Category: Finance

Why Not Work on Percentage, Bonus or Commission?

I have long and unyieldingly stood against any form of contingent-pay in the non-profit sector — having an organization’s staff development officer working for compensation based on a percentage of funds raised, a bonus, or a commission.

Such arrangements, and any variations, are denounced by major “for-the-profession” associations. They go so far as to state, emphatically, that contingent-pay is unethical.

Most development professionals themselves think it’s a bad idea. But I do far more than just cite high standards and strong ethics as good reasons to have nothing at all to do with the contingent-pay practice.

I let the contingent-pay principals know of the very real harm possible when working in that way. In my article on the subject I list a number of very real and damaging consequences that may befall both parties when working to such an arrangement. (See: The Argument Against Paying Development Professionals Based Upon The Amount Of Funds Raised For Non-Profit Organizations)

My hard stance against contingent-pay was bolstered even more by a personal experience, several years ago, when I was engaged as a fundraising consultant for a major organization. Sadly, it represents what appears to be an ever-growing issue.

During my several months serving the organization, I conceived, developed and produced fundraising plans where there had been none. Annual, endowment, capital, sponsorship, and underwriting campaigns were all fully developed and were being phased into the duties of the organization’s new and first-ever Director of Development … whom I helped hire.

The individual was hired at a straight annual salary basis while I was nearing the end of my consulting term. Soon, the Director of Development was up and running very well and I concluded my consulting engagement.

In a routine phone call some months later, just to check in to see how that individual was doing, it became readily clear that the several key development initiatives I had set out for the organization had not progressed much, if at all, except for the Annual Fund.

There were no ongoing cultivation activities. Recruitment of a volunteer fundraising team was abandoned. There was nothing in place to ensure opportunities for long-term funding. What was clear was that the Director of Development was dead set only on meeting the Annual Fund goal.

Why? Because after I left, the next salary review with management allowed the D.O.D. to work toward a bonus of $5,000, contingent upon meeting the Annual Fund goal by the end of the campaign/fiscal year.

Just about all of the warnings I cite in my article were at work in this case. Money was being raised only for this year. There was no thinking/planning for tomorrow.

When I see all the wrong that can befall an organization, or an individual, in contingent-pay schemes, I cannot imagine for the life of me why anyone would want to go that route.

What do you think? I’d be interested in your comments.

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If you have a question or comment for Tony, he can be reached at [email protected]. There is also a lot of good fundraising information on his website: Raise-Funds.com

Grant Reports Aren’t Always Required, But They’re (Almost) Always A Good Idea !!

Not sure about you, but the dog eating my homework excuse never worked for me. And not turning in a grant report to a funder who requires one is not going to work either.

At best, you’ll be given an extension for the report, and have a slightly tarnished reputation. At worst, you’ll lose that funder forever.

So, what about grantors that don’t require a report? Should you take the time to write and submit one? My answer is a qualified, “Yes.”

Reporting is an important part of stewardship, and a great way to show the donor that their gift has made an impact. In addition to several feel-good communications to the grantor during the year, a grant report submitted sometime during the year or with your next proposal is certainly best practice.

What should be included in your grant report? A good template would be a report required from another foundation that funds the same project or program. In lieu of that, I recommend including the following sections:

1  Briefly outline the goals of the project/program funded by XXX Foundation.

2  Who or what has been the primary beneficiary of this project/program? How many
    people have you served through this project/program?

3  What were the specific results of the project/program? Compare the actual results to the
    projected outcomes described in the original proposal.

4  Attach a detailed project budget and a specific breakdown of how the grant has been spent.

5  What difference did this grant make to your organization and for the population you are
    serving?

6  What are your plans for the future of this project/program, including funding, expansion,
    replication or termination?

Will preparation of this report require extra work on your part? Yes, but hopefully not too much, because an NPO’s established grant program will have defined goals, metrics and budgets for each project/program for which it is seeking grant funding.

These goals, metrics, and budgets will have been included in grant proposals, and the results of which will need to be communicated in grant reports.

One final point, circling back to my qualified “Yes” as to whether you should submit a report to grantors that don’t require a report. As I have said in previous postings, “relationships are at the heart of all fundraising activities, and grants are no exception.”

