Author: Hank Lewis, MA, CFRM

Had a “wrong number” phone call recently from a “Director of Development” of an organization based in my area who was trying to reach a totally different business.

Even though I was not the intended recipient of the call, when the caller learned that I was a fundraising consultant, she thought that it was “kismet” that we had connected.

She had “questions” related to obtaining corporate contributions … the apparent focus of most of her (organization’s) fundraising efforts.

She talked about her emphasis (to corporations) on the wonderful things her organization does for its constituents, but she totally missed the concept that if you want money from a corporation you have to show them how giving to you will improve their bottom line and/or their public image.

I asked about her background in development and learned that, after many years in industry, she’s been in fundraising for ten years – with a singular focus on corporations. With her emphasis on corporate fundraising I asked if she was the Corporate Affairs Director, but she emphasized that she was the D.O.D.

I asked about her background/training in development … and there was none !!

Even with her participation/attendance at AFP chapter meetings, she seems to believe that anyone can be a Director Of Development … with or without the experience/skills needed to direct a development program. That also suggests that AFP isn’t effectively conveying to its members/attendees what development is and what a Director of Development does. That’s sad.

It’s also scary/depressing how often NPOs hire development staff/directors who have no clue that there’s a difference between fundraising and development. Of course, the people at the NPOs also have little-or-no understanding of what that difference is. They’re only looking to hire someone to raise money … so they won’t have to !!!!!

What do you think ?? Let me know, and I’ll post your comments.

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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.

An email asked: “What advice is there for new nonprofits without a funding history? So many groups with a lot of potential just don’t know where to begin.”

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The biggest mistake most new NPOs make is the assumption/belief that, because they want to do wonderful things, everyone (read: gov’t, corporations, foundations and “rich people”) will want to give them money.

The fact is that an NPO must prove itself — prove it can do what it says it can, prove it can be fiscally responsible, prove it is actually needed — before gov’t, corps and fndns will be willing to invest in it.

Of course (he says with tongue-in-cheek), that leaves rich people, and all new NPOs think that Bill Gates is going to send them a check — all they’ll have to do is write him a letter, then watch the mail.

Hey, don’t hold your breath on that one.

A major factor for getting money from rich people is having access to those people. If you have personal relationships with the wealthy, then it’ll be easy for you to pick up the phone and make an appointment to go see your “friend” and ask for that big check. The same if you know someone who has those connections and can/will do that for you.

Failing all that, it comes down to the hard realization that, if you don’t know someone with an “in,” you must rely on the tried and true methods for obtaining that initial funding.

If you can’t rely on outsiders (the gov’t, corps, fndns and the wealthy), it’s up to the insiders to make it happen.

For each new non-profit, the specifics may be different, but the general circumstances are pretty much the same. There must be an understanding that if the people who created the new organization can’t/won’t give of their own resources (to the extent they can) then why would anyone else want to … why should anyone else??.

Once that is understood, the founders of that new NPO must take an inventory — who of the people that they know might come to care (as much as you do) about the reasons why the NPO was created … and eventually want to support that organization.

There must also be an evaluation of how those founders and the people with whom they have relationships can begin to make a difference. This step is often best accomplished with some expert guidance.

Many new NPOs bring in someone to speak with their leadership, to educate them as to the processes and procedures that are, typically, most effective, and to help them determine what might be most effective for them. Founders of many new NPOs also attend seminars/workshops designed to educate new NPO leaders.

Bottom line for a new NPO is — to paraphrase, “Only when you’ve helped yourself will others be willing to help you.” PROVE you’re worthy, and future funding will be a lot more likely.

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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.

On a listserve in which I used to participate, someone posted the following:
<< We plan to write to donors who have not contributed in the last few years and ask if they would like to remain on our list…. >>

My Response:

Those folks must have had some reason for giving to you in the first place. To ask if they want to be removed from the list serves no one’s purposes — unless it’s someone whose focus is on the list, and not on the purpose of the list.

Ask them what you need to do to get them to give again, or what you did to make them stop — I assume you can come up with better wording than this.

Give them a reason to want to write that check – motivation is about getting them to want to do what you want them to do….

Asking people if they want to remain on your list is to not address the real question — if they are interested in the pursuit of your mission.

