Category: Financing & Loans

When I was young, there was a rule about thank-you notes. If I got $5 from a distant aunt, I wasn’t allowed to spend it until after I had written and mailed her a thank you note. When you were young, you probably had a rule at your house that was similar.

It’s a great rule for fundraising professionals too, yet we often do a lousy job of it online.

After you’ve struggled to improve your online donation process [See: Audit Your Own Website (Part 1) & Audit Your Own Website (Part 2)] you need to appreciate that a first-time online donor is on a trial relationship with you. The way you communicate with that donor sets the stage for whether you will broaden and deepen that relationship, or whether it will be a “drive-by” donation.

Thank-you Page: Immediately after the gift is processed, the donor should see a page that promptly proclaims “Thank you for your gift!” If you are able to access the information on the gift when you display this page, thank them by name, e.g. “Hank Lewis, Thank you for your gift!”

Then, immediately, invite them to take more action.
• Invite them to watch a video on your website showing how their gift is being put to good use.
• Give them a button they can click to proclaim to their FaceBook friends that “I support [Your Organization here].”
• Invite them to complete a short survey, so they can express their interest in your mutual cause (open-ended survey questions are great because you can learn more about the vocabulary that the donor uses – this is great for follow-up appeal copywriting)

Thank-you Email: Most donation processing systems send an email immediately after the gift is completed (though one out of six organizations to whom we gave recently sent us nothing). Make sure this is a welcoming email. As my colleague, Heather Fignar, puts it: “This should not be a receipt, but a receptionist.” She means that the email should be welcoming and gracious, not merely a recitation of the details of the gift. Again, offer them options for learning more about your organization and proclaiming their shared passion for your cause.

If your donation process merely spits out a receipt, and you can’t change it, then you need to regularly import your new donors into your email system and send them the email message you want to send them. Two email messages are better than one.

Thank-you Letter: It is common, but not required, to send online donors a printed thank-you letter in the mail. This is a great way to introduce them to the direct mail appeal cycle. Here are some important things to consider:
• This does not replace the need for an immediate online thank-you page and email.
• Get them into your direct mail system quickly – within four weeks – or you will lose the connection you established with the gift
• Some people will not want a mail relationship with you. Honor that. Make it easy for them to opt out. It will not only save you money on wasted mail costs, but it might help maintain the relationship with the new donor.

Questions about the online giving thank-you process? Or about how to improve your results? Ask Me.

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Rick Christ has been helping nonprofit organizations use the internet for fundraising, communications and advocacy since 2009, and has been a frequent writer on the subject. He delights in your questions and arguments. Please contact him at: RChrist@Amergent.com or at his LinkedIn Page

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.

… in the Combined Federal Campaign…

is to run a stealth CFC campaign. If a nonprofit has done all the work to become admitted to the CFC, and then they keep it a secret, it shouldn’t be a “surprise” when the results are not as good as they hoped.

With apologies to Jeff Foxworthy, You Might Be Running A Stealth Campaign If:

1. The CFC logo and 5 digit code are not on your nonprofit’s home-page.
2. Your email “signatures” do not include the fact that the nonprofit participates in the CFC, and they omit the CFC code.

3. There is no section on the website describing what workplace giving is, and the benefits to the nonprofit for donations made through workplace giving.

4. You don’t have a communications plan for reaching anonymous donors.

5. You don’t have a communications plan for reaching current supporters that have a Federal “connection,” meaning that in addition to current Federal employees, your current supporters may have children, parents, friends, spouses, etc. who are Federal employees and thus able to give via the CFC.

6. Your nonprofit’s buildings, windows and/or real estate that are visible from the street, don’t have signage with the CFC logo and your CFC 5 digit code.

7. There is no mention of the CFC in any of your nonprofit’s materials: newsletters, annual reports, special reports, etc.

8. At your recognition events, the CFC donors and volunteers are not recognized or thanked.

9. Your nonprofit’s fundraising database has no code for CFC donors.

10. You don’t ask current supporters who are Federal employees to give via the CFC through payroll deduction. (Payroll deduction often dramatically increases the size of a gift, even from the same person).

There are five stages in a CFC campaign, and the solicitation period is just one of the stages. It’s important to have a communication plan in place that allows you to develop relationships with your current CFC donor pool, as well as with potential donors.
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In the next post in the series, we’ll take a look at the unique aspects of the CFC and some specific ways to increase your nonprofit’s visibility.

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During his 25-year career in the Federal sector, Bill Huddleston, The CFC Coach, served in many CFC roles. If you want to get involved in the Combined Federal Campaign, maximize your nonprofit’s CFC revenues, or just ask a few questions, this is the guy to contact …
Bill Huddleston1@gmail.com .

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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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.

If you’ve started down the yellow brick road to foundation funding, then get set to meet some different characters (foundations) along the way – specifically: Private, Corporate, Family, and Community Foundations.