Communicating with your grantor is an essential part of continuing a healthy relationship that benefits the foundation or corporate grantor as well as your nonprofit.

So call, write, or e-mail your grantor if you don’t know what their reporting requirements are. They will appreciate your follow-up, and they will appreciate your providing them with the reports they want, in the format they prefer.

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Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs, and helps them secure funding from foundations and corporations. Contact Lynn deLearie..

And Some Questions in Response:
We are a small 501(c)(3) arts organization with an annual budget of about $25,000 in a small community of about 4,000. We are looking at mounting a capital campaign to buy a building and make it a community arts center. Most buildings of the needed size are selling for $100,000 to $175,000. Considering remodeling, we think we are looking at having to raise $200,000 to $250,000.

*Does your estimate include what it will cost to run a capital campaign ?
*Do you have or can you “easily” get the funds needed to plan for and
implement a capital campaign ?
*How many people do you estimate will make gifts/commitments of
$10,000, $15,000, $25,000 or more ? That’s what will determine the
success (or failure) of your campaign.
*Who has the respect/credibility/clout to lead a campaign and get the
right people to want to give?

Our membership feels that raising the money is do-able over the course of two years.

*What happens to your organization’s reputation/credibility if you
run a capital campaign and don’t meet your goal ?
*Where have your members gotten their experience/expertise at
designing and implementing a capital campaign ?

We have, however, two very conservative board members. They want to know what happens with the capital fund if an organization does not achieve its goal. Say we raise $89,000 in two years, they ask, and then hit a brick wall and give up. I think such a thing won’t happen, but what do I tell them now, to assuage their concerns? Do the donations have to be returned?

It’s a good thing you have board members who require answers
to the hard questions. If you run a capital campaign, and it’s clear
to your prospects that you are raising the money to buy/renovate
a building, failure means returning every cent to the donors.

No capital campaign should be implemented without first having
a Study (professionally) done to determine the feasibility of attaining
the needed leadership and the likelihood of obtaining the larger gifts
that ensure reaching a goal.

Is there a way to phrase requests so that the funds could be used for other charitable purposes in the community?

When you ask people to support you, you must be clear why the money
is needed, and you must use it for the stated purpose(s).

If you run a major fundraising campaign and don’t tell your donors the
money is to buy and renovate a building … if you give the impression
that the money is to be used for something else … that’s fraud !!

If the “other charitable purposes” relate to your mission, you have to be
clear what all of those “purposes” might be.

Bottom line is that you don’t even think about doing a capital campaign
until you KNOW (not believe) it will be successful !!

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact me at [email protected] 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.

One of the most precious commodities in any government grant proposal effort is the amount of time you have to conceptualize, develop, produce, and deliver your proposal. For many nonprofit organizations, time slips away too easily.

Phases of Grant Proposal Development

There is a good four-phase rule-of-thumb that can be applied to grants, each phase representing 25 percent of the needed time:
 •  Phase I: grant guidelines analysis, proposal strategizing, planning, and outlining.
 •  Phase II: proposal writing and illustration.
 •  Phase III: proposal review and revision.
 •  Phase IV: proposal finalization, edit, packaging, and delivery.

Address the Problem of Slippage
There is usually, however, some slippage from one phase to another and, to address the problem of slippage, I recommend that you do the following:
 •  Do some tasks in Phase I before the release of the grant guidelines.
 •  Do some tasks more quickly.
 •  Add more proposal staff to do the work, if possible.
 •  Overlap tasks so that they can be done simultaneously rather than serially.

If you have to cut corners, there are three realistic steps that you should take:
 First, you can group tasks into one of three categories:
   (1) Tasks that must be done;
   (2) Tasks that would be good to do; and,
   (3) Tasks that are not likely to have an impact on the proposal.
 Limit yourself to the most important tasks with the greatest payoff.

 Second, schedule proposal tasks in parallel rather than in sequence to save time.

 And third, relentlessly focus on milestones and delivery.

