Category: Financing & Loans

It Can Be Confusing to Someone New to the Field….

To review a basic concept, the terms “Fundraising” and “Development” are not synonymous. Development refers to the process of establishing, maintaining and enhancing relationships with individuals, corporations and foundations … for the purpose of creating/maintaining a giving constituency that provides ongoing support for a nonprofit organization.

Fundraising, as a distinct sub-category of income generation, includes those activities that get people to GIVE their money to non-profit organizations and, ideally, to get them to keep giving.

Fundraising does not include raising money by selling things; and, although those activities labelled “fundraisers” generate income, because they are not based on “giving,” but rather on selling, they aren’t part of “Fundraising.” Income generation, “Yes.” Fundraising, “No.”

People who buy candy or cookies from local students are (usually) looking to help the student or satisfy a sweet tooth, not necessarily to support the school activity.

Frequently, people who buy tickets to an event do so because of who’s selling the tickets and/or because they see the event as entertainment. Too often, attendees at dinners know little if anything about the organization the event supports.

In many people’s minds, fundraising equates to “philanthropy,” another term that’s misused a lot. The origin (Greek) and original meaning of the word is “love of man,” or “love of humankind.” Today, the term is often misused to label almost anything to do with fundraising.

In fact, “philanthropy” is a (small) subset of fundraising. It’s about self-motivated giving – giving in consideration of the needs of others, as opposed to most fundraising, which is about the needs of the donor.

In a broad sense, raising money is about getting people to want to give; and, whether it’s a Corporation, a Foundation, a prospective Major Donor or the recipient of a mass solicitation, they’re not going to write you a check if the process doesn’t satisfy their needs.

Getting a Corporation to want to give to a non-profit organization is a simple matter of learning, understanding and acting on the needs of the corporation and those of its decision makers. Will giving to you help the corporation’s marketing efforts and increase its revenue? Will supporting you and espousing your cause make the corporate leaders look good?

Foundations give based on their mission and the needs of the foundation leadership. Do you solicit foundations whose leaders feel strongly about your programs/activities and about the people you serve? Do you know who those leaders are and what is important to them?

To get an individual (potential) major donor to want to give, you have to know that person well enough to know what is important to him/her. You have to know/understand his/her priorities. Why would someone make a gift if doing so didn’t satisfy his/her needs?

Just because a NPO does wonderful things in a cost-effective manner doesn’t mean that potential donors will want to give to it.

Getting people to want to give, and corporations and foundations are run by people, is about learning, understanding and appealing to their various needs.

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This is a three-part story of a small Historical Society that embarked upon a Capital Campaign at the urging of their current President and her husband, who donated $1M for a major project. The campaign was undertaken without a Planning Study; and, in their second year of fundraising only $156,000 has been raised… $100,000 of which is from one donor.

(Again, this is a response to an email, with my comments in bold.)

Please understand we still do not have blueprints and specs on this – so it has not gone out to bid. We have no hard numbers yet.

I have three questions:
1.  Conflict of Interest as it relates to our President holding that office while she & her husband are pitching this project.

Any board member can pitch any project or course of action.

It’s not a conflict of interest unless the president and her husband stand to benefit from what’s being proposed. It is an example of board members with money bullying the board on which they are not a majority; and, it’s an example of a board that’s hiding behind very thick rose-colored glasses.

2.  The soundness of our ED’s and a few others’ statements on how “in their experience” the money will come in after we break ground because of the excitement.

In my 40+ years as a fundraising consultant/mentor/educator I have never seen the excitement (defined as an interest in and/or willingness to give to the project) build after the groundbreaking. Typically, the perspective is that if you’re breaking ground you must have enough money to complete the project (which you should), so you don’t need my money.

3.  How and whether a Donor’s Capital Campaign contribution is returned when it is requested. Can the threat of this continue to drive decisions?

Keep in mind that your organization’s reputation is at risk, and the reputations of the individual board members. Returning contributed funds shows good faith and transparency. The organization may look like it failed at the project, but good faith can go a long way toward long term survival.

I have serious doubts as to whether we can raise the remaining funds for this project. Our Town has not had that depth in the past and we compete with a number of other nonprofits with more sex appeal.

