Monday, September 29, 2008

A few of the biggest fundraising mistakes

What are the biggest blunders, oversights or mistakes in fundraising? Well, The Relentlessly Practical Guide to Raising Serious Money lists the twenty biggest fundraising mistakes you or your organization can make.

Today we are going to look at a few of those mistakes that I think many people make (these are excerpted from The Relentlessly Practical Guide to Raising Serious Money):

  • Failing to Cultivate Donors: Cultivation, a sustained effort to inform and involve your prospects, is needed for practically every gift—the bigger the gift, usually the more preparatory steps needed. The best cultivation, which uses a mixture of printed matter, special events, and personal attention, takes place slowly over a period of time, sometimes years. If there's any secret to it, it is being yourself and cultivating people the way you would want to be cultivated. That is, with simple sincerity, not glitzy programs. Donors give more when they can visualize an organization not as an organization but as people. Achieving that end is, in essence, the goal of all successful cultivation programs. *Gifts like these don't often drop out of the sky, they take months if not years of cultivation.
  • Thinking Your Organization Will Attract Support Simply Because It's a Good Cause: Just because you have a good cause—one of thousands, really—doesn't mean money will wend its way to you. Organizations must attract support the old-fashioned way—earn it. Giving away money is something we all do reluctantly, and it's hardly an instinctive act. Nonetheless, people will support you if you present them with a challenging project that is consistent with their interests. To succeed, you must explain exactly why you seek the funding, why your project is compelling, who will benefit, and why the money is needed now. In other words, your needs—presented as opportunities—must be specific, people-oriented, and have a sense of urgency. Keep in mind, always, that people give in order to get. They don't simply want to give away their money; they want to feel they're investing it and getting something in return. *This is often seen in smaller, newer nonprofit organizations and in organizations that get most of their money from government or foundation sources. Building a individual donor program is very important for all organizations.
  • Failing to Thank Your Donors: Thanking donors, besides being polite, is an act of cultivation—and a smart one. People appreciate when their generosity is recognized. They not only feel closer to your organization, they're inclined to continue giving. Most important with thank yous is to acknowledge gifts positively and quickly. You want the donor to know that your trustees are aware of the gift, that his or her generosity will stir others to give, and that your organization will put the money to good use. Board members can be especially effective in expressing appreciation, either by sending notes or by making telephone calls to selected donors. *Don't underestimate the impact of a personal phone call to a donor to thank them for their gift- no matter the size of gift.
  • Failing to Have a Strong Rationale: Before setting out to raise money, each organization must think through the rationale for its appeal: why do the funds need to be raised, what will they achieve, and who will benefit? The mere fact that you and your board need money won't stir people, no matter how well organized your effort. Rather, with your case for support you must move your prospects emotionally and intellectually. They need to feel that, by contributing to your organization, life will in some way be better for them, for their children and grandchildren. They need to sense that their community—or even the nation—will be advanced as a result. *This is extremely important and can make or break your fundraising goals. I serve on the Board of Directors of Pet Haven, a nonprofit animal rescue, which is an organization that does an excellent job of having a strong rationale. Every ask they send out, they send information on one or two new intakes (dogs or cats) with their story and why they need money. To read an example of one of their "stories", click here.
If you want to read the full list of all top twenty mistakes from the book, GuideStar published Part I and Part II, which lists all of the biggest fundraising mistakes.

Friday, September 26, 2008

Press Releases: When, What, How?

For those of you that are puzzled about press releases, this week's post includes some resources to make writing a press release a little easier.

If you have never written a press release before, this summarizes what all a press release should include, with a few tips on helping you get noticed. To get help you get started, here is a sample press release. Now that you know how to write them, here are a few more great tips for writing them effectively.

Now that you know how to write them, you can visit Kivi's Nonprofit Communications Blog, which has a great post that talks about timing of press releases. She discusses when you should send them out, depending on what type of coverage you are seeking (pre-event or post-event).

On an unrelated note, the Nonprofit SOS: Evaluation Series was featured on the TechSoup Blog. And if you haven't already, please take a minute to take this quick, two question survey.

