All posts pertaining to cultivation, solicitation, and stewardship

Does Government Funding Destroy Philanthropy?

A few days ago an email washed into my inbox from the University of Notre Dame talking about the “Science of Generosity“. I scrolled down to the first block of text and saw they were talking about trying to provide the existence of a “selfish gene”. For those of you who know me well, you can probably guess that I wrinkled my eyebrow skeptically and closed the email. However, instead of sending the email to trash, I put it aside to investigate later … and I am glad I did.

Upon further review, this academic initiative has many interesting objectives including:

  • the sources, origins and causes of generosity,
  • the manifestations and expressions of generosity, and
  • the consequences of generosity for both donors and recipients.

While I am looking forward to hearing more from these researchers, one block of text really grabbed my attention as it relates to the idea of government funding:

“Crowding out,” or decreased donations as a result of government grants is an issue dealt with by many charities. But government grants to charities don’t decrease donations because donors consider themselves to have given indirectly as taxpayers; instead, they decrease because of the reduced fundraising that follows government grants (Andreoni, “The Inherent Sociality of Giving”).

Is it possible that non-profit staff and board members “ease up” on their fundraising focus and efforts in the wake of a big government grant coming in? Is that what accounts for what I’ve witnessed in so many board rooms when volunteers point their fingers at staff during fiscal crisis and say, “If you would just go write another grant, we wouldn’t be in this situation?”

Is it possible that a non-profit organization can get addicted to government funding that their board’s “fundraising muscles” atrophy so badly that they “forget how to fundraise” or refuse to engage in the hard work of resource development?

If this is all true, then I suspect it is because government funding warps the concepts of “urgency” and “accountability” that are two of the nine keys associated with engaging volunteers in the difficult activity we call fundraising. I look forward to hearing more from the University of Notre Dame about this philanthropy principle and so many others.

What do you think about this idea of “crowding out“? Do you think it is real? Have you seen this principle in action in your board room or others? If you think it does exist, what do you think can be done to counteract it and maintain a high level of volunteer engagement in fundraising activities? Should non-profits just stop pursuing government funding and pursue more traditional charitable giving audience such as individuals and corporations? Please take 30 seconds and weigh-in with your thoughts by using the comment box below. We can all learn from each other.

Here is to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847|

Hey Mom, non-profits can have cavities too!

Last Monday, I made that dreaded trip to see the dentist. I am proud to say I have no cavities; however, I need to apparently stop biting my cheeks and grinding my teeth. While I am proud of my oral hygiene, the big news is that my dentist has gotten very good at stewarding his clients.

Right about now, I suspect that many of you are blinking at the screen and thinking something like: “Huh? A for-profit dentist is stewarding his clients like a non-profit organization stewards its donors? Whatcha talking about, Erik!”

This is what I am talking about:

  • A few weeks before my appointment  I received a newsletter in my mailbox from the dentist. Of course, the newsletter contained some articles about dental services he provides. However, there was also interesting reading about the growing body of research between dental hygiene and heart disease as well as oral cancers and HPV. I walked away from that newsletter feeling better about my semi-annual investment in my mouth. Ah-ha . . . STEWARDSHIP!
  • By the time I got home from my dentist appointment, there were already two emails sitting in my inbox from my dentist. The first email thanked me for visiting and asked me to take an online survey. The rationale was that he values my business and wants to continue providing high quality service. Correct me if I’m wrong here, but . . . ah-ha . . . STEWARDSHIP!
  • The second email invited me to join his “online community” where members are able to: receive email appointment reminders; request appointments online; receive special announcements; write a review; refer a friend; watch a YouTube video of him talking about the overall health-ROI associated with investing in your mouth. I was directed to his website. I was directed to his Facebook page. I was directed to his Twitter account.  OMG . . . this isn’t just STEWARDSHIP, but it was electronic stewardship (ala ePhilanthropy for non-profits).

Back in the old days, dentists used to clean your teeth and you wouldn’t hear from them again for another 6-months when someone called to remind you about your upcoming appointment. This got me thinking about the number of non-profit agencies out there who take a donor’s charitable contribution, fire out a generic computer  generated recognition letter, and then do nothing until it is time to ask for the next gift.

Hmmmm . . . if my dentist can evolve, then so can many of those non-profit organizations who are still engaging in “transactional fundraising”.

