Tag: government funding

Sir Isaac Newton was right about nonprofit organizations

Fundraising

We all learned as kids in school that Sir Isaac Newton stipulated in his Third Law of Motion that for every action there is an equal and opposite reaction. Thanks to Newton, I was not surprised earlier this week by anything I read in The State of Grantseeking Fall 2011 report conducted by GrantStation and PhilanTech. This excerpt kind of sums up the entire report:

“While nonprofits remain optimistic about their ability to raise funds and deliver services,” said Dahna Goldstein, Founder of PhilanTech, “many organizations – particularly smaller organizations – are applying for more grants but receiving smaller grants.”

Surely, none of you are surprised by this. Right? Anyone who thinks about it for a moment will see the following:

  • Government funds have dried up in “The New Norm” (aka this new economic paradigm that we’re living in).
  • Government debt levels mean that the “golden days of government funding” are probably over for a long time.
  • The difference between writing a government grant and a foundation grant is almost non-existent.
  • Non-profits are shifting their attention and efforts to foundation grant opportunities.
  • The pool of money available from foundations doesn’t magically expand because interest increases. So, you have more proposals chasing the same pool of funding and there are only two possible outcomes (unless the pool of funding expands):
    1. you either get more rejected proposals, or
    2. you get more funded proposals at smaller gift levels

While some people are asking questions like “how can we write better grant proposals and become more competitive,” I think these types of questions all miss the mark. I think the better question is:

“Why the heck aren’t non-profit organizations overhauling their resource development plans to better position themselves to secure more sustainable funding from individuals (e.g. people like you and me) rather than from institutions (e.g. corporations, foundations and government)?”

After all, when you look at the charitable giving statistics for the as long as they’ve been published, you clearly see that the vast sum of all charitable giving come from individuals.  When I scratch my head and ponder this question, I can only come to a few disturbing conclusions:

  • Asking people for money is scary, and it is hard to get board members and volunteers to move beyond this paralyzing fear.
  • Many non-profit professionals (e.g. CEOs and fundraising staff) aren’t practicing the 9-keys of volunteer engagement and as a result there are many disengaged volunteers and board members sitting around our board room tables. So, mobilizing our “people resources” in the name of individual giving seems like a non-starter to many non-profit professionals.
  • It is always easier to travel the path of least resistance. This was what Robert Frost was saying in his famous poem “The Road Not Taken”. In other words, it is far easier to shift your efforts from writing proposals for government agencies to writing proposals for foundations.

Here is my word of caution to the entire non-profit sector . . . It is important to remember that foundations don’t give away magic money, and they don’t typically spend down their fund balance. Their year-to-year contributions are based upon their “investment income,” which usually means that when the stock market goes down so does the pool of available dollars from foundations.

I would draw a comparison to Isaac Newton’s first law of motion that most people have come to know as “what goes up must come down,” but I won’t because I just know there are argumentative investment professionals reading this blog who don’t think this law applies to the stock market. However, ask yourself this question: “Is it possible that the stock market in this ‘New Norm’ might experience adjustments and contractions if the economy doesn’t start dramatically improving soon?”

My point is simple . . . Read The State of Grantseeking Fall 2011 report . . . come to grips with the realities of “The New Norm” . . . engage your volunteers using the resource development planning process . . . and start asking tough questions around “What if?” and “How do we re-align our fundraising efforts, adjust to The New Norm and start asking individual donors for their support?”

There are many different individual giving models out there. Please tune in next week and we’ll talk about a few of those models.

Has your non-profit organization experienced some of the same things that the 900 respondents reflected in the grantseeker report? If so, what is it specifically? If not, what are you experiencing and what do you think accounts for your success against this industry trend?

Please use the comment box below to weigh-in.

Here’s 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

Non-profits and Sunshine Laws?

Board development, resource development

Have you ever participated in an interesting conversation that inspired you enough to go do some research? Last night I had one of those moments, and what I found was so interesting I just had to share it with you this morning.

So, last night I was out enjoying a nice dinner with a non-profit board volunteer when the conversation turned to the subject of board meetings and how the local newspaper covers their agency.

He said, “Erik, the problem with making difficult discussions in the board room is that we’re subject to the Open Meetings Act.”

I said, “Really? I don’t think so. The Open Meetings Act is aimed primarily at government and public institutions.”

He responded with, “Erik, with as much government money as our agency takes, we are covered by this law and have to let the public and press into our meetings.”

