Fewer statistics and more stories, please?

June 6, 2013 erik Fundraising

As someone who blogs every day, I find it necessary to read a lot of other people’s blogs, too. Every one in a while, I come across something that gets me thinking. If it is really good or cuts against the grain of something I believe, I might mentally chew on it for days. Two bloggers, who I respect and read a lot, are Jeff Brook at Future Fundraising Now and Marc Pitman (aka The Fundraising Coach). Both of these guys have had me chewing on something recently, and I must admit that my jaw hurts from all that macerating. The topic in question? Should you include statistics in your fundraising appeals?

In recent years, the non-profit sector has been hyper-focused on things like:

measuring program outcomes
measuring community impact
benchmarking projects
analytics

I must admit that I’ve bitten into this trend as hard as anyone. I am a bit of a data geek, and I love information. If I were being truthful, I’d even admit that sometimes the old expression “paralysis by analysis ” defines my work (even though I fight hard not to fall into this trap).

The logical extension of these tendencies is to include data and statistics in fundraising appeals, which is something I’ve done for years.

So, when I recently read Future Fundraising Now and The Fundraising Coach, it felt like nails on a chalkboard for a moment. However, I try to read with an open mind, and I must admit that they have a point. Here is how I did an about-face on this subject . . .

Hurricane Katrina

As I thought back upon this devastating natural disaster, I remembered being glued to the radio listening to NPR deliver the blow-by-blow description of what was happening on the Gulf coast. I have very clear memories of my attention waning when the reporter started saying things like:

1.2 million evacuees
$81 billion in damage
1,833 deaths

I also remember being glued to my radio as the reporter interviewed individuals who had survived the storm as they told their stories:

I remember one woman telling a reporter about climbing into the attic with her family as she watched the water levels fill the first floor of her home and start to consume the second floor.
I remember a gentleman talking about how long he had to wait on his roof for rescuers and how hard that ordeal was.
I remember a public official talking about the national guard’s efforts to evacuate trapped senior citizens from a nursing home.

Statistics . . . .Zzzzzzzzzzzzz. Stories? Please continue … I’m listening!

Before the written word

There is a lot of debate about how long the written word has played a role in human culture; however, I think it is fair to say that literacy rates only started significantly climbing in the last few hundred years.

So, how did humans communicate to each other important things like:

How to appropriately behave?
What to value and what is important?
Who should do what and by when?

It was storytelling. Sitting around a campfire and telling stories. Passing lessons along from one generation to the next generation by word of mouth in the form of a story with a moral to every story.

Fundraising conclusions

I still believe that measuring community impact and program outcomes is important. Please don’t stop doing this hard and arduous work. It is important to measure for accountability, stewardship and quality control purposes, but . . .

Please stop sharing all of that data with me during the solicitation process.

I want to hear warm fuzzy stories about your clients and how my contribution has contributed to those success stories.

Please train your volunteers to be good storytellers because there is nothing worse that having to sit through lunch with someone who can’t tell a good story. This is an art form. For some people it comes naturally and for others they need substantial training on how to do this.

So where should you put all of your data?

Well, I still believe that this information is an important part of being a good steward of donor dollars.

Upload it to your website . . . those donors who love data can find it there, and this sends a strong message about your commitment to transparency.
Share some of it in your annual report.
Create an impact report and send it to your donors every quarter.
Sprinkle some of it into newletter stories.

BUT . . . whatever you do, please don’t share this with me when you’re asking for my money. And if you do, please forgive me for the yawning and vacant blank stare.

If I’ve intrigued you with today’s post, then you may want to check out the blog posts by Jeff and Marc at the following links:

The Fundraising Coach, “Throw statistics out of your fundraising letters!“
Future Fundraising Now, “Why using statistics will kill your fundraising“

What does your agency do with its data? How much to your share with your donors? How and when do you share it with your donors? Do you include it in your written case for support document and training your volunteer solicitors to use it when soliciting contributions? Do you include it in your direct mail appeal? What has been your experience when using a storytelling approach to fundraising?

Please share your thoughts and experiences in the comment box below. Why? 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
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http://www.linkedin.com/in/erikanderson847

Can you read your donor’s mind?