Whatever your time constraints, scheduling a grants proposal and finding ways to reach milestones is one of the most important roles of a Proposal Manager. Use the schedule to organize and complete your most essential activities, and if the schedule slips, find ways to finish the essential tasks well to submit a competitive grant application.

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

Responsible planning, in any economy, involves identifying sources of funding sufficient to ensure continuation/survival of the programs that satisfy the needs of the people and the communities you serve.

Ensuring the funding of your programs requires that you minimize the risk of (again?) losing a large percentage of your income.

According to “Giving USA 2011,” in 2010, over 80% of the non-governmental dollars that went to Non-Profit Organizations came from individual donors or their estates. And, common wisdom is that at least 80% of that amount — or 65% of all non-government dollars — came from major gifts from individuals.

And even though everybody, including the wealthy, have been impacted by the economy, major donors are still a reliable source of funding.

Their gifts may be smaller than before the “recession,” but if they still have the means, if you still have a relationship with them and if they have a need you can satisfy by getting them to give to you, then they are still major gift prospects.

For an NPO without a major gifts program, now is the time to look seriously at creating one. Indicators (including the increase in spending over the holidays) are that people’s attitudes/outlooks about the economy have turned positive, and the people that are spending are (or should be) your prospects.

A major gift program is no more than the step-by-step identification, cultivation, involvement and solicitation of a number of individuals … each in their own timeframe. (See: Who Is A Major Gift Prospect)

The difference between successful and unsuccessful major gift programs is the effort placed on identifying and cultivating prospective major gift prospects. It is the determination of who has access to people with wealth, who is the best person to guide the cultivation process for each individual, and who is the best person to know when the time is right to ask … and then do the “asking.”

A Major Gifts Program is easier to design and implement, and more cost effective than direct mail and the vast majority of events. Major gifts are also a more reliable source of long-term funding than are corporate and foundation grants.

The big question is whether your organization is getting your share of the major gifts money that has been and is still supporting so many nonprofits !!

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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 [email protected]
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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.

If you have a donor’s email address, use it several times without asking for money.

The best way to use a donor’s email address is to thank them for a recent gift, and tell them how their money is being used.

If you have a donor’s email address on file, then send them an email message every time you get a gift via mail or phone. The benefits include:

• You get to thank them twice: once in the email, and again with the letter they’ll receive in the mail.
• You can thank them much faster than the standards letter. There’s no reason you can’t hack your system to send an email message of thanks within 24 hours of when their gift is updated to your database. That’s two or more weeks faster than a letter is likely to get to them.
• They’re more likely to open future email messages from you when they get email messages that are not just appeals.
• You build the habit of engaging them online.
• You can invite them do something else online, like become a FaceBook fan, or watch a YouTube video
• You can show them in sound and motion how their gift is making a difference.
• Gathering their feedback via a short survey or open-ended question.

To really make the email thank-you message work best, it should be:

• Personalized: include the gift amount, the project they are helping to support, and the date of their gift.
• Simple: it doesn’t need fancy graphics, just a logo at the top and a few short paragraphs of copy.
• Signed by the person who signed the original appeal that triggered the gift.
• Inviting: give them a few ways to further your mission, via links to FaceBook, YouTube, your website, or a short survey.
• Far-reaching: If this is a milestone gift (10^th, 25^th, etc.) or if they’ve given for many years, say so in the email. It will brighten their day to be recognized.

More questions about email fundraising? Send me an email!

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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: [email protected] or at his LinkedIn Page

Strategic Planning

Every nonprofit must periodically assess its success in pursuing its mission, and must evaluate its progress toward achieving its long-term goals and objectives.

Those assessments and evaluations can only proceed if an organization has clearly established (and periodically) confirms its reason for being, and has established benchmarks by which it can judge its success and achievements.

On an annual basis, part of the strategic planning process is the analysis of income and expenses for the year ending, and the creation of a budget for the coming year. Budget creation must be based on “real” numbers, numbers that are based on need and the likelihood of income being at levels that will satisfy the need.

It directly follows that a budget cannot (should not) be adopted unless there will be sufficient income to fund all planned/desired activities.

Strategic Planning, therefore, cannot proceed without a parallel process of Development Planning that indicates/reveals what an organization’s (realistic) fundraising potential is for the coming year.