If you know me well, then you know that not knowing an answer to something like this just drives me crazy. So, when I got back to my hotel room, I just popped open Google and started digging.

Ah ha! The first thing I found validated my point of view. The Illinois Open Meetings Act specifically exempts non-profit organizations. Click here to read more.

However, as with most things in life, nothing is simple or that clear cut. The next thing I found online was from Ann Taylor Schwing. She provided a dizzying number of bullet points pointing to various numbers of possible scenarios when the Open Meetings Act might extend beyond government entities and into board rooms of private organizations.

Click here to read more and see if your agency might fit into some these exceptions. After I consumed Ann’s work, my head started spinning and went into overdrive. For example:

  • One of the exceptions that Ann points out is: “whether the functions performed by the private entity would otherwise  be performed by a public body, or were performed by the public body before the creation of the private entity“. Well, this certainly should give many agency’s a moment to pause and consider.
  • Another of the exceptions Ann highlights is: “the extent to which public entities may control the entity in question and the extent to which the entity is autonomous“. This got me to start counting the number of non-profits in my hometown who were recently quoted in the newspaper as saying, “If my city funding gets cut, we’re going to end up closing our doors.” As the Church Lady used to say on Saturday Night Live, “Well now. Isn’t THAT interesting?”

OK, you’re probably wondering what all this means and if it necessitates any action on your part. Here are just a few of my thoughts:

  1. I would click the aforementioned links and do some research. No one wants to be surprised by a newspaper report or a disgruntled donor or client who demands access to your board room. I like to live by the general rule that “Prior Proper Preparation Prevents Piss Poor Performance”.  🙂
  2. If the second bullet point sounds like it might describe your agency (e.g. your agency is so reliant on government money and your ‘independence’ is compromised), then you should engaging board members in a discussion around whether or not this is OK with them and what to do about it. After all, this is a quintessential “board governance” issue that the law calls on them to wrestle with. Right?
  3. There is a bigger picture issue here as it pertains to non-profit transparency. You might want to start engaging board volunteers in a discussion around whether or not opening your board meetings to the public (e.g. donors, clients, neighbors, etc) is a good idea. And if it is, then how do you function in that public space and still get sensitive board business accomplished.

Some of you are probably thinking “Erik, are you crazy?” Well, maybe I am, but ask yourself this: “do donor have a right to attend governance meetings as an investor in your organization?” More to the point, I’ve seen some non-profit organizations model themselves after publicly traded for-profit organizations by hosting an annual meeting that is open to the public and is seen as a stewardship opportunity for donors.

Does your agency host an annual meeting that is open to donors and the public? If so, please tell us what it looks like and what is discussed in the comment box below. Has your agency ever been pressured by the press or the public about the Open Meetings Act? If so, please share with us what happened.

Come on folks! We can all learn from each other. Please take a moment to weigh-in.

Here’s 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

Taking a page out of NPR’s playbook

Fundraising, Planning

In my hometown of Elgin, Illinois, there have been a number of sleepless nights for non-profit organizations whose revenue model is heavily dependent on government funding. The economy and housing bubble caught up with the city, and now there are projected budget deficits. As you can imagine, non-profit funding is on the proposed chopping block. All of this is compounded by the fact that we live in Illinois, which by most accounts has one of the worst state budget problems in the country. So, state funding has also been on the retreat for years.

I’ve been saying for years to all of my non-profit friends who would listen: “the government funding gravy train is coming to a halt . . . get out and get out NOW.”

Usually this dramatic plea has been met with nods of agreement, then shoulder shrugs, and finally questions around “how to”.

Yesterday’s blog post about non-profit benchmarking titled “What Gets Measured Gets Done” got me thinking and wondering: has anyone ever done this before, and if so, do they have a roadmap that others can duplicate?

It didn’t take long for me to find an answer, and it was there in front of me all along. National Public Radio (NPR) was founded in 1970. It was heavily and almost exclusively government funding supported through much of the 1970s and 1980s. Today it receives less than 10-percent of its revenue from the federal government.

From what I can tell, it didn’t happen overnight but it seems to have occurred quickly after a funding crisis in 1983.

It shouldn’t surprise anyone that NPR turned to individuals as a cornerstone to their strategy. After all, more than three-quarters of all charitable giving in America comes from individuals.