April 22, 2013 erik Donor-centered fundraising, Fundraising

Ever since the first day I was introduced to the concept of fundraising, I’ve seen lots of people around me struggle with one basic question: “Why do people make charitable contributions to non-profit organizations?” Maybe it is just me, but I think our profession is obsessed with finding an answer to this question.

Here are just a few examples of situations where I’ve seen a version of this question debated:

Board volunteers who are reluctant fundraising solicitors trying to rationalize why they won’t make an ask,
Fundraising volunteers who are grappling with an organization’s internal case for support document, and
Fundraising professionals and non-profit executive directors who are trying to craft a strategy or develop a resource development plan that results in increased revenue.

This question reminds me of the plot in “Moby Dick“. The characters I just described above are Ishmael, and the answer to the question that I posed in the first paragraph is Moby Dick. Am I off base? Or is this one of those age-old questions that are elusive and difficult to really answer?

Last night I was back in my basement unpacking boxes and I came across more training materials from the Boy Scouts as well as Boys & Girls Clubs of America. Those two documents got me thinking about this topic.

The following are the “six reasons why donors give” according to my Boy Scout training material:

They are asked.
They believe in the ideas of the organization, and care.
To achieve prestige and recognition.
To seek power and influence.
Because of peer pressure.
For tax consideration.

When I looked at the Boys & Girls Club’s training handout, it was based on survey research found in Jerold Panas’ book “Mega Gifts“. In that book, he listed TWENTY ONE reasons donors give (e.g. major gifts individuals who give more than $1 million) to non-profit organizations and he listed them in the order these individuals ranked them. I won’t give you the entire ranked list (because you need to click the link above and buy his book), but here are the top six for comparative value to the Boy Scout’s list:

Belief in mission of the institution. (1)
Community responsibility and civic pride. (15)
Regard for staff leadership. (17)
Fiscal stability of the institution. (20)
Respect for the institution locally. (4)
Regard for volunteer leadership of institution. (9)

After each of the ranked reasons, I provided a number in parenthesis. The number in parenthesis is where fundraising professionals ranked the same reasons they believe donors give to their charities.

What conclusions can we draw from all of these lists? Here is what I think:

Generalizations are dangerous, and we need to stop stereotyping donors’ intentions.
I believe donors are like snowflakes. While there might be a few generalizations we can make, we need to invest time into getting to know our donors and understanding their individual motivations.
Reviewing all of the lists and rankings, we apparently don’t know as much as we think we know.

What strategies and tactics do you and your organization use to figure out donor intent on an individual level? Are there big reasons you believe donors give to your agency that aren’t on any of the aforementioned lists? Please share your thoughts and ideas in the comment box below because we can all learn from each other.

Here’s to your health!

Donor says: “Less selling. More serving.”

April 18, 2013 erik Fundraising

Over the last few days, I’ve had the pleasure of doing one-on-one donor interviews for a client of mine. I just love it when I get an opportunity like this because there is nothing more enlightening than chatting with someone about their philanthropy.

I don’t know about you, but I sometimes develop a blind spot about what I think donors know versus what they don’t know when it comes to the fundraising profession. For me, it is that “Wizard of Oz” moment where the wizard is discovered by Toto and his response is: “Ignore the man behind the curtain.”

So, it is always startling to me when a donor engages in a fundraising process conversation with me. This is exactly what happened yesterday during one of my donor interviews.

The donor I am referencing simply said:

“The non-profit sector needs to have a paradigm shift. They need to move from selling to serving.”

This opened the door to a rich conversation about the importance of stewardship and loving your donors. (Believe it or not the words ‘stewardship’ and ‘loving your donors’ came out of his mouth and not mine.)

The idea of putting less time, energy and effort into SELLING and redirecting it into SERVING (e.g. stewardship) has been top of mind for me lately because I signed up for Pamela Grow’s four week eCourse titled “Monthly Giving: The Basics & More!”