What is your agency doing to enhance the “donor experience” and improve stewardship efforts? Have you ever considered sending donors a survey immediately after their solicitation to ask about the quality of their solicitation experience? Think about it for a moment . . . it starts to sound less and less silly the more you ponder it. Are you keeping your eyes open for how other non-profits and for-profits are changing the way they steward their donors and clients? What are you seeing?

Please use the comment box below and weigh-in with a your thoughts and observations. It doesn’t have to be a long comment . . . 30 seconds will suffice. We can all learn from each other.

Here is to your health (both non-profit health and dental health)!!!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847|

If I only had a heart . . .

There are 9-keys to “inspiring and managing yours board for fundraising success”. In fact, the reality is that these 9-keys are the same nine things you need to do to “engage” anyone in anything. However, I believe that these nine concepts are not all equal. While all are important, I have come to realize that the most important and most difficult engagement tool was best summed up by the “Wizard of Oz’s” Tim Man in this YouTube video.

The most important engagement tool in your nonprofit toolbox in my humble opinion is “MISSION-FOCUS”.

I personally learned this lesson more than 7-years ago when one of my more influential board volunteers (I’ll omit his name for privacy purposes, but let’s just say he was really good with other people’s money) resigned from the Boys & Girls Club of Elgin’s board of directors. While he resigned for personal reasons and still supported the Club, I didn’t see the train wreck coming until it was too late.

This board volunteer was infamous for taking 15+ prospects’ pledge cards as part of the annual campaign every year. His reasoning seemed sound: 1) they were clients of his, 2) they were friends of his, and 3) he had always solicited these donors. I’d be lying if I tried to tell you that I ever tried to talk him out of being such an overachiever. However, in hindsight I wish that I had.

The first year this individual wasn’t on our board, we tried to redistribute his annual campaign prospects to other volunteers. I finally understood how big of a fool I had been when my phone rang a few weeks after our annual campaign kickoff meeting. The call came in from one of our more steady donors who had always been solicited by this former board volunteer.

The call started off nice enough. “Hi . . . how are you . . . how are things down at the Club?” However, pleasant conversation quickly turned into a cross-examination: “why is so-and-so calling me for my annual campaign pledge this year . . . what happened to he-who-I-loved-to-get-solicited-by . . . is there something wrong at the Club whereby he just walked away from your board of directors?” And as if that wasn’t enough to cause me to run to the restroom and vomit, most of the calls ended with the donor talking to me like I was a kindergartener and telling me that they didn’t donate to the Club because of our mission but because of who had been asking.

The lesson I painfully learned was that stewardship was very important in the resource development process. Successful stewardship and relationship building meant transitioning a donor-relationship from their the volunteer-solicitor connection to a love affair with the organization’s mission. While it might not happen overnight, working on it symbolized a commitment to sustainability and a donor-centered paradigm. The Tin Man was 100% correct when he sang about the value of his heart.

Being “MISSION-FOCUSED” goes beyond stewardship . . . here are just a few ideas for infusing mission in everything you do at your non-profit organization:

  1. Host your board meetings, committee meetings and fundraising meeting at your service facility as a way of reminding everyone what their volunteer time commitments are all about.
  2. Focus newsletter content on return on investment messaging and all things related to your agency’s mission. Skip the boring advertisements for the next opportunity to make a contribution.
  3. Don’t let your annual campaign volunteer solicitors go on important solicitations by themselves. Staff should do everything possible to get invited on important solicitations and ensure: 1) the ask is not being done in a “quid pro quo” manner and 2) mission-oriented reasons are infused throughout the solicitation call.
  4. Find ways to bring the idea of your clients into important meetings. For example, ask agency clients to participate in an essay contest about what they value most about your organization, its programs and mission. Share those essays with board volunteers, fundraising volunteers and donors.
  5. Incorporate a “mission moment” into ALL MEETINGS as a way to keep the focus on why you’re asking others to do what they do.

Failure to inject “MISSION-FOCUS” into all of your meetings and fundraising campaigns can be disastrous. It can lead to volunteer-fatigue and donor turnover. It can create a sense of disengagement that results in staff doing everything. Do I need to go on? Come on  . . . if a Tim Man can get it, then surely we all understand the importance of this concept. Right?

I can go on and on, but I’d rather you share with your fellow DonorDreams blog subscribers what you do to maintain a healthy dose of “MISSION-FOCUS” in everything you do. Please use the comment box below to share your example because we can all learn from each other. There are no right or wrong answers. Please jump in.

