Monthly Archives: April 2015

Advancing the culture of philanthropy, one broke student at a time

What’s more valuable to a nonprofit that embraces the culture of philanthropy, a major gift of $5,000 or a grad student who sends a $5 check each month? Believe it or not, we should probably be more excited to break out the bubbly for the latter.

 

culture of philanthropy

Well, not the Dom Perignon – we still have a budget, you know.

 

Many idealists bounce from one nonprofit to the next, each time disillusioned by what they consider a lack of any discernible culture of philanthropy. Relationships with donors are managed en masse, social media campaigns are about as contrived as they come, fundraisers are heckled daily with unreasonable quotas… you’ve probably seen it yourself many times. Yet fixing the problem isn’t as easy as it might seem. To begin with, advice for cultivating a philanthropic office can be frustratingly vague. Riddled with sexy key words such as “mission,” “synergy,” and “stewardship,” and frequently concluding with the genius observation that it’s necessary to “institutionalize and reinforce desired changes,” these so-called solutions don’t seem workable at all.

 

A concrete step that more and more innovating nonprofits are taking – and which will likely bear dividends no matter what the size of your office – is to gear operations towards donor-centricity. It’s a bold, somewhat counter-intuitive approach to the mass of donor data that’s currently available to us, data that some experts claim has been horribly misused in ways that actually hinder a nonprofit’s culture of philanthropy. The outdated donation-driven approach forces fundraisers to obsess over (monthly, yearly) monetary goals. It focuses on major gifts like a charging horse wearing blinders. Even in the few areas where personalized stewardship is encouraged, it is always couched in a way meant to extract the most additional money possible, as soon as possible. “Mr. XYZ, thank you for your generous gift of $50. Now would you consider sending us a much-needed donation of $100?” Donation-driven philanthropy is a turn-off to supporters and absolutely demoralizing to idealistic staff members who didn’t realize that they were signing up to become pushy salespeople.

 

salesman

If you act today, I’ll throw in this FREE “our culture of philanthropy is dead” trading card!

 

In contrast, focusing on donors builds public goodwill, raises office morale, and almost always results in greater philanthropy in the long run. Implementation does require some sacrifice and investment up front. Fundraisers will have to resist the urge to push for more (or more expensive) gifts even if it means not meeting a monthly goal. But the good news is that a lot of the information needed to cultivate dedicated and enthusiastic lifetime supporters is already being collected. What program does this person care about the most? What time of the year does she prefer to donate? Does she live nearby? And the time required for a true culture of philanthropy to blossom only seems unproductive in the context of month-by-month, dollar-by-hour valuation. In the long term, as many studies have indicated, these hours will result in more dollars raised.

 

So without further ado here are some practical suggestions for how to make donor-centricity work for you:

  • Say thanks in a meaningful way. A personal phone call would be best, but if that’s not possible at least consider a handwritten or hand-signed note.
  • Never make your supporters feel that their gift wasn’t enough. Remember that they’re not required to give anything at all. When thanking someone for their donation, do not take the opportunity to hit them up for another donation. For every person who responds positively to such a request there is another one who will be turned off to your organization for good – not a viable strategy if you care about donor retention at all, and you definitely should.
  • Keep your core supporters updated on social media rather than through letters. Monthly mailings and e-newsletters can be overwhelming and cause donor fatigue. If a supporter only gives around Christmas or right before tax day she might prefer not to hear from your organization for the rest of the year, and you should respect that. In contrast someone who “likes” your nonprofit on Facebook signals that they definitely do want to hear about your latest activities, projects, and success stories. Indulge them!
  • When you do solicit donations, flip the script. In other words, don’t send everyone the same letter. Here’s your chance to use all that data you have! If your supporter donated to a project two years ago that was recently completed, let them know what he’s helped make possible. Discuss the issues that he indicated on past surveys he’s most interested in and the progress your organization has made on those fronts. This isn’t a time-consuming or expensive process – it can be automated with a simple computer program using information from your donor database – but it shows people that you care about their experience as donors.
  • Utilize “ambient” opportunities. This is particularly useful for small, local charities because it’s both engaging and low-pressure. Post about volunteer opportunities, clothes drives, and fundraising events on Facebook. Supporters have the opportunity to interact with each other, which deepens enthusiasm for your cause and your organization. Even if they only “like” or “share” your post, it keeps you present in their thoughts and helps spread your message on social media.
  • Send tokens of appreciation. Birthday cards, magnets, flashlight keychains, little teddy bears to celebrate five years of steadfast support.
  • Remember that the culture of philanthropy depends on everyone in your office. Apply the same donor-centricity to internal giving (particularly Board giving, which is usually met with nonchalance rather than celebrated as the enormously generous, critical support line that it is). A CEO or Executive Director should lead by example by instituting metrics and goals that center on the lifetime value of a donor rather than on monthly quotas.
donor-centric

Send something unbearably cute if you really want to make an impression.