Much of the information below comes from the wizards at the MIT Office of Foundation relations; I’ve added the bulleted items in italics. You can download the MIT summary at MIT Resources

Private Foundation
• Nongovernmental, non-profit, self-governed organization
• Funds (usually from a single source, such as one individual, family, or corporation) and programs managed by its own trustees or directors
• Often is a large, complex, professionally managed organization
• Must “pay out” approximately 5% of the market value of its assets each year
• Must pay a yearly 1-2% excise tax on its net investment income
• Usually have formal grant application and reporting procedures

Corporate Foundation
• Assets are derived primarily from contributions of a for-profit business
• Funding comes from an initial endowment and/or periodic contributions
• May maintain ties to the parent company but is an independent entity
• Abides by same rules and regulations governing private foundations
• Often have formal grant application and reporting procedures

Family Foundation
• Technically, not a legal term; refers to any independent private foundation whose funds are managed or strongly influenced by members of the donor’s family
• Family members often serve as officers or board members
• Family members often have a significant role in grantmaking decisions
• Comprise ~40-45% of all private and community foundations
• Most are small, informal organizations
• Usually do NOT have formal grant application and reporting procedures

Community Foundation
• Serves a specific geographic community or region (e.g., The Boston Foundation)
• Usually focuses mainly, if not exclusively, on local needs
• Usually a “public charity” (raises a significant portion of its funds from the public each year), not a “private foundation”
• Funds usually derived from many donors but managed in a single endowment
• Income from the endowment is used to make grants
• Make grants from donor-advised funds that reflect the donors’ interests
• May make grants from discretionary funds to support key regional initiatives

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Lynn deLearie, owner of Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs, and helps them secure funding from foundations and corporations. She can be contacted at lynn.delearie@gmail.com..

Not long ago, we received an email with a “programs-vs-finance” question….

“Finance is telling me that once a grant is approved it should be listed in the GL immediately, because it becomes a liability not to do so.

“We have always waited for the grant award letter to be returned before actually marking the grant “approved,” in case a donor has an issue with something in the letter.

“Since most people want their money, I get the letters back within a week and pay out within two to four weeks.

“How would an auditor look at a grant that was approved on May 1 but not posted to the GL until July 1… This grant would probably have a start date of June 1.”

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The accounting rules state that gifts must be recorded as soon as you know about them and they are unconditional (not contingent on something else happening). When approved by the funder, the grant is recorded as income in restricted funds and a receivable. As the money is sent to the organization, the receivable is relieved. As the money is actually spent on funded expenses, the income is released from restricted to unrestricted. This transfer is usually done at the end of each month in a lump amount for the month, rather than with each transaction. After the transfer, the income and expense report for the grant should show net income of zero because the recognized income will equal the expenses. This continues until the grant is used up or you return funds.

Many people outside the nonprofit world have a hard time understanding this concept – that you have to spend money in order to recognize income.

Sometimes this leads to strange looking results. If the grant is approved in May 2011 and your fiscal year begins in July 2011, it is completely against audit rules not to record that grant in the fiscal year ending 30 June 2011. That leaves you with a large source of income in one year and a large expenditure in the next year. The classified Balance Sheet (one with columns for unrestricted, temporarily restricted, and permanently funds) makes it clear when restricted funds have been received and spent. It’s the total column that you are likely to see in your day-to-day accounting software that looks extra good in one year and extra bad in the next.

Back before SFAS 116 (1993), the restricted funds would be shown as a liability called Deferred Income. Now the funds are shown in the equity section as Restricted Net Assets.

There are some segments of SAFS 116 (www.fasb.org) that govern the financial statement presentation of restricted funds.

To obtain a full understanding of the subject look at the PPC Guide to Nonprofit Contributions

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Christine L. Manor, CPA, wrote QuickBooks for Not-for-Profit Organizations, available from The Sleeter Group … at www.sleeterstore.com. Christine can be reached at clm@clmanor.com

Good government grant proposals tell a compelling story. To tell a compelling story you must have strong Win-Themes because they help reviewers understand why you can provide the best solution to the problem identified in the grant guidelines. When you start your proposal, first create your Win-Themes.

Developing compelling Win-Themes for your government grant proposal is not an easy process. It will involve several meetings with your proposal team and plenty of brainstorming. However, the results will justify the effort because your Win-Themes will provide overarching story lines for your entire proposal.

A Strong Win-Theme:
• Links your solution to the problem identified in the grant guidelines — a problem or a need that your project is supposed to address.
• Supports your solution by providing evidence that your program will help address the problem or need
• Provides reasons and proof that evaluators need to give you a high rating.

A Strong Win-Theme has Three Elements:
Features are characteristics or elements of your solution. They may be software or the number of key personnel, to use a few examples. They are the means to your end, not the end itself.

Benefits are advantages that solve the government agency’s problem or address a major concern. In grant proposals, they usually involve the provision of services. Benefits address the all-important “So What” question.

Proof is the evidence that demonstrates your solution is likely to work.

