Hank Lewis, MA, CFRM – Page 18

March 1, 2011April 24, 2022

Fundraising Ethics

businesswoman-tudying-the-ethics-of-fundraising

The question was raised, recently, why the (ManagementHelp.Org) Library doesn’t have anything about fundraising ethics, so Carter McNamara added a subtopic heading under Fundraising, and sort of suggested that it would be a good idea to address the issue in this blog.

This is, therefore, the first (hopefully) of a number of postings on Fundraising Ethics … the total number of postings depending on the questions/issues raised by readers.

I don’t want to write a list of “thou-shalts,” or “thou-shalt-nots,” and I’m hoping that there will be lots of comments/questions. I’ll offer a couple of basic concepts and ask a few questions to get the discussions started, but if this is to go anywhere, it’s going to be up to you to respond.

Fundraising ethics addresses, among other concepts, 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 the nonprofit organization.

One concept, one reality upon which a lot of this is based, is that since nonprofits are tax-exempt organizations eligible to receive tax-deductible contributions, everyone else’s tax bill is higher to make up for the taxes that nonprofits don’t pay and for the break that donors get in reducing their taxes.

In essence, nonprofits are publicly supported; and, as such, they are responsible to the communities they serve and to the broad public in general. Nonprofits are not private organizations; they don’t belong to any one individual, not even the individuals who create them. What NPOs do, and even what they plan to do, is (should be) open to the public.

So, to stir things up … a few questions:
   1. Is it ethical for an NPO to hire a firm to run a carnival/fundraiser
      where the NPO realizes $10,000 it wouldn’t have had, while the
      vendor actually retains 90% of the generated income ??

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

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

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Have a comment or a question about starting 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.

February 24, 2011April 24, 2022

Major Donor on The Board

Got an email, not long ago, asking: “Is there any danger with placing a major donor on the Board of a nonprofit organization?”

I responded that: Ideally, a non-profit organization will have a list of criteria for prospective Board Members and a formal procedure for (identifying and) recruiting new Board Members — meaning that no one can become a Board Member without going through steps A through Z.

The list of criteria should include, among other things, consideration of ethical and conflict-of-interest questions.

Too many NPOs make the mistake of placing a major donor on the Board without consideration of whether s/he can/will do all those things required of a Board Member.

An option would be to ask the major donor to serve on the development (or other) committee for a year or two. Then, other Board Members can get to know him/her and determine if this is a person who has what it takes to be a Board Member and is someone with whom the others would want to work.

It would be nice if all Board Members could be major donors. It would also be nice if all major donors had what it takes to be Board Members. Reality, however, teaches us differently.

As to the dangers you questioned, there are no legal implications, unless you violate your own by-laws and/or policies. The one issue that raises a red flag is that you could create the impression that your board seats are up for sale – that board members are selected on the basis of the size of their checkbooks and not on the basis of whether they can best serve the needs of the nonprofit … and of the community.

Bottom line: A seat on the board should never be a reward for giving; and, sometimes you must decline a major gift, because the attached strings would be too costly … in too many ways.

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February 21, 2011April 24, 2022

Using Gift Clubs to Encourage Major Gifts

The club “leader” sets the pace, and invites others to join his/her Club – with an understanding that they are expected to give at a specific (major gift) level, and participate in specific activities.

Not everyone who gives at that (specific) level is invited to be a club member … we are talking about club membership as a motivation for giving, not as a reward for giving.

You can leave it right there — with club membership, the personal/expressed “gratitude” of the “leader,” and the requirement of making an “annual” gift of a specific size — as the whole package.

Or, better yet, you can involve the members of a club in one-or-more different, mission-related activities — i.e., for educational institutions, the club members could work with the admissions or student recruitment offices, mentor a group of students, or help the institution acquire broader publicity. Use your imagination….

Some clubs do not require members to make an actual long-term pledge, but rather, it is “understood” that they are expected to make a commitment to renewing annually. Some have found it effective to require a commitment from members to give at a specific level for ten years, or some other definite period.

Both methods have been successful. The decision about requiring a specific pledge or a long-term, annually renewable commitment must be based upon the constituency of the organization, the (changing) circumstances, and what system club members will accept. As always, it’s about the needs of the donors !!

Everything connected with the club must be done with class. The goal must be to have the friends of the organization recognize — and covet — the prestige of membership.

Traditionally, members are given some symbol of their membership in the gift club. The symbol is usually an inexpensive, one-time gift and is designed to engender a bonding between club members, and “announce” to others their membership in the club – i.e., lapel pins, desk ornaments, wall plaques.

