rob's favorites 175.jpg •Trends in Fundraising •Five Principles of Fundraising •Giving Pyramid and Bullseye •Relationship Management with Donors • • • ¡ ¡Growth of nonprofits ¡Transfer of wealth ¡Changes in regulatory treatment ¡Commercialization of nonprofits ¡Competition from for-profits ¡Internet use to raise funds ¡Professionalization ¡Social entrepreneurship What are some of the trends that are impacting capacity building and fundraising for nonprofits. Growth of nonprofit sector internationally has been phenomenal. Today the number is as compared to in 2000. This means that you have an increased number of causes competing for donative dollars that have not kept pace. The forthcoming transfer of wealth (from all adults alive today to heirs, charities, taxes and other recipients) for the period from 1998 to 2052 will be between $41 trillion and $136 trillion. Charitable organizations around the world must be included among the designated beneficiaries of some of this extraordinary sum. Changes in regulatory treatment. Increased scrutiny about nonprofit status. How gifts are solicited, whether causes are really charitable, accurate reporting of gifts, financials, quality of service, etc. Increased use of the internet to raise funds. Information technology is changing face of philanthropy. The fundraising marketplace is global, immediate, and timely. Commercialization of the nonprofit sector. Movement into areas that have traditionally been purview of for-profits. Imposition of fee structures. Will these business activities diminish charitable images and affect fundraising? Will clients suffer with change in emphasis? Competition from for-profit organizations. The trend toward privatization of human service delivery systems weakens the bond between private donors and charities. For-profit trend is being stimulated through governmental regulations and financial incentives. Private firms competing with charities include art galleries, clinics, fitness centers, nursing homes, schools and training services. For-profits cream skin. Professionalization of fundraising function – nsfre certification. Changing face of volunteerism. Levels and types of involvement changing – two career families. People want to see impact of gifts ¡Forms of commercialization: §More fee-for-service §Corporate partnerships §Social purpose enterprises §Market culture and practice § § § There has been growth in nonprofit reliance on fees for service charges. As of 1997, the most recent year for which figures are available, 49 percent of nonprofit revenue, including that of religious congregations, came from commercial sources compared to 31 percent from government and less than 20 percent from charitable contributions. Most of this came from mission-related services, such as tuition for education institutions and box office receipts for theaters. But nonprofits are also deriving money from the sales of ancillary goods and services, such as merchandise in museum gift shops and facility rentals by religious congregations. Nonprofits are also integrating the market more directly into the pursuit of their social missions through the formation of "social purpose enterprises," or "social ventures." These hybrid organizations use market means to pursue nonprofit objectives e.g. by forming a catering business through which to train former drug addicts. Nonprofits are being drawn further into the commercial orbit by alliances with the corporate world. Businesses have found that teaming up with nonprofits adds respectability and trust to their images while cultivating new markets, new sources of employees, and new pools of research and expertise. In exchange, corporations donate money, form employee volunteer programs, sponsor events, loan out executives, and provide equipment, space and contacts As they have come to operate in an increasingly competitive, market-oriented environment, nonprofits have also increasingly absorbed the culture and manner of the market into their internal structures and operations. Nonprofits are no longer bashful about aggressively advertising their services or competing for charitable contributions. Indeed, they have become increasingly "entrepreneurial," worrying about their "market niche" and engaging in "strategic planning." Agencies are increasingly adopting performance measurement techniques, adopting smaller, corporate-style boards, and building more elaborate organizational structures. ¡Pressures leading to commercialization §Declining government financial support §Slowed growth in private giving §Increased service demands §Growing competition (for-profit and nonprofit) §Increased accountability demand §Increased presence of corporate partners § § The pressures propelling nonprofit organizations towards greater engagement with the prevailing market system are multiple. They include declining government financial support, slow growth in private giving, increased service demands from widely disparate population groups, growing competition from for-profit and nonprofit organizations, increased accountability demands, and the increasing presence of potential