Tuesday, September 23, 2008

Young donors are where it's at.

The Chronicle of Philanthropy included several articles in their recent publication about how our current economic times are affecting different nonprofits, including information about a recent survey, and it's results: "29% of Americans Plan to Cut Giving This Year." Yikes.

The survey found that although donors over 65 planned to give less or not at all, donors between 25 and 34 plan to increase this donations this fall. This will be an interesting shift for many nonprofit organizations that have been focusing on older donors for years.

This goes to show you, young donors are where it's at. They are starting giving circles and giving away their fortunes. And some have found that they give just as much as older donors.

So, how to reach these generous young donors? Well, the first and most obvious answer is- use technology! Young donors are online, they are using facebook and myspace, they check their email multiple times per day, they scout charities by looking at their websites and blogs. Also, young donors have indicated that they want to make our world a better place to live, so make sure to explain very specifically how their donation- regardless the amount- makes a real difference. And don't forget to get them involved with your board of directors, having a young person on your board will often bring new ideas into the organization and help you reach more young donors.

Now remember, as the years pass, people will tell you to focus on different age groups (a year ago some told you to give up on younger donors), but always keep in mind that young donors are the future. They will be alive and committed to your organization for 30, 50, 70 years to come.

Monday, September 22, 2008

Nonprofit SOS Survey

I need your help. Please take a minute (literally) and answer two short, quick questions about your nonprofit work.

Click Here to take survey

Thank you!

Reader Question: Can nonprofit board members win the organization's raffle?

Just to elaborate a little further, this person was asking whether a Director from their board of directors could win the raffle prize at their event. This same question could be asked about whether staff can win the raffle prize at an event.

This is a tricky question. Technically speaking, in most states, the answer is yes- your staff or board members can win raffle prizes. Now, this can vary, so make sure to check your state Gambling Board to see what the rules or laws are in your state.

So, it is allowed, but would you want your staff or board members to win the raffle? I would think no. From the appearance point of view, it may not look good to the donors and volunteers who spent money on raffle tickets if an organization insider won the prize.

I think this is a decision that each organization has to make, keeping in mind any rules or laws that gambling board have.

Thursday, September 18, 2008

Don't force nonprofit staff to ask their personal networks for donations.

Many people have worked at nonprofit organizations where people were expected to fundraise when their job didn't have much to do with fundraising- even worse, they were expected and even guilted into asking their personal networks for donations.

In my opinion, this is wrong. Although, I am a believer that pretty much all jobs have something to do with fundraising. I think if you are going to expect all employees to fundraise, that expectation needs to be included in their job description and clearly communicated to them. For most nonprofit workers, it doesn't work like that. They start a job as the Office Manager or Program Coordinator and when a big event comes along, so does the pressure for them to sell tickets to their friends, families and others in their personal network.

While not communicating expectations about fundraising to non-fundraising staff is frustrating, I think the bigger sin is forcing and guilting staff into asking their personal networks for donations or to buy tickets. If staff volunteer to do this, then there isn't a problem. But in many cases it is an unpublicized mandate and if you don't want to do it, people secretly question your commitment or say things like "you'll do this because we need money for your program (job, computer, etc)." Not only should a staff member not be forced into this, but they also shouldn't be looked down upon because they don't want to go to their personal networks for money. Nowadays, people have multiple charities they support. While they probably feel at least somewhat passionate about the organization where they are working, they probably also serve on a nonprofit board and volunteer for another nonprofit- both of which they fundraise for.

In short, it's ok to expect all staff to help with fundraising- as long as those expectations are clear from the start- but don't force or guilt staff into asking friends and family for money. They may or may not do it, but it's their decision and it doesn't make them less committed.

Tuesday, September 16, 2008

Should you have performance reviews for your board members?

Incorporating performance reviews for board members into your governance process can help ensure that you have an effective and successful board of directors for your organization. But they are just volunteers right? Well, yes, but volunteers and board member should be reviewed. Evaluating your nonprofit board is particularly important because they can have such an enormous impact on your organization.

So, the Executive Director reviews staff, the Board reviews the Executive Director...who reviews the Board? Well, itself. Boards need to be accountable and have self-evaluations.