Try to find out if you’ve been communicating adequately with them – ask them what further information they’d like you to provide. Don’t just treat them as (non-productive) names on a list.

Never ask prior donors if they want to be removed from your list, some of them might say, “Yes.” Prior donors are a resource you want to conserve.

Approach the question from the perspective of “what would make those prior donors rediscover the romance?” — rather than asking if they want a “divorce.”

Be creative in giving them opportunities to show that they still support you and your mission, forget about asking them if they want to be removed from your list.

In addition to the above, send your mailing with “Address Correction Requested” – that way you can remove from your list people who are actually not getting your mail or you can get the new address of a donor that may have moved.
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Have a comment or a question about starting, evaluating or expanding your fundraising program?
Contact Hank Lewis. 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.

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From the next posting (this Thursday), until after Labor Day, the Fundraising Blog will post only once each week. We will resume the twice weekly postings in September. Enjoy your summer. ….Hank, Natalie, Jayme, Lynn, Rick & Bill

This posting was “provoked” by a question in an email.

In fundraising, as in sales, it’s targeted marketing that is most effective. But you can’t target the folks in your market until they’ve been identified.

Donor acquisition, the most expensive part of the “development/fundraising” process, is a necessary investment. And that’s what it is, an investment.

You spend $1, $2 or $3 to obtain a new donor, a new constituent, not to raise a dollar. To talk about cost-per-dollar-raised for donor acquisition is to not understand the process or its purpose.

Direct mail is, for many NPOs, an essential part of building a substantial base for the donor pyramid. And the factors that have the greatest impact on the results of donor-acquisition mailings are: the list selection process, the roll-out mailings, the testing of copy, etc. — all the tried-and-tested elements of the traditional direct mail program.

And such a program cannot be evaluated in its first six months of operation, its first year, or even two years. Three years, according to some direct mail experts, is likely the minimum period for such an evaluation — the period it takes to begin generating enough repeat contributions from newly acquired donors to have a direct mail program begin to “show a profit” from those donors.

And, if a Board is attempting to evaluate the performance of a new development person and/or the programs s/he has initiated, there needs to be some time, likely a multi-year period, for his/her programs — through the normal process — to begin to mature.

No matter on what level, or to what end we work with nonprofits, it wouldn’t hurt to have a broad-based background in development, before trying to apply to development/fundraising some theory of ranges or medians or marketing statistics.

And, the way of getting a N-P Board to understand the process, and the expected results-over-time, is to have them talk to people who have experience with and understand the process.

Certainly, if the members of a nonprofit Board and their CEO don’t know what to look for when they hire a development person, they sure aren’t going to know how to evaluate that person or his/her programs.

If you’re looking for advice on measuring the effectiveness of development programs, listen to the development professionals — everybody has opinions, but not everybody has the experience and expertise.
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Have a comment or a question about starting, evaluating or expanding your fundraising program?
Contact Hank Lewis. 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.

Some time ago, an email raised the question: “When you are setting your fundraising goal for the coming year, is there a formula or commonly accepted “rule” on which to base an increase over the prior year’s goal?”

There is a basic ethical rule in fundraising — that you cannot and should not raise more money than that for which you have established a need.

The strategic planning process of an institution, its annual planning and income forecasting all lead to the establishment of fundraising goals — goals that are established based on two major criteria.

The idea that an annual fundraising goal can be increased arbitrarily, not based on actual need, is counter to the whole concept of accountability to our constituents.

To raise money, we tell our prospects of our need, and ask them to help us meet that need. If we raise our goal beyond our institution’s actual (established) need, but still tell prospects we “need” their support, we are (in essence) lying to them.

Only if an increase in an annual fundraising goal is based on a real need — not a “we can always use the money” rationale, does it have legitimacy.

In addition, the existence of a need for additional funding is only half of the justification for increasing the goal. The other half has to do with whether that goal will be attainable.

Big rule in fundraising: Never set a goal that you aren’t sure you can meet. And that assuredness must be based on your fundraising history, your knowledge of your current donors, your potential donors, the state of the economy, etc.

