Wednesday, October 29, 2008

Tapping small businesses for money, in-kind donations, and volunteers

Small businesses are giving, and all you need to do is ask. A recent article by the Chronicle of Philanthropy took a look at giving habits of businesses. The study included 1,033 businesses, half of which were small businesses (with 2 or less workers). It found that many small business owners (43%) thought they should be doing more charitable giving.

That is a large proportion of businesses that would like to be doing more giving. Now your job is to ask. Some may think targeting small businesses is a waste of time (they don't have a lot of money, they never give cash, etc), but I can tell you that isn't the case. The study found that "66 percent of those who give through their company donate cash, while 51 percent volunteer, 41 percent give services, and 39 percent contribute products", with the median amount given between $500-$2,000 in cash.

Plus, a huge advantage of asking small businesses for their support is that you typically will get an answer immediately. While large corporations and companies often have complex processes to receive donations, which include paperwork and waiting 1-6 months until you hear anything, small businesses are the complete opposite. You can often walk in the door of your neighborhood restaurant and walk out with a gift certificate in less than 10 minutes.

So, now you know it is worth your time, but how to make the case? For most businesses you only will have to explain what your organization does and why you need a donation. Although, some businesses may require a little more persuading. For those, just convince them it is a good marketing tactic. In fact, the study found that 43 % of small-businesses use their giving as a way to promote their company.

Make sure you highlight this benefit to businesses when asking them for support. Some may ask "How effective is the promotion tactic really?" Well, a 2007 study that looked at corporate giving over 10 years found that "for every dollar spent 2 to 3 dollars is returned in sales." Now obviously this will vary business to business, but that is a pretty decent return on investment. Don't forget to mention that their donation is tax deductible!

Saturday, October 25, 2008

What does evaluation look like in practice?

Two researchers, Carman and Fredericks, recently took a look at what evaluation actually looks like in practice at nonprofit organizations. They targeted human service nonprofit organizations, and sent surveys out to a sample of over 300 nonprofits.

They found that most nonprofits (90%) complete at least some evaluation in their organizations, with 46% making a "concerted effort to evaluate most of their programs and organizational activities." This is great news, that so many are using evaluation in some way, but it is concerning that only half are making a "concerted" effort. Organizations need to use evaluation not only when developing new programs, but also to make sure their existing programs are effective.

Not surprisingly, most (80%) organizations use internal management or executive staff to gather evaluation data, and only two organizations in the entire study used external evaluators (the rest used an internal evaluation staff member, board committees/members, or their external funder). This statistic was a little scary. Not many people have experience or have been educated in evaluation methods- which is why I believe degree programs in nonprofit management should require at least one evaluation course. Hopefully the over 80% of organizations that do evaluation internally used an evaluator at one point to design their evaluation process to ensure they are following best practices and accurately measuring what they think they are measuring.

Their analysis also found that nonprofit organizations tend to think about evaluation in three distinct ways: (1) as a resource drain and distraction; (2) as an external, promotional tool; and (3) as a strategic management tool. This wasn't especially surprising, as many organizations only evaluate their programs because their funders require them to do so. This is why I think we need a fundamental shift in the way we think about evaluation. Evaluation, as I have mentioned in other posts, is at the core of many jobs, and we need to take an active role to evaluate our programs, policies, and organizations.

Here is the full article citation, in case you would like to read the complete article (I also have it available in PDF, email me if you would like a copy):

Carman, J. G., & Fredericks, K. A. (2008). Nonprofits and evaluation: Empirical evidence from the field. In J. G. Carman & K. A. Fredericks (Eds.), Nonprofits and evaluation. New Directions for Evaluation, 119, 51–71.

Tuesday, October 21, 2008

Using SWOT Analysis for Strategic Planning

An important tool that many organizations use when developing their strategic plan is a SWOT analysis.

