Author: Hank Lewis, MA, CFRM

The following is a recently received email. My comments/responses are the indented paragraphs.

We’re a relatively young 501c3, at about 5 years old, but have relied mostly on dues from members up to this point. Last year we participated in our state’s annual nonprofit day of giving.

It is my observation that memberships/dues are not the best ways to
raise money. As an organization matures, it becomes easier to raise
a lot more from contributions, because people who pay dues very often say,
when asked for a contribution, that they’ve already paid/given for the year.

We earmarked all of that income as Educational Scholarship money, to turn around and give to applicants from the local high schools (not our membership), and to each of 3 local university/college art departments (it was their discretion which student was awarded.)

Simple enough. This year, we’d like to … fund those same scholarships again, perhaps in greater number, but we’d also like to spend some on educational opportunities for our own members – via workshops, visiting expert artists, etc. (Membership is open to anyone declaring themselves an artist, and we have 3 levels of membership with varying benefits.)

Ethically, we wonder if just saying/advertising on social media that we’re “raising money for scholarships and education” is enough, or if we need to be more specific. (Like 80% to fund our scholarships and 20% to our own workshops. Spelling out the details on our donor page).

Yes, you need to be more specific, but not in terms of percentages. Explain (briefly) about the scholarships you award and the educational programs you provide … and, how those scholarships and programs make a difference in the community. Phrase it in terms of how people benefit, not in terms of what a great job you’re doing.

Ethics often equates to transparency, and for a nonprofit, that’s essential.

Also, ethics requires that if you ask people for money for one-or-more specific purposes, and they give to specifically to support those purposes, you have to use their gifts specifically (only) for those purposes.

Financially, we’ll track the funds separately. Not sure how that will effect our annual IRS info/bookkeeping.

Tracking funds via the nonprofit equivalent of an income and expense statement is standard. BUT, you not only have to report to the IRS, you have to report to your constituency/community. Remember, pretty much nothing a nonprofit does is secret. And, if you budget wisely, spend wisely, and report your income and expenses properly, it’s good marketing, good community relations and a good basis for asking people to support what you do.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

I had a conversation, recently, with a board member of an organization – a type of “foundation” that raises funds to support activities designed to advance/sustain their profession, who indicated that the board was “disappointed” with the total dollars that have been raised over their first few years.

When the organization was first created, they sought the advice of a development consultant (me) … who explained the basis of successful fundraising: prospect identification; determination of the needs of prospective donors; working with those prospects to find the fit – where prospect needs could be satisfied by making significant gifts to the organization; determining the amount of the “Ask;” and, actually asking for the gift.

The members of that organization’s board insisted that their organization’s members were different from every other group of prospective donors, that their members would want to help/contribute, that all that needed to be done was to make those members aware of the need, and that they wouldn’t have to be evaluated, cultivated and “Asked.”

Not surprisingly, those board members were also extremely uncomfortable with the idea that they’d actually have to ask someone, face-to-face, for a specific dollar figure. Their solicitations were all passive – emails and flyers lauding the goals of the “foundation,” signs and a sign-up table at meetings, etc. So, no surprise that they’ve only been able to raise 10% of the funds they’ve publicly stated were needed to do what should be done to maintain/advance their profession.

These are intelligent, highly educated, capable people who, like many who would be similarly described, believe they know fundraising/development better than those who trained for and have decades of experience in the field. Can you imagine how disbelieving, even horrified they would be if I told them I knew how to practice their profession better than they do ??

I wonder whether their inability/refusal to take the advice of the fundraising professional stems from a fear of having to ask people for money, from an arrogance often seen in many of the “highly educated” or a combination of the two. Is it possible they’d rather fail than overcome their fears of Asking?

Whatever the reason, this “foundation” has to choose between doing it their way, and not having the funds to actually do what’s needed to ensure their profession’s future, or….

This is not, by the way, an unusual occurrence … and it’s not something that only happens in relation to fundraising/development. It’s fairly common that people/groups/organizations are unable or refuse to accept the advice/direction of the consultant/expert from whom they’ve sought that advice/direction. I’m sure a psychologist could explain it !!

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

This time, calling it by it’s correct name !!

As previously noted in these postings, “Development” has its focus on the relationships between the organization and its constituents/donors that can result in contributed income, “Fundraising” focuses only on the dollars.

For a new nonprofit, immediate funding would probably be needed to ensure survival in the short term, but it’s quality relationships that result in consistent dollars over-the-long-term.

It must also be understood that Development Plans are constructed for specific sets of circumstances — there is no one-fits-all model.

Before the Development Plan comes the Strategic Plan … to determine priorities and where the organization wants to be by the end of this year, in two years, in three years … and for what programs/staff/equipment/overhead/etc. funding will be needed.

