Financing & Loans – Page 7 – Management Library

October 21, 2015March 1, 2022

The Gift Table … Chiseled in Stone ??

Contemplative male manager at his office desk

A couple of weeks ago, in response to the posting “comparing” a Capital Campaign to the Annual Fund, I received the following, multi-part question:

I am part of a capital campaign now and we had a donor ask why the gift table does not change for a gift that comes in that is not listed on the gift table. For instance, if a gift comes in at $150K but the gift table lists $100K and then $250K next.

There isn’t one answer to that question.

From the “academic” perspective, once the Planning Study is over and the Gift Table is printed in various campaign materials, that’s pretty much it. No more changes to the Pyramid.

BUT, since development/fundraising is about the needs of the donor, looking at it from the perspective of a major donor, where the donor’s ego requires a change to the Table, You Change The Table !!

I’d expect that you can’t change the Gift Table in all the publications you’ve produced for the campaign, but the “Master Gift Table” in the Campaign Office, and the one on-line (if there are such) can/should be changed to reflect the “realities.”

It would not be very costly to create a 3’x4′ Table to hang on a wall – with boxes to fill in when a commitment is made for one/any of the listed amounts … and to have that chart reprinted if/when “required.”

I also think that it could be awkward or misconstrued if several donors have already seen the set table to have other versions floating around, no?

Whatever is decided, it must take the needs/sensitivities of your constituents/donors into consideration.

That’s actually my answer to most issues in development 🙂

Realistically, if your Gift Table was constructed based on the results of a Planning Study, then the commitments at the top of the pyramid would have been fairly well assured, and adding another level shouldn’t bother/annoy/impact those other major donors … especially since, for most major donors, this would not be their first ride on the carousel.

And, if anyone asks, you can always respond that the Gift Table was modified based on information received after the Planning Study was completed and after the initial Gift Table was constructed.

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October 14, 2015March 1, 2022

What Nonprofits Should Know About Bequests

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

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

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

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

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

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

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

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

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

October 7, 2015March 1, 2022

Can the Executive Director Get a Piece of the Funds That Are Raised?

A question was asked:
I know that charitable organizations often have phone banks or door-to-door canvassing where the workers take a percentage of the funds they raise. Likewise, supervisors on such giving programs often also get a percentage. What is the difference if the ED also gets a percentage?

In the sense that it is unethical for all three individuals to get a percentage of the funds they raise, there is no difference.

The question of ethics in percentage compensation in fundraising relates, in part, to whether the donor is first informed that the solicitor (and others) will be getting a piece of their contribution or whether the donor is allowed to believe that all of his/her gift will go to advance the mission of the organization.

The ethical question refers to the donor being able to make an informed decision and knowing that his/her gift will be used as s/he intended — to help people in need.

If the donor is first informed that a percentage of her/his gift will go to the solicitor (and others), and s/he still elects to make that gift, then there is no conflict.

Chances are, however, that donors, if so informed, will choose not to make a gift.

Any NPO whose employees and/or representatives receive a percentage of gift income, and do not inform donors “up front,” are depriving a donor of the right to know and are, therefore, being unethical — and possibly fraudulent.

Nonprofit organizations and their treatment/use of their income is different from that of for-profits because the “assumption” is made that any money given to an NPO goes to advance their “good works.”

This is also a good circumstance to which to apply the “Washington Post test” — as previously described. Would an NPO want their donors to learn from their local news media about the “misdirection” of their funds ??

September 30, 2015February 22, 2023

What Sets A Capital Campaign Apart From Annual Fund Raising Efforts?

Differences between a capital campaign and annual fundraising

That was the first part of a question … that continued to ask:
“I believe the answer to be a hard drive at research of prospective large gift donors, cultivating these prospects and obtaining a commitment or large gift. Where do general corporate and community direct mail efforts come in? Are there specific procedures for direct mail (donor-base expansion), or is there no specific correlation between the two. In other words, where do the Direct Mailing efforts come into play during a capital campaign?”

First, comparing the activities of an annual fund program with a capital campaign is like comparing apples and watermelons — both are fruit, but….