Many organizations with formally established gift clubs also invite* members to an annual special activity — a reception, dinner or other (mission-related) event having particular significance to the institution and club members. (*Invite = no ticket fee)

Gift clubs can work for almost any non-profit; all it takes is an understanding of what motivates donors, and a good dose of creativity.

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[Note: If only donors are invited to those special events, then the fair-market-value of their “ticket” would be deducted from the amount of their “club dues,” thereby reducing their tax deduction. If prospective club members (and other non-club-level donors) are also invited, and actually attend the event, then there would be no connection between “club dues” and the invitation to the event … with no impact on the amount of a member’s deductible donation. Check with your tax attorney.]

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(My thanks to my long-time friend and colleague, James A. Keenan, Jr., President, Keenan and Associates, Lowell, MA, for his collaboration on this piece.)

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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 17, 2011April 25, 2022

Gift Clubs: What They Are … And Aren’t

It has become common for nonprofit organizations to publish listings of donors arranged by the sizes/ranges of their gifts. In the vast majority of cases, those gift range categories are often known, erroneously, as “gift clubs.”

This is a very popular, simple process. It is popular because it is easy to implement and doesn’t take much thinking. Many organizations use this mechanism because they look around and see the lists that other groups publish, and think they must/should.

To a significant segment of the donor population, however, the particular category in which they become listed is of little consequence, and was not what had motivated the gift. Motivations for giving can be as varied and diverse as the backgrounds, personalities, experiences and lifestyles of your donors.

Gift Clubs, as they were originally “designed,” don’t have names-on-a-list as the be-all-and-end-all of the development process. Gift Clubs serve to identify, cultivate and satisfy much of what motivates donors. They embody a process that engenders major gifts, as well as providing donor recognition. (See: What Is A Major Gift?)

To be successful, a gift club must be highly visible to your target audience, and membership must be marketed as being highly desirable … and not just because you say so !! (When it comes to major gift fundraising, marketing is a one-on-one proposition.)

Membership-By-Invitation is the major factor that distinguishes gift clubs from “recognition lists.”

First, and most importantly, each of these clubs must have a chair or president, a person whose reputation, social/political position and/or clout commands the respect of his/her peers and evokes some level of desire in prospective donors to want to become a member of that club.

Basic level for an invitation-to-become-a-member can vary as the type of organization and circumstances vary; and, you can have more than one “Club” with the same minimum dollar requirement — with different leaders and different (mission-related) activities.

Name your clubs for an “activity,” name them after organizational founders, name them after people you want to honor, give them names that would help you market the desirability of becoming a member, but don’t call them gift clubs.

February 7, 2011April 25, 2022

So, You Want To Raise The Money To Build A Playground !! #2

Naming Opportunities

(This post is Part 2 of a 2 Part Response to a Submitted Question)

The other first step is to make a list of potential “purchasers” of those naming opportunities. These must be people with the (significant) resources to be able to afford the “purchase” – people to whom you have or someone close to your organization has access, and they must be people who have a need that will be satisfied by writing that check.

The “need” can be as simple as the desire to see one’s name posted in a public place or as “philanthropic” as the desire to provide-something-for-the-kids. In essence, someone has to know enough about your likely donors to be able to answer that question.

Once you’ve made up the two lists, the discussions start as to how much to “charge” for each naming opportunity … said discussion to be realistically based on what people might be willing to “pay” for each “opportunity.”

When you’re finished with that process, you should have two lists: one of your naming opportunities with “prices,” the other of your list of potential “opportunity purchasers.”

Just to clarify, I’ve been talking about “charging,” “selling,” “prices” and “purchasing,” but we’re really talking about tax-deductible contributions … assuming that the organization “selling” those “naming opportunities” is a 501(c)(3) nonprofit organization.

The “bottom line” of the process comes after the lists have been completed: Asking For The Check.

That MUST be done on a face-to-face basis. The process is simple: to have the right person meet with a potential donor and ask for the specific dollar figure, explaining how “it” will benefit the kids and how the donor will be recognized for his/her gift.

Don’t waste your time trying to do this any other way. The biggest mistake many organizations make is believing that this doesn’t apply to them. Any method you use other than face-to-face may raise some money, but it will be a heck of a lot less than if it was in-person.

The hard part of the process is figuring out who the right person would be to ask each specific potential donor for his/her check. (See: Asking For The Major Gift. Take your time. This process can’t/shouldn’t be rushed.