So, there you go . . . it is a roadmap! It might not be an easy road, but it has been done before, and it is possible to transform your revenue model. Here are just a few quick suggestions for those of you who are interested in taking the next few steps:

  • Tune into NPR and start listening. While tuning in for the programming can be fun and delightful, I especially recommend listening during the pledge drive. Bring your notepad and pencil because there are lots of notes to take. NPR does one of the best jobs I’ve seen with their pledge drive. They employ best practices effortlessly. We can all learn a lot if we just listen and watch.
  • Consider making a pledge. I made my first pledge to NPR in 1998 during the Clinton impeachment trial. After making that small contribution, the stewardship stuff and communications I received from them was amazing and almost felt like drinking out of a fire hose. They do a nice job with stewardship. It was the best $25 I’ve ever spent in my life, and it was cheaper than most trainings.
  • Go check-out their cyber presence. Review their website. Follow them on Twitter. Like them on Facebook. Subscribe to a few of their blogs. Then sit back and watch them masterfully use social media and the internet to cross promote content and communicate with their clients who are also their donors.

Obviously, NPR’s plan can’t be exactly duplicated for a number of reasons. However, it is a good place to start. Please note that the aforementioned bullet points can all be done today and only focus on listening, observing and fact gathering. This is, after all, the essence of benchmarking. There will be lots of action and work on the road ahead, but for now it is important to do your homework and engage your volunteers with both the benchmarking and planning efforts.

How does your agency plan on adjusting its revenue model? What is your strategy? Are you benchmarking yet, and if so who are you studying?

Please use the comment box below to answer these questions and share your thoughts with the rest of us. It only takes a minute and you feel good inside when you do so. Why do it . . . because 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
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Capping nonprofit CEOs salaries and bonuses?

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!

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

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

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!

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

Does Government Funding Destroy Philanthropy?

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!

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

Huh? Fundraising zombie volunteers cost money?

Fundraising, volunteers

As most of you know, I’ve been talking this week about the City of Elgin’s upcoming Nightmare on Chicago Street special event and the role that area non-profits have been asked to play. While I won’t re-hash the story for you here, I encourage you to go back and read Monday’s post titled “Beware of Fundraising Zombies” and yesterday’s post titled “Fundraising zombies ‘doing the math’.” These posts along with what I write today focus on special events and how non-profits need to be especially careful about measuring “return on investment” (ROI) and thinking through how many events are too many.

So, while emailing back and forth with a very smart and dear friend of mine yesterday about this topic, they said:

“Come-on, Erik! What is the big deal with non-profits recruiting some of their volunteers to help the city out with their day-of-event operations? Sure, the ROI is poor, but there really isn’t any cost related to doing this. Right?”

As you’ve guessed, my response was “No, you’re wrong. There is a cost that no one is considering.” and thus the final chapter of my zombie fundraising posts was born.  Here is the explanation:

  • When a person agrees to volunteer, they are making a contribution of time to that particular non-profit agency. Right?
  • Most people consider “gifts of time” to be more valuable than their “gifts of money”. I’ve heard people say this often, and I know you have, too.
  • There are studies that show the “value of a volunteer’s time” is calculated to be $21.36 per hour. Don’t believe me? Click here to see the research for yourself.
  • The cost for a non-profit organization to build the necessary infrastructure to run a volunteer management program is calculated to be $300 per volunteer per year according to a study by Pubic/Private Ventures titled “Making the Most of Volunteers”. For some organizations like Big Brothers Big Sisters, these costs go up to $1,000 per mentoring match. Click here to review the evidence yourself.
  • In my experience, a person’s volunteer hours are not an endless pool that non-profits can keep tapping over and over again. While it isn’t set firmly in concrete, most people have a limit to how much time they are willing to give. If you follow this logic, then recruiting a volunteer to work the zombie event means the non-profit is possibly forgoing future “contributions of time” from those volunteers for the charity’s projects back home.
  • Applying the concepts of ROI and “opportunity cost” that were discussed in yesterday’s blog post, let’s look at this entire thing from a different angle. Each charity receives 100 tickets that they sell for $5.00 each, resulting in $500 gross income. Let’s just say a participating non-profit recruits FIVE VOLUNTEERS who each contribute FIVE HOURS on the day of event. To put this into financial terms . . . 5 volunteers multiplied by 5 hours each and then multiplied by $21.36 per hour equals $536.00. This doesn’t even include allocating the costs associated with maintaining the agency’s volunteer management infrastructure.  It also doesn’t include the time associated with ticket selling if the agency asked volunteers to help sell its share of tickets to this event.