It has often been said that capital campaigns are a synthesis of everything else we do in development. It is also true that the skills and experience required to design/implement a capital campaign are so much greater than those needed for annual fund activities; and, that a comparison of the two isn’t realistic.

To fully understand what a Capital Campaign is, it would be best not to approach the concept from the AF-CC comparison. That would be misleading. It would just be better to define/discuss capital campaigns.

1. It is important, to be able to understand what CCs are all about, to understand the purpose and structure of the (CC, MG [Major Gifts]) “Pyramid” – see: “How To Use The Gift Table”. Since it would be insane to think of attaining a million dollar CC goal by obtaining 1,000 gifts for $1,000 — think of the number of solicitors you’d need, the leadership structure, the volunteer training, etc., etc., — the “pyramid” is a visual representation of the numbers and sizes of gifts you’d need to attain your goal.

The ideal capital campaign would identify, cultivate and (successfully) solicit the one person who could/would make the one (large enough) gift to satisfy campaign needs. Failing that, look for two gifts that would fill the bill; or three; or four; etc. Eventually, for most campaigns, you wind up with the “pyramid.”

The million-dollar CC should be able to attain its goal with relatively few gifts — fifty to one-hundred-fifty. The larger the goal, and some of today’s campaigns range into the billions, the greater the number of gifts would be needed to achieve it … but the “pyramid” will always apply.

2. The case for a CC is substantially different than that for an AF. The former looks at bricks-and-mortar, equipment, real estate, architects, etc., and the latter covers program, salaries, supplies, etc. The case for the former tends to be of the preparing-for-the future type, the latter focuses on the present.

3. CC (or MG) gifts may require months/years of cultivation; and, you need to know much more about your prospects than you would/do for the AF. If you’re planning on asking someone for a $1m gift, you’d better know enough about that prospect to show him/her how making that gift will satisfy his/her needs.

4. A CC usually relies on the prospect identification, cultivation and solicitation activities of volunteers.

5. Referencing #1 (above), the focus is on MGs for capital purposes, and rarely do such gifts come from corporate sources.

6. Referencing #1 (above), the focus is on MGs for capital purposes, and solicitation by direct mail (or other mass approach methodology) cannot and should not be relied upon.

If the smaller gifts are sought, it will only be for the public relations and/or constituent building value, not for their help in attaining the goal. Traditionally, the General Gifts Phase of a CC is implemented (if at all) only after the campaign goal has been (pretty much) attained; and, the purpose of that phase (although not public stated) is to allow the whole “community” the opportunity to be “part” of a successful campaign.

A capital campaign is not an annual fund that has been “expanded.”

To go back to the original question — and the way it was framed/worded, it gives the impression that what’s being asked is, “Why couldn’t an AF person run a CC ??” Answer: A CC requires a larger, more sophisticated set of skills, a different mind-set, a whole level of complexity, experience and training above what is needed for the AF.

September 23, 2015February 27, 2023

Evaluating Your Development Program

Development Program Evaluation is not limited to comparing the dollars raised “this” year to previous years’ totals. It’s about being sure that each/every element of your “program” is performing as desired/required … to ensure adequate funding for your services, now and in the future.

The performance of a Development Program is evaluated based on Donor Acquisition, Donor Retention, Donor Cultivation, Donor Stewardship, Leadership and, of course, Dollars Raised.

The reasons for Donor Acquisition fall into two general categories – to expand your donor base, and to replace the donors you lose through attrition. Among the questions you should address are: (1) How productive are the lists you are using; (2) How effective are the letters you are sending to the different prospect groups; and, (3) Are you mailing too often or not often enough.

There are two aspects to Donor Retention; one relates to the percentage of donors acquired “last year” that contribute “this year; the percentage of donors who are “regular” contributors; and, the percentage of your donors that “lose interest” in your organization. These are fairly easy to determine … mere arithmetic. And, if you’re losing more than you’re acquiring, that raises a number of significant questions.

The central aspect of Donor Cultivation that requires examination is whether you have a sufficient number of (potential major) donors being cultivated, so as to maintain a steady stream of major gifts. Again, this is a numbers game. You have to have a large enough number of leaders who are working to identify , cultivate, solicit and maintain relationships with (potential) donors.

