donor – Page 12 – The Healthy Non-Profit

Being thankful!

November 24, 2011 DonorDreams Uncategorized

This Thanksgiving holiday season I am grateful to all of you who subscribe to this blog.

When I first started writing it a number of months ago, I set a goal of reaching 100 subscribers by the end of 2011. I am thrilled to inform you that our little online community currently sits at 124 and counting. The next goal is to figure out how to expand our little non-profit online community to 300 subscribers by the end of 2012.

As is the case with your special events and annual campaign fundraisers, you don’t increase the number of donors by hoping more new prospects spontaneously show up at your door with checks in hand. Hope is never a strategy!

So, I am asking for your help this holiday season. If you know of someone who works or volunteers for a non-profit organization and is committed to life-long learning, please forward a copy of one of my blog posts along to them and encourage them to subscribe. As you know, it is FREE and can be done by simplying typing an email address into the subscriptions widget in the upper right corner of my blog. After doing that, they need to verify they did it by clicking the link that is emailed to them by WordPress.

As you know, I write this blog because I believe in my heart we can all learn from each other. So, it stands to reason that the more people who join our little online community, the more collective knowledge we’ll have access to, which means we can increase our learning capacity exponentially.

Please know that I am thankful for your willingness to engage in a discussion about donors, fundraising, resource development and non-profits in general. Thank you! Enjoy the turkey today. And as always, here is to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Canned cranberry sauce and donor mistrust

November 23, 2011 DonorDreams Fundraising

Last week I read a great blog post from Meredith Hilt titled “Driving Me Crazy: Canned Goods for Cash“. She laid out three great reasons to give cash instead of canned goods. I was totally convinced, and the most effective argument for me was that food networks can buy food in bulk which makes the dollar you use to buy a can of green beans stretch much farther.

So, yesterday I was driving to Dallas to spend Thanksgiving with my in-laws, and I was listening to NPR’s “Talk of the Nation”. One of the stories was exactly the same topic as Meredith Hilt’s post. As the miles passed, Neal Conan asked all the right questions of all the right guests. I was starting to tune out until Neal opened the phone lines and a caller surprised me by saying something like this:

I like to donate canned foods instead of a check because I know the non-profit organization cannot use my food donation to pay for overhead costs like staff salaries.

Well, I am happy to report that I kept my car on the road and arrived in Dallas safely many hours later. I am also happy to share with you that the next caller responded beautifully. She pointed out that overhead is necessary to pay the people to distribute the food, pay the utility company to heat and cool the area where the food is stored, and pay for the insurance on the building. Well done!

However, my mind has fixated on this exchange of thoughts, and I’ve come to the conclusion that people don’t trust non-profit organizations the same way they did before. Additionally, trust in the non-profit sector feels like it is eroding more and more every year.

I suspect part of the trust-gap is directly related to executive salaries. I only say this because it is usually the first thing out of people’s mouths.

I suspect that as long as unemployment remains high, people will question how and why non-profit boards can justify paying their executive director what might be perceived as a substantial salary. This is an emotional argument on the part of most people. I say this because if they looked at how large many of these agency budgets have grown, then an executive salary between $70,000 and $120,000 doesn’t look so inflated. Of course, when the average household in America is earning approximately $45,000/year and they’re working harder and harder for less and less, these arguments tend to fall short.

For those donors who are freaked out and afraid of non-profit organizations with high overhead, I think we have an obligation (in all circumstances and even in passing conversations) to educate the public about resources like Guidestar and Charity Navigator. These sites are far from perfect, but they are the only resources that exist to help skeptical donors feel like they are getting impartial information to help them make smart charitable investment decisions.

Personally, I wouldn’t stop here as I outlined in my blog post “Nothing Up My Sleeve! What About Yours?” a few weeks ago.

How does your agency deal with the “overhead question”? What about the question of executive compensation and defusing the issue with ‘average Joe’ donors? What are your thoughts about third-party accountability websites? Please take a moment to weigh-in with your thoughts on this Thanksgiving-get-away-day. We can all learn from each other.

Here is to your health!

Does your non-profit have a soul?

November 22, 2011 DonorDreams Uncategorized

A few weeks ago I facilitated a values exercise for an organization that is in the process of trying to build a powerful and functional new team. After the exercise (which was contentious but very productive), some of the feedback I received from participants as well as others is that a values discussion is just one big waste of time.