Development Planning

So many (immature) nonprofits set their fundraising goals based on what they’d like to raise, as opposed to what they can raise.

Goal setting is not the arbitrary choice of a dollar target. Goal Setting must be based on an organization’s knowledge of their past fundraising achievements and what they know, from that experience and their fundraising expertise, that they will be able to raise for the coming year.

An NPO cannot risk setting a fundraising goal that they don’t reach. Failure to reach a fundraising goal sends the wrong messages to the community, to the constituency and to (potential) donors. It says that the NPO doesn’t plan well, isn’t broadly supported by the community, and doesn’t have the dollar support they need for the activities in their budget.
 
 
So, when an organization is doing its Strategic Planning, it must take the results of the Development Planning process into consideration when setting short- and long-term goals and objectives. You can’t include activities/expenses in the Strategic Plan that projected income won’t support, and income projections must be based on reality, not wishful thinking.

The Development Plan is the large dose of reality that places limits on the Strategic Plan, and the Strategic Plan is the “justification” for setting fundraising goals. It’s like love and marriage, you can’t have one without the other !!

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact me at [email protected] 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.

In this and the next several CFC posts, we’ll examine some of the steps that you and your organization can take to benefit from participation in the CFC, in addition to those activities that generate revenue.

One challenge that many non-profits face is how to provide real opportunities for their staff members to develop their professional skills in a meaningful manner. And one of the huge benefits of participating in workplace giving campaigns is that they can be an integral part of your non-profit’s leadership development program.

These are just some of the skills that can be developed by participating in CFC campaigns:

• Oral Communication/public speaking skills – you can practice your “elevator speech” dozens of times in the course of a campaign.

• Team Building – the non-profit program officer can get practical experience in creating and leading a team, whether they are paid staff or volunteers.

• Listening Skills – your team will have the opportunity to listen to hundreds of people in your community – what are they saying, what’s most important to them, etc. These are your potential donors and supporters – does your mission resonate with them, are they aware of your organization?

• Written Communication – there are many opportunities to develop one’s writing ability, from simple memos to analyses (of the comments from community members) prepared for the nonprofit’s leadership.

Where sports teams have team meetings, playbooks, exercise regimens, etc, they also have a place where they practice what they’ve learned. For CFC charities that use workplace giving as a means of leadership development, a particular type of CFC special event, the Charity Fair, is that “practice field or rehearsal hall.”

Charity Fairs are held by a sponsoring Federal agency, and most will have between ten and twenty charities set up in a large room (like a cafeteria or auditorium), and will last from two to four hours (similar to a Job Fair, but without resumes).

By having your staff members and/or volunteers participate in charity fairs at the different Federal agencies, you give them the opportunity to do three things:

• Tell your story.

• Meet and listen to potential donors.

• Distribute literature and other promotional items with your message/URL on them.

Early each year, you can assign a staff person to determine which promotional items would make the most sense for your organization, and what the costs would be for each item.

Here are a few key points, regarding promotional items, from a presentation by Jeff Brown, of America’s Charities, given at a workshop he and I presented at the Foundation Center last September:

• Size Matters: They don’t need to be gigantic. Some of the more effective items are as small as pens or tubes of lip balm.

• Be Visible: Put your organization’s logo/name on the item, and include a website URL to make it easy for potential donors to further research your organization.

• Quality is Important: Don’t use items that appear to be cheaply made. They will not only reflect on your name and reputation, but they tend to break easily and reduce the time span of your brand promotion. And, handing out pens that work once before running out of ink doesn’t say good things about your organization.

It can be important that your promotional items, in some way, tie to your non-profit’s mission. For example, for years the Community Health Charities handed out a small band-aid box, designed to be kept at one’s desk. It had their name, the CFC code number, their URL and phone number, and people never threw it away! Compare that to your typical paper brochure!

Assign/tackle this project now, so you will have enough time to select and obtain the items well before you need them for a charity fair.

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

We should (and usually do) work hard to make our best possible case for support to corporations … wanting them to know as much as possible about us. But an equally important issue is, “What do we know about them?”