Here is to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847|

Corporate philanthropy: He loves me — He loves me NOT

Last week I facilitated a panel discussion about corporate philanthropy at a Boys & Girls Club regional conference in Milwaukee. Serving on that panel was a CEO, COO and CFO from two companies in the Fortune 500 and another company from the Fortune 1000. I personally had a great time interviewing those gentlemen, but later that evening I caught some of the news coverage about the Occupy Wall Street protests. Needless to say, it was a confusing day for me that represented quite a dichotomy.

When I feel this way, I typically like to retreat back to listing off simple facts and try to find some truth and clarity. Here are a few of those facts running through my head this morning:

  • Of the $300 billion given to charities every year, approximately 5-percent comes from corporations and more than 75% comes from individuals
  • There are CEOs who are committed to corporate responsibility and making our world a better place to live as seen in this YouTube video from the 2011 Board of Boards CEO conference.
  • There are individuals who are afraid of corporations and banks as you can see in this YouTube video of a 20-year-old Wall Street protester.
  • While corporations are legal structures without emotions, there are countless numbers of people behind the corporate veil who are living, breathing and compassionate.

From a charitable giving and non-profit perspective, I am always amazed at how aggressive we go after corporate sponsorship and donations even though the statistics don’t seem to justify that strategy. After giving this some thought, I’ve concluded the following two things:

  1. Non-profit volunteer solicitors must feel more uncomfortable talking to individuals about making a donation than even I thought possible.
  2. Non-profit volunteers exhibit this sense of “entitlement” when talking to corporations about charitable giving. (e.g. corporations “owe” this charitable money to our non-profit organizations because we shop at their stores every day and give them our hard-earned money).

If my two conclusions are “on the mark,” then non-profit leaders have a problem on their hands, and I assure you that things are not going to end well. Regardless of how much we cross our fingers and wish, these two things will NOT change: 1) corporations will not suddenly find more money to give away (go back and listen to the CEO conference video very carefully) and 2) individuals will always be the at the heart of a successful charitable giving program.

Please don’t misunderstand what I am saying here. Don’t stop engaging corporate America . . . continue writing grants, asking for contributions and sponsorships, and building partnerships. However, you need to keep perspective and your eyes on the prize. Listen carefully to this corporate philanthropy manager and I suspect you will come to the realization that your corporate philanthropy strategy can drive the SINGLE MOST IMPORTANT THING to your resource development plans — increased individual giving and support.

Non-profit leaders need to pick themselves up off the ground, put the daisy down and stop singing songs related to: “She loves me, she loves me not“. We need to start LEADING and understand that corporate leaders need to make tough decisions around their limited charitable giving budgets. CEOs want to see return on investment, but even more so, they want their non-profit partners to help them engage their employees and advance their brand.

Additionally, non-profit leaders need to double down on training and working with their fundraising volunteers. We need to help these people get over their fear associated with soliciting individuals. We also need to help them let go of their entitlement attitudes around corporate philanthropy. These two things won’t happen without your leadership, and this paradigm shift must occur if your non-profit organization is going to get healthy during these tough economic times.

So, please feel free to go down to the Wall Street protests in your community, pick-up a sign and march to your heart’s content. It is quintessentially American to do so if you feel that way about the state of our economy and corporate America. However, you ALSO need to figure out how to build bridges to your corporate partners that will enable you to walk their employees (and your future donors) across that bridge and towards your organization’s mission.

Here is to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847|

Can a non-profit board contract out its management to a for-profit company?

An old childhood friend of mine reached out to me this morning with an interesting question:

“Do you think there is a conflict with a non-profit’s status if they contract with a for-profit company to manage the organization?”

She asked this question because her company is starting to investigate the possibility of offering a service whereby it would get into this line of work. So, I promised that 1) I would do a little research on the subject and 2) pose the question to subscribers of this blog to get your thoughts. While I will share some of my thoughts below, please use the comment box to weigh-in.

As I swirled this question around in my head, I ultimately came to the conclusion that my answer is “I don’t advise it, but IT DEPENDS“.

