Category: Finance

Had a call, today, from a non-profit organization that has never before done a “major” event, but they’ve decided that they really want to do one now. I could probably have transcribed the conversation before we began talking, as it seems like there’s not a week that goes by that I don’t get a similar call.

This organization is 4 years old, they’ve done a few (Hank, pardon my use of the word) “fundraisers,” and they feel certain they are ready for the “big” event.

First question I asked was, ”Why did you contact me? Answer: “My boss went to an event you did and loved it and wants us to do one just like it.”

Great, now we have a real problem…the event that she loved was for 500 people in an elegant expensive locale and was now in its 8th year … an event that the organization has been planning, developing and growing for longer than that.

Then I asked, “Tell me about your organization and why you want to do an event. After an overlong description of all the wonderful things the organization does, she said that they wanted to do an event to attract people to the organization and their work.

Good idea!! So I asked, “Do you have potential donors who would want to buy tickets and attend … how large is your mailing list … where will the money come from to rent the place, pay for the invitations, postage, food, beverages, etc….??

“Oh, we thought we would ask one of our board members to chair it and have the rest of the board on the committee, and they would raise the money….”

My next question, “How much money does your board raise now? Answer: “Not much.” So, why, I ask, would you think they would/could raise money for an event ??

“Why not?” they ask.

Anybody have an aspirin?
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Have a question about creating or expanding your special event? Email me at Info@NatalieShear.com. With over 30 years in conference and event planning, we can help you turn your vision into reality.

Grants represent the most effort for the least predictable return.

The question, therefore, is to first determine what resources will be needed before an organization contemplates launching a grants program!!

Researching grant sources, planning projects, preparing proposals and budgets and managing funded programs all require a lot someone’s time/labor – all of those comprise the “opportunity costs.” What, then, will the nonprofit organization have to give up to work on preparing grant proposals?

As Hank suggested in his June 1 posting, cultivating major donors is (should be) a high priority for most organizations. Most fundraisers can judge how likely it is that their efforts will result in a gift, and they move ahead in their pursuit of potential donors based on that judgment.

Annual fund experience generally is predictable, and the organization can assess the return on its investment. Similarly, special events (especially those created by Natalie) yield results that can be consistent from year to year.

On an annual basis, only about 5% – 10% of grant applications are funded. That’s not very impressive, and a good reason why organizations need to assess the benefits they will realize from pursuing grants.

But, before they do that, they should have predictable, consistent sources of hard money income. That is, those sources of funds they can rely on from year to year.
If they are at a stage in their development where they honestly can say they can rely on their normal income sources and, if they can envision special initiatives that are beyond the scope of their operating revenues, they can consider if a grant program is warranted.

If it is, they need to devote resources to funder identification, proposal writing and grants management. Such infrastructure is necessary for the pursuit of grants. If these resources incur unacceptably high opportunity costs, the organization is not ready to engage in a grants program. Their efforts are better directed to more productive sources of funding.
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Have a question about starting or expanding your grants program? Email me at Andrew@GrantServices.com..

The biggest mistake that many non-profits make is their belief that grants from corporations, foundations and government will continue, or (even) increase, over the long-term.

Historically, those sources of funding for specific programs either remain the same or decrease – especially during rough economic times (Remember !! … It wasn’t that long ago).

While overall costs of operation tend to rise, few foundations or corporations want to make long-term commitments to a non-profit organization.

Planning-for-the-future, therefore, involves identifying potential sources of funding sufficient to ensure continuation or expansion of the programs that satisfy the needs of the people and the communities being served.

Worded another way, “Ensuring future funding requires minimizing the risk of losing a large percentage of your income.”

Most foundations help a NPO initiate a program/concept, help them create the structure that will support it, and then go on to do the same with other organizations.

Corporations want to be perceived as supportive members of the community. The more NPOs they support, from the same, limited pot of money, the more visible they’ll be and (generally) the better their image.

It’s also dangerous to rely just on events — no matter how successful, as someone else’s event or activity may prove to be a greater attraction for your attendees, or the economy may engender second thoughts about buying those event tickets.

Ask yourself, “When the grant for a specific program runs out, do you end that program and discontinue service to those who need it, or will you have a backup plan … a reliable source of ongoing funding ??”

Roughly 80% of contributed dollars come from individual donors or their estates. And the common wisdom is that at least 80% of that amount — or about two-thirds of all contributed dollars – come as major gifts from individuals.

A major gift program is easier to design/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 charitable funding than all others.

And, by the way, the second biggest mistake that many non-profits make is to assume that this doesn’t apply to them !!

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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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There used to be hard-and-fast rules as to what was, or wasn’t, a special event. Today, everything gets that label, from a small cocktail reception, to a board lunch, to a Gala Auction for 1,000.

Nonprofits think special events are cool and a great way to raise money, but they’re only partially right. Events are indeed cool, but only a great way to raise money if the organization has the donor base to make it happen.

