising consultants she’d contacted had the “template” that they were going to apply to whatever situation they encountered !!

Some fundraising consultants are so locked into one pattern, one philosophy, one approach to every problem, that their mind-set doesn’t allow them to approach a client’s needs with an open mind.

I expect that one of the things that “fundraising consultants” need do is focus on the needs of the NPOs they (want to) serve, not on a method that puts process over the interests/needs of the “client.”

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When a consultant’s ethics don’t put the effective pursuit of a NPO’s mission above the pursuit of a consulting fee, when those ethics consider what the client wants above what the client needs (to pursue it’s mission), one of the frequent end results is some degree of discomfort/distrust of consultants.

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Right now, anyone can say that s/he is a consultant – anyone can hang out that shingle.

If we don’t, by our actions, convince the public that we’re honest, honorable and ethical, and that our advice is based on experience and expertise — not a couple of courses we’ve taken or some volunteer works we’ve done, fundraising consultants won’t engender the level of trust that we’d like.

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If you’re a fundraising consultant, work with an NPO that hires fundraising consultants, or just have a thought (or two) that can add perspective to any of the above “questions,” I’d really like to hear your thoughts on the subject.

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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.

October 5, 2011January 31, 2022

Board Status for Staff Members

Board meeting of business executives in a conference room

It is important that specific terms be used/understood with consistent definitions. Members of a Board of a non-profit organization, by law, are those individuals who have specific responsibilities and liabilities, and who have unrestricted voting rights — except for conflict of interest situations.

Anyone who does not have voting rights, therefore, is not a Member of the Board.

For someone to be a Member of the Board, “by virtue of the office that they hold,” does not — cannot — restrict their voting rights.

To say that, “Executive directors are usually ex officio members of the board and that they are non-voting members,” is a contradiction. If they are Board Members, they have a vote. If they don’t have a vote, they’re not Board Members.

Of course many well-meaning and well-intentioned NPOs include language in their by-laws about Executive Directors (and/or others) being non-voting Board Members, but that doesn’t make such provisions correct.

When it comes to his/her participation in board activities, the Executive Director does play a very important advisory role, but that’s all it is, or should be — advisory.

Don’t be confused by the use of different terms to refer to the person who oversees the day-to-day operations of an NPO. However that position is defined, whether President or Executive Director or any other designation, if s/he is paid staff, then s/he shouldn’t be a Board Member. It creates too many conflicts of interest.

My observation would be that any Board that makes provisions for others to be non-voting members doesn’t understand the non-profit process or the legal implications, and I would caution against doing something just because others “usually” do it.

Check with an attorney who has expertise in non-profit law, not just any attorney, to be sure what the legal strictures are in your state.

Meanwhile, your E.D. can function as a resource and provide recommendations. That’s always a good idea.
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October 4, 2011April 21, 2022

Major Gifts Committee Member Job Description

In response to an email request….

“This” committee was created with the understanding that, to obtain the gift income needed for this organization to effectively pursue its mission, an organized approach to the acquisition of major gifts must be designed, and assiduously followed.

Major gifts, for this purpose, are those that are obtained from a relatively small percentage of this organization’s donors and that (should) constitute a large percentage of this organization’s income.

Committee Membership shall include selected Trustees, Volunteers, Major Donors, and this organization’s Chief Executive and Chief Development Officers.

Committee Members shall be well educated about the organization’s Mission, History and Strategic, Development & Marketing Plans.

Committee Members shall Participate in:
   •   Identifying Prospective Major Donors —
            Suggest Names and Prepare & Review Lists
   •   Generating Timetables for the Identification,
            Education, Cultivation and Solicitation of Prospects
   •   Educating/Cultivating Prospective Major Donors —
            Invite/Escort Prospects to Events/Presentations
            Contact Regularly, based on developed timetable
   •   Evaluating Prospective Major Donors
   •   Soliciting Appropriate Prospects
   •   Weekly (periodic) meetings to review plans, timetables and progress

Committee Members shall take, and present to the Chief Development Officer, notes on the dates and substance of all contacts with those prospects that have been assigned to him/her.