corporate partners. world2011users.png Another trend impacting the sector is that of increased use of technology – to deliver services, to build capacity, to garner support. Of course, we all know that increased internet usage means that as a sector we have increased capacity to do what we do better. If we look at the internet just in the narrow aspect of fundraising for our causes, we can see the massive potential. Online fundraising has quickly become the most effective medium to engage supporters of a cause for a nonprofit organization. As donors continue to understand and adopt the power of the internet and social networks, other marketing initiatives such as direct mail are taking a back seat to online fundraising. According to a study performed by Nonprofit Technology Community (NTEN) , online fundraising has maintained a steady annual growth for the past five years. During the recent recession there was a slight decrease in the amount given per online donations however the number of online donations continues to point upwards. In 2008 the average donation amount was $112.00 and in 2009 decreased to $92.00. The amount on online fundraising transactions is up 43% in 2009. ¡Reach ¡Passive vs. active involvement ¡Types §Membership fundraising §SMS/DMS §E-mail fundraising §Large gifts on-line §Pledging on-line §Merchandise sales §Auctions Consider impact of internet –took over 20 years for radio to reach 50 million households in North America (50 million being a benchmark indicating some form of mass communications) . !2 years for television to reach same saturation level and four years for internet to do it. In the early days, on-line fundraising was largely passive. Nonprofits were content to build giving forms, hope donors found their way to the form and then counted the unsolicited gifts that trickled in. Over time, nonprofits have become more proactive; new trends emphasize proactive approaches – e-mail fundraising (blast e-mails), use of application service providers, using better planning, testing and tracking of internet tactics. All nonprofits should be on-line with their fundraising efforts. There are too many people on the Internet to ignore. Donor-on-line behavior – studies show that on-line donors tend to be more generous. Average gift of $48. 71 vs. $29 in direct mail and $24 in person. 35 to 50 % larger gifts. Also tend to subscribe more to monthly giving programs than those giving through mail or personal solicitation. On-line works well with automatic deductions from a credit card. Types of on-line fundraising: Membership fundraising – Example is World Wildlife Fund – has created an on-line membership opportunity for visitors. In bottom on right-hand corner of the home page, the text “join” takes visitors to a membership form that gives them chance to make membership donation of $15 and then be entitled to bi-monthly newsletter, t-shirt and annual Travel Magazine. Realized 70 new memberships per month – 27- percent growth in membership donations. E-mail fundraising – direct messages to potential donors lists promoting cause, offering gift in exchange for donations. Getting e-mail addresses is key. Relatively low cost. Large gifts on-line – electronic transactions where the prospective donor enters information on-line, sends it to the agency and then the agency processes the gift. Particularly in disaster situations, these kinds of immediately accessiable ways to donate have been well-accepted (red cross) have to publicize this on-line option as a way for people to donate. Security concerns. Still have to cultivate donors in other ways. Pledging on-line – If you are conducting any kind of campaign – give donors an opportunity to pledge via the internet – fulfillment through mail or in-person Merchandise sales – Use your web-site as place to sell merchandise associated with your cause. Auctions – more risky. Must find an appropriate auction site on which to sell the organization’s item, contact the owner/manager of site, determine commission/listing fees. Prepare back-up materials, determine the rules, establish starting price, follow through (mailing, fulfillment) Charity portals – websites fun by for-profits and nonprofit groups that list a variety of charities on site, with description and how to donate – becomes a “shopping” site for charitable people looking for good causes to give their donations to. Important aspects of internet fundraising – you must drive traffic to your side – put your website address on everything, register with key search engines to make sure others link to you. Use portals, use affiliates (sponsoring organizations) to link to you. ¡The Experience of the Haiti Earthquake §Red Cross raised $30M via text donations; 10% of total funds raised. §Harbinger of person-to-person philanthropy change C:\Users\Rob\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\3FC2GLTH\MC900104976[1].wmf Within philanthropy circles, one of the major subtexts of the earthquake in Haiti was the phenomenal success of text-message fundraising appeals. Nonprofits are abuzz about it. The Red Cross alone raised more than $30 