To do an event, your organization needs:
• A great donor/mailing list of people who will want to come to an event to support your work;
• Board members who will step up to the plate, and make an example-setting contribution;
• Leaders who will make calls to friends and colleagues to engender their support/participation;
• A great honoree or two who ”bring” more people and money to the table;
• Co-Chairs and a Host Committee who will deliver their own contributions and those of others; and,
• A staff event coordinator who does nothing but the event … because that person will have no time to do anything else.

No one wants to spend an evening listening to talking heads. Learn to be brief, and if you must present a long biographical history of someone, do it in the evening’s printed program and/or in a quick (2-3 minute) video presentation.

There are a lot of variables to the success of an event. The evening is only so long; don’t try to do too much. If you have two honorees and two presenters you’re done !!

And, one thing to remember, it takes years to build a major event that people mark on their calendars as a “don’t miss.”

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Have a question about creating or expanding your special event? Email me at Info@NatalieShear.com. With over 30 years in conference and event planning, we can help you turn your vision into reality.
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Have you seen Natalie’s ebook on Special Events ??

That’s an important distinction. The defining characteristic of a gift is that control over its use passes to the recipient the minute the transfer is made. While some donors may restrict a gift to a general purpose — scholarships for example — decisions over the deployment of the funds within that restriction rest entirely with the recipient.

Furthermore, the donor receives nothing in return, as is clearly stated in standard gift receipts.

The opposite is true with grants. A grant is an exchange transaction in which each party receives a “benefit.” The grantor maintains an element of control throughout the life of the grant, and sometimes thereafter.
The terms of the grant are spelled out in a grant agreement or contract that is signed by both parties, and the grantee is obligated to fulfill those terms or risk forfeiting the funds.

The terms typically include performance of the project procedures described in the grant proposal, accomplishment of enumerated outcomes, reporting on a specified schedule and adherence to accepted accounting standards … including maintenance of separate accounts for the grant funds.

What does the grantor get in return? While not a tangible benefit, the grantor’s agenda is promoted. To be successful in obtaining a grant, an applicant must address the funder’s agenda, and create a partnership in which the grantee conducts programs or projects that are mutually beneficial.

Government grants especially fit this model, although it is also true of many large foundations. Government grants essentially are elements of policy control – the government agency promotes its policy initiatives by using funds to enable the grantee to conduct programs consistent with that agenda.

In the case of corporate grants, the expectation is that the company does get some tangible return – if nothing more than good will in the community; but, more on that in a future blog on corporate funding.

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Have a question about starting or expanding your grants program? Email me at Andrew@GrantServices.com..

(Adapted from an Article on “Founders Syndrome) Written in 2004)

In his blog, “Consulting Skills,” dated April 23, Carter McNamara asked, “What is a Mature Organization.” I’d like to try and answer that question from the perspective of a fundraising consultant.

I have to base my “answer” on a couple of basic concepts — that a NPO can’t function effectively (no less raise money) without:

1) A set of operating parameters (i.e., by-laws) that enables (and doesn’t prevent) an organization from operating in a manner that is most (cost-)effective and best serves the needs of those being served. Including:
• Term-limits for board members – as the “community” changes there is a real need to have board members who understand the cultures and the needs of the various segments of the community
• Procedures to ensure that board members are selected based on both the current and anticipated needs of the NPO
• Job descriptions for board members and board committees
• Provisions for board member evaluation, training, and removal – to include a focus on the fundraising process and their roles in it
• A clear statement that the CEO (an employee — paid or not) takes direction from the board, IS NOT A MEMBER OF THE BOARD, and can be replaced if s/he doesn’t observe the policies set by the board (This issue does not directly impact the fundraising process, but it’s a pet peeve of mine and I wanted it said!)

2) A set of policies that delineates:
• From whom the organization will/will not accept support
• The types of gifts it will/will not accept
• The types (with examples) of recognition it will/will not grant
• How contributed funds will/will not be retained/spent/invested
• How mission, vision and ethics will impact decision making

And, if in addition to the above, a NPO has a balanced/diverse fundraising program – an appropriate mix of funding sources (foundations, corporations, mass solicitation, special events and major gifts) – without reliance on “fundraisers,” then I’d probably consider that NPO to be a mature organization … from a fundraising perspective.
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Have a question about starting or expanding your fundraising program? Email me at AskDCA@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 work to answer your question.

 
In case you haven’t yet been there and done that, applying for and accepting a grant is the equivalent of signing a contract – in some cases there really is a contract.

The process is that grantors publish parameters for projects/programs they will fund, and you request funding for a project/program that is within their parameters.

If you are granted funding, it is understood and expected that said funding will support the project described in your proposal; and, that you will report back on how the grant was used and how it helped you to attain the goals stated in your proposal.

Some grantors require periodic (financial and activity) reports on the progress of the project for which they’ve provided the funding. Some don’t. In either case, you should take great care in preparing and submitting such reports, as they will look at the reports from your last grant, before providing new money.

You can improve your chances of being funded, but only if your applications go to the right funders … only if they contain the required information … only if you’ve provided the required follow-up information on prior grants … only if your programs meet the specific requirements outlined by those grantmakers.

And, btw, in addition to publishing guidelines describing who and what they will fund — a significant number of foundations specify who and what they won’t fund.