I was recently thinking about the extent, the depth, to which we have to know our corporate prospects in order to make the assessments, ratings and evaluations that must precede our (best) requests for their money.

One thing that came to mind was the annual fund-raising conference held in our area, and the notes I made each year, over several years, from attending the corporate-giving panel sessions. The conferences usually included three or four corporate contributions managers — representing large corporations and banks.

Each time, the different corporate contribution managers cited their “Top Ten” requirements/preferences for any non-profit institution to be able to attract their corporation’s attention for funding. My notes, even though they were different people, representing different corporations, indicated basically the same “Top” three things those stewards of corporate funding wanted from contribution seekers.

They said:
(1) Know Who We Are:
• Read our corporation’s Annual Report.
• Have you looked at our website?
• Do you know what we make and sell?
• Who are our customers?
• How many employees do we have?
• Where are our locations?
• Who are our Officers, and are any of them involved in your organization?

(2) Understand Our Concerns:
• What are our policies regarding endowments, capital campaigns, annual operating support,
giving to projects and services, and United Way supporting agencies?
• And if you wish to “double dip,” when it comes to obtaining our support for a specific campaign,
you should know whether we will also support a special fund-raising event or project you are
producing.
• Keeping your organizations’ solicitations organized/coordinated is supremely important to us.
Make certain that if more than one individual from your organization contacts us, that they
know what the “left and right hands are doing.”

(3) Understand Our Interests:
• Do we employ a strategic philanthropic practice, i.e., be it focus on education (what type),
health care, social services, arts & culture, etc.?
• Are any of our employees donors to your organization?
• Do we match their donations with our corporation’s funds? If so, how much?
• What is our corporate citizenship mission in your community?
• Do we want/need to be recognized publicly with our corporate sponsorships, be they local,
statewide, national, or global?

From the mouths of those stewards of their corporations’ money — while it’s obvious they want to know about our organizations — they certainly made it clear that we had better know more about them than the easily available surface information.

All of that, then, becomes the basis of the profile we develop for our best chance to be on the receiving end of the corporate money flow.

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If you have a question or comment for Tony, he can be reached at [email protected]. There is also a lot of good fundraising information on his website: Raise-Funds.com

Too often we wind up letting the tail wag the dog. I know, I’ve been there.

Not long ago, I came across an RFP (Request for Proposal) that was outside the scope of what our organization was planning to do during the current fiscal year. I talked to our program staff, and they came up with a good idea that would fit the RFP … an idea, however, that was not in our operating budget.

So, with the enthusiasm of the staff, I wrote and submitted the proposal. And we won the grant.

Great news, right ?? Not exactly !!

Now we have to implement this new project that doesn’t underwrite any costs in our current operating budget. So, in reality, we will have to ask our already stretched program staff to implement this project in their “spare time”….

The better way to manage your grant program is to collaborate with your program staff during the budgeting process to agree on what your organization is planning for the next fiscal year.

Projects, programs, and overhead costs that end up in your operating budget can then be included in your grant-seeking calendar. Those that end up getting cut during budgeting can also be included, but at a lower priority.

This allows you, as the grant manager, to focus your efforts on funding your organization’s operating budget, instead of chasing after money for projects or programs that your organization may not need or can’t afford to implement.

There is, then, a simple question that should, with rare exception, define your decision-making process: Is the project or program in the current operating budget? If YES, pursue for grant funding; if NO, don’t….

This might come in handy when you have to explain to your program staff/executive director/board member why you didn’t pursue a “great grant opportunity” that they handed to you.

And, please keep in mind that this is best managed with some flexibility. Perhaps an RFP comes your way that is too good to pass up. As long as your NPO’s leadership and program staff give it the green light … and understand the consequences of implementing the new venture, then go for it.

Another green light for an off-budget project or program is one in which you can include a portion of your current operating budget – perhaps staff time to implement the new project/program.

Just remember, don’t let off-budget new-ideas control your grant-seeking process. Be the dog wagging the tail, not the other way around; you will better serve your organization with a more thoughtful approach.
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Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs, and helps them secure funding from foundations and corporations. Contact Lynn deLearie..