Financing & Loans – Page 4 – Management Library

June 1, 2016February 23, 2022

Give & Get: Wise Advice or An Obsolete Concept??

A few months ago I received an inquiry from one of the national development publications. The writer was preparing to do a piece profiling some “…smart, brave organizations that have dispensed with a fundraising convention – tradition, “best practice”, sacred cow, what have you – and have been the better for it.

One of those conventions – practices or policies that groups do year after year just because that’s how it’s been done — is employing a formal or informal give-get type policy with their boards. I am hoping you might be able to point me to some examples where a nonprofit reconsidered its give-get policy. Do you know of a group that has dropped or changed theirs in recent years in favor of engaging their board in different ways?
==================
My immediate, almost knee-jerk response was that, “I hope the focus of the piece is on identifying the need and making “changes (only) if changes were warranted,” and that the piece encourages organizations to do serious evaluations on which to base their need for change !!”

My extended response was that “I must comment/observe that there seems to be a major bias against the Give-And-Get requirement, and I hope that there is not going to be a piece in your publication condemning the practice.

That you are looking for “smart/brave organizations” that have done away with G&G, that in the context of your question you labeled G&G “tradition, ‘best practice,’ sacred cow,” that “doing something the way it’s been done is counterproductive, all suggests that you are looking for information that will support that opinion … as opposed to writing a piece that might raise a question and suggest various answers.

In essence, the value/correctness of G&G, like any non-profit practice/activity, depends on the organization and circumstances.

I have, indeed, written a lot about what to do when G&G doesn’t/won’t/can’t work … for whatever reason; but, I’ve never dismissed the practice.

There are boards/organizations/leaderships/circumstances where G&G not only works, but works well.

Give-and-Get is an ideal — the idea that board members set an example by their giving, that they demonstrate their commitment, and that they share their passion with others … and get others to give.

Board members that don’t support their organizations (to whatever extent they are capable) and don’t “encourage” others to support those organizations (to whatever extent they are capable) send the wrong message to the “community.”

After all, if board members won’t support their own organizations — financially and/or passionately, why should anyone else ??

Almost immediately, I got a response to my note:
Surely conventional wisdom is sometimes – if not often — wise. The focus on the proposed article is to look at nonprofits that critically examine conventional wisdom (or, more directly, fundraising practices they’ve been doing year after year simply because that’s how they’ve always done it) and bravely, in their particular circumstances, made changes if changes were warranted.

I was reassured/relieved !!

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what’s addressed in the series.

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.

May 25, 2016February 23, 2022

An “Immature” 30-Year-Old Ministry

Business meeting at a nonprofit organization

Before anyone gets insulted, a “mature” nonprofit has a strategic plan, a development plan and, even, a marketing plan. They have a budget and they know where the money is coming from to fund that budget. An “immature” nonprofit, on the other hand, doesn’t….

In a recent email, the writer said that she had been approached by a 30-year-old local ministry, a home for pregnant unwed mothers, where they can learn parenting skills and/or contemplate adoption. And, all who work for the home are self-funded “missionaries.”

That being said, the home is the greatest secret in our area because they are all over-worked, spread very thinly, and have no time to do much in the context of development — networking or building ongoing “giving” relationships. They are, obviously, in great need of someone to do donor relations/development/fundraising.

Currently they have 3 small fundraiser type events each year. They don’t even have a database to share their message, nor do they have the time to get the message out to potential donors or the community as a whole.

The writer further said: My family is personally invested in this ministry, as we adopted a child through them. Having said all that, they asked if I would consider helping them (raise money) for a percentage. I know enough to know that is not good practice. As much as I would love to volunteer to assist them, I cannot. Could you provide any creative thoughts or ideas of how I could help make this a win-win for everyone?
==============
First, to react to the hot-button issue, it’s not only not a good practice, it is considered unethical for anyone to be compensated with a percentage of funds that they raise.

And, as I’ve often written, (three small) fundraiser events (each year) are OK for new organizations … as they build their database of event participants and donors, but a 30-year-old organization should be more “mature” in their operations. Those nonprofits that live from hand to mouth never know when the mouth may become to big for the hand, and reliance on fundraising events puts an organization’s health/future at risk.