Drumroll please? My conclusion here is that non-profit agency gross $500 in ticket sales, but invest $536.00 of volunteer time as part of this special event collaboration. While I won’t go so far as to say the agency just lost $36.00 (even though I am really tempted to draw that conclusion), I think you can agree that this investment is looking less attractive by the second. Right?

Let me just be clear. I support this event and think everyone should attend. Who can’t agree that zombies and Halloween are fun. For the third time this week, I am encouraging everyone to buy their tickets at the door. By doing so, you’ll send a message to your favorite non-profit organization that you love them and won’t support this kind of counterintuitive fundraising behavior.

Let me doubly clear. I don’t think the City of Elgin is trying to hurt the non-profit sector. I know that this idea of involving non-profits in revenue sharing for this event was borne out of the desire to be collaborative and helpful during tough economic times. Additionally, it is the city’s economic development mission to drive foot traffic downtown to benefit its downtown merchants. This event should do exactly that, which is why I tip my hat to the city for trying to do “something”.

All I am saying is that non-profit organizations need to start looking at fundraising in a different light because their decision-making on these issues can and does have a real impact. Everyone — including the non-profit agencies, the city, donors, agency staff and bord volunteers — plays a role in doing this.

How does your non-profit organization evaluate its fundraising and resource development activities to ensure what you’re doing makes sense? Do you have a real and engaged resource development committee? What does that committee do? What efforts and considerations go into creating your agency’s annual written resource development plan? Do you have one? What does it look like? How much of these activities are ‘put on staff’ compared to collaborating with board volunteers, fundraising volunteers and donors to help find these hidden facts and answers?

There has been decent activity over the last few days with regards to usage of the “comment box” for this blog. Let’s keep up that awesome effort. It will take you less than 30-seconds to type your thoughts into the comment box below. Please do so because we can all learn from each other!

Here is to your health! (And I hope this will be the last zombie inspired post for a while . . . Have a Happy Halloween! In the spirit of Halloween fun, my gift to you is this YouTube video of President George W. Bush talking about zombies. LOL Enjoy!)

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

Beware of Fundraising Zombies!

Fundraising

I’ve finally had my fill of special events ! ! ! ! ! ! ! !

In my hometown of Elgin, Illinois, the city will host a “zombie-themed” Halloween event for adults on October 29, 2011. It is being promoted as “Nightmare on Chicago Street“. While this sounds fun and I am sure it is a great idea to entice people to visit our starving downtown merchants, I was shocked and disappointed when I heard that city staff, council members and our newly elected mayor were promoting this as one of their strategies to help area non-profit organizations during tough economic times.

Here is the back story in a quick nutshell.  The City of Elgin is facing tough times (as are most municipalities) and is projecting a $4.5 million budget deficit next year unless belt-tightening occurs. There are some who want to cut city spending to support non-profit organizations that align with key community strategic priorities. Please understand that the story is much more complicated than this quick synopsis, but let’s start here.

With non-profit organizations starting to light their torches and grab their pitchforks, someone at city hall came up with the genius idea to sell this event to non-profits as a way to make some money. Again . . . here it is in a quick nutshell . . . non-profits have been given 100 tickets on consignment, they sell tickets for $5.00 each, and they get to keep the profits (aka $500.00). In exchange for the city’s incredible generosity, participating non-profit organizations are supposed to rally their volunteers to help out on the day of the event.

Hmmmmmm? Where do I start?

  • Wow, really? An opportunity to net $500? Thanks! Let’s get real . . . weeks of ticket sales and a bushel basket of volunteer hours all for a $500.00 return on investment is paltry. In fact, a good non-profit agency can sit down with an individual donor and walk away with a $500.00 pledge to their annual campaign with a simple one-hour investment of time.
  • The ONLY reasons that intelligent non-profits organize a few well-run annual special events is to: 1) raise awareness of their brand and 2) create a venue for new prospective donors to join the party and get to know the charity in a fun atmosphere. This city event accomplishes neither of these goals for any of the participating organizations.
  • Most importantly, when will ANYONE out there read the “2007 Special Events Study” commissioned by Charity Navigator? Special event are a terrible way to raise money. The study found that the typical non-profit organization ends up spending $1.33 to raise $1.00 (looking at direct and indirect costs) with a special event vehicle.