Literally, the night before this donor interview, this is what I read in the first week’s materials:

“One of the most amazing things about monthly giving is that once a donor signs up for a monthly giving program, you can stop asking them for money, because the person is giving you money each and every month. Instead of making regular asks, you can focus 100% on stewarding your donors. Imagine, donors that get tons of attention from your non-profit, and none of it an ask!”

I’ve always been fascinated by monthly giving, but I’ve never had an opportunity to develop or run such a program. So, my curiosity got the best of me and I signed up for this eCourse.

I’m not suggesting that the silver bullet for your resource development program is a monthly giving program. Heck, I’ve only read the first week’s worth of reading materials. Truth be told . . . the case for support is compelling, and I’m excited to learn more.

At the intersection of this eCourse and yesterday’s donor interview, I am left wondering what other non-profit organizations are doing to shift more of their time into stewardship activities?

I suspect the reason monthly giving programs are appealing is because it recognizes a basic truism, which is there is only so much time in a fundraising professional’s day and the money needs to come in the door. Investing in the development of a monthly giving program creates an environment where solicitation time can be converted into stewardship time.

I’m going to stop here because you need to sign up for Pamela’s eCourse if you want to learn more.

What are you and your organization doing to invest more time into “serving your donors“? What does that look like? How are they responding? Please share your thoughts and experiences in the comment box below.

Here’s to your health!

The best advice I ever got . . .

April 17, 2013 erik Board development

On Monday, Dani Robbins’ Non Profit Evolution blog started off with these words, “The best advice I ever got as a nonprofit CEO was . . .” Since reading those words, I’ve had a delightful dinner with Dani at a great Indian restaurant in Columbus, Ohio, and we talked a lot about those days when we were both young non-profit executive directors.

For some reason, I can’t get the words from her Monday blog post out of my head. Every moment that my mind gets a chance to wander, it comes back to a simple question, which is “What was the best advice I ever got as a non-profit CEO?”

Honestly, there was so much advice that at times it felt overwhelming. EVERYONE had an opinion because EVERYONE thought they knew how to do my job. I believe this is a cross that every nonprofit executive director must bear.

Of course, there was someone in my life who could do my job because he had done it before. His name was Fred Paulke, and he was previously my executive director at another agency.

I bring Fred into the conversation because there are two great pieces of advice that Fred gave me, and I can’t decide which one is “the best“.

Committing yourself

The first piece of advice was to stop “over promising and under delivering.”

Fred did a resource development audit for me, and one of his findings was that I had a tendency as a young executive director to over promise and under deliver to board members and donors.

Embarrassing? Ummmmm . . . yeah!

However, true friends tell you when you have a bugger hanging off the tip of your nose. Am I right?

So, the best advice I may have ever received is “STOP DOING THAT!”

In fact, I believe the advice was to “find ways to reverse this habit and start under promising and over delivering.”

Simply put, every time you under deliver you’re eroding your credibility. If you do this enough times, board members and donors will cease believing you when you tell them that you will do something for them by a certain time.

Additionally, being late with something that you promise a board member or donor (or anyone really) is nothing short of: 1) poor customer service, 2) poor stewardship, and 3) unprofessional.

Truth be told? I still struggle with this today. This simple idea turns out to be not so simple.

Do you also struggle with over promising and under delivering? Don’t quickly dismiss this question. Give it some thought.

Do you tell board members that you will have board materials out one week in advance and actually get it into their hands three or four days in advance?
Do you tell donors that you will get their gift acknowledgement letters in the mail within 24 hours of receiving their contribution and actually take two or three days after a big event?
Do you intend to publish your newsletter quarterly and actually only get around to it twice a year?
Does your website and Facebook page go weeks or months without getting fresh content?

I suspect that many of us struggle with this issue, and it isn’t because we’re bad people. I think most of us are eager to please and want to do good.

If you struggle with over promising and under committing, you may want to check out Tiffany deSilva “Seamless Success” blog post titled “Overwhelmed? You Might be Over-Promising and Under-Delivering“. She has a few simple tips to help you knock it off.