I think that your last paragraph sums it up. It’s what I gathered from reading the rest of your note.

Final Note: It must be emphasized that a properly done Planning Study would have uncovered the extent of support (or lack thereof) to be expected from the Society’s constituency/community, and it would have uncovered the extent of the board’s acuity and/or naiveté. There’s no substitute for Planning.

That’s it for this year.
Wishing You All the Happiest of Holidays,
and the Best for the New Year.
We’ll see you on January 6th.

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

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Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
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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
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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 three-part story of a small Historical Society that embarked upon a Capital Campaign at the urging of their current President and her husband, who donated $1M for a major project. The campaign was undertaken without a Planning Study; and, in their second year of fundraising only $156,000 has been raised… $100,000 of which is from one donor.

(Again, this is a response to an email, with my comments in bold.)

My finance committee and I thought we would continue fundraising until our goal had been reached.

My reaction to that is that it seems that someone is not dealing with reality.

The Executive Director (without the Treasurer or approval of the Board) applied for a Bridge Loan with a local bank – which came back as an approval for a $ 500,000 Construction Loan. Such a loan (line of credit), if drawn upon, can only be paid back with future fundraising. And, there is no room in our Operating Budget to handle the monthly payments for this.

An ED applying for a loan without board approval is a definite NO-NO. I can’t understand how a bank could approve such a loan without the documents that would also be needed to conduct a capital campaign planning study — plans and specs !!

If the reality is that the organization could not pay the payments on such a loan, then the board must vote to decline the bank’s offer.

Board Members of a nonprofit have a fiduciary responsibility, and they could become liable, individually, for any debts accrued by the nonprofit. I’d strongly recommend asking the advice of an attorney with solid knowledge in nonprofit law.

I managed to get this before our entire Board of 19 members but they voted 13-6 to go along with the loan because our President and her husband offered to cover all expenses above 1.7 M conditional on board approval of the $500,000 loan. If the board did not approve this they were taking their marbles and going home.

At this point, I would advise the board to hand them their marbles and show them the door.

The future of the organization is at risk. The board should not let itself be blinded by what appears to be easy money, money they don’t have to “give or get.”

Next Week – Part Three

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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’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
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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 an email I’d received, with my comments in bold.)

We are a small Historical Society that backed into a Capital Campaign when our current President and her husband donated $1M for a new vault and study center.

A design and build Contractor on our Board did the best he could, without plans and specs, to estimate the cost of the structure. He came in at 1.2M. But apparently a number of things were not included in his estimate and the suspected cost is now 1.7 M. Before overruns.

Our 2nd year of fundraising for this project only yielded $ 156,000 and $100,000 of that is from one donor.

I gather that your organization did not have a Planning Study done to determine if and how a capital campaign could/would be successful.

As there were no plans/specs, I don’t see how you can legitimately ask people to give to support a project the depth of which is unknown.

It is my impression, just from your first paragraph, that the organization saw $1million on the table, and did no thinking or planning.

It is my opinion, based on the above, that you should not have gotten into a capital campaign.

Our Executive Director has told the Board that if we do not build within 2 years we have to start returning the money?? Is that true?

I can’t say if there are any State laws that would required returning the donated funds within a specific time period – I don’t know !! I do know that, at the rate money is being raised, that your organization’s credibility is on shaky ground.

Without a firm capital campaign plan, there is no way to know, to even
have an idea when/if all the needed funds could/would be raised.

Accepting contributions for a specific purpose, without being able to
assure donors of a timeline for the use of those funds for that purpose,
again brings your credibility into question.

And, accepting such contributions and not using those funds for the
intended purpose within a reasonable timeframe could border on fraud.

With what you’ve told me, and if you can’t come up with a solid plan
(based on reality, not wishful thinking) for raising ALL the needed funds
within a reasonable timeframe, my reaction is to tell you to return the
funds that have been contributed.

So, though I don’t know your ED’s thought process, I must agree with the conclusion.

Next Week – Part Two

=-=-=-=-=-=-=-=-=-=-=-=-=-=
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’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
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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.

An email noted: “Staff members at my organization seem to believe we will lose our donors if we ask them to give more than once a year. I would appreciate hearing from others on this concern.”