Committee Members shall also respect/maintain the confidentiality of all information relating to all prospects and donors.

September 27, 2011February 15, 2023

Fundraising Ethics Revisited

person-wring-a-posting-on-fundraising-ethics

A couple of months ago I wrote my first posting on fundraising ethics. In that posting I posed three questions — three situations that required ethical resolutions. And, although there have been a few emails from readers that related to ethical questions, the situations that I posed have not been addressed.

So, in the context of the rights of the donor, the public’s right to know, the appearance/reality of conflict-of-interest and how those issues impact the people served by a nonprofit organization, I’ll try to address those questions … without giving direct answers.

1. Is it ethical for an NPO to hire a firm to run a “fundraiser” where the NPO realizes $10,000 it wouldn’t
have had, while the vendor actually retains 90% of the generated income ??

Would your donors feel comfortable giving to you if they knew that only
10% of their giving would actually go to help the people you serve?

Would you inform the people paying to attend your fundraisers that
only 10% of their giving would actually go to help the people you serve?

If you wouldn’t so inform the attendees, why not?

Would you want to see that information on the front page of your local
newspaper? If not, why not?

Where the cost of most fundraising doesn’t exceed 20%, is it reasonable
to use a fundraising method that costs 90% of the gross?

2. Is it ethical for a major donor to a hospital to get his/her child moved to the top of the “treatment” list ??

How would the parents of children already on the waiting list react
to having someone jump to the head of the line?

How would the public react to an article on the front page on the
local newspaper that children in need of treatment were delayed
in getting that treatment because a major donor got “special
treatment?”

What would happen to an institution’s reputation of being fair and
caring? …or don’t people care?

3. Is it ethical for the CEO of a nonprofit to recruit family members to serve on the organization’s board ??

How would current and potential donors react to learning that the
CEO’s family has a vote on what the CEO is paid?

Assuming that the CEO and his/her family members are in
agreement on the issues that the CEO must decide, would the
public see the decision-making process as one designed to
benefit the community? …or the CEO and his/her family?

A good rule of thumb (but not the only rule) to use in judging whether something is or isn’t ethical is whether it feels right. If you’d rather not see it on the front page on your local newspaper, then it probably doesn’t pass the smell test.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact 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, he’ll be pleased to answer your questions.

September 20, 2011April 21, 2022

How Do You Pay A Fundraiser???

That was the subject line in a recent email in which the writer asked:

“We have a skilled fundraiser who wants to do an event for us. She is willing to do it for 10% of profits after expenses. She is passionate about our cause and has worked hard for us for a couple of year — often at her own expense — to promote other successful, but, much smaller events.

“To do this big event she wants to get paid…and I can understand that, as it will be a big undertaking.

“Seems we won’t have any risk involved. We know her, we trust her and if we don’t make any money then she won’t make any money. Is there something I’m missing, or do you think under these circumstances this could work ok?”

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I responded that I’ve always believed in and adhered to the “rule” that no consultant/vendor to a nonprofit organization should be compensated based on a percentage of funds raised. (There’s good reason for that “rule,” and AFP has a comprehensive “white paper” discussing the issue — AFP Ethics Paper.)

So, not to repeat what you can read in that document….

In essence, a nonprofit organization should be able to afford/pay for the services of any consultant/vendor that they engage. If they can’t afford it, they shouldn’t be doing it !!

All consultants/vendors should be able to put a dollar price on the time/effort/services they provide … a price that reflects the current “market.” And the consultant and the organization should come to an agreement (contract) as to the specific dollar figure and how it is to be paid.

I understand what you said about your “skilled fundraiser” being passionate about your cause, about having worked for you in the past, and having given of her time and resources. That was her choice — commendable, but her choice.