The development plan functions to help you keep in mind where the money came from last year, what you had to do to get it, and what you’re going to have to do to get that same money this year. Secondarily, the development plan looks at how to increase funding from former sources and generate new money from new sources.

At the end of the process of constructing a Development Plan, you have a fundraising goal for the year (or for whatever period you’re doing the planning), a goal that MUST reflect reality. It must represent what you know of the organization’s fundraising history and what you know about your prospective new donors.

That goal must be achievable, it cannot contain any element of wishful thinking. If the fundraising goal and the projected income from all other sources don’t add up to what the budget requires, it’s the budget that must be trimmed, not the fundraising goal that must be increased.

At the end of the year (or whatever period for which the development plan was constructed) you look at each element of the plan: what the goal was for each activity (direct mail, personal solicitation, special events, etc.); whether each of those goals were attained; what factors, if any, kept you from attaining each/any of the individual goals that comprised the overall goal; and, what you’d need to do to reach all of your funding goals next year.

The development plan for the period just concluded is the basis for constructing the plan for the next time period. The new plan is based on the realities learned/faced last time, and its goals must be attainable.

A fundraising goal cannot be set just because the Board and/or the ED says more money is needed. Board and/or ED insistence that the goal be higher (by a percentage or by a dollar figure), when the goal isn’t supported by history/reality, is a recipe for failure. And failure to achieve fundraising goals leads to a loss of confidence in the nonprofit and its leadership.

More on Goal Setting next week.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

As noted last week: (1) The fundraising plan addresses (where appropriate) mass solicitation (mail, email, telephone), individual solicitation (major gifts), foundation applications, corporate solicitation and special events; and, (2) A fundraising plan, more than anything, must be a reflection of reality.

In crafting a plan, “reality” derives from experience. For example, only if you’ve previously done direct mail can you project how much you will need to spend for that activity and how much you’re likely to raise from that activity in the coming year.

For a new nonprofit, without the experience to craft an actual plan, the “plan” will consist of a number of activities that will investigate various fundraising methodologies.

That “plan” might include the intent to research a number of foundations to determine which (type of) foundations would be likely to support the organization’s mission. It might include the intent to call and/or write (or have someone write) letters-of-inquiry (preliminary proposals) to a small number of foundations. It might even include the intent to identify the executives and board members of the identified foundations who live in the organization’s service area.

It might include the intent to compile lists of local and national corporations that serve your area and/or your constituency, then to research which of those corporations … and which of their executives … are active members of your community.

And, most importantly, it should include the intent to identify who the leaders are in your community … those people who sit on the boards of local corporations, who are board members of other nonprofits, and those who are major donors to other nonprofits. Those are the folks with the money, the people who are most likely to be able to make the major gifts you’ll need for long-term survival.

The “plan” might include the intent to talk with one-or-more fundraising/development consultants … with an eye toward identifying one with whom you’ll be comfortable working. You might even talk with a direct marketing firm about direct mail … how many pieces should be in a “test” mailing, how many test mailings should you do in a year, what would it cost….

If an organization wants to grow/survive, it must invest in the research that will (help them) identify likely (long-term) donors.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

This is one of the most important aspects of a successful Development program, but it’s a subject that needs a lot more attention than it gets.

An organization’s development/fundraising plan, once formulated, provides the map, the guidelines for doing what must be done to raise the funds an organization needs to operate/survive. Sticking with the “map” analogy for a moment, it shows you the route you must take to get to where you want/need to be … and where you want to end up.

A Fundraising Plan addresses what will need to be done in order to raise a dollar amount that has, through the above-described process, been deemed attainable.

Typically, an organization should be creating a “new” fundraising plan each year. As circumstances change, like the economy, as there are changes in a nonprofit’s leadership and/or staff, as new potential donors are identified and as more is learned about current donors, a fundraising plan must change, must adapt to any/all changes.

The first question that you should be asking is, “What is a fundraising plan?”

So, I’ll start by noting what a Fundraising Plan isn’t: A Fundraising Plan is not the equivalent of “Let’s Put On A Play,” or “Let’s have a Bake Sale.” A Fundraising Plan is not just a list of activities. It is not a wish list.

A fundraising plan, more than anything, must be a reflection of reality. It must be based on what you know … not on what you think you know or would like to be true, but on fact. A fundraising plan addresses all types of fundraising that your organization will be doing for the coming year. It includes mass solicitation (mail, email, telephone), individual solicitation (major gifts, planned gifts), foundation applications, corporate solicitation and special events (not fundraisers).

Usually, for a new/young organization, very little is “known.” You don’t know who the people/foundations/corporations are who would be likely to support you if they knew about your mission/purpose; and, you don’t know why potential donors would want to support you – and their reasons will rarely relate to how good you think your organization might be or how strongly you believe in your mission.