Addressing their need for fundraising, if they ever want to be able to provide service to more people, they will probably have to hirie a development staff person … who would be compensated by salary. That staff person would have to bring development experience and expertise to the job, as it’s likely that s/he will not get much help from the “missionaries.”

The “missionaries” (or some other volunteer) should invest some time to identify and establish relationships with potential major donors, donors who could provide initial funding for that staff person.

It’s a simple answer to what I am sure is a serious problem, but if the organization is to grow, or even just survive, an investment must be made.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
The ebook on “Major Gifts” would further address
the issues in this posting.

May 18, 2016February 23, 2022

Another New Nonprofit…

Two women having a discussion about their nonprofit organization

…that wants other people to fund their good idea !!

The email said: “We have started a NPO with the premise of completing a project to support a religious group. The project is a book we plan to market, with the profits going to that group. Our team consists of experts to write, design, produce and market the book, but we do not have any depth in fundraising.

This is a side project. We each have families to support, and we do not have the funds needed to get lift off.

All the articles we have read warn (against having a) fundraiser working on commission. No doubt we are not alone with our dilemma. What suggestions might you offer to help? Cost to get to production is $50K. Total cost, including marketing, is $250K.

This is a project at the point of now obtaining the funds from donors, investors, etc., so that this project can then be turned a finished product for sale. We have a prototype as part if our presentation.
======
Not knowing the details of the situation, and whether the NPO is a 501(c)(3), I can only observe that a large percentage of new nonprofits fail because the people who start them don’t/can’t obtain and/or commit the funds needed.

A nonprofit organization is not a hobby. It takes serious commitment to do what needs to be done to survive/succeed. Just having a good idea and/or wanting to help is not enough. And, “if the people who have the idea aren’t willing or can’t support it, why should/would anyone else?”

And, a basic concept of fundraising is that people give to satisfy their own needs. If those needs coincide with those of the NPO, all the better, but that’s not always the case.

From what you said, it seems that the “book” itself could be a vehicle for raising money. What if there was a list, at the front of the book, of those who made it possible — the “major donors.”

And, rather than go into a discussion of what is a major gift and how to go about obtaining such (and at the risk of sounding self-serving), I suggest that “The Fundraising Series” of ebooks might help you clarify your thinking about raising money — one book in particular, “Major Gifts,” might help you determine the best direction for your fundraising efforts. (See the link below.)

I also remark upon the “lumping together” of investors and donors. The former expect a financial return on their money, the latter, shouldn’t….

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
We’ve been posting these pieces for the last five years,
and we welcome your questions/problems.
They are likely to engender further discussion.
Look forward to hearing from you.
Comments & Questions
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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.

May 5, 2016February 23, 2022

The Fundraising Blog is Taking a Break

We’ll be back in a couple of weeks, and we look forward to answering your questions and discussing your issues.

Thank you…

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
We’ve been posting these pieces for the last five years,
and we welcome your questions/problems.
They are likely to engender further discussion.
Look forward to hearing from you.
Comments & Questions
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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, anonymous or with appropriate attribution (your choice), could be the basis of a new posting.

April 27, 2016February 20, 2023

Questions from A New Organization About Their Annual Event

The email said that the “new” organization has one major event every year, and their Executive Director appointed one of their new board members as the event chair for this year because she (the ED) was pretty much burned out from doing everything over the last two years.

She anticipates having to continue to play an active role because volunteer contributions and commitments are minimal. She indicated that last year the Event Chair held/conducted/attended no planning/progress meetings after the initial one; and, she only got involved in those activities that benefitted her own agenda which, in many cases, were at odds with the agenda/needs of the organization.

This year the board assigned the Event Chairmanship to their new board member who has a doctorate and experience on other boards and even is the Executive Director of one of them.

But, again, The ED is seeing the same behavior. A person that is promoting their own self interest and doing their own thing and not conducting matters as they should but as they see fit to align with their personal and professional agendas.

The ED says that she is baffled. “What should I do? Have an event chairperson and a vice chair? Should my role include always stepping in when others drop the ball. Should this be included in the bylaws. What is the appropriate action for an ED to take?”