Creating Great Win-Themes
Step 1: State the basic problem or need identified in the grant guidelines. Example: Increase contraceptive use in Ethiopia.
Step 2: Add your features and benefits. Example: A social marketing campaign (feature) will increase contraceptive use by 5 percent over three years (benefit).
Step 3: Add proof. Example: The same campaign has been successfully implemented in Sudan and Kenya.

Now there’s a great Win-Theme: Our social marketing campaign will increase contraceptive use in Ethiopia by 5 percent over a three-year-period, as it already has done in Sudan and Kenya.

A terrible Win-Theme simply rehashes the grant guidelines and fails to answer the “So What?” question. A bad Win-Theme is all features and no benefits. A great Win-Theme combines features, benefits, and proof to frame your grant proposal.

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Dr. Jayme Sokolow, founder and president of The Development Source, Inc., helps nonprofit organizations develop successful proposals to government agencies. Contact Jayme Sokolow

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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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.

Hints On How To Make Giving To You A Lot Easier

a: Always have a prominent “Where the need is greatest” choice – many people will trust you to allocate their gift as you need to, and unrestricted gifts are the primary goal of every client we’ve ever had.

b: Give people the chance to give a gift to two or more funds at the same time. It’s surprising how many people will give to multiple funds online; these donors tend to be better repeat giving prospects

c: Offer the option to make this a recurring gift. Some nonprofits generate a surprising number of new monthly donors from their website each month.

d: The way you arrange the gift options on your page matters. Test a horizontal gift array ($25, $50, $100, or “other”) against a vertical array. Test an ascending array against a declining array. Test different amounts in the array. Each test will yield a different rate of completed donation forms and average gift amounts.

e: Online gifts by credit card are NOT the only way people like to give online. Give them choices including PayPal, a printable form, and e-check.
[See: “Getting The Whole Pie”]

f: After you’ve gotten their gift amount and attribution, then ask if it’s an honor or memorial gift, and if so, collect that information. Then get their name and address, and finally, ask for their method of payment. This way, if they have to go hunt for their credit card, they’ve invested enough time already that they’re likely to get up off their chair and find it.

g: Don’t ask questions that are not necessary for completing the gift. Phone numbers, “how did you hear about us” and other pieces of useful information tend to get in the way of people completing a gift

h: The donation form is no place for links to other pages on your site with more information. You don’t want to give them chances to leave the donation page except by clicking the “submit” button at the bottom of the page.

i: There will always be errors made by donors in the donation process. They’ll enter their credit card number incorrectly, for example. Make sure that your error messages are clear and forgiving. Here’s a good example of a bad example:

j: Measure the success rate of your donation page:

Look at your web site analytics reports (Google Analytics, Webtrends, etc.) and look at the total “page views” of your donation form each month.

Divide the number of online donations (of all types – PayPal, printed forms, phone, e-check) into the number of page views. That’s the completion rate of your form.

Then divide the total dollar amount of online gifts by the number of gifts to yield an average gift amount. Keep testing different arrangements of your form until you have maximized those two ratios.

Keep reviewing your own site — make it easier to find, easier to get to your donation page, and easier to complete the gift — until you start to see real increases in your online donation results. Do this internal work before you invest a dime in drawing more traffic to your website.

Questions about the online giving process? Or, how to improve your results? Ask Me.
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Rick Christ has been helping nonprofit organizations use the internet for fundraising, communications and advocacy since 2009, and has been a frequent writer on the subject. He delights in your questions and arguments. Please contact him at: RChrist@Amergent.com or at his LinkedIn Page

A recent email asked:
“Do you have an article or statement on what is the standard “special event fundraising equation” used to determine financial success? Obviously, one would set a goal, and if that goal is set, you have been successful. Raising awareness and “making friends” is priceless. But, is there a basic non-profit formula goal such as ‘for every dollar spent to organize, coordinate, market, and produce the event, you would hope to raise two dollars?’”

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Sadly, there is no “Special Event Fundraising Equation.”

The cost per dollar raised, or return on investment, is dependent on a number of factors. Since those factors have been addressed in prior postings*, I’ll keep it simple. (See: Special Events)

The first time, or even the first couple of times an organization runs an event, they’d be lucky to break even. Only after an NPO’s community/constituency is familiar with the event can there be any assurance that there will be a sufficient number of people interested in the event and willing to attend.

Over the years, as the event becomes a “tradition.” and the organization knows what works and what doesn’t, do the costs and income become predictable.

As the event “matures,” the gap between costs and “profit” increases. A fully mature event can generate two, three, even four times its cost … but that does not happen overnight.

As to setting a goal for an event, you can only do that after you’ve had a number of years of experience with that event. Setting a goal in the first couple of years would be an exercise in wishful thinking or in self-delusion. And remember, you only set a goal when you KNOW you can reach it. Failure to attain a fundraising goal sends a wrong message to your current and future donors.

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Have a comment or a question about creating or expanding your special event?
Ask Natalie Shear. With over 30 years in conference and event planning, she can help you turn your vision into reality.
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Have you seen Natalie’s ebook on Special Events ??