So, obviously, you must first learn who those people are and what would cause them to want to support you.

For a new nonprofit, the founders, their families, their friends, their families’ friends, and their friends’ friends are the most likely (prospective) donors. They will give because the people that are asking are people they care about … they will support those people … not necessarily the mission.

Please note:
1. We do not advocate the use of “fundraisers,” to the contrary,
    as those activities can’t be relied upon for ongoing/long-term support.

2. Better than two-thirds of funding for nonprofit organizations comes from
    large gifts from individual donors. If you’re looking for funding, you should
    look at where most funds come from !!

Next week’s posting will look at a Fundraising Plan for a New Organization.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

Back in February, I posted a piece “Development As A Profession Vs. Development As An Activity,” in which I noted that the Development process includes the establishment of relationships with potential donors (individuals, foundations, corporations), with the purpose of learning their needs and how the satisfaction of those needs can/will correspond with the satisfaction of the needs of the nonprofit organization – specifically, financial support of the nonprofit.

The Development process involves the education of the prospective donors as to the mission, programs, successes and needs of the nonprofit organization and the people it serves. The term “donor cultivation” refers to the “getting to know you” process – the donor getting to know the NPO and the appropriate people at the NPO getting to know the (prospective) donor.

Cultivation is also preparing the prospective donor for the solicitation. After all, once the “cultivation” process begins, most folks will know that they are going to be “Asked” at some point. Cultivation is not, and should not be, a “secret” process. It is not something you’re doing to the prospect, but is something you’re both doing together.

It is only after the relationship has been formed, the parties have gotten to know each other, and how the needs of both could be satisfied, that the “solicitation” of the donor can proceed. “Fundraising,” asking for the gift, is the next-to-the-last-step in the development process.

The next steps, part of creating/maintaining/enhancing the relationship between the organization and the donor, include how and how often you thank the donor, how you maintain ongoing contact with the donor (personal visits, phone calls, notes … by email and/or snail mail, depending on the generation/age of the donor, newsletters … electronic and/or snail mail), and how you recognize/honor the donor.

It is often said, “The thank-you is the first step in the cultivation in preparation for the next solicitation.”

That is the “stewardship” process. It is what happens after the gift has been made. It is ongoing, and many people may be involved — more on that in a later posting.

But, whether it’s called “cultivation” or “stewardship,” it is all about the “relationship.”

So, bottom line, because it is an ongoing process, there is, in practice, no “last step” in the Development process.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

This is a follow up to last week’s post on “special event income.”

The person who asked the question that engendered that posting didn’t provide enough information for me to be able to address her specific circumstances.

So, I got another note, expressing disappointment … and maybe a little annoyance.

This time my correspondent wrote: “I was asked to develop a budget for a small project ($30,000 a year). We have designed and embarked upon a campaign of grant writing and solicitation of yearly pledges (from individuals and organizations) to fund the program. I believed that part of our campaign should also include fundraisers and special events because our clients are teenagers and we hope to involve them in such endeavors to teach them leadership skills, and to help them become materially involved in the maintenance of the project.”

I’ve already responded to that additional information – an edited version follows.

I do and will always object to “fundraisers,” but I’ll come back to that later.

The most important issue/concept noted above is that the purpose of the activities that will involve teenagers is to involve teenagers. If you call those activities “fundraisers” or “special events,” that’s of little importance.

Getting the kids involved in an activity supporting the organization’s mission is major. If the activity raises money, all the better, but that shouldn’t be the main objective … and you shouldn’t count on the income from that activity.

If you budget for the activity, you budget it as an expense, with no anticipated income … ’cause you haven’t done it before and you cannot put guesswork into a budget.

You cannot, in fact, include anything in a budget for which you don’t have firm evidence … specifically, income figures. And, before you can develop a budget that lists specific expenses and a total expense figure, you have to know if you’re going to have the money to engage in those activities that you’ve listed in the budget.

Reliance on “fundraisers” is dangerous, as there is rarely any assurance they will generate the same (or more, or any) income every year.

If a nonprofit organization is to survive beyond the first few years, there must be a solid plan — what you want to do and how you’re (actually) going to get the money to do that, but not wishful thinking.

A published budget (and everything a nonprofit does, except for client information) is or will become public knowledge. You can’t put a budget out there, then fail to do what you said you were going to do and/or fail to raise the funds needed to do it.

If that happens, the NPO loses all credibility and a great percentage of their supporters/donors, especially from foundations and wealthy individuals.

So, I have to add, again, there is no percentage of a nonprofit’s budget that should be based on income from “fundraisers” and/or untested “special events.”