Prioritizing

The other great piece of advice Fred gave me when I was a young executive director was this:

10% to 20% of the people you meet and work with are going to love you (and will likely love you through thick and thin);
10% to 20% of the people you meet and work with are going to be critics (and will likely never like you or what you’re doing)
There will be 60% to 80% of the people with whom you meet and work that don’t have any opinion of you and your work. They are a blank slate and persuadable (at least in the very beginning of your relationship).

Fred explained that it would be really easy to spend all of my time with the people who love me. Who doesn’t love a “love feast”??? It also would be really easy to spend all of my time trying to win over the critics.

If you are interested in getting the best return on investment on your time, his advice was to focus on those in the middle. Doing so is a sure-fire recipe for success.

The reason I love this advice is because the moral to the story pertains to how important it is for executive directors (and really anyone) to prioritize their time, energy, and resources.

So, what is the best advice you’ve ever received as a non-profit executive, fundraising professional, or non-profit volunteer? Do you have tips to share on how not to over promise and under deliver? Do you have best practices on prioritizing your time? Please pay-it-forward today by sharing your thoughts in the comment box below.

Here’s to your health!

Great non-profit advice from those boxes in my basement: Part 3

April 11, 2013 erik volunteers

On Monday, I shared with you that in the corner of my basement, there is a small mountain of boxes from my last place of residence. I’ve decided after seven years, none of it can be very important. So, I’m opening the boxes and starting to trash the contents. In the very first box I found a treasure trove of training materials from when I worked for the Boy Scouts (BSA) as a District Executive in the 1990s. I decided that the readers of this blog might find some of it helpful and useful. On Monday, I shared with you BSA’s tips for running an annual campaign. Yesterday, I offered you the Scouts’ perspective on volunteer management. Today, we will look at volunteer retention.

Unlike the last two BSA documents that I blogged about, this last one was not what I would call “simple”. It was not a brochure or a laminated card for your wallet. It was a 32-page manual titled “Selecting District People,” and Section VIII is all about “Volunteer Retention“.

I really love how the BSA starts Section VIII off with the following limerick:

There once was a chairman named Tad,
Who recruited new people like mad;
A whiz we all thought,
But the trouble he brought
‘Cause they left ‘fore they served; it was sad!

I think this really says it all! Don’t you?

The BSA credits the Boy Scouts of Canada with coming up with the following “seven keys to the care and maintenance of volunteers:”

Recruit the volunteers you need.
Reclaim the volunteers who left scouting.
Refuse/reject volunteers who are not suitable.
Retain the volunteers you have.
Recognize the volunteers you have.
Rotate volunteers who need more challenging work.
Refer the volunteers who move.

Wow . . . seven ‘”R’s” . . . pretty clever. 😉

This section goes on to offer many different retention ideas, and the following are just a few:

Know your volunteers’ interests and align their volunteer opportunities with those interests.
When you see a volunteer exhibiting “burn out,” don’t wait until it is too late. Engage these volunteers early and help them change to new duties.
Volunteers sometimes drop out for personal reasons (e.g. health issues, divorce, work stress, etc). When this happens, keep in touch with them and invite them back when the situation is resolved.

For me, a good volunteer program has one central value that guides it . . . volunteers are members of your family and should be treated as such.

Just a few days ago, I received an email from my online friend Joanne Fritz at about.com. One of her stories was titled “What Do Your Volunteers Want? 10 Ways to Make Volunteers Happy“. She really takes the issue of volunteer retention to a new level. If you have a minute or two in your busy non-profit day, I strongly urge you to click-through and read this post. I know it will generate a few “AH-HA” moments for you.

While the mountain of boxes in the corner of my basement is still large, I’m stopping this series of blog posts here before it gets too stale. Besides, I’ve only gotten through one box so far and I have to pick-up the pace. LOL 😉

Is your agency trying to build a volunteer recruitment and management program? If so, how is it going? Do you track volunteer retention? What are you doing to improve your retention rates? Please share a few of your thoughts and ideas in the comment box below. We can all learn from each other.

Here’s to your health!

Non-profit donors, hospital visits, and stewardship opportunities

March 27, 2013 erik Fundraising

It is the morning of Wednesday, March 27, 2013 and my soon-to-be 40-year-old brother is on his way to the hospital for hip replacement surgery. He is the youngest hip replacement patient that his doctor has ever seen. With all of this going on, my mind still wanders back to non-profit organizations and how they treat their donors at times like these.