Donor Stewardship is your ongoing contact, and the substance of that contact, with your current and PYBuNT (Prior Years But Not This) donors. You should be keeping records as to how often you (that’s a generic “you”) are in touch with your donors, what recognition/visibility they get for their support, what information you are providing to them, and how you are providing that information.

“Leadership” is how many new leaders have been recruited, how many have been trained, how many are involved in the cultivation/solicitation/stewardship of donors, and how enthusiastic those leaders are.

A Grants (gov’t, foundation and corporate) Program would be evaluated based on the number/percentage of grant proposals that actually get funded, the size of those grants, and the number of grantors that “regularly” support you. A Grants Program is not about how many proposals you submit, but about your reputation/credibility with the grantors.

And, the success of your Special Events Program is measured by leadership participation, the number of new donors acquired, whether an event will draw a crowd (again) next year, and the extent to which each event enhanced your organization’s reputation/credibility. And, where it would be great if all your events were extremely productive, dollar-wise, that’s not always a measure of success.

I’m sure you noted the overlap of the elements, and that to evaluate a Development Program there is a lot of information to be gathered (on an ongoing basis) and evaluated.

One last item to consider: What is the cost-per-dollar raised for each element of your Development Program, and for your Program, overall?

The bottom line in doing your annual evaluation is having goals against which to compare your reality.

If you don’t have a Fundraising Plan with specific goals for each segment of the development process, you can’t evaluate whether or not you’ve reached your goals.

September 16, 2015February 16, 2023

Funding for Donor Acquisition & for Donor Research

As previously noted, Donor Acquisition, requires an investment … often, a significant investment. But with many nonprofits finding finances a little tight, the question often is, “Where do we get the money?”

I’ll start by examining the components of a donor acquisition mailing – the package: The carrier envelope, the letter, the return envelope and (occasionally) an insert – a brochure or flyer. Each of those elements can be used to raise the funds needed to produce and mail the package.

The letter can come from, and be “signed” by, a donor who will fund the mailing; and, the carrier envelope can have that donor’s return address – assuming that the donor is well known enough to get people to want to open an envelope with his/her corner-card.

An insert can bear the statement that it was funded by “Donor Name;” and, the return envelope can be addressed to the donor in-care-of the organization’s address.

In fact, different batches of letters can be signed by different individuals; the same for different batches of inserts; and, the different batches of return envelopes can be addressed to different donors….

That way, donors lend/add their credibility and reputation to that of the nonprofit, and the nonprofit adds to the donors’ visibility and position in the community.

A Planning Study is also an activity that can be funded by one-or-more donors.

One of the early steps in a Planning Study is to send potential interviewees a note describing the process and asking that they agree to be interviewed. A letter that comes from the right person can impact the likelihood of that participation. Then, when the potential interviewee is called to set up an appointment, the caller notes that s/he is calling on behalf of “Donor Name;” and, the “Thank You” note, for participating in the Study can be signed by a donor.

Each of these opportunities, like the Naming Opportunities in a major campaign, is “priced” at what the market will bear. The cost of mailings, of printing flyers, or of any element (or elements) of an activity, should bear no relation to what you might ask the donor to pay for the “Opportunity.”

One last thought: When you think of who might be the right people to approach to help with this kind of funding, don’t forget corporations.

September 9, 2015March 1, 2022

A Planning Study Is Research

In my August 12th posting, I provided a link to a three-part piece on Planning Studies. In that series, I discussed how/why the Planning Study is the best way to determine what programs/activities donors are likely/willing to support, and for identifying which donors will support which program/activity.

In a Planning Study you are interviewing people/donors who have agreed to be interviewed. People who are amenable to being asked detailed questions, many of which will touch on the personal. Without question, the Planning Study is Research.

Keep in mind that the people who are the best interviewees are likely to be former and prospective major donors; and, it is also likely that they have participated in previous studies … for yours or other organizations. It is also likely that they know and understand the “Study Process” and its purpose.