My advice for Elgin area non-profit organizations — act like Nancy Reagan and “Just Say No!” Stop selling your tickets. Turn your tickets back into the city. Don’t recruit your volunteers to work this event. It isn’t worth it, and more to the point . . . you are being poor stewards of your organization’s resources if you go down this road.  Frankly, I can’t think of a bigger non-profit sin.

 

My advice to the City of Elgin (or any city doing this kind of thing with their non-profit sector) — do this event and do it in style. The downtown merchants are in desperate need of your help. You need to drive traffic downtown. However, you need to stop exploiting your influence with non-profit organizations. It just isn’t cool! You know non-profits will jump through any hoops you put out there for them because they mistakenly believe that currying your favor might lead to city grants or government funding. Start partnering with non-profits by reaching out to those who align with the city’s strategic interests. This collaboration could include any number of things: helping identify grant opportunities at the state and federal level, partnering on grant writing,  and providing access to key city resources including your employees (e.g. volunteer opportunities, etc).

My advice to donors — Go to the Nightmare on Chicago Street or whatever your local municipality is organizing. We need to re-ignite our collective sense of community during these tough economic times. With regard to Elgin’s event, DO NOT purchase tickets from your favorite non-profit organization. You are doing them a great disservice, sending the wrong message, and enabling bad fundraising practices. Instead, pay the extra $2.00 at the door and send a personal check to the charity you would’ve bought your tickets from (because a direct donation to a non-profit’s annual campaign is the least expensive way for an organization to raise funds). As a matter of fact, I encourage donors to go a step further . . . send a message to those non-profits who are selling tickets by boycotting all of their events for the next year. Whenever you get an event invitation in the mail, just send them the money you would’ve spent. If no one shows up to their events, non-profits will stop organizing them and you will have more time to spend at home with your family.

OK . . . there are lots of people having fun with the Nightmare on Chicago Street (and countless other special events being organized in other communities) as evidenced by this YouTube video on Elgin zombies and this YouTube video of pumpkins and ghosts on Chicago Street. Have a ton of fun, but join me in sending a strong message to non-profit organizations about being more attentive to concepts like “return on investment” and being “good stewards” of their agency’s resources.

Where is your organization regarding the question of special event fundraising? How do you perceive the government funding trends? What are you doing to insulate your agency against city council and city staff belt-tightening initiatives? Please weigh-in using the comment box below because we can all learn from each other.

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

The Brady Bunch and eliminating government funding dependency

Fundraising

Before I left on vacation, I sent approximately 75 of my closest non-profit friends an online survey that would give me necessary insights on services and pricing I should offer as part of my new consulting business. It was an anonymous survey so I don’t know who responded, but I wish to thank the 56 people who took time out of their busy schedules to help me out. The information they provided have helped me greatly with my business plan.

Some people also dropped me an email when they completed the survey because they were compelled to share additional comments. I very much appreciated those emails because the advice provided in each instance was “pure gold.” However, one response caught my attention and has had my mind spinning for a few days. Here is part of what she said:

“This is probably just me, but I am so frustrated with the concept and the reality of ‘strategic planning’.  These past two years have shown that in order to be strategic an organization needs information…at least somewhat reliable information.  The only strategic goal that makes sense would be to eliminate government funding. I am hoping that someone will come up with a way to address plans for the future based on the way not-for-profits really live.”

It is funny how my brain works sometimes. As I’ve stewed on this input, I couldn’t get The Brady Bunch’s song “Time to Change” out of my head. Click the YouTube link if you want to enjoy a blast from the past. LOL

So, I googled the lyrics to the song and found this great advice:

“When it’s time to change, then its time to change
Don’t fight the tide, come along for the ride, don’t you see
When it’s time to change, you’ve got to rearrange
who you are into what you’re gonna be.”

I think this is great advice for non-profit organizations regarding how to approach what is likely to be a government funding crisis for many non-profit organizations. Essentially, the song suggests that fighting change is the wrong course of action. Those who will survive will figure out how to adapt and ride the tide.

