chronicle of philanthropy – The Healthy Non-Profit

How does your community compare to others in fundraising?

March 25, 2013 erik Fundraising, technology

My side of town is doing better than people expect! Hip Hip Hooray!” In my opinion, this is cause for celebration because I live on the east side of Elgin, Illinois, which can come with a stigma or two according to some people (mostly those who live west of the Fox River). This morning I discovered an amazing online benchmarking tool from our friends at The Chronicle of Philanthropy that allows me to explore philanthropy in my state, city, and neighborhood.

So, all of my celebration this morning stems from the fact that I discovered my zip code (60120) is doing better than average in total charitable contributions compared all zip codes in the State of Illinois. We rank 3,976 out of 28,725. Woo Hoo! Of course, we’re still behind our west side neighbors who rank 2,347, but frankly I don’t care. I am thrilled to be doing this well!

I am also intrigued by all of the data that The Chronicle of Philanthropy is able to put at my fingertips with regards to philanthropy and demographics data. Here is some of what I learned about my side of town this morning:

Last year we contributed a total of $10.2 million.
The median level of contributions was $1,666 per household.
Median household discretionary income is $41,310.
Households in my zip code donate 4% of their income.
55.6% of households identify as Hispanic.
33.1% of people are under the age of 20 (which compares to 27% for the average zip code in the country).
32.8% of people don’t possess a high school diploma (which compares to 14.4% for the average zip code in the country).

I could go on and on with amazing little factoids about my little corner of the world, but I will stop here because I don’t want to take some of the fun out of you exploring this online tool.

Now some of you might be scratching your head and asking the age-old question “Who cares?”

Simply put, this online tool puts a powerful benchmarking tool in the hands of every non-profit organization in America. Powerful!!!

Again, some of you still might be scratching your head and asking the age-old question “Who cares?”

The following are just a few reasons why every non-profit organization regardless of their size or skill level should be looking at benchmarking exercises for their fundraising program:

Benchmarking allows you to see where you stand in comparison to others.
When your organization is faced with making a difficult choice between a number of different options, then benchmarking can help you make tough decisions.
Benchmarking allows you to clearly see what you’re doing well and where you might need to improve.

Let’s go back to my hometown of Elgin, Illinois for a moment . . .

Elgin, Illinois is made up of four zip codes (e.g. 60120, 60121, 60123, and 60124), and the total charitable giving reported on tax returns filed from these four zip codes adds up to $39,582,326. If I operated a non-profit organization with $1 million per year in private sector fundraising revenue, then I would know that I am capturing 2.53% of the reported philanthropy in the area. With this knowledge, I can do a better job of measuring success and progress.

There are countless other ways to slice and dice this benchmarking data, and there are many ways it can be used. We’ve already made the case for how this information can be used to evaluate and assess your fundraising program. It could also be used to make decisions on who and where to target your fundraising efforts.

Does your non-profit organization do any benchmarking? If so, please share your success stories in the comment box below. If not, please weigh-in on some of the obstacles you encounter. If you took a moment to click around The Chronicle of Philanthropy’s online tool, please also share your comments or thoughts. We can all learn from each other.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
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2012 Non-Profit Trends and Predictions: Contraction Continues

December 28, 2011 DonorDreams Uncategorized

This week I’m looking back upon 2011 for major trends, and then looking forward to 2012 with an eye towards making a few predictions. Today, we are looking at non-profit failures, mergers, acquisitions, and strategic alliances.

I have heard rumblings for years that the non-profit sector is about to experience a wave of mergers. This conversation always involves facts like:

There are approximately 1.5 million non-profit corporations in existence of which three-quarters are classified as “charitable”
Every year brings another 20,000 to 60,000 new non-profit agencies in existence (depending on what source you read)
Almost 25-percent of non-profits allegedly report $25,000 in annual revenue and are obviously very small (and the vast majority operate with annual budgets of less than $3 million . . . in fact most are smaller than $1 million)
Every year 30,000 to 60,000 non-profit organizations go out of business

In 2008, Paul Light predicted that the new economic challenges would result in more than 100,000 non-profit organizations failing over a two year period. Two years later Caroline Preston wrote a follow-up article in the Chronicle of Philanthropy and investigated whether or not this prediction actually came true. As you can imagine, the answer was difficult to ascertain, but in the end the conclusion seemed to be a resounding — “YES“.

With so many friends working in the non-profit sector, I’ve tried to stay on top of where they perceive their agencies to be with regard to financial solvency, and I must admit that I see too many indicators pointing to:

2012 continuing (and likely escalating) the trend
of non-profit failures, mergers, acquisitions and strategic alliances.

Guidestar recently published a great document titled: “Late Fall 2011: Nonprofit Fundraising Study“. If you have some time, you need to read this report! While I am usually very skeptical about the validity of survey research, I indulge in it every once in a while. After looking at this report, I am even more convinced now that the non-profit sector is still only at the beginning of a long-term trend involving bankruptcy, mergers, and alliances because:

small non-profits are experiencing more financial stress than before (and I suspect many are finally at their breaking point)
small agencies are experiencing more donor turnover (most likely resulting from poor stewardship efforts)
small organizations have less money in the bank and their reserves are marginal (a bad position to be in if there is another economic shock)
small non-profits report are preparing to downsize staff in 2012 (not a great situation to be in when donors want to see more impact for less money)

Combine some of these generalizations with the government funding contraction trends we’re seeing, and it becomes obvious to me that more failures and mergers awaits us as we travel down the 2012 road. If you want some good reading materials on this subject, you may want to check out the following resources:

Is your non-profit organization living on the edge? Have you ever looked at merger, acquisition, or strategic alliances? If so, what were your considerations in moving forward or not moving forward? If the best time to look at mergers and strategic alliances is BEFORE a crisis, are you starting to look more seriously at these opportunities?

Here’s to your health!