OK. I know I’ve said this before, but the worst, absolutely the worst, thing that has ever happened to nonprofit fundraising is the invention/use of the term “Annual Fund.”

“It” tells/convinces (inexperienced) development staff that they only have to ask constituents to give once each year, or that they only have to get constituents to give once each year.

“It” also suggests to donors/constituents that they should only give once each year.

Boy, is that dumb. Why would any non-profit organization want to do that ??

Fundraising/Development is an ongoing process of cultivation/education, solicitation and stewardship. In case you never heard the expression, “the thank-you is the first step in cultivating for the next gift.”

People who don’t approve of asking more than once each year, are the same people who think that asking for money is basically distasteful; something someone else should do, not them — it’s beneath them.

What that means is that they have no clue what the non-profit sector is all about.

Of course, if the folks at your agency are right, then all the experience and experts are wrong. What do you think the odds are of that ??

=-=-=-=-=-=-=-=-=-=-=-=-=-=
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’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
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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.

WISHING YOU ALL THE BEST

AND HOPING YOU’RE SPENDING THIS HOLIDAY

WITH PEOPLE YOU CARE ABOUT AND

WHO CARE ABOUT YOU

 
 

See You Next Week

 
 

=-=-=-=-=-=-=-=-=-=-=-=-=-=
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’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
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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.

A recent email described changes to the structure/function of the different departments in an organization’s development office, noted that a development office should function on the basis of “what’s best for the donor,” and asked that I comment (approve/disapprove) of what was described. I responded….

I understand/accept that the structure/functioning of your organization’s development operation is not the best, but if you’re asking me to comment on that structure and how it functions, I can’t.

For the audits of nonprofit development operations that I’ve done, I’ve had to be there, make the observations and do the interviews, to be able to suggest what if anything was wrong and how to correct it.

I’d be a fool to suggest changes in an operation with which I’ve had no substantive relationship.

Regarding your reference to a development office functioning on the basis of “what’s best for the donor,” that’s not exactly the optimum perspective for a development operation.

Of course an ideal development operation must take the needs of its donors into consideration … and do what it can to satisfy those needs. I have always emphasized that development (the building and maintaining of relationships aspect of the process) is about the needs of the donor.

Not everything in a development operation is about “what’s best for the donor.” Some things have to be about what’s best for the development operation and the nonprofit that it serves.

Determining what’s best for the development operation requires serious research and (sometimes) trial-and-error. And, no one (in this case, meaning me) can make a judgment about such an operation without that live-on-site research….

And, btw, there is no one-system-fits-all development organization. What works for one nonprofit may-or-may-not work for another.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
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’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
=-=-=-=-=-=-=-=-=-=-=-=-=-=

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.

A participant in a listserve observed that ”the realm of ‘planning’ is (often) made infinitely more complicated because different words are used to mean the same thing and the same words are used to mean different things.”

Indeed, there is great diversity in the use of terms like “visioning,” “mission” and “strategic planning.” So I go back to my basic training in development — 40+ years ago — to address the issue at hand.

Early on, it was explained that the term “campaign” came from the military, as do the terms/concepts of “strategy” and “tactics.”

Where “strategy” and “strategic” (as in planning) have come to common usage in business and development, “tactics” has yet to gain wide- (if any) usage.

Strategy is/was defined as “planning and directing large-scale military operations … of maneuvering forces into the most advantageous position prior to actual engagement with the enemy.” The common usage in the for-profit and non-profit communities is a derivative of that definition.

The military definition of “tactics” refers to arranging/maneuvering with reference to short-term objectives or immediate needs … and adapting to circumstances.

Strategy is a focus on the long view, and tactics looks at how to apply the strategies in the short term.

Leadership is responsible for formulation of strategy (strategic plans), using whatever resources needed for that process — including staff, in many (but not necessarily all) cases.

Staff then takes their “marching orders” from the strategic plan, and defines how they will make it work in the day-to-day reality. Where staff is not responsible for the strategy (Strategic Plan), they are responsible for the developing the tactics that translate the “concept” into “reality.”