After reading the above (which I have paraphrased and edited for brevity and so as not to identify the writer and her organization), I responded as follows:

Putting something in the By-Laws locks you into doing “it” that way. Having the board adopt a policy would put the requirements in writing, and would be changeable as required by circumstances.

But, whether in the By-Laws or as a Policy, it makes no difference if the person(s) responsible for planning and implementing an activity won’t follow the “guidelines.”

You indicate that your organization is new, which leads me to ask how the Board Members were recruited, and what is required of them?

You also mentioned that you appointed a Board Member to be Event Chair, and the question that comes to mind is how you, as the ED, gets to appoint/direct the Board or its members to do anything. That’s backward. The Board Directs the Executive Director … who is not a member of the Board.

So, back to your Event Chair…. It may be that your organization is so young that the people you have been choosing don’t feel obligated to put your organization’s needs first. They may see the Event Chair position only as a means to enhance their own visibility.

It also strikes me that recruiting Board Members and/or Event Chairs who hold positions with other nonprofits can set up a conflict of interest … with your interests lagging behind.

Your Event, at this early stage of your organization’s existence, may not be one of the activities that community members see as a must-attend. If it’s not one of the “highlights” of the nonprofit community, it won’t draw Chairs or Co-Chairs who will put the required energy and time into it.

Like any activity you want someone else to do, they have to want to do it, so you must determine what it is that would make your “Chair” adopt that frame of mind.

And, as to the duties of an Event Chair, typically the focus is on making a significant $ gift to support the event and getting others to do the same. An Event Chair should not have to deal with the logistics.

And, if the Board Members you are “asking” to make the Event happen don’t have the appropriate experience/skills/willingness to learn….!!

I seem to have raised more questions than I’ve answered, but the issues are part of the reality of successfully running an organization/event.

April 20, 2016February 28, 2022

Creating The Small/New Organization Fundraising Plan

Far too many small/new nonprofits think of fundraising in the context of an activity, but a Fundraising Plan is not the equivalent of “Let’s Put On A Play….”

For those of you who don’t recognize the Mickey Rooney reference, the phrase is the equivalent of “let’s do a fund-raiser,” the kind of thinking that does more to harm an organization than it does to help.

A fund-raiser is a stand-alone activity that tends to be a one-time event, an event that’s not part of a plan to ensure the continuation/survival of an organization.

Fund-raisers, where they may generate needed income in the short-term, tend not to lay the groundwork for future fundraising. They take a lot of work, work that can rarely be built upon for the future.

Of course, we do recognize that many small/new nonprofits don’t (yet) have a base of support that can be counted on over the long-term, and quick fixes are necessary.

But a fundraising/development plan, by definition, considers future financial needs. A Plan, when properly researched, constructed and followed, provides confidence and assurance that an organization will be able to continue to provide needed services to its constituents.

The basic focus of a Plan is the people who do-and-will care enough about what the organization does for them and for others that they are likely to become donors.

I emphasize the above as a reminder that people give to satisfy their own needs, not (necessarily) the needs of the organizations they support.

And, since 80% of all contributed funding from individuals is in the form of “major gifts,” the people on whom you should be focusing are those who are potential major donors.

So, the first step in the creation of a fundraising plan is the identification of those people who can help you the most … and are likely to do so, if properly motivated.

Please, do not just make up a list of everyone you think has lots of money. Limit your list to those to whom you have (or someone close to you has) or can get access. Then note how you have access, and “research” what it is that is of interest/meaning to each of those individuals.

The next step is to look (creatively) at what your organization does-or-can-do to make those people see you as a way to satisfy their needs – keeping in mind that it’s not always your mission, programs, activities and the people you serve that would engender their interest.

Once you have the above information, the creation of a Plan would involve how you are going to convince/educate those individuals that they can get what they need by supporting your organization.

April 13, 2016February 28, 2022

The Role of the Board in Church “Owned” Nonprofits

An email began: A chapter of Catholic Charities is set up as a single-member corporation, that member being the diocese as represented by the bishop. The board is convinced that they are really just an advisory board and have no right, authority, or need to question the actions or expenditures of the CEO, and are utterly clueless about their regulatory or fiduciary responsibilities. They assume the diocese has all the power and all of the liability. And the diocese — and its legal counsel — has no interest in having them think/act otherwise.