I made a conscious decision to hear thes folks and not respond immediately. I wanted to marinade on it for a few weeks. Well, I’m done soaking and I am ready to confidently say “Organizational values are NOT a joke!”

Don’t believe me? You don’t have to . . . just listen to Jim Kouzes and Barry Posner who stated the following in their book “The Leadership Challenge“:

“Shared values make an enormous difference to organizational and personal vitality. Research confirms that firms with strong corporate culture based on a foundation of shared values outperform other firms by a huge margin. Their revenue grew 4-times fast; their rate of job creation was 7-times higher; their stock price grew 12-times faster; and their profit performance was 750-percent higher.”

Before your non-profit organization can craft of vision of who it wants to be, it must address the values questions. The reasons for this are well laid out in Stephen Fairley and Bill Zipp’s book “The Business Coaching Toolkit“. Here are three reasons they believe this to be true:

Values give your people a cause to life for instead of just a job to do.
Values give your associates principles to apply instead of just policies to enforce.
Values produce leaders with relational authority and not just positional authority.

Still don’t believe me? OK . . . think about a time that you weren’t living your life in alignment with your personal values. For example, you might value something like “balance” because your family is very important to you, but the demands on your time at work forces you to make decisions that don’t allow for “balance” in your life. How does living out of alignment with your values make you feel? I suspect there is tension and pressure.

Now take this example and extrapolate it to the people you work with, the donors who contribute to you, and the board volunteers who serve selflessly with you.

As part of your organization’s next strategic planning initiative, I encourage you to start with mission-focus and before you transition to talk about “organizational vision” facilitate a collaborative discussion with all stakeholder groups around organizational values.

I promise you won’t be disappointed. You will find that your organizational values act as a catalyst for all kinds of things and refocuses your hiring decisions, recruitment decisions and can even affect how you solicit and steward donors.

Does your organization have values? Are they real or just something plastic? How do you see your agency using its values? When they developed those values did they include donors in that discussion? Please use the comment box to share your thoughts. We can all learn from each other.

Here is to your health!

Gobble Gobble … pass the stewardship please?

November 21, 2011 DonorDreams Board development, Fundraising, volunteers

This non-profit professional loves Thanksgiving! Yes, as you can tell from my picture, I love the epicurean delights that grace my table for this holiday. However, what I really love has almost nothing to do with food . . . it is the idea of taking time to simply say “thank you” that really appeals to my inner non-profit soul. It is for this reason I believe Thanksgiving is quintessentially a non-profit holiday.

What are you doing this Thanksgiving holiday to reach out to your donors and volunteers and express your thanks and gratitude?

When I worked for the Boy Scouts more than a decade ago, I found tremendous joy in cooking a full-blown Thanksgiving meal for my District Committee. Mmmmmm . . . I remember it as if it were just yesterday. Turkey, ham, stuffing, mashed potatoes, beans, rolls, dutch oven cobbler . . . prepared and served with my own two hands in the church basement we used to meet every month.

After feeding 50 of my best donors and volunteers, I relished the opportunity to take 2- or 3-minutes and tell them how thankful I was for their help and support. I also highlighted a handful of our collective successes from the last year.

Years later, as I worked with local Boys & Girls Club affiliates throughout the Midwest region, we worked on developing “thank-a-thon” events to steward donors around the Thanksgiving holiday. This was simply a handful of board volunteers who were armed with a list of donors, short script, and telephone. The message was short and sweet . . .

thank you for your support,
your support made a difference,
we accomplished X/Y/Z and couldn’t have done it without the support of caring and generous people like you,
we hope we can continue to count on your support in the future, and
this Thanksgiving we give thanks for people like you. Enjoy the holidays!

There was no solicitation for money. There was no guilt. It was an expression of simple gratitude. It demonstrated that donors and volunteers were part of a larger family — our “non-profit family”.

What are your personal plans to steward board volunteers, donors and volunteers this holiday season? I see many non-profits doing something. So, please take 30-seconds and share your favorite Thanksgiving stewardship activity of all time. If you’re a volunteer or donor, please share the best Thanksgiving stewardship activity that your favorite non-profit has ever included you in. We can all learn from each other . . . but that requires using the comment box below to share. Please?

Here is to your health! Enjoy your Thanksgiving with both your immediate family as well as your non-profit family. 🙂

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

When donors cry (literally)

November 18, 2011 DonorDreams Donor-centered fundraising, Fundraising

Have you ever been engaged in conversation with a donor and they spontaneously erupted into tears? This had never happened to me until recently, and I need to talk about it because it really shook me right down to my resource development foundation.