So, many of you are probably saying (just like my friend did in her email), “That’s great Erik, but where do I start? Strategic planning hasn’t worked for me in the past.” Here are just a few random thoughts I hope you will chew on and consider as you start preparing for 2012:

  • Engage board volunteers to help with a benchmarking project (identify nonprofit agencies that look like yours and have a different funding model then study their best practices … figure out what they are doing and how to measure it at your organization).
  • Conduct a resource development audit or a resource development review. This might help you identify new opportunities and paths forward.
  • Engage key stakeholders (e.g. staff, board, donors, etc) in creating a written resource development plan that doesn’t rely on government funding. Use the process to “engage” people … which means asking at each turn “who wants to help with this part of the plan?” And when no one wants to implement the suggestions they just provided, then axe it from the plan and ask them what else should be done? Realistic plans work; whereas, unsupported, pie-in-the-sky plans never work!

If this all seems like too much work and you are exhausted from the daily grind, then how about just starting with this one simple idea:

  • Call your top 5 donors
  • Ask them to join you for lunch or after-work cocktails
  • Tell them your story and the future forecast of government funding
  • Ask them what they think your agency should do
  • Then just shut-up, listen, take notes and ask for their help in taking the next small step

Donors can be MORE THAN just a source of funding for your agency … they can be the voices of change much like Peter Brady was for the Brady Bunch.

What are you and your agency doing to prepare for a future with scarce government resources? How do you plan on strategically repositioning your organization? What tools and strategies will you use? Who will you engage? Please use the comment box below to share because we can learn from each other.

Here is to your health!

Erik Anderson
Owner, The Healthy Non-Profit LLC
eanderson847@gmail.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Who should we blame?

Fundraising

In yesterday’s blog, I talked about philanthropy in other countries and it generated a comment from a reader that got me thinking. She said that other more “socialist” countries reduce the need for philanthropy because they tax their people heavily and provide those services. As I chewed on this comment, it got me thinking about the role that government funding has played in the USA for countless numbers of non-profit organizations, and I started worrying about the future.

I cannot think of many non-profit organizations (except for churches and maybe the Boy Scouts of America) who didn’t jump on the government funding bandwagon back in the 1990s. Government tax roles were healthy and there was talk of surpluses. It became easy for non-profit leaders to cozy up to their local politicians and secure a bushel basket full of government funding, which made it easier to expand services and dial-back the breakneck fundraising pace some organizations had set for themselves.

When the human body stops using certain muscles, those muscles atrophy and turn into saggy fat. I am left wondering how many non-profit organizations got used to government revenue streams and lost their edge with regards to resource development and fundraising.

As you know, I just returned from a European vacation and they are in the exact same boat as the USA with regards to debt, deficits and economic pressures. I believe we can look at what is happening in Europe as a preview of what is about to happen in the USA with regards to government spending. I can sum it up in one word . . . “AUSTERITY” . . . which means cuts to government services.

I read a front page newspaper article while in London about how a neighboring city was eliminating curbside garbage service for their residents. Our Canadian dinner couple on the cruise ship also shared with us that their hometown of Toronto was looking at similar proposals around garbage pick-up, closing parks and museums, and increasing student-teacher ratios.

I really don’t think that it is a jump in logic to assume that there will be many non-profit organizations here in the USA who will see their government funding eliminated or substantially reduced in the upcoming few years.

Since you can’t just turn on and off the fundraising spigot (remember that fundraising all about relationships which often take time to develop), I recently have heard a number of my non-profit friends talking about service cuts and downsizing . . . and downsizing means people losing their jobs and clients losing services they depend upon.

So, who is to blame for this situation?

  • Should we blame the government and our politicians for creating an unsustainable situation that created an environment of entitlement throughout the non-profit community?
  • Should we blame non-profit CEOs and resource development professionals for securing government funding without realistic sustainability plans to replace those revenue streams?
  • Should we blame non-profit board volunteers for allowing their staff to “do whatever it takes” to secure funding without asking the tough questions pertaining to sustainability? Or for possibly shirking their fundraising responsibilities because government funding made it easy to do so?

Maybe I am just grasping at straws here, but perhaps the creators of the television cartoon show, “South Park,” got it right when they suggested we should all just “Blame Canada“. Click on the link to enjoy Robin Williams’ performance.  LOL

All kidding aside, I know that the blame game is typically a dumb activity, but I seriously wonder what you think? Who do you think played a bigger role in digging many non-profit organizations into this hole? And the better question is: What do you think those “overly-dependent-government-funding” organizations need to start doing today to avoid hitting the iceberg that is in front of us all? Please weigh-in and share your opinion because we can learn from each other!

Here is to your health!

Erik Anderson
Owner, The Healthy Non-Profit LLC
eanderson847@gmail.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847