I’ve worked with a number of NPOs “affiliated with” the Catholic Church, and in every instance, the corporation was set up as a single-member corporation, that member being the diocese as represented by the bishop. And, in each case, there was a Board of Trustees/Directors/Governors that, in reality, had no authority or responsibilities other than what the Diocese granted. And, often, the authority and responsibility was changed periodically.

Boards of NPOs “owned” by the church (any church) serve at the pleasure of the church.

The responsibilities of Board Members, as traditionally known, don’t apply in those circumstances.

In my experience, the more common scenario is where the Diocese (or Archdiocese) lets the “board” believe they have the “authority and responsibility.” The key is the phrase “lets the board believe.”

I recall working with an NPO that had been created by an Archdiocese to provide the community with a cultural center and a variety of cultural experiences – within “acceptable” limits.

My work was with the “Board” – to create Board-like processes/procedures and committees, suggest revisions in the by-laws, create development and marketing programs, and, in general, lift them out of the rut they’d been in for many years under the direction of a priest/Executive Director.

This Board was left alone as long as they raised money, but the entire Board had to report to the Archbishop and his council once each year, where the Archbishop’s counselors recommended that he approve or disapprove what the NPO’s board was doing/planning, especially any changes in by-laws.

The frustration of the process was that, no matter how much progress I might make with the Board, it was all subject to review/revision/approval/ disapproval by the hierarchy.

Of course, I understood the relationship going in, and did feel much was accomplished, but church-owned NPOs will never be like those we experience in the secular world.

Not a comment, just an observation.

The email continued: How would YOU advise a lone board member in this or a similar situation? How do they buck a “get along” board, a despotic CEO, and the perceived power of a major institution (the diocese, in this case) to expose and correct the misuse of charitable funds?

To your other questions, I would observe that CEOs of these NPOs are (usually) appointed/hired by the hierarchy (read, diocese), and that, in the context of the situation, are more the voice of the hierarchy than is the Board. The Board (literally) has no choice but to “go along.”

Dioceses (usually) have very good business managers and legal counsel, they do their own audits of the NPOs that they own, and it would be very surprising if they didn’t know of the CEOs activities/actions. Along with the business-like operation, there is an atmosphere of “don’t rock the boat.”

Any Board Member (or other individual) could bring their concern directly to the diocesan legal staff, or the (Arch-)Bishop’s clerical staff. But that’s no guarantee of any result or consequence.

Taking the matter outside the “church” can get real messy.

Recommendation to the concerned Board Member: Think very carefully about how committed you are to making a change, and how your efforts to effect that change will impact your life.

Not saying you should or shouldn’t…. just think hard, first.

April 6, 2016February 28, 2022

So, You Think You Want To Be A Fundraising/Development Consultant !!

A fundraising/development consultant holding a laptop

You may be an experienced, knowledgeable development professional, and you may know/discover what is it that a (prospective) client needs, but a basic concept of the consulting business is that you can only sell a nonprofit what it wants to buy.

The larger the NPO, (usually) the better they understand the elements of the development process and the more sophisticated their development operation. The corollary relates to the smaller/newer/less sophisticated NPOs; but, for both extremes (and the middle), it’s still what they want to buy.

I’ve been in single practice since ’83, and I found, early on, that I sign up fewer clients when I try to sell them what (I think) they need, than I do when I submit a contract to sell them what they think they need.

A colleague has often talked about the amount of time she spends with prospective clients working to arrive at a meeting of the minds — a point at which she understands where the NPO wants to go and where they need to go, and where the NPO understands what needs to be done to get to where they want to be. And, only then, do they write a contract incorporating all of what they agreed was needed to achieve the agreed upon goals.

I believe that approach is the ideal, but for consultants who find themselves in the valley – the period of reduced income between clients, I would suggest a simpler approach – simpler in appearance, not intent.

After the initial meeting(s) with the prospective client, when you have a pretty good idea of what they want and what they need, you can prepare a contract that has as its “Objective” the attainment of the NPO’s “wants,” but includes in “Methods” (whatever you call that section of your contracts/proposals) those activities (worded appropriately) that will help them satisfy their “needs.”

There should/must be a section of your contract/proposal that describes those activities for which the client organization will be responsible, and that section should also take the above into consideration.