In essence, you don’t want to risk not meeting a fundraising goal, as failing to meet a goal suggests to potential donors that your community/constituency doesn’t really support you. Such a failure can (often does) significantly reduce contributed income in subsequent years.

The mistake made by too many “development” officers, including the one who asked the question, is that they focus on the process, when they should be keeping their sights on the reason the process was created.

Bottom Line: Setting a fundraising goal is an involved process that requires serious thought and evaluation, not an arbitrary “rule of thumb.” See: Constructing The Gift Table and How To Use The Gift Table

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Have a comment or a question about starting, evaluating or expanding your fundraising program?
Contact Hank Lewis. 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.

I received an email some time back that, with my response, suggests a way to think through the question of whether or not to use a prospect research firm.

“I was a participant in your recent workshop on Major Gifts and wanted to thank you for an informative and inspiring session. My organization, The XYZ Trust, is poised to launch a major gifts effort and, while I have numerous questions I would like to ask, I will spare you by limiting it to one.

“I have recently received a solicitation to subscribe to a prospect research service and I’m intrigued by the potential of such a service in the identification of high net worth individuals and their personal and organizational networks.

“Have you ever heard of such a resource? I know you probably won’t explicitly endorse or pan such a commercial service, but is it at least worth exploring? “

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My Response:

If that firm can provide all they “promise,” it sounds like it would be a worthwhile investment depending on the following factors:
1. If you have the volunteers who can tap into any network or establish/expand contact with potential major donors that the process uncovers for you;
2. If those volunteers would be willing to make the contacts and work on the creation/enhancement of the needed relationships (the cultivation);
3. If your volunteers couldn’t make many of the same identifications of individuals and networks on their own;
4. If the price of the service is “reasonable;” and,
5. If you (read: your volunteers) will actually ask major gifts prospects for major gifts – using the definition I provided in a much earlier blog posting.
(See: ”What is A Major Gift”)

If you have a volunteer cadre that would be willing to work at creating and cultivating networks of potential major givers, I’d be pleased (as would other consultants) to be asked to work with/train you/them in that process. In the long term, teaching your leadership “how to fish” – and how to clean and cook the fish, would likely be more cost effective than having someone else do your fishing for you.

And, once the research firm does your fishing for you, do you have that volunteer cadre that knows how and would be willing to do what must come next ??

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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.

Give, Get or….

A reader asked if we “have any examples of good “get or give” policies for a non profit board.”

I like wording similar to: “It is the policy and practice of the Board of Trustees of (name of the NPO) that each Board Member shall make an annual (cash) contribution to this organization in an amount that would represent the best of his/her ability to give.”

• Where I believe strongly that no organization can ask others to give if the
   Board Members of that NPO have not given to the best of their individual
   abilities; and,

• Where Board Members are (and should be) recruited based on those skills,
   experiences, and perceptions/attitudes that they’ll bring to that role to help
   advance the NPO’s mission; and,

• Where every Trustee should, to the best of his/her ability, participate in
   the process of identifying potential (major) donors, not every trustee can
   be a good solicitor.

• Therefore, not every trustee should be required to “get.”

Even though having a Board comprised solely of major donors and effective fundraisers would be a (tongue-in-cheek) tough situation to live with, Board responsibilities extend far beyond just providing funding.

That old expression about Board Members having to “Give, Get or Get Off” is obsolete. And, not only that, it can be counter-productive, even destructive.

People with the “right stuff” to be Board Members, can’t always be major donors and/or “getters.” You can’t define a good Board Member just based on the size of his/her portfolio or that of his/her contacts/friends/etc.

When it comes to raising the big bucks, you can always (hopefully) create a volunteer cadre/council/board/committee the purpose of which is to function in that capacity. Board Members with the “right stuff” aren’t always easy to find.

(See: Leadership For A Major Gifts Program: Part 1 & Part 2

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me 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, we’ll likely be able to answer your questions.

A reader indicated that she was, “trying to find accounting literature that defines whether we can capitalize the cost of a capital campaign consultant and the project management time provided by development staff who worked on the campaign,” and she asked, are “these costs usually capitalized with the new building or building expansion as project costs?”