 

Now let’s go back to that grad student and her measly $5 monthly donation. Let’s say she keeps it up for four more years, then graduates, finds a great job, and increases her monthly give to $30. Let’s say she also volunteers for one event a year and once donates a weekend at her timeshare for a silent auction. And finally let’s say that her glowing Facebook support of your nonprofit inspires one of her friends to follow in her footsteps every five years (a very conservative estimate as anyone studying social media influence will tell you). Over the course of this modest but dedicated supporter’s lifetime, she will contribute to your nonprofit the value of $168,000, not to mention an amount of authentic positive sentiment that money simply can’t buy. That’s how embracing a donor-centric approach can create a sustainable and highly profitable culture of philanthropy. One that even the most starry-eyed idealist in your office will love.

What does a good Form 990 look like?

Tax Day is coming. Sadly, that dreaded IRS Form 990 isn’t going to fill itself out. You’ll send it off along with virtually every grant request, and many people interested in volunteering for you, working for you, or even just writing you a $50 check will track down the information on it. But what are they looking for, anyway?

 

The IRS Form 990

The IRS Form 990, window to a nonprofit organization’s soul.

 

If you think that the only thing that matters is that your organization isn’t in the red, you might be surprised that current financial health is only one of the many bits of important information to be gleaned. A good Form 990 will also hint at your genuine interest in cultivating donor relationships, and can directly reveal your trustworthiness, efficacy, and long-term potential.

Think of your 990 is an opportunity to turn a skeptic into a supporter. You know that they’ll see it, they know that you’ll see it, so why not use it to communicate all that rocks about your organization?

First and foremost, it’s important to fill in your mission statement and relevant program service accomplishments. Charity Navigator and similar services often lift their nonprofit summaries directly from 990s, without consulting websites or other outside sources, and if you (or your accountant) skips these sections it leaves the impression that you don’t really care if people understand your work or not. Be concise about your mission and include major program achievements and updates. Although interested parties will probably come across the same information (or even much more detailed versions) on your website, Facebook page, or Twitter feed, having it appear on the official IRS Form 990 or on Charity Navigator imbues it with authority that “self-generated” content lacks.

An appealing 990 is also one that instills trust in an organization. At least 75% of your expenses should go directly toward programs. As a rule, no one likes to see board members raking in over $100,000. Depending on the work they do they may not even be technically “overpaid” at that salary, but if someone is considering donating money – or even applying for a $40,000-a-year job – they want to be sure that those at the helm aren’t profiteering from their goodwill and generosity.  Likewise, unless your nonprofit’s explicitly in the lobbying game, donors tend to be turned off by excessive lobbying costs. In part this is because nonprofits pay a penalty if lobbying costs make up 5% of their total operations. Savvy donors realize that part of their contributions will go right back to Uncle Sam, not to the cause they’re trying to support.

 

d

Not everyone wants to feed the fat cats.

 

The Form 990 also requires nonprofits to share information on outside grant writers, event organizers, and other fundraisers. This information provides critical insight into small- to mid-sized organizations. Many of them save oodles in personnel costs by not retaining full-time grant writers or event organizers on staff. The public can therefore see the grant writer’s (or gala planner’s) compensation and compare it to the amount of grants received (or money raised at a gala). Is the nonprofit brilliantly reinvesting its resources, or frittering funds away with poor results? An experienced, flexible outside grant writer who takes the time to get to truly know your organization and craft high-quality requests can help your return signal competence, efficacy, and respect for donors and constituents.

Finally, a good Form 990 should demonstrate growth. This can be seen most obviously in the change in total revenue and total expenses over the last few years. A shrinking charity that doesn’t even keep up with inflation isn’t a good choice for philanthropy because it’ll fizzle away before long. If you undertook a project such as building a larger and better-equipped facility that caused short-term shrinkage, consider addressing its importance among your program service accomplishments. Another item of interest is the itemized Statement of Revenue. It breaks down how much support your nonprofit received from foundations, the Federal government, the state government, private donors, and other sources. A fundraiser worth his or her salt is knowledgeable about all types of funding and strategically pursues diversity and long-term sustainability. Being able to prove to potential donors, volunteers, and employees that you’re ascendant boosts their confidence in you immensely. If you want to turn supporters into more avid supporters, invest in your Facebook page. But if you want to turn skeptics into supporters, invest in a good Form 990!

Wild Fundraising is dedicated to the “big picture” – helping our clients achieve their mission every step of the way. If you need assistance creating a knock-out 990 please refer to the IRS instructions here or contact us at 619-436-7161.