The Study, therefore, should be designed with consideration for all of that.

Questions should be similar to the following:

“Of which programs/activities is the community most aware?”
“Which program/activity do you think should get funding priority?”
“Which programs do you think your colleagues/friends/peers would support?”
“What about this program appeals to you?”
“Would you like to name that program after you and/or your wife, or you parents?”
“What would you do to make ‘that’ happen?”

Often, the best questions are:

“What can we do to get you to want to support that program?” and,
“What can we do to get you to get your others to support that program?”

But you can’t ask those questions in a vacuum. There has to be a relationship between the organization and the potential interviewees. Those people have to “want” to be interviewed. They have to feel that granting an interview will satisfy one-or-more of their needs; and, they have to feel that the interview will produce the results they desire.

Next Week, a piece on “Funding for Donor Acquisition & for Donor Research”

August 12, 2015March 1, 2022

Donor Research: The Basics

A business team conducting a donor research

There are a number of ways to categorize research on (prospective) donors. One of the obvious ways is by whether or not they are current constituents, another is whether they’ve yet been donors to your organization.

For the first category, your research would be focused on identifying groups of people whose interests might suggest that they’d be interested in your mission and the activities in which you are involved to pursue your mission.

There are companies that compile lists of people based on what magazines they read, what tv shows they watch, where they live, how they vote, at what stores they shop, what websites they visit, what nonprofits they support, etc. You name it, and those companies amass and collect lists of people and their interests.

So, if you’re a nonprofit and you want to identify groups of people who are more likely to want to know more about you, assuming they know that you exist, it would pay to work with, to seek the advice of, one-or-more of those companies.

Then, when you’ve identified lists that fit your criteria, the next step would be to test those lists … usually by mass mailings. You would do additional mailings to those lists that result in the greatest response rates and the greatest dollar return. Part of the process might be to send multiple mailings to the same lists – at different times, to see which people respond to which aspects of your mission and to which of your programs.

That process, donor acquisition, requires an investment … often, a significant investment. And, for any organization that wants/needs to grow, it would be an ongoing investment. (How to fund that investment, in a future posting)

Another, relatively easy way to get lists of names of people who support causes and organizations like yours is to obtain the annual reports of nonprofits whose missions/activities parallel or complement yours. The smaller the community, the more useful those annual reports would be … keeping in mind that those donor lists only include names – no contact or biographical information.

Of course, some of the names on those lists may be highly recognizable – wealthy, prominent people that you’d want to know more about … with the thought that they might become major donors to your organization.

When you get responses to your donor acquisition mailings and you compile a list of names of potential (major) donors from the annual reports, you should probably do some more research.

Those that made “significant” gifts in response to your mailings, and those who are leaders/major donors to similar organizations, should be at the top of your research list.

Your first source for information would be your leadership and current major donors. Do any of them know anyone on the list? Do they know anyone who might know people on the list?

Next is the internet. “Google” those names, see what comes up.

There are also firms that will take your list of names and run them through their databases.

And, there is always the mechanism of a Planning Study, where the prospective donors are interviewed on a face-to-face basis … asking them the questions that would indicate what you’d need to do to get them to want to become (Major) Donors to your organization.

We’ll be on vacation for the next three weeks,and our
Next Posting will be on Sept 9: The Planning Study as Research

August 5, 2015March 1, 2022

Serious Fundraising is Based on Establishing the Right Relationships

Last week’s posting noted that (except for the donor acquisition process) you should not be in the business of cold-solicitation, and that your organization should have done some research on your prospective donors. And, btw, even if someone has given previously, s/he is still, for the purposes of this discussion, a prospective donor.

That posting also referenced the concept of having the right person asking for the right amount, at the right time, and under the right circumstances.

Also noted was that once you have a “relationship” with your prospective donor, the questions of who the right person is, what the right amount might be, and when-and-where to ask, will get answered !!

I must make a distinction, here, between the lower-rated and the major donors. The former are those who are asked to give via mass solicitation methods – direct mail, telephone, “fundraisers,” etc., and the latter are those who are solicited on a face-to-face basis.