It should be no surprise to any fundraising professional that non-profit hospitals are very good at resource development. In 2011, non-profit hospitals and healthcare systems improved their fundraising efforts by 8.2 percent over the previous year’s efforts, according to the Association for Healthcare Philanthropy. That’s right. We’re talking about 2010 and 2011 when unemployment, the economy, and the housing sector were softer than they are today.

In a nutshell, I believe people are at their most vulnerable when they walk through the doors of a hospital. They are scared and their support networks (e.g. friends, family, neighbors, etc) stand by their side.

Here is the point . . . good non-profit organizations constantly message to their donors things like:

“You’re part of our non-profit family.”
“We care very much about you, and we appreciate how much you care about our mission and clients.”
“You’re a valued friend.“

If all of this is true, then shouldn’t you be by their side during their time of greatest need? And if you aren’t there, then aren’t you undercutting all of the stewardship messaging you’ve invested in throughout the years?

Non-profit hospitals have it easy in this one regard because donors (and prospective donors) are on their home turf. Of course, they still need to do a ton of hard work (e.g. quality care, bedside manner, compassion, service, etc).

My brother’s surgery this morning reminds me of a life lesson that I learned more than a decade ago when a board member, who was struggling with kidney disease, was admitted to the hospital. Not only did I not send a card/balloons/flowers, but I had left a number of emails and voicemail messages pushing him about an upcoming committee meeting.

Needless to say, the post-hospital phone call was more than a little uncomfortable for me. It was a lesson that I learned and carry with me to this very day.

Last week, I started working pledge cards for one of my favorite charities. One of the first donors I called to set-up an appointment informed me that she was being admitted for surgery in a few days. She didn’t want to schedule a solicitation meeting and asked that I call back after her surgery.

So, what did I do?

I wished her well. I asked her when I should circle back around to check-in and set-up a meeting.
I calendarized the date she told me to call her.
I offered assistance. I told her that I’m happy to help in whatever way she thinks is appropriate. I can pick-up prescriptions, run to the store, or drive her to a doctor appointment.
I called the agency to report this news, and they immediately mailed a “get well soon” card to the donor.

Did I do this because I am working the angles to secure a contribution in the long-term?

Heck NO!

I did these things because it is what friends do for each other. It also happens to be what donor-centered fundraising professionals do.

Do you have any stories about donors, hospitalization, and stewardship activities? If so, please take a minute out of your busy day to share that story or what you consider a best practice in the comment box below. Why? Because we can all learn from each other.

Here’s to your health!

Under promise and over deliver? Managing donor expectations?

March 22, 2013 erik Fundraising

Welcome to O.D. Fridays at DonorDreams blog. Every Friday for the foreseeable future we will be looking at posts from John Greco’s blog called “johnponders ~ about life at work, mostly” and applying his organizational development messages to the non-profit community.

In a post titled “Squeeze Out the Doubt,” John looks at both sides of the “Under promise . . . Over deliver“. Yes, there is a debate surrounding this concept. One side says, this approach is the key to producing win-win business outcomes. The other side says, managing expectations will lead to inflated expectations and the need to always over deliver in order to attain a win-win outcome (e.g. unsustainable vicious cycle).

As someone who saw “Under promise . . . Over deliver” as a basic truism, I find this debate interesting and something I mentally chewed on for the last few days. While masticating on this concept, my mind turned to the relationship that non-profit organizations have with their donors (aka investors).

As I thought about it more, I think this debate is at the center of every agency’s fundraising program. Here are a few questions that I’ve heard clients and colleagues ask themselves:

Should we tell our donors how close we are to closing our doors? Or will it set the fundraising bar higher next time we solicit them for funds?
Do we share our mediocre program outcomes data with our donors? Or should we cherry pick the data and make them feel good about ROI?
When writing our case for support, should we under state our goals for program outputs and outcomes?
When talking about our fundraising campaign goals, should we talk about the stretch goal as if it is what we’ve budgeted?