While I need to be sketchy with the details as not to embarrass anyone, I can provide some conversational context and set the scene. The conversation was about a specific non-profit organization that they had been donating to for a very long time. Long story short . . . the non-profit organization is now talking about going out of business and the newspaper is covering the story.

We talked for a long time as the tears flowed, and I was given one of the greatest gifts that any resource development profession could ever be given. I was allowed a glimpse inside the soul of a donor. Here is what they were saddened to tears over (this is their thoughts and not my analysis):

They believed in their heart in the mission of that organization and were mourning the possible death of something they loved.
They believed that their financial contributions had been making a difference in the lives of people. Now they have doubts and feel deceived
They personally solicited friends and asked them to also make a contribution to this organization. Now they feel like they perpetuated a fraud against their friends and aren’t sure they can face their friends.

I was given a gift when I was allowed to bear witness to the raw power of philanthropy. It affects me, and I wanted to share this with you because there are some important lessons that all non-profit professional need to take away from this story:

What we tell donors regardless of whether it is during cultivation, solicitation or stewardship efforts is like a sacred promise. Many donors take it to heart and deposit it in their emotional bank account. We need to remember this at all times.
There are people who “go to bat” for those non-profits that they love. They leverage personal relationships all in the name of mission. They are out there making promises to their friends, and we need to do a better job of recognizing that investment. They tell their friends that your agency is a wise investment, and we owe it to them to make sure that is true by always focusing on sustainability and organizational capacity building efforts. Just focusing on programs for our clients that our mission calls us to serve is simply not enough.
We need to be very careful about what we say publicly in the press about the present state of our agency. Donors take those things to heart. It can affect them deeply. Cavalierly talking about the possibility of closing your doors is the equivalent of playing with someone’s emotions. It isn’t nice and will cost you donors.

I decided to write this blog post because this tearful conversation was impactful. I can’t get it out of my head. It made me profoundly sad and even a little angry. I had hoped that sharing this with others would make me feel better and get beyond it because of my belief that we can all learn from each other. While I do believe this, I am also not feeling any better about things. In fact, I think I am a little sadder as I fight back some tears and a little angrier as I clench my teeth to get through this post.

There can be no doubt that I am physically experiencing the power of philanthropy, and I hope I become a stronger more donor-centered fundraiser because of this experience. My holiday wish for you is that you walk away from this blog post feeling the same way and use this story to become more donor-centered, too.

Have you ever had a similar experience? Has any donor interaction ever affected you in a way that you’ve embraced it and used it to become a better professional? If so, please use the comment box below to share because we can all learn from each other.

Here is to your health!

Nothing up my sleeve! What about yours?

November 11, 2011 DonorDreams Fundraising

I started this week off by talking about government funding for non-profit organizations and how it might not be all that it appears to be. We transitioned mid-week into a discussion about executive compensation and now we’re ending the week totally focused on non-profit transparency. These topics are all related and go together as well as peanut butter and jelly. However, the issue of non-profit transparency still seems to be a murky subject for many of us including me.

What is transparency? How far should a non-profit organization go with transparency (e.g. should the executive director tatoo their salary on their forehead)? What are the best ways to share a large volume of organizational information if it wanted to be 100% transparent? I don’t know about you, but the more I think about this topic the more questions I seem to end up with.

I recently ran across a great blog post by GuideStar that dates back to November 2006. They asked their readers to define transparency, and I found a number of very interesting ideas. You should click the aforementioned link and read the post. Here is one of my favorite thoughts on this subject from one of their readers:

“. . . everything we do must be clearly understood and open to review and thoughtful discussion by all stakeholders to gain their complete confidence and respect.”