February 3, 2011April 25, 2022

So, You Want To Raise The Money To Build A Playground !! #1

Naming Opportunities

(This post is Part 1 of a 2 Part Response to a Submitted Question)

When I think of a playground, I picture swings, a set of see-saws, a jungle gym and various other pieces of equipment; and, I see multiple opportunities to raise money.

There are many ways to raise money, but I can only address the method that is the most effective at raising significant dollars — people asking other people to write checks.

Naming Opportunities are where donors get to have their names (or those of others being memorialized and/or honored) posted on a space or affixed to a piece of equipment/furniture.

In the case of a playground, the entire facility and each piece of equipment could be named after individual donors. Understand, there is no relationship between the cost of (the elements of) the project and what is “charged” for the honor of naming….

The “charge” for a naming opportunity is based on what the market will bear. If it will cost $250,000 to build a playground, but you have a donor who is willing to write a check for $300,000 to see his/her name over the entrance to the facility, then $300,000 is what it will “cost” for that naming opportunity. Realistically, that doesn’t happen too often.

What does happen, what must happen, is the work that goes into determining what the “cost” of each naming opportunity will be.

The process begins at two ends and works towards the middle. One of the two first steps is to make a list of everything in the playground that could possibly be named: each see-saw in the set (and the entire set), each swing (and the swing set), the shock-absorbing ground cover, anything you can think of. [The total “cost” of all the naming opportunities” typically exceeds the total cost of the finished project, and rarely are all the naming opportunities actually sold.]

The other “first step,” and the rest of the process, will be addressed in Part 2 of this posting.
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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 1, 2011April 25, 2022

Fundraising and The New Executive Director

A Note From a Reader:
“I will begin my new position as an ED in a non-profit next month and I would like to meet our sponsors and donors. We do not begin our campaign drive for another few months. What is the best approach to introduce myself to donors?

Would it be appropriate to call on them to give them an update on our programs and then follow up with a request for support down the road? I wouldn’t think it would be wise to visit with them simply to introduce myself, so I want to be sure to use the opportunity. Any advice is much appreciated as I am new to the ED role!”

My Response:
Meeting your leaders/donors/supporters is not just a good idea, it’s an essential.

Your best “reasons” for contacting them and asking to meet with them are to (1) introduce yourself, (2) indicate that (since you are new to the position) you’d like to get their observations/thoughts about the organization and;
(3) to help you understand the importance of the NPO to those individuals and why they support it.

Being new, you are in a perfect position to ask almost any question … about almost anything.

If you want to lay the groundwork for asking for money, remember: “If you want advice, ask for money. If you want money, ask for advice.” And, if you ask for advice, you’d better be prepared to take it !!

(When it comes to leadership and fundraising, some of the early postings in this blog address that issue.)

Also, fundraising/development is an ongoing/year-round process. It is not an activity that takes place in some limited/restricted timeframe. The concept/practice of a “campaign/drive” is counterproductive.

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January 25, 2011April 25, 2022

Endowment “Campaigns”

Endowment Campaigns are often thought of as another type of Capital Campaign, but there are two major (and some minor) differences between these types of fundraising efforts.

•   A capital campaign primarily raises funding
    for tangibles – bricks-and-mortar and
    equipment, sometimes programs. An
    endowment is a “savings account” from which an organization typically uses
    only the interest to help fund programs.

•   A capital campaign is designed to satisfy an “urgent” need – building
    repairs, equipment purchase/replacement or the construction of a (new)
    home for the organization and its programs. Creation of an endowment is
    almost always desirable, but it’s never urgent.

Although, on occasion, a capital campaign may include some effort to create-or-add-to an organization’s endowment, the prospective donors for gifts targeted for the endowment comprise a small segment of your overall constituency.

It takes a specific mindset to see the value in creating that “savings account,” especially during the urgency (for tangibles) of the usual capital campaign. Prospects for endowment gifts tend to fall into one-or-both of the following categories:

•   The Fiscally Knowledgeable: Those individuals (often involved in running
    businesses) who understand the benefit of having a large enough
    “savings account” such that the interest can/will fund the operation of
    (one-or-more of) an organization’s programs, or (ideally)
    can/will fund total operation of the organization.

•   The Ego Driven: Those individuals who would like to make a contribution
    that would become a “separate” endowment, funding all or part of a
    specific program, and having their name (or that of someone they’d like
    to honor/memorialize) attached to that endowment.