Some recommend that you do mid-term and annual reviews, I think that as long as you do a review annually you will be set. Just remember that the goal of a review isn't to tell a board member that they are doing a bad job- it's to help build team work, increase communication and to ensure the board is doing what it set out to do. It also gives members a meaningful measure of accountability and will provide a guideline for effective board performance.

This PowerPoint presentation does a great job going over evaluating board members, why it is important and how to go about it.

Now that you have decided to incorporate board member evaluations, here are a few resources to help you:

  • Here is a self-evaluation that can be used by both board members and the Executive Director to gain an understanding of how well the board is doing.
  • Here and here are self-evaluations for individual board members about their own performance.
  • Here is a checklist for evaluating board. It includes indicators for what is needed to have a healthy, well-managed organization.

Monday, September 15, 2008

New Blog Design!

Thank you to Teresa over at Delicious Design Studio for doing an awesome job at redesigning this blog!

Friday, September 12, 2008

Evaluation Series: Fundraising

It is very important to use evaluation in your organization's fundraising efforts. You can do this in a variety of ways, from holding a focus group of your donors to see why they give to using program evaluation information to increase gifts to your organization.

Today we will look at three areas of fundraising- grants, donors and special events. All three use evaluation in some way. When most people think of fundraising and evaluation they immediately think of grants. Every grant writer knows that funders look to that section of your application titled "Evaluation" to make sure you are evaluating your programs and using their money in an effective way. This includes a description of how specifically your organization will evaluate the project being funded. 79 Grantwriting Resources has a post on Evaluation Tools for Your Grant Application that is primarily aimed at youth-serving organizations but has some good information about tools for writing the evaluation section of grants.

You can also use evaluation with your donors in several ways. Counting What Counts mentions a major finding of the keynote speaker of a conference they were at- "after a donor gives a gift to your worthy cause, they want you to learn the measurable outcomes that the gift and your program produce." What does that mean? Well, use one of the tangible outcomes from your program evaluation and share it in the thank you note mentioning how that donor made that possible. You can also use evaluation in the form of focus groups to invite a group of your donors to hear why they give to the organization. You can use your findings to help you increase donations and secure new donors.

With special events, you can use evaluation to evaluate it's success. Or in other terms, it's return-on-investment. I wrote a previous post about this here. You can also use this list of questions to help evaluate your event.

Also, here is a great article that talks about evaluation for fundraising and its importance.

I'll end this series with a few more evaluation resources throughout the web:

  • The Nonprofit Sector Research Fund awards research grants and organizes convenings to expand knowledge of the nonprofit sector and philanthropy, improve nonprofit practices, and inform public policy related to nonprofits. Their website has project findings from their research studies.
  • This website provides information and links to other website to help your organization with evaluation.
  • Here is a "Basic Guide to Outcomes-Based Evaluation for Nonprofit Organizations with Very Limited Resources."
  • Here is a Basic Guide to Program Evaluation.

Thursday, September 11, 2008

Evaluation Series: Volunteer Management

You can incorporate evaluation into your work with volunteers in several ways. You can use evaluation to determine the needs of an organization so that you can recruit and appropriately assign volunteers. When recruiting you can use surveys to determine the skills volunteers have. Similar to Human Resources work, you can use evaluation to track a volunteers’ effectiveness, performance and to estimate the value of their volunteer time.

There are many excellent resources online for best practices in volunteer management. This is a tool for the eight steps of volunteer management and describes each step (including the needs assessment and evaluation. Here is a thorough introduction to volunteer management. If you would like to evaluate the effectiveness of your volunteer program, here is a guide on program evaluation 101.

The final post in this week's evaluation series is: Evaluation Series: Fundraising. The goal of this week's evaluation series is to highlight how evaluation can play a role in your job and to provide resources to accomplish incorporating evaluation in your organization.

Wednesday, September 10, 2008

Evaluation Series: Human Resources

Evaluation plays a leading role for human resources professionals. Almost every aspect of their job deals with evaluation in one way or another. If you are the human resources person for your organization, you will likely use evaluation from day one.