While getting a clear idea of what we’re talking about is important, it becomes equally important to wrap your arms around how to achieve organizational transparency. I’ve had a number of random thoughts about what I might do differently if I were on the frontline again as an executive director. Here are just a few of those ideas:

I would create a “transparency corner” of the agency’s website and post documents such as:
– most recent 990 tax return
– most recent financial audit and management letter
– a list of the agency’s Top 5 highest paid employees with their salaries and value of their
benefits package published
– board roster with contact information for each volunteer and a copy of the agency’s
whistleblower policy
– regularly updated program outcomes data and impact report
– updated financial dashboard that illustrates the current financial health of the organization
– most recent copy of the strategic plan along with a regularly updated scorecard that reports
on progress towards implementation
– if the organization is accredited, then a copy of the documentation from the last accreditation
visit (or if you’re a Boys & Girls Club a copy of the Club’s most recent SOE assessment from the national office)
– a list of government grants, program deliverable associated with those grants, program
outcomes data linked to those deliverables, and a way for the average citizen to contact the governmental agency
administering that grant to report questionable activity
Everyone seems to have a newsletter nowadays with an “Executive Director’s corner. I would focus every one of those “corners” on a different aspect of organizational transparency.
I would publish an “annual report” every year (even it is wasn’t glossy) and include a wide variety of transparency topics such as a list of people who support your agency; a thumbnail picture of how revenues and expense breakout; a snapshot of who the agency serves, a list of the organization’s biggest accomplishments in the last year; and much more.
I would produce and mail a quarterly “Community Impact Report” to ALL donors that answers the big picture questions of: “What are you doing with my money? What results is my charitable investment achieving? What have you learned and plan on doing differently?”

I am confident that this list can endlessly go on and on and one. So, I am going to stop here. However, I would encourage you to use the comment box below to answer one or both of these questions: 1) How do you define “transparency”? and 2) What additional transparency idea do you have that should be added to the list above (or what idea from this list should be removed)?

Please take a moment to weigh-in with your thoughts and opinions. It is just 60 seconds of your time and it could make a difference in another readers’ agency. Remember, we can all learn from each other.

Here is to your health!

The case for transparency and non-profit salaries

November 10, 2011 DonorDreams Uncategorized

The President of the United States makes $400,000 per year not including benefits. A member of the Illinois House of Representatives earns $67,836 per year in addition to receiving a $132 per diem for every day they are in session. The CEO of Fifth-Third Bancorp earns $3,144,823 per year and has another $1,572,411 in restricted stock awards and $40,779 in other compensation.

Dale Lonis is the Executive Director of the Elgin Symphony Orchestra (ESO) in my hometown of Elgin, Illinois. According to his agency’s 2009 990 tax return, his 2009 salary was $122,850 and his benefits package was valued at $8,594.

OK . . . I can hear many of you wondering why is it necessary to post this kind of information. After all, many of us learned at a very early age that talking about money-related topics is taboo in polite society. Well, the reason why a segment of our society has fought so hard for transparency in government, publicly traded corporations, and non-profits is as simple as this:

Those who make a living with ‘other people’s money’ should be held to a higher standard.

Still not sure you agree? Please consider the following:

Public servants are paid by “We The People” and we’re entitled to know what they are paying themselves to do “the people’s business”.
Publicly traded corporations owe “the market” accurate information about how they transact business because without that information we end up with situations like ENRON, MCI WorldCom, and Tyco. When companies ask for public investment and act in less-than-transparent ways, people can’t make smart investment decisions . . . the free market fails to work efficiently . . . people unfairly lose money.

Can’t the same be said for non-profit organizations? Aren’t donors trying to make wise investment decisions with their charitable dollars? How many donors are happy when they learn their charitable contributions were misused by a nonprofit organization? I suspect that no one is every happy when that happens, which begs the question about the need for increased transparency in this sector. Doesn’t it?

Let’s circle back to the Elgin Symphony Orchestra and look at the facts (which I simply gathered from the organization’s 990 tax return):

The board made a decision to pay their executive director $122,850 in 2009
This agency brought in $2.5 million in revenue in 2009

$696,179 in membership dues
$162,269 in government grants
$642,528 in direct contributions from donors
$1,026,023 in ticket sales
$22,000 in program book advertising
$19,848 in performance fees

This organization didn’t “balance its books” and ended 2008 with a deficit of $471,214 and ended 2009 with a deficit of $322,616

Thanks to laws that require non-profit tax forms to be public information and websites like guidestar.org that publish 990 tax forms, donors are able to easily secure this information and make wise investment decisions. Even though the aforementioned information is just a small slice of what you can pull from an organization’s 990 form, a donor can make a number of judgement calls from it. For example, a donor can weigh how they feel about:

this agency’s revenue model (fees vs. fundraising)
this agency’s fiscal health
this board’s track record with key management decisions around budgeting, executive compensation, business model, etc

Disclaimer . . . I am not suggesting that Dale Lonis is being overpaid (in fact, I would guess it is in line with similar sized organizations in similar communities). I am also not suggesting that the board has made any poor decisions. I will leave all those judgements for each individual reader of this blog. All I am trying to do is make the case for the value of transparency in the non-profit sector.

