Category: Financing & Loans

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.

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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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.

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.

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.

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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.

I received over 100 email messages from nonprofits in the last week of 2010. There’s a good reason for that: it’s the best week of the year for online fundraising.

I know, I sound like those billboards that say “You missed Ma’s Diner! Turn Back at Next Exit!” You can’t go back to December, but you can do two things:

1. Study some of the better emails that were sent then;
2. Start sending emails like that now, in January, and all year long.

Timing:
Why is the week between Christmas and New Year’s Day the best time to send an email asking for money? Most people say that it’s because you’re reminding donors that gifts made in the next few days will be deductible on their next tax return. No doubt there’s truth to that.

However, I’ve read in many places that tax savings are low on the list of reasons why people contribute to nonprofits. I think there’s another reason: Having just finished a crazy, hectic, overly-commercialized-yet-ultimately- unfulfilling few days unwrapping presents they don’t need or even want, donors yearn for more meaning. Your email can give them the opportunity to make a meaningful gift… and reap the tax deduction! If this is true, then you can make this case over and over in 2011.

In 2009, nonprofits that mailed on Monday December 28, Wednesday the 30th, and Thursday the 31st (early on that day – many people work only a half-day), raised more money than those who mailed only once or twice. This past year, the 31st was a day off for many more people (since New Year’s Day was a Saturday), so the best days seemed to be Monday and Thursday.

The message:
Shorter even than usual is the rule; Instead of a lengthy look backwards in the prior year, you might offer opportunities in the coming year, achievable if enough funds are raised. People will support your solutions to the problems they want solved.

It’s OK to send the same message several times in a row, especially to those who didn’t open the previous one. Use a different subject line and keep sending email.

Need help with your email schedule and appeals? Contact 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

Every year, government agencies around the country provide over $200 billion in grants … for specific services to local communities. Today, there are approximately 2,000 federal grant programs and over 40,000 state grant programs.

But before you get all excited about all that government money, you must really understand what government grants are and who is eligible to apply for them.

What Is A Government Grant ??

A (federal, state, local) government grant is the money awarded to a nonprofit organization (NPO) consistent with a contract between the government and the NPO – where the latter provides the service for which the former pays. (Grants, of course, do not have to be repaid.)

There is an application process for all government grants, and not all applicants qualify. Then, when you receive a grant, you are agreeing to carry out the activities described in your grant application and to adhere to all the conditions of the award. All such grants include various conditions, one of which is always that the grantee must provide periodic financial and program reports on their “contractual” activities.

There Are Two Kinds of Federal Grants. Continue reading “Introduction To Government Grants”

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.

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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.

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 ??
=-=-=-=-=-=-=-=-=-=-=-=-=-=
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.

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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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.

The web may be the most powerful broadcast tool of all time, but too many nonprofit organizations miss the even more important power of the web – a way to listen to their donors!

Why is listening so important?

• People like to be listened to…. So few people
  really listen these days – most just use the time others are talking to prepare
  their own next statement – and donors love to be asked their opinion. They’re
  passionate about your cause.
• When they have a problem with your organization, giving them an ear is the
  best way to keep them as a donor – and to fix a problem that’s probably
  driving other donors away too. Which would you rather they talked to –
  you, or their friends on FaceBook (or at the supermarket)?
• Using the words they use is the most powerful way to communicate to them
  in the future. Using their vocabulary always generates more response than
  using the language of your board or staff. Good copywriters yearn for donor
  correspondence.

How you can listen online easily and cheaply:

• Share your email from donors within the organization and with your
  fundraising counsel (minus the personal information)
• Actively solicit input in online and email surveys using open-ended questions
  like, “Why do you support us?” or “What do you think the biggest problem is
  concerning [your top issue]?” and “What do you think we (the donor and the
  organization) should do about it?”
• Look at your web site traffic statistics (Google Analytics, WebTrends, etc.)
  and see what words and phrases people are putting into search engines that
  end up at your site. What pages are they viewing most often? If you have a
  site search, look at those results too.
• Build a basic FaceBook fan page and invite people to comment. Thank each
  of them and share the significant comments internally.
• Use Twitter #hashtags and Google Alerts to track what people are saying
  about your organization and about your issues.

Need help implementing any of these ideas? Contact 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