It would be easy for me to come out and proclaim that honesty and transparency are always the best policies; however, I think it is much more complicated than a black-and-white proclamation.

For example, I am not a big fan of non-profits who run around their community screaming from every mountaintop that they are running out of money and weeks away from closing their doors. On one hand, I’ve talked to some non-profit professionals who see this as a way of low-balling expectations. If they keep the doors open, then they win. It also creates a heightened sense of urgency among donors. Right? On the other hand, donors don’t like to throw good money after bad money. So, the next time your agency asks for money, donors will set the bar higher than they might have otherwise done because they want to make sure they aren’t investing in the S.S. Titanic.

OK . . . this might not be the best example, but the point that I’ve driving at is that employing an “Under promise . . . Over deliver” strategy takes careful thought and application.

Please use the comment box and share examples of where you successfully employed this strategy with your board members, donors, volunteers, or staff. Did it result in a win-win? Or do you subscribe to another school of thought entirely (e.g. honesty is always the best policy, never promise anything and just deliver, etc)? If so, please tell us how that has worked for you.

Here’s to your health!

Fundraising questions to ask of donors and anticipate from them

March 14, 2013 erik Fundraising

It has been an exhausting whirlwind of work the last few months. While I would never dare complain about work so as not to upset the consulting gods, I need to take a short break. So, this week I will re-run some of the most viewed DonorDreams blog posts on fundraising and leadership. I hope you enjoy today’s post on questions you should ask of and expect from your donors. Enjoy the flashback! ~Erik

Fundraising questions to ask donors and anticipate from them

Originally published on June 21, 2012

Last week we started a series of blog posts focused on the art of asking questions, and this theme has carried over into this week. So far, we’ve looked at questions that executive directors should be asking themselves and their boards. We’ve also looked at questions board members should be ask of themselves and their fellow board volunteers. Yesterday, we looked at various questions you need to ask prospective board members before asking them to join your board. Today, we’re ending this series of posts by looking at 1) powerful questions that donors should be asking the non-profit agencies they support and 2) questions non-profits should be asking their supporters.

Questions that donors have of you

Over the last 15 years, I have been part of countless solicitation teams and answered more questions than I care to recall at this time of the morning. While those questions tend to be all over the place thanks in part to “unique circumstances,” there are commonly asked questions that many donors seem to ask after they’ve been asked to consider making a charitable contribution.

What will my contribution help accomplish?
Specifically, how will my contribution make a difference in your clients’ lives?
How financial stable is your organization?
There are so many worthy causes that keep asking for support. Why should I support you?
How much of my contribution directly supports programming and how much will underwrite administrative and fundraising expenses?
Tell me more about your fee structure and why are you charging your clients what you’re charging them? How do you know that is the right amount? Why not more?

The list of FAQs is much larger, but these are just questions that I recall answering over and over again. If you want a more comprehensive list of questions, you may want to read Harvey McKinnon’s book “The 11 Questions Every Donor Asks: And the Answers All Donors Crave“.

Why is it important to know what burning questions to expect? I think there are two HUGEreasons:

If you do a better job “anticipating” these questions and build those answers into your case for support and solicitation presentation, I predict that your annual campaign numbers will start climbing.
There is a long list of fears that get in the way of people volunteering to help your agency with fundraising. One of the top reasons is their fear of not being able to answer questions. Addressing FAQs as part of your annual campaign training program will improve volunteer confidence, reduce the amount of avoidance behavior during the campaign, and result in better solicitations (and hopeful result in better fundraising numbers).

Questions that you should have of donors

As I said earlier, I’ve been on many fundraising solicitation teams, and I’ve seen many things throughout the years. Too often, I’ve seen volunteers rush through the solicitation, get a commitment, and quickly downshift into chit-chat of a personal nature. It is almost as if the volunteer solicitor is non-verbally saying “Phew! Thank goodness that is over.”

I don’t believe there is anything wrong with chit-chat after the solicitation is completed. In fact, there is all sorts of important personal information that could and should be harvested from that conversation, captured on a contact report form, and entered into the donor database. However, most volunteer solicitors don’t receive training on what those conversations should look like.

