Category: Finance

It wasn’t that long ago that crusty-old-direct-mail-consultants were worried that email would cut into direct mail revenue. Consistent testing and a steady stream of anecdotes indicate that’s just not true.

For the last ten years, I’ve been testing direct mail results and the impact of email messages. In one of the simplest and longest-running tests, I tested three segments of names against each other, all from the same pool of recent donors who were scheduled to receive a direct mail “house” appeal:

Group A was comprised of recent donors with email addresses who were sent an email message just before they should have received a direct mail appeal.

Group B was comprised of recent donors with email addresses, to whom we did not send the email message.

Group C was the rest of the list – recent donors for whom we had no email address on file.

The email message that was sent to the people in Group A was only a brief note saying “I have just mailed you a very important letter. It’s in a white business envelope with the words “[Insert envelope teaser copy here]” across the top. Please look for it.”

That’s it. No link to give, nothing else. (I plan to test an upgraded pre-email message with an actual photo of the outer envelope).

Group A had a direct mail response rate that was about 10% higher than Group B. No surprise. The pre-email probably resulted in more recipients somehow sorting that appeal envelope into the “open” pile rather than the “recycle” pile.

But Group B, however, had a response rate that was in turn about 10% higher than that of Group C. Why? They received the same package at the same time, and neither had the advantage of the email message. They were from the same list of recent donors. Our theory? They had been well cultivated with email newsletters for the past several months, and that increased their response to this appeal.

At a recent nonprofit conference, a major nonprofit announced similar findings: when they added email messaging to support direct mail, they got 5.7% response and a $29.25 average gift in the mail, v 3.65% and $21.12 from those who didn’t get the email — plus they got $4000 in online gifts!

Would a post-email message improve direct mail results as much, or more, than a pre-email? Would both do even better? Ah, now you’re thinking.

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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

The Fundraising Appeal

A few months ago, a NYTimes article suggested that donors are being highly selective in deciding whose name goes on the payee line of their checks. Non-Profit Organizations, therefore, must do all they can to get donors to want to give to them.

At most times, especially in an economically “troubled climate,” donors want to be sure that their gifts are going to support/help people in need. NPOs must be sure, therefore, that their marketing, their literature and their solicitations all focus on the people in need … not on the needs of the NPO.

And, in addition to talking about people and their needs, the best wording can also talk about how the NPO is helping those people, how cost-effective it is in its operations, and how a donor’s gift to the NPO can/will help so many people.

Major Gifts Should Be A Priority

It occurred to me, following a recent conversation with the executive director of an NPO on the brink of closing its doors … that many people may think of major gifts as those you pursue after you’ve done all of the other fundraising.

The language that the E.D. used was to the effect that, “we have to be sure we can stay in business before we can think about going after major gifts.”

I would hope that I never said anything to any client, in any of my classes or postings, that would suggest that !!

I’ve often mentioned that many (start-up and ongoing) NPOs can (and do) create major gifts programs from scratch, and can (and do) operate quite nicely on that income.

Certainly, in tough economic times, NPOs should be making every effort to raise funds by whatever (legal/ethical) means possible … keeping in mind that one major gift can (and often does) exceed what is raised via other methods.

Any NPO not actively/vigorously working on obtaining major gifts is doing a disservice to the people it serves … or could serve.

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Have a comment or a question about starting, evaluating 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 Catalog of Federal Domestic Assistance …

That describes over 500 grant programs (awarding hundreds of billions of dollars), is a great place to get an overview of every grant program administered by the federal government.

The CFDA provides a full listing of 2,110 federal programs available to state and local governments, Indian tribal governments, territories and possessions of the United States, nonprofit organizations, and individuals.

The top five grant programs by Department are:
• Health and Human Services (417).
• Agriculture (229).
• Interior (217).
• Education (170).
• Justice (125).

On the CFDA Web site, you can use the search engine to identify grant programs by agency or by general topic; and, grant programs on that site are classified as either:

A formula grant… which is federal money distributed by a state agency
— based on some kind of formula.

A project grant… that comes directly from a federal agency.

The Federal Register

(www.gpoaccess.gov/fr) is a major resource for specific information about available grants. Published by the National Archives and Records Administration, this is a daily publication of the rules, proposed rules, and notices about grant programs of federal agencies that is searchable by date of announcement or by topic.

Although the Federal Register is very wordy, there is a very good reason to use it. The advance notices you can receive about federal grant opportunities will enable you to begin preparing your grant application before the official notice appears.