million via text donations by the middle of February, more than 10% of the total funds raised. This form of communication indeed will dramatically change the industry — but not in terms of fundraising. Text-messaging's revolutionary impact is best illustrated by Ushahidi. It's an online platform for sharing crisis information in real time. It was founded in Kenya in 2008, the result of post-election uprisings. Anyone with a cell phone can send a text into the system. In the days after the earthquake in Haiti, Ushahidi provided millions of people worldwide with a front-line look at what was happening on the ground. The information the system provided was used to help coordinate the crisis response. Ushahidi was up and running, gathering and reporting information within an hour of the Chilean quake, too. Ushahidi's use of text-messaging to gather data in the moment is the real change being wrought by text messaging and other forms of cheap, instantaneous communication. It's the harbinger of a person-to-person (P2P) revolution that will change philanthropy much the way it has changed other industries like music and media. As human beings we are wired for personal connections. We love to feel like we're making a difference in a specific person's life. That's why various campaigns such as child sponsorship and alternative gifts (give a goat, for instance) play up one-to-one connections. The P2P illusion is compelling in this way but it must be genuine. When the illusion is exposed as not creating that link, donors tend to get quite angry. Take for instance the case of Kiva. When it became clear last fall that the P2P connection between lenders and borrowers that Kiva touted was actually much more tenuous and theoretical, Kiva faced a firestorm of criticism. Part of the reason that people were upset is that the connections implied are now plausible. The communications infrastructure around the world has reached a point where beneficiaries of any program could conceivably be text-messaging regular updates on their lives. Kiva's misstep is an important sign of things to come for the entire nonprofit industry. The expectation and reality of true P2P connections threatens to dismantle much of philanthropy's standard operating model: Defining needs. Donors have typically depended on aid agencies to report on community needs. No longer; those in need will be able to tell donors exactly what the situation is. The data will be available in real time, to anyone. Accountability. Soon, child sponsorship donors (who by some estimates account for 50% of private U.S. international giving) will no longer be content with an annual letter from a sponsored child — they're going to want the child's cell phone number. (And given that 75% of the world's cell phones are in developing countries, this won't be such an outlandish request). GlobalGiving, an aggregator of international giving opportunities has already allowed beneficiaries to report on a project by text message and found that the head of the local effort was abusing his power. GlobalGiving took action to remedy the situation. How many nonprofits are prepared for that kind of on-the-ground accountability? Value-add. Many nonprofits, in the name of fundraising expediency, have positioned themselves as low-cost intermediaries for donated funds (92% of every dollar goes straight to the children!). P2P means you no longer need the middle man. So how will nonprofits start truly communicating the value they bring to the table? The P2P revolution will affect foundations as well, in many of the same ways. For years foundations have been struggling to find ways to gather and incorporate feedback from the nonprofits they fund. Now that feedback will come to them directly from beneficiaries. How will program officers at Ford, Rockefeller, and Gates respond to tens of thousands of text messages from the field? Will they develop the needed listening skills to incorporate feedback that can lead to rapid learning? Or will they be slow off the mark, further eroding public trust in the role they play? Rapid information sharing and P2P connections have already turned several major industries upside down. Philanthropy is next. ¡“Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” ― Apple Inc. The idea of social entrepreneurship is broadening our concept of the role, profiles and activities of donors. The mindset of a social entrepreneur is a bit different than your traditional donor who gives money and walks away. This view from Apple might offer a good understanding of the orientation of the social entrepreneur. ¡Generation of newly super-rich ¡Impatient disdain for cautious and unimaginative check-writing ¡Tackling giant issues ¡More strategic in focus ¡More global in approach ¡Demands results ¡Involves more creativity and innovation ¡Social return on investment ¡ bd10495_ And we have a generation of donors who view philanthropy in a new way. There has been literature written about the new philanthropist who deviates from the old views of giving. In the U.S., we increasingly have a division in the socio-economic strata of our