Do you still think I am off-base? You may want to check-out what is happening in New York’s non-profit community. You might also want to look at what frogloop blog says about a Guidestar study that illustrates how little transparency exists in the non-profit sector.

I started this discussion with yesterday’s blog post by invited you to weigh-in with your thoughts and start a dialog about non-profit executive compensation and transparency.

Do donors deserve this kind of information? If not, then how can they make informed charitable giving decisions and how can they hold agency’s accountable for they promised during the solicitation call? What is your organization doing to become more transparent? Where are yours thoughts on transparency with executive compensation? Do you think a non-profit organization should be required to put its annual 990 tax form on file at your local library or on their website? Is the 990 form too obtuse? Does a non-profit need to be required to publish a small handful of key organization metrics on their website?

Here is to your health!

Capping nonprofit CEOs salaries and bonuses?

November 9, 2011 DonorDreams Board development, Fundraising

For the last two days, I have blogged about the impact of government funding on non-profit organizations’ fundraising programs. All of this talk about Uncle Sam and the non-profit sector got me thinking about government funding and the for-profit sector (e.g. bank bailouts, farm subsidies, Occupy Wall Street, etc). So, it wasn’t a big leap in my head when I jumped from for-profit corporations taking public funds to limiting CEO compensation and then back to how this all relates to compensation of non-profit CEOs who accept public funds.

LOL … yes, my mind has been wandering a lot lately. I blame the sugar rush from Halloween. 😉

You only need to go back a few years in the news cycle to recall that segments of the public were incensed by the federal government’s TARP program, which was our country’s bank re-liquidation and bailout program. Part of that public debate (and it is being rehashed by the Occupy Wall Street protesters) is that for-profit corporations that accept public funds subject themselves to a different level of accountability and regulation by “We The People”.

Well, if you buy into this argument, then don’t you need to logically do the same for non-profit organizations who accept government funding?

While the IRS is currently charged with monitoring 501(c)(3) non-profit organizations’ executive compensation to ensure it is in line with similar size agencies in similar sized communities through a provision called the “private inurement rule,” the question I pose goes a little bit further. The aforementioned question asks if local city councils, state legislatures and Congress can or should legislate concrete rules around non-profit executive compensation for those who accept public funding. For example, if “non-profit agency X” accepts a grant from their local city council, then that board of directors of “non-profit agency X” agrees to abide by a local ordinance that defines what the city council sees as reasonable and acceptable compensation.

This debate was well frame by two individuals who I saw commenting on a Charity Navigator blog post.

Here is how one side of the coin sounds:

“I would suggest that we put some of these salaries in context (just as you did with the American Red Cross). Some of these CEO’s are managing organizations that are multi-million dollar “businesses.” As such, their salary compensation is reflective of the size of the organization’s revenue and project stream.”

Here is how the other side of the coin sounds:

“Comparing these salaries to “for-profit” salaries is just ridiculous. These organizations exist out of the goodness of the people who contribute. We give under the impression that we are Helping others….NOT Helping CEOs to get rich.”

Of course, neither of these points-of-view deal with the issue of what to do with non-profit organizations who accept public sector funding like the for-profit banking sector did when they accepted TARP funds.

So, here is the deal . . . I sometimes write blog posts with a very specific point of view. Other times I’ll approach a subject without any idea of what my opinion is and organically let things unwind. I am approaching this subject with a very open-mind, and I’ll use tomorrow’s and Friday’s blog posts to focus on this subject.

What this means is that I would like a spirited discussion among the readership of this blog. Please use the comment box below to weigh-in with your thoughts. You are even encouraged to post questions if you’re as undecided as I am.

If you want to read more on non-profit compensation best practices, our friends at “Nonprofit Law Blog” did an outstanding job with their posts titled: “Compensation Strategies and Best Practices for Non-Profit Organizations” . . . click here for Part One and here for Part Two.

How does your agency currently ensure that its compensation is in-line with community standards and in compliance with IRS rules? Does the acceptance of public funding “change the math” in your head when you look at this issue? Do you see similarities or differences between the comparisons I draw between for-profit corporations accepting public funds and non-profit organizations doing the same? What role does the donor play in all of this? Should donors expect total transparency for the non-profit organizations they support?