As not everyone can be (fully) educated via the one-on-one (pre-contract discussion) process, we must often rely upon them seeing the light through their involvement in the process we create after our contracts are signed and the relationship proceeds.

I found out a long time ago that I can be more effective using the subtle/indirect method of educating a client, than I can using a more direct (pre-contract) approach.

March 30, 2016February 16, 2023

Can Two Nonprofits, With Very Different Missions, Hold A Joint Fund-Raiser?

Representatives of two nonprofits discussing about the details of their joint fundraiser

That was a question that recently found my email inbox, along with the explanation that one of those organizations has a medical focus, the other is in the arts.

My immediate thought/response was, simply, “Yes.”

You just have to be sure that both organizations have a signed agreement as to how the expenses will be paid, and by whom; and, it must be clear to event attendees how/if the funds raised will be split between the two organizations, and what that split will be.

The one “problem” you might encounter is how to acknowledge contributions to the event. Do donors get a choice which NPO they support, or what percentage of their gifts go the which org? Which organization gets the names and contact information of the ticket buyers/attendees/donors? How will the thank you note and/or receipt be worded?

Of course, if tickets are sold for the event, it must be made clear what percentage of the ticket cost is tax deductible. The IRS is very picky about that.

The best way to cover all the bases is to be totally transparent — to make it clear, up front, how the expenses are being covered and how the net is being split.

That response evoked the following:

What if the organizations do not do what you have explained above?

I simply know that someone is having a fund-raiser with two completely distinct and different non-profit organizations. One is receiving all the monies raised while the other in bringing in the “clients” to donate. None of the donors knows the way the funds are being disbursed.

They are advertising that the ticket cost is tax deductible. But they do not say if the two non-profits will both receive funds.

Should I mention something to the hosts or just not worry about my donation and tax deduction to be legit ??

The IRS makes it clear that the cost of a ticket cannot be fully deductible if the purchaser is to receive any “real” benefit. And, if the IRS learns to the contrary, both organizations could put their (c)(3)s, and their donors, in jeopardy.

To not fully inform those people who are expected to buy tickets, is to risk both organizations’ credibility/standing in the community.

It sounds like what you are describing are a couple of amateur organizations — with no professionals in the development office, and no educated board members.

The questioner then wrote that he/she has “donated a significant sum to this non-profit — worrisome indeed for us that have.

If the “board” of these non-profits will not heed any advice given, is there recourse or a way to inform the IRS of the wrongdoings of this organization? There are many abusing the non-profits for their own advantage.

My final thought: The donor is always better off donating directly to a nonprofit, instead of through a so-called fund-raiser.

March 23, 2016February 28, 2022

Development Communications

It may get old, hearing the same thing over and over again, but it’s still worth starting a posting with a reminder that “Development” is about relationship building … with the intent that the relationships that are built will result in (financial) support for the nonprofit organization.

Development Communications function in helping to build those relationships and in maintaining them; and, the basic objective of these communications is to get your (prospective) donors to want to support you. To do that, your communications must say something that, to some degree, satisfies the needs of your (potential) donors.

Communications range from the printed, through the electronic to the verbal … and non-verbal.

Printed communications would include actual hard-copy brochures, fact sheets, envelope inserts, newsletters, personal notes, press releases, etc. And, all of those must be written not as laudatory pieces for your organization but with the focus on how people have been and are being helped, and will be helped because of the support of donors.

Your electronic communications, including your website, email, tweets, newsletters, DVDs, etc, must also be about people.

Verbal communications convey how the speaker feels about being part of “something,” being able to help, seeing the good his/her (verbal, emotional and financial) support has helped happen, feeling good about his/her relationship with the people who run the organization, make the programs happen, serve the people, and feeling good about his/her role in the process.

Non-verbal communications include a smile or a handshake … some action or body language that shows appreciation/gratitude.

Development Communications should be about people, people who have been and are being helped, and will be helped, and people whose support has made or will make a (specific) difference.

It’s not about an organization. It is about the people without whom you couldn’t do what you do … and help the people you help.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
=-=-=-=-=-=-=-=-=-=-=-=-=-=
We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this resource alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions
=-=-=-=-=-=-=-=-=-=-=-=-=-=