And, if you are thinking about grants, I suggest you take a look at Lynn deLearie’s ebook on Grants & Grantsmanship. It’ll save you much time and effort, and probably some money.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating or expanding your fundraising program? AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Want to learn more about the basics of Special Events?
Take a look at the ebook, Special Events
Looking for some fundraising Guidance for the New Nonprofit ,
take a look at that ebook.
They are part of
The Fundraising Series of ebooks.
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line and 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. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

A recent email asked: “What percentage of a non profit’s budget should come from fundraising events?”

I have a problem with the word, “should.” That implies that all nonprofits should be raising money through events. That is so wrong!!

That is a question that is (so) often posed by people new to the nonprofit world, people who can’t see very far into the future of their organizations.

To ensure ongoing/continual levels of income, an organization MUST create/cultivate a constituency that will support it over the long term. And, a nonprofit MUST have a long term fundraising/development plan that sees those constituents as donors, not purchasers of candy or tickets to events, but people who will GIVE to the organization because they want to – because they believe in its mission and they get satisfaction from GIVING.

That’s what the nonprofit community is all about. Have we forgotten the word “charity”? Have we forgotten that people give because they want to help?

So, what percentage….: 100%, 0%, or somewhere in between??

First, to differentiate between “Fundraising Events” and “Special Events.”

“Special Events” are special !! Whether a Dinner, a Reception, working with the people who are served by an organization (such as the service line at a soup kitchen), or other activity that has an expense line item in the organization’s budget.

What makes an event special is a combination of three things:
1. The desire on the part of the (potential) attendees to be there, because
it is a prestigious event to attend and because being there satisfies one-
or-more of their needs;
2. The extent to which event activities support the mission of the nonprofit
… other than by raising dollars; and,
3. The extent to which the event is planned and implemented by people
connected to and who care about the organization. [That does not, btw,
preclude the use of outsiders to help with the planning and logistics.]

A well planned/organized/executed Special Event should take in more than the event costs, and many nonprofits have events that are special and raise big bucks; but, a fundraising event is designed with only that goal … with little that happens at the event that relates to the organization’s mission.

There are, of course, organizations that have perfected the Special Event. I can think of one that raises over seven figures with their Annual Dinner … but their event started small and grew carefully over twenty years.

A (relatively) new organization that looks to run fundraising events (or fundraisers) to support their activities and the services they provide, will probably not survive too many years. Not that there aren’t some new/small organizations that manage to live on income from fundraising events, but reliance on fundraisers limits their growth and the services they provides to their community.

So, again the question: What percentage of a non profit’s budget should come from fundraising events? What do you think ??

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating or expanding your fundraising program? AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Want to learn more about the basics of Special Events?
Take a look at the ebook, Special Events
Looking for some fundraising Guidance for the New Nonprofit ,
take a look at that ebook.
In fact, you should take a look at
The Fundraising Series of ebooks.
They’re easy to read, to the point, and inexpensive ($1.99 – $4.99)
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line and 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. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

Unlike all of the other planned giving mechanisms, a bequest program doesn’t require major technical expertise and specific financial instruments. It’s easy, it’s fast, it can pay off substantially, and the dollars from bequests comprise close to 90% of all planned gifts.

Many non-profit organizations refuse to get into planned giving because of the perception that it’s all about technical wording and/or complicated financial instruments. That’s a misperception.

Most planned gifts mechanisms do require some degree of technical expertise, possible registration/approval by States, and a legal contract between the donor and the non-profit organization, BUT NOT BEQUESTS!!

Bequests are simple, and should be a standard item in every organization’s development tool box. Simply worded, a bequest is a gift left to you in someone’s will.

A “donor” can leave you a specific dollar figure, a percentage of their estate, a percentage of what’s left over in their estate after other gifts/provisions are executed, a specific gift depending if anything is left in their estates after other gifts/provisions are executed, or the entire estate. The actual wording however, is a topic for discussion between the prospective donor and their attorney.

Your job is to get those who might name you in their wills to want to do that.

What do you have to do?
1. Reach out to folks and get them involved with you and what you do.
    Involvement means working on committees, being asked for advice,
    helping to provide service
2. Be creative, think of how to get people so excited about being part
    of who you are and what you do that they’d want to help continue
    that work, even after they’re gone.
3. Let them know how easy it is to leave you a bequest.
4. Let them know of the recognition they’ll get — the appreciation
    they’ll be shown — while they’re still here.
5. Create a named “society” just to honor those who name you in
    their wills.

Recent figures show over $16 billion in bequests given to non-profit organizations in just one year. Do you want some of that !?

Consider, those who (first) name you in their wills are more likely to make major and planned gifts to you while they’re still with us. And, many Board Members find it easier to ask someone to name an organization in their will than they do to ask someone to write a check.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating or expanding your fundraising program? AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks.
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line and 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. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.