Know this, funders talk to each other. If you use your grants effectively, in the manner indicated in your proposals, then many grantors will let other foundations and corporations know that you are worthy. They will also pass the word if you are less than successful in meeting their requirements and your goals.
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Have a question about starting or expanding your fundraising program? Email me at AskDCA@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 work to answer your question.

Every day, thousands of non-profit organizations, believing that their financial problems are soon to be over, generate/send proposals that receive, at best, a brief reading.

Contrary to popular belief and unlike the grants Mr. Question-Mark touts in the TV ads, grants to non-profit organizations are not free-money. Grants come with a variety of obligations. Corporations, foundations and government agencies don’t just give it away. It takes more than mailing applications and waiting for the checks to arrive.

To Get Funded, you must know how to tell your story. You need a well-written narrative that tells:
• How and why and by whom your organization was created;
• The community needs you have been serving and/or intend to serve;
• Why there is a need to create/expand your program, and how you will do that;
• How successful you’ve been; and,
• Specific funding needs for all aspects of your operation.

The vast majority of grantors want to see your audited financial reports and your budgets. They want to know where the rest of your funding is from, and you will need to prove that you are fiscally responsible, can be trusted and that you operate in a business-like manner.

Funders want to know who your leaders are — trustees, volunteers and staff. And, they want to see if/how those people are financially supporting the organization.

You must also be able to tell the funders:
• How your mission/project(s) meets their guidelines;
• How your mission/project(s) will make a significant difference to the community;
• How their funding will help create a project/program that will become self-sustaining; (Remember, most funders don’t’ want to adopt you. Funding is designed to help you create something. You’ll then have to learn how to generate the ongoing funding by yourselves.) and,
• In the case of corporate funding, how the relationship will benefit the corporation — how it will impact their bottom line.

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Have a question about starting or expanding your fundraising program? Email me at AskDCA@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 work to answer your question.

(Be sure to see “Musts” 6-10 in this blog, too)

5. Please, do not — you MUST NOT — write your own fundraising materials. And, if you insist on doing so, pay an experienced fundraising writer to review and comment on your writing.

Writing for fundraising is an Art. Most fundraising letters, case statements, grant proposals, etc, are nowhere near as effective as they could be. Many fundraising letters (and you’ve probably gotten some of them) are really terrible.

4. You MUST diversify your sources of funding for your fundraising program to be successful over the long term,

Every time the economy takes a hit, government, corporations and foundations reduce their funding of non-profits. The greater the number of individual major donors an organization has, the smaller the chance that an economic downturn will force you to reduce services to your community.

3. You MUST NOT assume that a special event will make everything better!! You can’t expect to create a special event and have it be instantaneously successful. An event most often requires a multi-year period to establish itself and begin generating enough income to do more than pay its own costs.

A great number of attendees at special events are paying for entertainment or to “honor” someone they care about. You can’t count on those people buying tickets every year. They may find an event that’s more entertaining or that has an “honoree” to whom they feel a greater connection.

2. All donors MUST be thanked/recognized for their gifts, but not every donor wants to be thanked/recognized in the same way. Some like seeing their names in print, some don’t; some like plaques, some don’t; the better you know your donors, the more appropriately you can thank/recognize them.

1. A successful fundraising program MUST be designed based on the needs of donors, not the needs of the organization. Donors give to satisfy their needs, not yours.

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Have a question about starting or expanding your fundraising? Email me at AskDCA@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 work to answer your question.

10. All Board Members, MUST be donors – to the best of their ability. Not all board members are wealthy, but everyone should give at the highest level possible for their circumstances. It is important to be able to say to the public that 100% of your board supports your mission with their dollars. If your board members won’t give, why should anyone else?

9. You MUST give people reasons that will make them want to give. That you need money is not one of those reasons. Show prospective donors how their giving will make a difference in people’s lives. And, more importantly, show them how their giving will make a difference in their own lives.

8. You MUST understand that the best person-to-person fundraiser is a well-trained and well-motivated volunteer who solicits his/her peers, friends, family and colleagues. Professional fundraising staff or counsel can help you design and run your program and train your volunteers, but staff and counsel cannot usually do as good a job soliciting as can an impassioned volunteer.

7. You MUST do adequate planning/research before implementing any fundraising strategy — no matter the size of the gifts you’re soliciting or the goal you need to reach. And, you MUST periodically test variations of your fundraising methodology to ensure that your efforts are as cost-effective as possible.

6. You MUST have a means/method of tracking your fundraising and leadership prospects, your donors and your contacts with them. If you’re a very small organization and only have a few prospects/donors, you could probably use file folders and/or spreadsheets; but, once you have significant numbers of individuals to track, you must have the appropriate computer software.

There are many brands of such software, some is free, some is expensive, but don’t buy on the basis of cost. Select the software that will allow you the best use of the data you will collect. And don’t try to design your own — unless you’re a fundraising database expert, you don’t know what information to collect and how to arrange it.

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Have a question about starting or expanding your fundraising? Email me at AskDCA@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 work to answer your question.