  • The IRS is very specific about 501(c)(3) organizations needing to focus their efforts on the “greater good”. I can see potential conflicts in a relationship like this because the main focus of a for-profit corporation is “profit;” whereas, the main focus of a non-profit organization is achieving its “mission“. While not necessarily mutually exclusive, I do worry about the potential for conflict when making management decisions. I can see many different kinds of decisions pertaining to managing money and raising funds that could create conflicts of interest.
  • I’ve seen it way too often where non-profit boards develop a feeling of hopelessness and want to abdicate their fiduciary responsibilities to anyone who they think can fix their dysfunction. In situations like this, contracting management of the agency to a for-profit corporation might be a recipe for disaster. In my opinion, partnering with a for-profit organization requires a highly engaged non-profit board of directors who can and will provide more direction and oversight to their for-profit partners than they might otherwise have done for an Executive Director and agency staff.
  • The resource development and fundraising functions of a non-profit organization are complex and not something that makes much sense to many for-profit leaders. Cultivating & stewarding donor relationships as well as raising money isn’t as easy as hosting an event or writing a grant. It is a comprehensive program that requires knowledgable staff and engaged & committed board volunteers. A non-profit board cannot wash its hands of its resource development responsibilities and expect its for-profit partners to make it rain money. I also wonder how many donors might view such a partnership and how that might affect their financial support?
  • Board development is very different for non-profits compared to for-profit corporations. In the non-profit world, there can be no compensation for sitting on a board. Additionally, it appears to me that the process of identification, recruitment, orientation, recognition and annual evaluation has a different feel for non-profits compared to corporate boards. While board development is the responsibility of board volunteers, it typically evolves into a partnership between board and the executive director (with staff providing support and expertise). I can see many conflicts around this governance function when non-profits and for-profits partner around agency management.

In a nutshell, I am skeptical about any board turning complete and total management control of its non-profit agency’s management over to a for-profit company. However, I can see a non-profit board contracting with a for-profit corporation for specific management services, such as:

  • executive search
  • temporary staffing
  • accounting and payroll
  • marketing
  • market research & feasibility studies
  • facilitating planning processes (e.g. strategic planning, business plans, etc)
  • general consulting work around any number of topics

However, even in these circumstances, I don’t think it is wise for a non-profit board or Executive Director to contract out any back office function in a way that feels like they are “washing their hands” of their responsibilities. Significant oversight is required in these circumstances. If this oversight isn’t possible, then the partnership shouldn’t be consummated. Additionally, these arrangements should be spelled out in a contract (or a letter of agreement) that also clearly identifies potential conflicts of interest and indicates how they will be handled.

The one final thought I cannot get my head around is the idea of “non-profit receivership”. What if a board and staff are so dysfunctional, know it, don’t want to dissolve the agency, but they all agree to quit and give the organization a ‘new start’ . . . can they do so by temporarily (and contractually) putting their agency into a state of receivership with a for-profit organization? I suspect it cannot legally be done without a board of directors in place providing intense direction. I also suspect that receivership might best be done with another non-profit organization playing the role of “receiver”.

What are your thoughts on my friend’s question? I know we have some lawyers who subscribe to this blog . . . and I’d love to hear what they think. I know that my friend and her company will be monitoring this blog for comments to this post for the next day or two. PLEASE JUMP IN WITH YOUR OPINION. I suspect they will have to engage legal counsel to flesh out many of these questions, but your input can help them frame that engagement with their legal counsel.

I will end today’s post by sharing some of the research I found when trying to respond to my friend’s answer:

Here is to your health!      (Sorry for the long post . . . this is a complex topic)

Erik Anderson
Owner, The Healthy Non-Profit LLC!/eanderson847

Happy Birthday to the Fundraiser-in-Chief

A few months ago I wrote a blog post wondering if President Obama is our nation’s “Fundraiser-in-Chief“. I concluded that post by saying the 2012 campaign fundraising results will tell the tale. Well, second quarter fundraising numbers came in a few weeks ago, and Team Obama reported raising $85 million, which exceeded the campaign’s $60 million public goal for his campaign and the Democratic National Committee combined. Click here to read and see more about this story from the Huffington Post.

Regardless of whether you’re a Democrat or Republican, I think there are countless things we can all learn about fundraising from Team Obama.

For example, Team Obama is in Chicago tonight at the famed Aragon Ballroom to celebrate his 50th birthday. While this could’ve been just a plain-Jane birthday party, it has been turned into a HUGE fundraising opportunity. ABC News estimates that approximately 1,000 donors will pay between $50 and $35,800 to attend.