It doesn’t take a lot of analysis to recognize that the larger the gift you are seeking, the more time/effort/resources you’ll have to put in to realize that gift.

For the lower-rated donors, those whom you’ve acquired via a donor-acquisition process, the relationship often boils down to thanking them for their gifts and keeping them apprised of how their gifts are making a difference….

If you want the major gifts, there has to be a one-on-one relationship with the (prospective) donor. Typically, that relationship is with a current major donor and/or a board member. (See: What is a Major Gift? & Who is a Major Gift Prospect?)

Such a relationship is not limited to discussions of the organization’s mission and activities. It may begin with an introduction by a mutual friend/acquaintance. It may be a result of a “chance” meeting – based on researching where would be a good place for that to happen. It may happen when the prospect attends an event conducted by the organization. It can happen in any number of circumstances.

As the relationship develops, and the parties get to know each other … as people, not as a donor prospect and a representative of an organization, they are learning about each others interests and needs.

Keeping in mind that donors give to satisfy their own needs, not the needs of a nonprofit organization, over time the relationship uncovers what is important to the prospective major donor.

This is not being sneaky or underhanded. Anyone who is a potential major donor is unlikely to be an innocent, s/he has likely been cultivated by other organizations, and has likely been solicited by other organizations. These major donor prospects will recognize the process, and are unlikely to be offended by it.

As the relationship develops, the person who is getting to know the prospect is also becoming the person who will come to learn what it will take to get the prospect to want to make that major gift. That person will learn what the right amount would be, and what the right timing and circumstances would be. That person becomes the “Right” person.

If you are the “Right” person to establish a relationship with a prospective donor, the process of getting to know and educating the prospect about the organization is the process of Cultivation. It is a process that takes many different forms, and is adapted to the needs of the prospective donor.

Next Week, some thoughts about donor research.

July 29, 2015February 22, 2023

Getting Your (Potential) Donors To Want To Give

A donor handing an envelop over to an organization

Last week the focus was on learning about and understanding what your constituents and potential donors like about you.

Now, assuming that you’ve mastered that aspect of the development process, let’s look at what else you need to know about your potential donors; and, what you would have to do to influence those potential donors.

Once you know which aspects of your mission and which program(s) are most important to your constituents, the next question is: How do you turn those interested/concerned constituents into regular donors … even major donors ??

The easy answer goes back to the concept that donors give to satisfy their own needs, not the needs of the nonprofit organization. Another way to phrase that is that, “People give because giving makes them feel good.” If it didn’t make them feel good, they wouldn’t give.

A basic principle of fundraising, of development, is having the right person asking for the right amount, at the right time under the right circumstances.

So, who is the right person to ask for the gift ? It’s easier to answer that question if it’s personal. To whom are you most likely to say, “Yes,” when asked for a gift?

Asking for the right amount is important from two perspectives: asking for more than a potential donor is willing/able to give can only get you a refusal; and, asking for significantly less than a potential donor is willing/able to give will not allow the donor to obtain the greatest feeling of satisfaction, and may create the impression that you don’t know what you’re doing.

The right time to ask for the gift is when the donor is ready to say, “Yes.” You have to know when that is !!

The right circumstances involve location and environment. It can be at the donor’s home/office; when s/he is alone or with a significant other; while on a tour of the nonprofit; at a meal; on an airplane; in a car; or, any other appropriate place.

Sounds easy, doesn’t it ??!! Of course you’re asking, “How do I know who the right person is, what the right amount might be, and when-and-where to ask?”

If you were the prospective donor, the right person would be someone whose opinion you care about, someone who you care for, someone you respect, someone you want to get to know, someone who meets any/all qualifications you’d consider important/essential, a person to whom you would respond positively if s/he asked you to make a gift….

Since (except for the donor acquisition process) you should not be in the business of cold-solicitation, which is, most often, a waste of time, your organization should have done some research. You should have learned what you could about your prospective donor from a distance, and you should have created an actual relationship with him/her. (For more on Donor Acquisition … click here)

Once you have the “relationship,” the questions get answered … Next Week, some thoughts about the substance of the “relationship.”

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