Let me use an exaggerated example to advocate for not compensating on a percentage basis. If your event raises $11,000,000 at a cost of $1,000,000, then the consultant will get $1,000,000. How can you possibly justify giving a consultant that much money … money that could do so much good for your constituents ???

Using the same percentages on a smaller scale doesn’t justify using money that people give to you to help the people you serve, to instead compensate a vendor/consultant.

And, by-the-way, you refer to this person as a “fundraiser,” but describe her as an Event Planner/Organizer/Manager. Those two titles do not usually equate … unless she is actually raising the money for you.

If she is raising the money for you, there is not likely a relationship between the ticket purchasers and your organization; and what an NPO must have to ensure future funding is a relationship with those who support that organization.

That you believe you would go into the proposed relationship with no risk cannot be a justification for unethical behavior — as per the “rule.” And, there is a risk you haven’t considered: What if your community/constituents/local newspapers find out about a consultant/vendor getting so much money from your organization that could have helped lots of people !!??

In addition, I get the impression from your note that your organization does (has done) smaller events as “fundraisers.” “Fundraisers” don’t result in ongoing donors … people you can count on for support over the long term.

For my reaction to “fundraisers,” let me refer you to two early postings on my blog:
Fundraising Or Not Fundraising, That Is The Question
“Development” Is Not A Synonym For “Fundraising”

You should know, the above is a compilation of comments from both my wife and I.
I looked at your question from the perspective of a fundraising professional, and she from the perspective of a long-time Special Events Planner/Organizer/Manager.

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Have a comment or a question about starting, evaluating or expanding your fundraising program?
Contact Hank at AskHank@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, he’ll be pleased to answer your questions.

September 13, 2011April 22, 2022

Designing An “Ask Package”

Businessman thinking about designing a "ask package" to source for funds from donors

An email asked if I know of any resources for designing an “Ask Package”

The writer explained: “I’ve found lots of general rules such as ‘include your mission statement’ and ‘specifically outline what their donation will cover’ but I can’t find any templates for designing one. Are there any websites you could recommend?

“We’re a very small non-profit organization developed to raise funds to cover costs for a martial arts tournament team, and we’re just in the beginning phases of developing the materials.

“The “ask package” is what we want to give to prospective sponsors to ‘sell them’ our Non-Profit so they will donate to us. It’s more than just a fundraising letter, we want to include our mission statement, biographies of team members, statistics from past tournaments, pictures and then end with the sponsorship opportunities they can choose from.

“Do you have any suggestions on where on the internet I might be able to find free resources for this purpose?”

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So, to start, There’s no such thing as an “ask package” – or there shouldn’t be !!

Packages of materials (even with a cover letter) don’t do the asking. People who have established relationships with prospective donors do the asking. And looking to corporations to fund a nonprofit is to look to the least productive source of funding.

To put money/time/effort into creating a “package” could likely not be the best use of your resources.

Having said that, if you’re committed to raising money from corporations, the key is to focus on what the corporation can/will get from giving you money. They are profit making entities, and they are driven by their bottom line … they must be, they answer to their stockholders/owners.

Sending corporations a lot of unsolicited material often just annoys people. Your best bet is to (first) call the community relations or contributions departments of the corporations that might have an interest in your activities and ASK them what you’d need to do to get the corporation to want to give you money. That’s what those departments do.

I also suggest that you read the three postings at Corporate Fundraising

So, my answer to your question … create the narratives on your computer, and keep them there. If/when a corporation asks for more information, you can send them (only) what they ask for.

But, if you send them a pile of slick materials, they may well think that you already have more money than you need … since you’re spending it on brochures/photographs/printing.

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August 29, 2011February 16, 2023

Term Limits for Non-Profit Board Members

Work colleagues looking at a laptop in the office

Nonprofit organizations (NPOs) are created to address specific issues/problems/needs and serve specific communities/constituencies, and the primary role/responsibility of the Boards of those NPOs is to represent (the issues/problems/needs of) those communities/constituencies.