Team Obama reminds me that almost anything can and should be used by non-profit organizations as a solicitation opportunity or even cultivation or recognition/stewardship opportunities. Here are just a few ideas:

  • Hiring a new Executive Director or senior staff person
  • Electing a new board president
  • An organizational anniversary or a facility’s birthday
  • Celebrating your clients’ successes (e.g. an Eagle Scout banquet or announcing the winner of a Boys & Girls Club’s Youth of Year competition)
  • Hosting a reception to introduce a new community leader whose business /organization aligns with your mission (e.g. a literacy non-profit hosting a welcome reception for the town’s new head librarian)
  • Celebrating an accomplishment (e.g. releasing your organization’s program outcomes data in conjunction with a town hall meeting related to the subject matter).

Another interesting observation — even though it is a common practice by many non-profits — is how Team Obama turned their event into a series of events and opportunities kind of like a “Russian Nesting Doll”. It isn’t just a birthday party celebration. It is also a pre-party reception and a post-party VIP gathering. I am sure all of these things either came with additional price tags or were premium value-added upgrades for larger, significant donors.

The sky is the limit, and all that is required is a little bit of imagination on your part. If you are lacking creativity, then I suggest watching Team Obama and other successful non-profits in your community. We can all learn from each other! And there is more than just event planning and management that you can learn from Team Obama. Watch them carefully and you’ll find lessons in: goal setting, challenge gift strategies, ePhilanthropy & social media, multi-channel fundraising, direct mail, donor stewardship … and the list goes on and on. Again, it doesn’t matter if you’re Democrat, Republican or apolitical.

What fun and interesting opportunities have you used to cultivate, solicit and/or steward prospects and donors? Please use the comment box below to share.

Here is to your health! And, oh yeah, Happy Birthyday Mr. President … here is a YouTube video to help you celebrate.

Erik Anderson
Owner, The Healthy Non-Profit LLC!/eanderson847

What are you saying?

Last night I was watching Comedy Central before bedtime and caught an interview between Stephen Colbert of The Colbert Report and Grover Norquist of Americans for Tax Reform.  It was obvious that Norquist made an appearance on The Colbert Report because he wants to “cultivate” new Millennial generation voters and educate them about his anti-tax message.

Unfortunately for poor Grover, his time was not well spent because when all was said and done the only thing he essentially accomplished was to 1) explain his anti-tax pledge and 2) demonstrate how much he hates taxes. He never got around to telling the young Millennial audience WHY an anti-tax position is important to their generation. I was left wondering what is the case for support?

This got me thinking about many recent conversations I’ve had with non-profit friends. We’ve focused too much on the “how to” communicate with prospects & donors as well as the “how often” to do it. Unfortunately, I think we’re missing the boat (like Grover did last night) by not talking about WHAT should we say to our prospects and donors.

In today’s day and age of non-profit competitiveness, it is not good enough to:

  • send out a gift acknowledgement letter that just says “thank you”
  • mail a quarterly newsletter to donors
  • e-blast informational emails
  • call donors with appreciation
  • host a recognition event
  • get the newspaper to print your press releases
  • set-up and use Facebook pages and Twitter accounts

This laundry list is important, but even more important is what your messaging will be once your secure and use these communication vehicles. Here are a few suggestions to help you fine tune your messaging:

  • Go back and re-read everything you’ve used in the last 3-months.
  • Assess the messaging with a critical eye. Ask yourself if there is a fine tuned message focused on what you do, why you do it, and where are you doing it, and why is it urgent and critical for the community. (If all you hear is “blah-blah-blah,” then you have some work to do.)
  • Pull together a focus group of donors and ask them what messages they hear and what do they want to hear.
  • Dust off your organization’s “case for support” document. Re-read, assess, test, and re-write based on what you hear from others.

Tom Ahern put it best in his most recent e-newsletter when he said: “Our job as donor communicators, I am now convinced by experience and research, is to bring JOY to the donor’s door.”

Has your donor communications brought joy to your donors? Have you asked them? Or are you just grabbing the megaphone and yelling as loudly as you can “we need more money”? Please go to the comment section of this blog and weigh-in on your organization’s communications best practices and how you know they are effective. Let’s learn from each other!

Here is to your health!

Erik Anderson
Owner, The Healthy Non-Profit LLC!/eanderson847!/profile.php?id=1021153653