citizens. And we have a growing number of donors, a new generation if you will, of the super-rich. The stock market run-up of the 1990s created a generation of newly super-rich executives and entrepreneurs worth hundreds of millions. Individual donors have ushered in a new era of philanthropy. (these are younger philanthropists than ever. They are determined to donate their fortunes not on their deathbeds but during their lifetimes. Doing so allows them to undertake important projects sooner and t o exert more control and to see the fruits of their labors). In this category would also fall your celebrity philanthropists who receive much publicity for the philanthropic efforts. New philanthropy displays an impatient disdain for the cautious and unimaginative check-writing that dominated charitable giving for decades. New philanthropy is more ambitious. Today’s philanthropists are tackling giant issues, from remaking American education to curing cancer (they want to concentrate their efforts – moves away from diversified giving and giving only to an area that is personal to them and for which they want to be identified and make an impact.) New philanthropy is more strategic. Donors are taking the same systematic approach they used to compete in business, laying out detailed plans that get at the heart of systemic problems, not just symptoms. New philanthropy is more global. Just as business doesn’t stop at national borders, neither does charitable giving. Donors from Bill Gates to George Soros have sweeping international agendas. New philanthropy demands results. New philanthropists attach a lot of strings. Recipients are often required to meet milestone goals, to invite foundation members onto their boards and to produce measurable results or risk losing their funding. New philanthropy involves more creativity and innovation – many of the philanthropists are corporate or entrepreneurial dropouts who want to work in the nonprofit sector. New philanthropists resonate with Carnegies claim that the man who dies leaving behind him millions of available wealth will pass away unwept, unhonored and unsung. The man who dies thus rich dies disgraced. They also approach giving as if it is a business proposition. They want to know what their social return on their investment is and will only be continued donors to those causes that show that their gift is supporting a winning business proposition. Start of this new era can be traced to late Sept. 1007, when cable-TV mogul Ted Turner anted up an historic $1 billion pledge to the U.S. and challenged wealthy skinflints to do likewise. Billionaires got an even bigger prodding two years later when the world’s riches man, Bill Gates, pumped a staggering $16.5 billion into his foundation to help pay for a campaign to improve health care for the world’s poor. Gates and his wife Melinda have since poured a total of $26.5 billion – 60% of their current net worth – into their foundation, making it the world’s largest. Their mission is to bring vaccines to poor children in Africa and India == it is a strategic and sweeping as Carnegie’s promise to build a library in every American town. ¡Focus on outcomes ¡Recession and economic conditions ¡Devolution ¡Strategic partnerships ¡Ethics oversight Focus on outcomes – led by foundations and corporations which want nonprofits to prove that programs that hey help support are changing lives and world. Return on investment. Recession and economic conditions – Recession has increased the social problems demanding attention and resources. Homeless families and individuals, acute low-income housing shortages and rising crime rates have become center-stage issues. Lower tax revenues from reduced business activity (and consequently less governmental support) compound these difficulties and have put more pressure on charitable donations to supply essential services. During economic downturns, reduced corporate earnings limit both direct contributions and additions to company foundations; the foundation shortfall has a long-term effect on available funds. Devolution and greater reliance on faith-based and ngo to provide vital social services. NGOs saddled with the responsibility without the requisite funds to accomplish the mission. Strategic partnerships – joining together to achieve economies/efficiencies/impact/survive. Collaborations, alliances and mergers are among the options. Ethics inquiries – improprieties of organizations like Red Cross, United Way has led to increased investigation of all ngos practices. ¡Guidestar Example ¡Cause-related marketing campaigns ¡Example: Subaru Share the Love Campaign §Benefits: American Society for the Prevention of Cruelty to Animals, Make-A-Wish, and the Meals on Wheels Association of America § Determining: Who had: There are some tried and true principles that have proven over time to guide how we do fundraising. Let’s take a look at some of these. ¡Principle 1: §People give to people to help people People give to people to help people. Fundraising is often referred to as friendraising. Weinstein says that there are two things you should keep in