Grants.Gov

Perhaps the handiest way to find grant opportunities is through this website (www.grants.gov), which lists all current and upcoming grant opportunities by agency, number, and by topic. Clicking on a listing leads you to the grant guidelines, deadlines, eligible applicants, the amount of money available, and the estimated number of grants to be awarded.

For example, under “family planning” there are over 100 federal grant and contract opportunities in the area of contraception, family planning services, HIV/AIDS, and STIs.

Become a Tracker!

Once you have identified federal grant programs of interest, you should begin monitoring them (on a daily basis) in the Federal Register or Grants.Gov. That’s the only way you will know when grant funds become available. A successful application often depends on how ready you are to pounce on a grant opportunity.

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Dr. Jayme Sokolow, the founder and president of The Development Source, Inc. helps nonprofit organizations develop proposals to government agencies, foundations, and corporations. He can be contacted at Jayme Sokolow.

Someone asked, recently, about putting together a “fundraising plan.” My response was about creating a “Development Plan.”

Where the latter has its focus on the relationships between the organization and its constituents/donors that can result in contributed income, the former just focuses on the dollars. And, when just focusing on dollars is sometimes OK for the short-term, it’s quality relationships that result in consistent dollars over-the-long-term.

It must also be understood that Development Plans are constructed for specific sets of circumstances — there is no one-fits-all model.

The basics of a Development Plan:

Before the Development Plan comes the Strategic Plan … to determine priorities and where the organization wants to be by the end of this year, in two years, in three years … and for what programs/staff/equipment/overhead/etc. funding will be needed.

The development plan functions to help you keep in mind where the money came from last year, what you had to do to get it*, and what you’re going to have to do to get that same money this year. Secondarily, the development plan looks at how to increase funding from former sources and generate new money from new sources.

   [*…referring to the various methods of cultivation as well as the various
   methodologies for fundraising, i.e., direct mail, major gifts, events, etc.]

At the end of the process of constructing a Development Plan, you have a fundraising goal for the year (or for whatever period you’re doing the planning), a goal that MUST reflect reality. It must represent what you know of the organization’s fundraising history and what you know about your prospective new donors.

That goal must be attainable, it cannot contain any element of wishful thinking, If the fundraising goal and the projected income from all other sources don’t add up to what the budget requires, it’s the budget that must be trimmed, not the fundraising goal that must be increased.

In constructing a Development Plan, you must keep in mind that where fundraising serves the needs of the nonprofit organization (NPO), it is not about the needs of the NPO. Fundraising is about the needs of the (prospective) donor. If your Development Plan doesn’t consider the donor’s needs, how can you expect him/her to consider yours?

(See: Fundraising or Not Fundraising, That is The Question)

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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.

I respond to Michael (his comment is below) that we don’t disagree, that it’s just a difference in vocabulary.

My reference to nonprofits being public institutions is a matter of perspective, not legal language. Nonprofits are required/supposed to serve the needs of the “community,” and I write from the perspective of the “community’s” right to know how effective a nonprofit is that serves them – how cost effective and how effective at addressing the issue it was created to address.

Organizations (like AFP) that serve/represent staff and consulting fundraising professionals use language that refers to nonprofits as being “publicly owned.” The intent of that language being to maintain awareness among fundraising professionals and the organizations they serve and keep us/them focused on what is and isn’t “ethical.”

Where that language may differ from the legal language of the IRS, the intent is the same – to protect the rights of the community/public.

In that context, “Ethics” is all about doing what’s best for the community/people being served. To word it in a way that addresses a common problem: “Ethics” is about doing what’s best for the community/people being served, not what’s best for the board and staff members of the nonprofit. “Ethics” is also about using contributions (only) as the donors intended, and letting those donors know such is the case.

Excerpt from Michael’s comment:
“Hank and I are old friends and colleagues, so my disagreements
with him are always respectful – and I admit the possibility of error!

“I take issue with the assertion that charities are, in effect, public
institutions due to their tax-exempt recognition and “tax subsidy”.
In fact, legally as well as functionally, charities are explicitly private
entities run for a specific defined “public benefit purpose” (to use
IRS language).

“If favorable tax treatment alone defined whether a US institution is
public, than there would be *no* private institutions. Every taxpayer,
whether individual, partnership, or corporate, receives favorable tax
treatment to reduce or eliminate their Federal income tax burden.

“Charities, as private entities, receive favorable tax treatment in
exchange for their explicit promise to operate in a certain way and
comply with applicable parts of the IRS Code.

“I would never argue that charities and nonprofits should act without
accountability. However, nonprofits serve a valuable societal function,
recognized in law and regulation, that is collective, but explicitly not
public.” Michael Wyland — michael@sumptionandwyland.com

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Have a comment or a question about starting, evaluating 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 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