A Board does this by ensuring that the NPO’s mission is consistent the reason(s) that organization was created … and by adapting that mission to the ongoing needs of the community being served; by establishing policy on how the business affairs of the organization are to proceed; by selecting, evaluating the performance of and (when needed) replacing the chief executive officer; and, by providing the resources needed for the CEO to pursue the mission.

Now, simply put: When the Board Members of a Non-Profit Organization do not have specific term limits, and some-or-all of the same people continue to serve without limit, the Board, over time, is likely to become less representative of the community. There are three common reasons this happens:

(1) Boards get used to doing things their way;

(2) Board members only think important those things that they think are important; and,

(3) Their focus is on providing service to those to whom they provide service.

That was not intended to be cryptic. It is merely a way of saying that a board without term limits has no requirement, no major incentive, to re-examine, change or broaden their mission and/or their activities and services.

When most organizations are created, board members tend to be very similar in attitudes, outlook and concern about a particular problem. They tend to come from similar cultural, ethnic and/or experiential backgrounds, and they focus on what they know. Eventually, because of the limited scope of their vision, they can lose contact with what’s going on and what might be needed in the broad community.

Of course, “eventually” may differ for different communities. For some communities, where people and/or circumstances are visibly changing, board tenure should not exceed two terms of three years. Where change occurs slowly, three terms might be reasonable.

Representation requires consideration of a number of elements, from the changing demographics of the community, to the skills an individual brings to the position, to the relative ability of the Board Members to help the corporation obtain the resources it needs to operate at optimum levels.

Often the Members of a Non-Profit Board get comfortable doing things a certain way, but Board Members must understand that their responsibility is to act in a way that is best for the community. The manner in which a board of trustees operates is not for the convenience or comfort of its members, it is to ensure that the interests of the community are being served and protected.

Nothing stands still — everything changes, including our communities, and a nonprofit Board must change with its community. Only a Board that maintains its vitality can function at its best. New blood brings different perspectives, different attitudes and different skills, all of which may be needed for a changing community.

Term limits are an essential ingredient in maintaining a Board’s vitality. Any Board that insists that term-limits are not necessary for them, for whatever reason, is acting on the basis of its own needs, and not out of consideration for the community they are supposed to be serving.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact 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, he’ll be pleased to answer your questions.

August 16, 2011April 22, 2022

Are Major Gifts Annual Gifts ??

An email raised the question as to whether “Major Gifts” should be counted in the total for the “Annual Fund.”

I can’t help it. I have to say it, “I really hate the term, ‘Annual Fund.’” (See: The Annual Fund Is Obsolete.)

OK, now that I’ve gotten that off my chest….

By a literal definition, annual gifts are those from donors who (only) give once each year. If some people make multiple gifts during a fiscal year, and if others make gifts some years but not others, their gifts cannot be rightly called “Annual Gifts.”

To distinguish between annual donors and Major Donors, the latter make their gifts based on a number of factors, not necessarily according to the calendar. (See: Major Gifts).

For the former … only “lower-rated donors” are (should be) solicited for “Annual Giving.” These are donors who are likely to give relatively small amounts, and who are not likely to give more than once each year — probably because they are not asked to give more than once each year !!!!! (They are often donors who have been conditioned to think that they’re only supposed to give once each year.)

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A Fundraising Program may generate income from direct mail, telephone solicitation, grants, special events, Major Gifts and any other methodology. At the end of the fiscal year, all of that income is accounted for under whatever headings exist in an organization’s budget/accounting process.

The totals for each methodology, then, are combined to provide a total for the year. Even though not all gifts made to the organization that year were “annual gifts,” the overall total is often referred to as “Annual Giving.”

Some NPOs make a distinction between income raised by the usual A-F modalities and that from a Major Gifts Program; some include a Major Gifts component in the A-F; and, some make no distinction at all.

It’s up to you (your institution) how you define “Annual Fund,” and what income you include in its total.

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