1. The technical/accounting answer comes from Christine L. Manor, CPA
( clm@clmanor.com, who wrote “QuickBooks for Not-for-Profit Organizations”) referencing Financial Accounting Standards Board (FASB) guidelines:

In terms of accounting for fundraising costs, refer your accountant to 13.08 Per FASB ASC 958-720-25-4, costs of fundraising, including the costs of special fundraising events, should be expensed as incurred, and costs are considered to be incurred when the item or service has been received.

Fundraising costs incurred in one period, such as those made to obtain capital campaign counsel, compile a list of prospective campaign donors, or actually solicit commitments to a campaign, may result in contributions that will be received in future periods. These costs should be expensed as incurred.

Christine emphasized that, “even though you may lump all the planning and construction costs into a capital campaign asset account, you can’t put the fundraising costs there. Fundraising costs must be charged directly to a fundraising expense account.”

113.43 Per the FASB ASC glossary, fundraising activities are activities undertaken to (prepare to) induce potential donors to contribute money, securities, services, material, other assets, or time…

2. Even though the question seemed to focus on accounting practices, regulations and requirements, let me add that my experience has been that most nonprofits build campaign costs into their overall campaign goals.

So, even though the actual costs of a campaign have to be “accounted for” in the period in which they were accrued, those costs can be recouped by adding the anticipated total amount of the expenses to the campaign goal.

But, caution, those costs must be listed as such in any campaign budget or literature that includes a breakdown of what the campaign is designed to accomplish. Anything else would be unethical.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me 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, we’ll likely be able to answer your questions.

That question was asked on one of the listserves where I am (usually) just a lurker, but was one I felt moved to answer. What I said was that….

I’ve been a fundraising consultant for well over 30 years, and I obtained my CFRE when the program was relatively new – back in the early ‘80s. I maintained my certification for twenty years, and (for the most part) found the initial process and the required ongoing-recertification to be worthwhile.

The CFRE is a basic certification. It says that the person who has worked for and earned the designation has a minimum of five years in the field and has an understanding of the fundraising/development basics.

But that’s it !! Where having the certification “says” that a person has knowledge of the basics in fundraising, the certificate alone does not say anything about an individual’s skills or ability to use the knowledge.

The field of fundraising is fairly broad, and most people who enter the field have little knowledge/understanding of what all of the elements are and how they relate to and support each other.

So, my response to the question is: If someone plans on staying in the field, it would be to their advantage (and to the advantage of any non-profit that might hire them) to be serious about their education, to discover what it is that they didn’t know they didn’t know and learn to take seriously this field we work in.

The certification process organizes the various elements, relates them to each other and presents them in a way that is relatively easy to grasp. In that context, I believe it is worth the time and cost of pursuing the certification … whether or not you maintain the certification over the long term.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me 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, we’ll likely be able to answer your questions.

An Ethical Question:

The following is based on a question raised by a financial planner….

In the non-profit world, there is an ethical prohibition against anyone profiting by advising/encouraging another to make a gift to a non-profit organization. There is also a specific prohibition against anyone being compensated by a percentage of any amounts donated to an NPO.

It’s OK for a financial adviser to be compensated by a nonprofit organization for advising on and/or managing its assets; and, it’s OK for a financial adviser to be compensated for advising on and/or managing the assets of potential donors.

It seems like it would strengthen the relationship between a financial adviser and his/her individual (wealthy) clients to be able to offer advice/direction regarding their giving … and the benefits they’d derive from giving.

But the advisor should not seek nor accept compensation based on the money that moves from the donor to the NPO.

Four related thoughts:
1) By offering a useful service to wealthy clients, without “additional”
compensation, financial advisers are likely to get more referrals to
other wealthy clients.
2) The recommendations a financial advisor makes to his/her wealthy
clients should be based on his/her knowledge of whether a nonprofit
does good work, manages its finances effectively, and if the potential
donor’s needs will be satisfied by giving to that nonprofit organization.
3) It is considered unethical for an NPO to provide financial planning
advice to a (prospective) donor if the intent of that advice is to get
that individual to make a gift to the NPO.
4) If a (potential) donor wants/needs financial advice about making
a gift to an NPO, and asks the NPO, the NPO must (ethically) refer
that person to his/her independent financial planner.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me 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, we’ll likely be able to answer your questions.