S = Strengths
W = Weaknesses
O = Opportunities
T = Threats

When putting together a SWOT analysis for your organization, you will need to look at each of the following:

  • Strengths: These are internal factors that have helped the organization be successful (good cash flow, strong management team, etc) that you will want to leverage and grow.
  • Weaknesses: These are internal factors that are detrimental to the organization (high employee turnover, no funding, etc) that you want to stop and fix.
  • Opportunities: These are environmental factors that will help your organization (growing market for your services, demographic changes, strong economy, etc). You will want to take advantage of these factors.
  • Threats: These are environmental factors that can affect your organization negatively (poor economy, decreased demand for your services, emergence of multiple competing nonprofit organizations, etc). You will want to take these into consideration and have a plan of action for countering any negative affects of these factors.

Once you have developed a SWOT analysis for your organization, you will want to develop a plan of action that typically centers around the opportunities your organization has, while still addressing any threats and weaknesses. A SWOT analysis is an easy, effective strategic planning tool.

For more information about developing a SWOT analysis, you can click here and here.

Thursday, October 16, 2008

Upcoming Presidential Elections

This blog is nonpartisan. With that being said, the elections are only a few weeks away and it is extremely important that everyone votes. Not only is it important that everyone votes, it is important that people understand the candidate's positions on important issues. I thought I would highlight a few things about the two Presidential candidates related to nonprofits from the recent edition of the Chronicle of Philanthropy:

Senator John McCain

  • Contributed $105,467 to charity (26 percent of his income) in 2007
  • To balance the federal budget would consider a spending freeze on everything except entitlement programs (social security) and defense
  • A Cool/Unique Idea: Would hold volunteerism summits so people could share information about effective programs and get more students participating in community service.

Senator Barack Obama

  • Contributed $240,370 to charity (5 percent of his income) in 2007
  • To balance the federal budget would continue to prioritize affordable college tuition, early-childhood education, energy independence, fixing the health-care system, rebuilding infrastructure and science education
  • A Cool/Unique Idea: Would create American Opportunity Tax Credit worth $4,000 in exchange for 100 hours of public service.

To read more about either candidate you can visit their websites (click on their names above), or if you subscribe to the Chronicle, you can read the full article here.

Wednesday, October 15, 2008

Who should pay for the meal or coffee when meeting with a donor?

Meeting with donors is part of the job when working as an Executive Director or Development Director at a nonprofit organization. Organizations that are hip to donor cultivation and have strong donor programs in place, regularly meeting with their major donors to update them on programs and get their thoughts on the direction of an organization.

Now at the end of the meeting, after you both have enjoyed lunch and the check comes, who should pick up that check? Well, everyone does it differently. Some organizations believe that it is the donor's responsibility to pay since they are a donor. This is where I disagree, when you take a donor to lunch or coffee to update them about your organization, and especially when you are asking for money, you should always offer to pay. Typically, donors won't want their money to go towards taking themselves or other donors out to eat, so they will insist on taking care of the check, but it shouldn't be expected that they will.

Kim Klein goes over this and other common questions (like what to wear) in her Getting Major Gifts handout.

So, you can't afford to have a large amount of money allocated to these meetings for donor cultivation? Well, then be creative. Ask them to coffee (less expensive), ask them to your office and give them a tour, or go to their home. Regardless of how you meet with a donor, what is important is that you meet with them and keep them informed about your organization.

Monday, October 13, 2008

Reader Question: How do I start an individual donor program?

Dear Kristen:

Due to our lack of funds, my first project is to develop a private donor program for my organization. I think they are mostly interested in trying to find potential donors and figuring out a way to solicit funds. I am writing you to ask if you know of any resources (books, websites) you think might be helpful to me while trying to come up with a plan.

As our economic climate continues to shift, organizations that have been heavily dependent on government/foundation contracts and grants have begun looking at beginning or developing their individual donor program.

My response:

There are several resources available that I can think of right away. Here are a few you might consider:

Conducting a Successful Annual Giving Program
The Relentlessly Practical Guide to Raising Serious Money: Proven Strategies for Nonprofit Organizations
Building Your Direct Mail Program

MNCN's fundraising lunches are great. If you live in the Twin Cities (Minnesota) or can make it down, they are free and can give you great tips/advice. There really aren't many workshops/classes in Minnesota that are specifically about how to start an individual donor program. There are a couple nationwide, but I am assuming your organization wouldn't have the resources to pay for your travel and a large workshop cost (correct me if I am wrong).