mind: People give – not institutions/foundations. They make their decisions based on relationships and to what degree the appeal responds to the funder’s (their own) interests. They also base their decision on the quality of the organization’s leadership – do they believe that you will be good stewards of their hard-earned money and contributions? They give to people – donors don’t give in response to institutional needs. Donor’s don’t want to contribute to cover your administrative expense – generally, they want to contribute to direct services that aid those in need. Further, they don’t give to some unknown entity – they often give because they know you personally – they want to give to living, breathing individuals. What is the acceptable level of administrative expense most funding bodies/donors want to see for a NFP? 15%. ¡People give……. § Behind every gift is the decision of an individual ¡To people……. §Based on some personal linkage ¡To help people. §Not to institutions or their overheads, but to human needs C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\IVKRRS8D\MC900383146[1].wmf ¡Principle 2: §People give relative to their means People give relative to their means. People give in relation to their means and with consideration given to what others give. $10 can be a big gift to some – and nothing for others. Have to consider the wherewithal of the individual to give – it is not a one size fits all approach. On other hand, those with great stores of money often don’t give proportionately. You should the more affluent the opportunity to give at more significant levels. The power of peer comparison should not be overlooked. (Example: publishing of annual fund drive donations). However, be cautious of publishing the “average gift”. This givers others the signal that average is satisfactory. ¡One size fits all!!!!!!! ¡So, personalize the ask amount. ¡ C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\IAIH7XO0\MP900427662[1].jpg ¡Principle 3: §Those closest must set the pace. Those closest must set the pace. “leadership in itself, let it never be forgotten, is always the key factor in successful fundraising, whatever the cause, whatever the goal and whatever the scope of the campaign.” (Seymour, 1966. Those closest to the cause – the board, staff and volunteers must lead the cause. When they lead in giving, others follow. Ideally, each board member cares enough about the nonprofit to support it financially; that means giving money. How can you ask others to support a case if you are not personally supporting? Other ways boards can assist in fundraising: making fundraising calls, signing letters, hosting cultivation events, otherwise drawing contributions to group. Get or get philosophy toward board involvement in fundraising. Board Donors Past Donors Volunteers/Staff Attendees The Universe Another way of looking at this is the giving target. You want to start at the center and work out in fundraising efforts. Start with soliciting funds from your board, then existing donors, then those who have given previously, then your staff and volunteers, then those who have been affiliated with the organization on the periphery (special event attendees, friends, vendors, etc.), then open it up to wider universe (targeted by relevant factors) ¡Principle 4: §Successful fundraising is the right person asking the right prospect for the right amount for the right project at the right time and in the right way. Successful fundraising is the right person asking the right prospect for the right amount for the right project at the right time and in the right way. Consider who is the right person to ask for the contribution. Usually a volunteer with a peer relationship with a prospective donor. Or a CEO or board member with a peer relationship. The key idea is peer status. Ideal solicitation team (for face to face) is often volunteer board member/leader with key staff member (CEO). Ideal signer of mail appeal is board president – with personal note from peer. Right prospect – these are people who have given in the past, or have a natural affiliation with program or people who have been generous to similar causes. Prospect = linkage, ability, interest! Right amount – don’t take approach that anything you give will be appreciated – no tin cup mentality. This demeans the organization’s cause. People are looking for direction in terms of size of gift. Consider in advance, do research and define what is the prospect’s capacity to give. Personalize request amounts. Ask should not be standard! Right project – Ask donors to support those causes where they have greatest interest. If in a FHBA situation, you are approaching an elderly gentleman whose wife has recently passed with Alzeimers and you have choice of asking him for general support, support for children’s bereavement program or Alzheimer’s inpatient unit, the choice should be obvious. Be specific in what your are asking for money for – what will this $5000 give toward purchasing. Give people choices. Right time – timing of campaigns is critical. April may not be a good time to start a capital campaign – those with wherewithal to give large amounts are probably writing out big tax checks. Also consider timing of other campaigns in your community and timing with other events/solicitations of agency. Space out requests throughout year. Right way – Again,appeal to interests of prospect. Crisis appeals lose effect over time. Emphasize what the gift will go for in specific terms. Consider each prospect and what will be the best way to solicit gifts. Don’t rely on direct mail to solicit gifts from your prospects that have greatest capacity to give. ¡Right person= Peer, acquaintance, leader ¡Right prospect = linkage, ability, interest ¡Right amount = personalized request based on history and capacity ¡Right project = interest of donor ¡Right time = avoid conflicting requests and bad times of year ¡Right way = tactic that is successful for that prospect ¡ ¡ ¡ ¡ ¡Principle 5: §Understand the 80/20 rule. Follow the 80/20 rule. Most nonprofits have relatively consistent patterns of giving. A small number of individuals often contribute the bulk of a nonprofit’s funding. For many organizations, as few as 10 to 20 percent of donors provide 70 to 80 percent of their funding. Such an arrangement of contributions is referred to as a giving pyramid. Few major donors at the top of the pyramid account for a sizeable proportion of contributions and a relatively large number of donors at the base contribute a small portion of the total. Inverse relationship between the number of donors in a giving category and the size of they funding they provided. This provides powerful cues as to how an organization should dedicate its time and resources in fundraising efforts. Also says something about funding diversification – don’t become overly reliant on one group, one method or one leader in fundraising. Major Giving Annual Giving Estate Giving 20% Donors 80% Gifts 80% Donors 20% Gifts This provides a visual representation of the giving pyramid. C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\880LLQPA\MP900422261[1].jpg ¡Build a base of small donors ¡Work to increase gifts of many over time ¡Conflicting demands ¡Indecisiveness ¡Confusing means with goals ¡Giving up too soon ¡Following personal preferences ¡Failing to look at fundraising as an investment hh01631_ There are some common pitfalls to keep in mind in your fundraising practice. Sometimes fundraising doesn’t go as planned because of these things: Conflicting demands – operational needs taking precedence over development needs, one type of fundraising effort (annual campaign, for example) working against another type of fundraising effort (special event, capital campaign). Must have a clear eye on priorities. Indecisiveness: Inability to decide on a strategy to pursue and consequently stay with tired approaches or don’t move at all. Or rely on just one fundraising approach when a diversified approach (many fundraising tactics) may assure that you’re giving donors at all giving levels opportunities to support . Confusing means with goals – holding a great special even(good time had by all) but unprofitable endeavor. Making fundraising the end, not the means. Elaborate special events may be a success in attendees eyes and may show some profit, but consider lost opportunities and wages devoted to planning, etc. Following personal preferences, ignoring experience. What works well in fundraising may not always be inline with your personal tastes/preferences (golf tournament vs. AFD) Failing to look at fundraising as an investment – some fundraising tactics take years to bear fruit. Don’t give up to soon. Takes money to make money. But don’t throw good money after bad. ¡Fundraising is friendraising ¡It’s all about building relationships with donors! ¡Donor Cultivation ¡Donor Thank Yous ¡Donor Recognition ¡Donor Education ¡ ¡ ¡Treat all donors as prospects ¡Remember that donors are investors ¡Get to know your donors ¡Have a regular schedule of “host opportunities” ¡Be mindful of donor interests and concerns ¡What are some ways the organization could cultivate donors? ¡What are three ways you could cultivate a relationship with a major donor prospect? C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\IAIH7XO0\MC900088976[1].wmf ¡Timeframes: No more than seven days ¡Personalization (include spouse/partner) ¡Benefit focused ¡Specify amount ¡Recognition option ¡Tax statement ¡ —Ways to do it: —Timely acknowledgement system —Visibility —Incentives —Naming opportunities —Emphasize continuing relationship (number of years) —Rule of seven —Personal notes/calls/visits —Encourage participation in life of organization —Accuracy —Use of donor recognition levels ¡What are five ways you could recognize the gift from a major donor? C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\880LLQPA\MC900088974[1].wmf ¡Information media §Newsletters §Annual reports §E-mails ¡Open houses ¡Program visits ¡Conferences C:\Users\Rob\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\OWWBN21B\MPj04394190000[1].jpg ¡Trends in Fundraising ¡Five Principles of Fundraising ¡Giving Pyramid and Bullseye ¡Relationship Management with Donors