You will use components of evaluation while developing job descriptions- you will interview and survey your colleagues to ensure that the job description includes everything it should.
Once you have the job description, then you will need to develop interview questions and complete the interviews using best practices. You will want to develop a rating scale to measure the key qualifications of a position and use it to make the hiring decision.

Once you have a new hire, you will continue to use evaluation throughout an employee’s career. You will use surveys to evaluate job satisfaction and performance reviews to determine raises. Make sure to follow best practices when determining how to measure an employee’s performance, which includes having clear, measurable metrics for an employee's performance and providing constructive feedback for areas of improvement. As you can see, evaluation plays a large role in human resources and can help you be more successful in your position.

A side note, you have likely noticed that I am using the term "best practice" a lot. I mentioned it in my last post, but I thought I should take a minute to more clearly define what exactly I am talking about when I say "best practice." So, what exactly is best practice? The Business Dictionary defines it as "Methods and techniques that have consistently shown results superior than those achieved with other means, and which are used as benchmarks to strive for. There is, however, no practice that is best for everyone or in every situation, and no best practice remains best for very long as people keep on finding better ways of doing things. See also best in class and leading practice."

Watch for tomorrow’s post- Evaluation Series: Volunteer Management

Tuesday, September 9, 2008

Evaluation Series: Nonprofit Communications and Marketing

Nonprofit communications and marketing professionals can and do use evaluation in a variety of meaningful ways. From evaluating communications efforts to holding focus groups to identify branding strategies. While many believe that these sorts of tools are only for our for-profit counterparts- this is simply not the case.

The underlying goal of nonprofit communications and marketing professionals is to ensure that the organization’s mission is communicated effectively. To achieve that, a lot of factors come into play. Do they have an appealing slogan and logo? Does the website draw people in? What type of advertising works best? How are people hearing about our organization? These are all questions that evaluation can answer.

You don’t need to do a formal evaluation or even hire a consultant. You just need to understand the role and importance evaluation plays in your day-to-day work and do your best to follow best practices.

What do I mean by best practices? I mean that when you use evaluation make sure you are doing everything in your power to do it right. For example, focus group best practices dictate that you need to make sure you have the right people participating in your focus group- not just settling for whoever signed up. These sorts of best practices can easily be found via a quick search online. I also have linked to a variety of resources throughout this post.

Watch for tomorrow’s post- Evaluation Series: Human Resources.

Monday, September 8, 2008

Evaluation Series: Why should you care about evaluation?

What could evaluation possibly have to do with my job? That is a question human resource managers, development professionals, communications directors and other nonprofit staff often ask. The answer? A lot.

While most nonprofit organizations do not have the capacity to complete formal evaluations of their programs, nonprofit staff can and should incorporate evaluation best practices in their day-to-day work.

Pretty much every nonprofit worker has used some form of evaluation at one point in their career. Program Managers use pre and post-tests to measure program effectiveness, communications directors use focus groups to determine branding strategies, human resources uses performances appraisals for annual reviews, and almost everyone has used SurveyMonkey for one thing or another.

What is important is making sure that when you use evaluation, that you are following best practices. This week, I will provide tips on evaluation and highlight how evaluation fits with four different nonprofit professions:

Tuesday- Nonprofit Communications and Marketing

Wednesday- Human Resources

Thursday- Volunteer Management

Friday- Fundraising

Friday, September 5, 2008

A blog worth your time.

I recently happened upon a great blog- Brazen Careerist by Penelope Trunk, that I had to share. While Penelope does not work in the nonprofit world, her posts are still very relevant and interesting. I found myself on her blog for over an hour reading post after post- I especially like how her posts include "Posts that are probably related" and lists a few more posts you should read. A few posts I especially enjoyed were "The Wall Street Journal tries to guilt women into giving up maternity leave", "You only need $40,000 to be happy", "How to wait: Don't" and "6 most violated resume writing rules." But believe when I tell you that there are hundreds, yes hundreds of entertaining and useful posts on her blog. Enjoy.