I use the word, “ideally,” with the awareness that this would be a very unusual situation. Most nonprofit organizations, including the largest, are focused on raising enough money to get through this year … and, maybe, expand their program a little bit.

Even the largest universities, with billion dollar endowments, don’t have enough ongoing income to fund all of their programs and scholarships. The ideal is that, someday, their endowments might generate sufficient income for all their needs; but, right now, NPOs can only look upon creating/having an endowment as … wouldn’t-it-be-nice!!

A final thought: Since a “campaign,” by definition, is of limited duration, and fundraising efforts for endowment tend to be ongoing … endowment fundraising is often part of an organization’s major gifts program.

January 18, 2011April 25, 2022

Donor Recognition vs. Donor Privacy

-businesswoman-talking-with-a-donor-who-doesnt-want-his-identity-known

You can’t/shouldn’t assume that donors are OK with having their names (and the amounts or ranges of their gifts) made known to anyone outside the NPO they are supporting. Donors have a right to assume that such information is confidential.

The Codes of Ethics of the various organizations of professional fundraising staff and/or counsel unequivocally state that a donor has the right to privacy, and only s/he can give permission for his/her name to be publicized.

There are three common ways this is accomplished:
•   By asking the donor to check a box on the form they return with their gift
    agreeing that their name may be used;
•   By checking a box on the form they return with their gift denying
    permission for their name to be used; and,
•   By asking that donors check a box on the form they return with their gift
    if they don’t wish their name published — if the box is not checked, the
    assumption is made that permission has been given.

In the case of a gift/check submitted personally or through a solicitor, the donor should be asked his/her preference, and that preference should be recorded … and honored.

Since not every NPO is yet asking donors for such permission, and not every donor reads all those forms as carefully as they should, NPOs should make the extra effort — especially when contemplating publicizing donors’ names as broadly as does the internet — to adequately inform donors and to get specific permission.

It’s considerate, and it’s good donor relations.

Even publishing a donor’s name in an off-line annual report should engender the same kind/degree of consideration of the donor’s right to privacy.

Interestingly (and sadly) enough, most NPOs to which I’ve described this concept, and emphasized the ethics of complying with such rules of “consideration,” choose not to consider that concept to the degree they should.

It points up the need for everyone (board, staff, volunteers) to be educated about the ethics of fundraising – and, yes, there is a code of ethics for the practice of fundraising.

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January 11, 2011February 21, 2023

Capital Campaigns #14: Recognizing Your Leaders & Donors

As noted earlier, the first official announcement of the campaign is about the person who has volunteered to Chair the Campaign and who has made a significant (pace-setting) commitment. That is one way in which the Chair is recognized.

The Chair, who is often (one of) the largest donor(s) to the campaign, is recognized initially by being asked to be the Chair. And, most/many other pieces of campaign and post-campaign publicity will include his/her name and how s/he has made a difference. The same, at appropriate levels, goes for all of the Division Leaders, Co-Chairs and Vice-Chairs

In addition, those leaders, who are likely major donors, get to decide what other formal recognition they’d like !! Yep, in a way, it’s their decision.

Recognition is not just a matter of putting up plaques or publishing lists, recognition must satisfy the needs of the leader/donor. Remember, in the Planning Study that was done to determine how a campaign would succeed, potential leaders and donors were also asked about the kind of recognition they thought would be appropriate.

So pay attention to the information you got from the Study. Listen to people !!

Recognition can be as simple as a handshake from the right person. It can be an inexpensive, unique gift (like a signed book or something made by someone served by the nonprofit, it can be a name on a brick, it can be almost anything … as long as it’s meaningful to the person being recognized.

Some folks do like to see their names on buildings, walls, equipment, the backs of seats at the opera, accomodations for the homeless animals, and in published lists of donors, etc., etc. You can name programs or parts of programs after major donors … or after someone they’d like to honor/remember. A creative person can come up with an extensive list of “naming opportunities.” Some folks don’t like that stuff !!

Even many anonymous donors want/need to be recognized – maybe not publicly, but in some fashion. Consider the (really anonymous) donor whose gift comes through a law firm – a narrative, of how that donor’s gift made a real impact, can be sent to the contact at the law firm for forwarding to the donor.

Although it’s highly unlikely, an effective recognition program may have as many ways of honoring/recognizing its leaders and major donors, as it has leaders and major donors!!

In essence, “Recognition” is a matter of satisfying people’s needs. The more people you can “recognize,” the more people will want to work with you and/or give to you in the future.

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