Quoting another listserve participant: “My opinion regarding strategies and goals for a strategic plan is that they go out no more than 3-5 years. And I view tactical or operational plans (I actually call them “Action Plans”) as 1 year in length … at the most”

Part of the confusion is the use the term “strategic planning” to refer to both, long-range and short-term. I just thought that a different term could help clear the air.

I would add … that those who do not do Tactical Planning or “Action Planning” (no matter what they call it) are unlikely to achieve their strategic goals.

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Want to learn more about The Basic Concepts of Fundraising?
The Fundraising Series of ebooks?
are easy to read, to the point, and inexpensive ($1.99-$4.99)
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=-=-=-=-=-=-=-=-=-=-=-=-=-=
We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this “blog” alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a question about starting, evaluating or expanding
your fundraising program?
AskHank
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On a listserve dealing with nonprofit-related legal matters, an attorney commented: “I can think of several of my law clients who have made very large gifts, and who would be horrified at the thought of having their names published on the Internet. They would feel that this was an invasion of their privacy, and that it would expose them to all sorts of unwanted solicitations.

“Of course, to be fair, I have plenty of other clients who want the publicity and would actually enjoy the wider exposure that the web brings.”

In Response:
The various Codes of Ethics impacting the nonprofit sector clearly state that donors have the right to privacy, and only they can give permission for their names to be publicized.

There are three common ways nonprofit organizations can make it easy for donors to clarify their preference:
1. (Preferable) By asking them to check a box on the forms they return with their gifts agreeing
    that their name may be used;
2. (Not as Preferable) By asking them to check a box on the forms they return with their gift
    denying permission for their names to be used; and,
3. (Least Preferable) By asking that donors check a box on the form they return with their
    gifts if they don’t wish their names published – and indicating that if the box is not
    checked, the assumption will be made that permission has been given.

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

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

And, publishing a donor’s name in an off-line/printed annual report, or in any other format in any medium, should engender the same kind/degree of consideration of the donor’s right to privacy.

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

It points up the need for everyone (board, staff, volunteers) to be educated about the ethics of fund raising.

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Want to learn more about The Basic Concepts of Fundraising?
Book One of The Fundraising Series:
The Basics: Perceptions & Realities
is for You, and it’s only $1.99
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=-=-=-=-=-=-=-=-=-=-=-=-=-=
We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this “blog” alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions

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

To paraphrase a posting from a listserve: “If you are going to get someone to want to become a (major) donor to your organization, you have to start with ‘where they’re at,’ and ‘where you’re at.‘

[I put “major” in parentheses because I want to be sure that it is
understood that the concept applies to all potential donors …
more so the larger the gift being sought, but it does apply to all.
See previous posts on Donor Acquisition and Donor Retention.]

We each/all go about connecting with others by showing different parts of who (and what) we are. Different things are important to each of us, so we focus-on and talk-about those things that have significance for us.

In Development, the primary focus in the creation of the relationship (that will, ideally, lead to significant support of the nonprofit) is an understanding of the needs of the (potential) donor – where she/he ‘is at.’

On August 5th, I posted a piece on “Establishing the Right Relationships.” In that posting I noted that, “If you want the major gifts, there has to be a one-on-one relationship with the (prospective) donor; and that, typically, said relationship is with a current major donor and/or a board member.”

I also discussed the Cultivation (getting to know you) process that takes place between the “Cultivator” and the “Prospect.”

What was not discussed was the selection of the “Cultivator.”

In most cases you could assign almost any board member or major donor to be the point-person for the cultivation of a prospective major donor, but why leave to chance any factors that you can “control” from the beginning??

“Compatibility” is the key.

It would be best to pair up cultivators and prospects who have similar likes, dislikes, backgrounds, attitudes, etc. With the appropriate pairing, relationships are likely to “happen” more quickly than if just “any” cultivator is assigned to a prospect.

And, to state the obvious, you (should) already have all the information you need about the likes, dislikes, etc. of your board members and major donors. This is where “you’re at.” This is where you start.

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Want to learn more about Major Gifts Fundraising?
Book Four in The Fundraising Series:
Major Gifts: Planning & Implementation
will provide the direction for creating/expanding Your Major Gifts Program
and it’s only $3.99
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We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this “blog” alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions

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