Please take a few moments to weigh-in using the comment box below. It will only take a minute or two out of your day, and doing so will enrich the discussion tomorrow and Friday. Besides, as I always say, we can all learn from each other.

Here is to your health!

Don’t blame the donor for the “crowding out” effect of govt funding

November 8, 2011 DonorDreams Fundraising

Yesterday’s blog post — “Does Government Funding Destroy Philanthropy” — was about the University of Notre Dame’s “Science of Generosity” initiative and the concept of “Crowding Out” when it comes to government funding and its effect on non-profit organization’s resource development programs. Since I posed more questions than I stated opinions, I’ve had this topic on my mind for the last 24 hours and engaged a number of people in this discussion. Not surprisingly, I’ve also been combing through the internet looking for some answers. Here is what the question boils down to :

Does accepting government funding impact a non-profit organization’s resource development program because: a) donors don’t see the need to contribute to an agency that appears to have adequate resource via federal, state or local government grants OR b) non-profit staff and board volunteers relax their efforts once these dollars are added to their revenue budget?

Joshua Benton wrote a great post at the Nieman Journalism Lab blog that examined this question by looking at a study done by Jame Andreoni and A. Abigail Payne. Joshua Benton did a great job boiling it all down when he wrote this:

“The paper finds that for every $1,000 given through a government grant, nonprofits reduce their spending on fundraising by an average of $137. But that decrease leads to a drop of $772 in donor gifts. (The paper found that, contrary to the fears of some, government grants encourage outside donors to give instead of discouraging them — but the impact is small, only about $45 per $1,000 in government grants. In other words, adding it all together, $1,000 in government money only nets out to $410 in the end, on average.”

At first, I read this and thought . . . “Oh, the return on investment is still on the positive side and not something non-profits should worry about.” However, after thinking about it for two seconds, I believe non-profits SHOULD BE concerned.

I believe non-profit folks need to think about it this way:

$1,000 of government dollars really isn’t adding $1,000 to your revenue budget when you look at what you end up losing. So, for every $1,000 you are only “up” by $410.
The donors that stop contributing do so because non-profits (probably subconsciously) reduce their financial investment and focus on engaging donors.
Once these donors stop contributing and disengage, they can’t be easily “reactivated” once they’ve lapsed for 12 to 24 months. This essentially means the financial investment to reactivate a lapsed donor starts to look like the investment a non-profit makes to cultivate cold prospects.
When the government money dries up (which happens during tough economic times), a non-profit who has been dependant on public sector funding and under-invested in their resource development program is poorly positioned to survive. I liken this phenomenon to a human being who turned into a couch potato, stopped exercising, lost muscle mass and is suddenly called upon to run a marathon.

The bottom line is that non-profits cannot blame donors for the position they’re in today . . . many non-profit professionals and board volunteers took their foot off the accelerator and eased up on their fundraising efforts.

While assigning fault and blame is a common human reaction, the better question is what should non-profits who find themselves in this position start doing today if they want to survive this current economic downturn and the impact associated with shrinking government funding? Here are just a few of my thoughts:

STOP applying for “new” government funds as a strategy to make up for what you are losing from other government revenue streams.
START engaging board volunteers and donors in a conversation around how to reduce dependency on government funding and boost revenue from foundations, corporations and most importantly individuals. Make sure it isn’t just talk because talk is cheap. Put it down in writing and make sure action plans answer tactical questions pertaining to who, what, where, when, why, and how.
ENGAGE your current government funding agencies is honest conversations around the state of the funding programs your non-profit organization currently participates in. Do they anticipate cuts? If so, how large do they project those cuts to be. BE PROACTIVE.
RE-INVEST in board development efforts and start building a board with amazing “fundraising acumen”.

I believe government funding is damaging to your non-profit mission and suggest you get out of it as soon as possible. If you want help, you know how to get a hold of me. 😉

Have you done an analysis of your non-profit organization’s government funding trends and compared it to your investment in fundraising efforts and systems? If so, what do you see? What is the state of your government funding? Do you feel comfortable with where you are or do you have that infamous “knot in your stomach”? Where are you steering your agency’s resource development efforts as you look ahead to the next 3-years?

Please share your thoughts to one or more of these questions by using the comment box found below. We can all learn from each other!

Here is to your health!

Does Government Funding Destroy Philanthropy?

November 7, 2011 DonorDreams Fundraising, resource development

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!