While it would be easy to use that post-solicitation time to talk about family and personal things, it think the following questions might be more useful in developing a deeper philanthropic relationship with your donors:

If you only had one year to live, what would be most important to you to accomplish?
What are the issues, injustices, principles or causes in this world that get you riled up?
If you could change one thing in the world, what would it be?
What accomplishment or legacy would have ultimate significance to you?
In philanthropic terms, if you had unlimited resources, what would you set out to do?

While it is important to know the names of a donor’s spouse and children as well as where they went to school or go to church, I think it is far more important to understand a donor’s passions, dreams, and desires. Knowing and understanding these things puts you in a position of helping them achieve big things. I believe this is one of the biggest differences between transactional fundraising and donor-centered fundraising™.

I believe these types of questions can transform how a donor views you and your organization . . . FROM fundraising vulture TO philanthropic dream-maker.

Please take a minute this morning to share a commonly asked question that you hear donors asking your volunteer solicitors in the comment box below. Or share with this online community one or two questions that you like to ask donors that helps you better understand their philanthropic hopes and dreams. We can all learn from each other and it is just 60 seconds out of your day. Please?

Here’s to your health!

Gift acknowledgement letters, quid pro quo and the IRS

March 11, 2013 erik Fundraising

It has been an exhausting whirlwind of work the last few months. While I would never dare complain about work so as not to upset the consulting gods, I need to take a short break. So, this week I will re-run some of the most viewed DonorDreams blog posts on fundraising and leadership. I hope you enjoy today’s post on gift acknowledgement letters. Enjoy the flashback! ~Erik

Gift acknowledgement letters, quid pro quo and the IRS

Originally posted on March 27, 2012

I cannot count the number of times that I’ve attended a non-profit organization’s special event fundraiser and walked away with a gift acknowledgement letter that was not compliant with “IRS Publication 1771, Charitable Contributions–Substantiation and Disclosure Requirements”.

Rather than use the language of accountants and tax professionals to explain, I’ll let the following hypothetically example speak for itself.

My first contribution to “Agency X” is the purchase of two dinner tickets for what I am hoping will be the best rubber chicken of my life. My out-of-pocket expenses to get in the room is $120.
When I show up, I am assaulted by happy volunteers selling 50-50 raffle tickets. My out-of-pocket expenses to get these intensely happy people who are blocking my path to the bar is $20.
With a nice glass of wine in my hand, I am finally able to mingle with old friends, but I end distracted by all of the shiny objects in the silent auction. <<Sigh>> At the end of the evening, I discover that “Agency X” is deeper into my wallet for another $250 in out-of-pocket expenses.
The final blow came many glasses of wine into the evening during the live auction (ahhhh, of course it is always the booze and the live auction that sinks most donors). Those Opening Day Chicago Cubs tickets had my name written all of them and only cost $1,000.

So, the next morning usually comes with a hangover and regret (even though “Agency X” is an amazing charity and you’re always happy to have supported their awesome mission). A few days later in the mail comes a gift acknowledgement letter. It tells me how wonderful I am and contains some nice “return on investment” and stewardship verbiage. Ahhhh, gotta love that warm fuzzy feeling.

You’re probably wondering “What’s wrong with all that?”

Well, the gift acknowledgement letter thanked me for my charitable contribution of $1,390.

Sure, if you do the math $120 + $20 + $250 + $1,000 does add up to $1,390, but this was not size of my “charitable contribution” according to the Internal Revenue Service, and now I need to take time out of my busy day to chase down the executive director or fundraising professional at “Agency X” for a correct letter. To help clarify the math, here is exactly what the IRS has to say on the subject:

“A donor may only take a contribution deduction to the extent that his/her contribution exceeds the fair market value of the goods or services the donor receives in return for the contribution; therefore, donors need to know the value of the goods or services.”