Thursday, September 4, 2008

Independent Contractor vs. Employee Part II

Previously we talked about the employee vs. independent contractor situation that many organizations face (both for-profit and non-profit). To read the original post, click here. That post has received an unbelievable amount of interest, it seems there are a lot of people and nonprofit organizations out there trying to figure out how to deal with the independent contractor vs. employee situation. So, I decided to expand on the original post and demonstrate that this transition is not as costly as one may think and it worth it in the long run.

In my previous post, I explained how to figure out whether someone is an independent contractor and what it means if you have misclassified independent contractors. For many organizations, they may realize they are misclassifying their independent contractors but have no idea how to change it, or just simply don't have the money to change them to employees.

I wanted to take a little time today to discuss this transition and the costs involved. When paying someone as an independent contractor there are typically few costs involved, you pay them for their work (and give them a 1099 at the end of the year) and sometimes you reimburse them for things like mileage or printing. You don't pay any FICA taxes for them, and they are responsible for turning in their share of federal and state income taxes in addition to paying a self-employment tax.

With employees, costs can rise significantly. With employees, you pay the employer portion of FICA (6.2% of gross compensation up to a limit of $102,000 of compensation) for social security and medicare. You also will typically provide benefits (depending on the benefit package your organization has), pay overtime, need unemployment insurance and if you don't currently have any employees, you will have to set-up payroll (either in-house or via a payroll service).

With all these new and additional costs, many nonprofit organizations continue to misclassify their employees to save money. Having worked with an organization on this very transition, I can tell you it can be done. It doesn't cost as much as you would think and it is worth the cost to avoid the risk of being sued by a misclassified independent contractor or being fined by the IRS.

What exactly does it cost? This will vary organization by organization. I will use the organization I worked with as an example. They were paying their independent contractor and acting executive director $44,000 per year. They recognized that the contractor was definitely an employee, so they decided to change their status. They had three new costs associated with this change- FICA, payroll service and unemployment insurance. They didn't have to worry about overtime pay because it was a salaried position. They didn't provide health/dental insurance to start (it was a goal once they had enough money). They did provide paid time off- which didn't cost them anything and would help staff retention. So, for the $44,000 position it cost them approximately $2,700 annually for FICA (6.2%) and about $1,000 annually for unemployment insurance (this cost varies depending on organization and state). The other cost was the cost to secure a payroll service. They didn't have the staff time or expertise to manage payroll in-house so they hired a payroll service. The payroll service only cost about $30 per month ($360 per year) and took care of withholding and paying all taxes for both the organization and the employee, providing w-2s and keeping the organization updated on employment laws. So, the entire additional annual cost of having an employee instead of an independent contractor was about $4,000, or about a 9% increase. This is very minimal and manageable, especially if your organization is small and only pays it's independent contractor $10,000 per year.

I hope this helps organizations avoid the risk of misclassification. If you have any questions about this for your organization, feel free to contact me.

Click here for Independent Contractor vs. Employee Part I.

Tuesday, September 2, 2008

How will the federal government change the tax deduction for donations?

Could donors lose the incentive of a tax-deductible donation? The Chronicle of Philanthropy published an article this week, Paying It Forward — and Back, that looks at upcoming changes that may occur in the tax code for nonprofit organizations.

With an estimated $44 billion in lost federal revenue due to tax deductions, legislators are taking a look at ways to get that back. This combined with increasing complaints of large universities and hospitals that are "business-like" with "lofty executive compensation", and with only 5 percent of $1 million gifts from 2001-2003 going to social service organizations, many are calling for something to be done. Some potential tactics that will be explored in 2009 include: going after large universities that "hoard" billion dollar endowments and do not have required payouts, creating a new tax category for universities and hospitals, changing the current deduction for donations to incentize people to donate to social service charities and taking a second look at the classification for who receives 501 (c) (3) status.

This could have enormous ramifications for nonprofit organizations, depending on what happens. Fortunately, the likelihood of the tax deduction for nonprofit donations being taken away is slim to none. This is certainly an issue all in the nonprofit world should keep an eye on.

You have to be a subscriber of the Chronicle to read the full article, if you are not a subscriber please email me for a PDF of the article.