Let’s circle back and do the math one more time:

The event tickets cost $120, but the food I received in exchange for the ticket purchase was valued at $20 per plate. So, $120 minus $40 means that the charitable contribution only amounted to $80.
The $20 in raffle tickets got me four chances at a cash prize. The “value” I received for those chances was twenty bucks. So, $20 minus $20 means that I didn’t make a charitable contribution in the eyes of the IRS.
The silent auction was a huge benefit to me because I got some amazing bargains. Woo Hoo! Move over Wal-Mart! So, I might have spent $250, but the items I won totaled $500 in value. So, $250 minus $500 means that I didn’t make a charitable contribution in the eyes of the IRS.
And last but certainly not least, there was the booze fueled live auction. The bad news . . . it was $1,000. The good news . . . I finally got something to write off on my taxes. Opening Day tickets to see another woeful season of the Chicago Cubs are valued at $500 (of course, White Sox fans would argue that they are worth nothing). So, $1,000 minus $500 means that I can deduct $500 from my taxes next year.

The IRS tells us that it is legitimate to acknowledge my overall gift of $1,390 as long as somewhere (usually at the bottom of the letter in a footnote) there is language that explains that the fair market value of the items I purchased was $810 and only $580 of my $1,390 contribution is tax-deductible.

In my experience as a donor, this rarely happens and I end up wasting my time chasing after a new gift acknowledgement letter. The harm to “Agency X” is twofold:

It is counterproductive to annoy the donor. This is not good stewardship and doesn’t help “Agency X” in its efforts to secure the next contribution from me.
It can result in fines to “Agency X” if the IRS ever found out.

What is the potential penalty? Here is what the code says:

“A penalty is imposed on charities that do not meet the written disclosure requirement. The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing.”

If you want to learn more, Joanne Fritz at about.com does a nice job explaining it. You can also click here to get it directly from the IRS.

Note: “Agency X” does not exist. I am not calling out any one particular non-profit organization in my philanthropy portfolio. The aforementioned examples are a “compilation” of things I’ve purchased over the last 10 years. Please don’t add me to you special event mailing list. :-)

Please scroll down and use the comment box below to share the “boilerplate language” that your agency uses at the bottom of its special event gift acknowledgement letters. Please trust me that 30 seconds of your time will benefit countless smaller non-profit agencies. If I had a nickel for every time I was asked for sample boilerplate language, I’d be rich! We can all learn from each other.

Here’s to your health!

Your donors know when you’re lying

February 22, 2013 erik Fundraising, organizational development

In a post titled “My Son Knows When I’m Lying,” John talks about one study that claims that people lie two or three times every 10 minutes. He uses that study to transition into talking about “microexpressions” and how our faces betray us all of the time.

John’s blog post got me thinking about how many non-profit organizations lie to their donors.

OK . . . I’m sure some of you think I’m being harsh, but I don’t necessarily mean big lies that come with legal complications. Here are a few examples floating through my head:

“Please join our board. It only involves coming to one meeting, once a month.”
“We do a great job at measuring our outcomes and impact, which is how we know your contribution makes a huge difference.”
“Yes, we’re going to miss our development director something fierce, but they left to pursue a once in lifetime opportunity.”
“We doing a great job weathering the economic downturn. We are on a good fiscal footing.”

Little white lies. We tell donors these things all the time. In fact, the list goes on and on (but I certainly hope it isn’t anywhere close to the two to three lies every 10 minutes that John referenced in his blog post). We do this for any number of reasons including:

We don’t want to worry or concern our donors.
We fear that if they knew the truth, they’d stop donating to us.
A wise person once said, “If you like sausage, you don’t want to know how it is made.” 😉

With all of this being said, John’s blog post also got me thinking that about how donors probably see right through all of it. If this is true, then it begs the questions:

What do white lies do to our organizational credibility?
Do our microexpressions betray us enough to have an impact on donor retention rates?
Is there a better way to steward donors where we can avoid little white lies and be more transparent all the while cultivating a deeper sense of donor engagement?

I ask lots of questions today and offer no tips, tricks or solutions; however, I don’t think there are easy answers that I can offer you. Regardless, I suspect many of you have thoughts on this subject. How are you working hard at being more transparent and honest with your donors? What strategies and tactics do to you use? Please scroll down and share a quick thought or idea in the comment box below. We can all learn from each other.

Here’s to your health!