Starting a monthly donor program
Starting a donor program
Building a donor base
Minnesot Council of Nonprofit's resources for fundraising


Also, please take a moment to take this quick survey. It only has two questions!

Wednesday, October 8, 2008

Make sure to use a traffic tracker on your website!

It is important to track your traffic for multiple reasons, here are a few:

  • You can see what your landing page is (what page people start at on your website from search engines).
  • You can see how many people visit your website, what type of browser they use (which informs web design), where they are located and more!
  • You can see the effect of different aspects of outreach and media (if you have an article in the Sunday paper about your event, you can see if traffic increased because of that article), this is particularly important because it enables you to judge the value of what types of media, pr, communications, outreach, etc you do.
  • What keywords people are using to get to your website.

There are many more great things that traffic trackers allow you to do or see. To highlight the traffic tracker that I use, Google Analytics, which in my experience has been the best. It is free (yes it doesn't cost anything!), very easy to use, and provides A LOT of information. And all you need to do to add it to your website is to add a little bit of html code to each webpage- it doesn't take more than 10 minutes. So, make sure to take advantage of this great resource!

Monday, October 6, 2008

What is too much when it comes to executive compensation?

An article in the Chronicle of Philanthropy's October 2nd edition focused on the recent uproar over the Charlotte United Way's compensation package for its leader, Gloria Pace King. Ms. King was set to receive a $2 million pension upon retirement. This edition also highlighted that a recent survey showed that the median compensation among the 291 organizations surveyed was $326,500.

The issue of what is appropriate compensation comes up frequently for boards trying to determine compensation packages for their leaders. Some believe that nonprofit workers should receive much less than their for-profit counterparts, but I have always wondered why? A CEO of a for-profit $40 million corporation in most cases has the same amount of work as the Executive Director of a $40 million nonprofit. Wouldn't you think that since the nonprofit is serving the public good they should receive equal or greater pay? :)

The issue of the pension package for Ms. King started as an anonymous tip to the media, hinting that they look at the organization's 990 (for those that don't know, you can find the compensation of nonprofit leaders on the organization's 990s). The media discovered a large pension payment and immediately reported on it. Of course, many other media outlets then picked it up and the public outcry began. For those that are wondering, Ms. King's salary was around $370,000, which is a little higher than the median, but considering that she ran a $45 million organization for over a decade and brought it up to the 18th largest United Way (in terms of revenue raised), the compensation is probably reasonable. Unfortunately, the Board gave in to the public pressure and gave her a month to resign or she would be fired. Oh, and they also said they are going to exercise their option to cancel up to $1 million in promised pension payments.

Unfortunately, these types of situations happen often. So, how to avoid it? Seek independent review from outside experts when determining compensation packages, and make sure to look at what similar organizations (both in size and focus) are paying their leaders.

AWOL Last Week

I'm sorry about missing my post last week. I was attending the Minnesota Council of Nonprofits Annual Conference in St. Paul, MN. I presented a session: "Thinking Outside the Box: How to secure funding and relationships with cities, counties and watersheds." The presentation slides will be available here later today. I will follow up with Monday's post shortly.

Wednesday, October 1, 2008

It's time for the end of the year appeal

Now that fall is here, it's the time of the year where every nonprofit is thinking about their end of the year appeal letter. For most organizations there timeline is something like this:

Early November- send holiday card/thank you card
Late November- send appeal letter with ask
Early December- follow up on those who have not yet donated

This timeline is what most organizations have followed year in and year out. With the current financial crisis causing donors to cut back on their giving, nonprofits are trying to make sure they don't decrease their individual donation income. For most nonprofits, that means moving this timeline up a week or two.

Yesterday, at a fundraising committee meeting, I was trying to think of ways to make sure that donors continued to donate to the organization and one thing I came up with was switching the way we do things. I was thinking that instead of calling at the end, only to those who haven't given, how about calling at the beginning?

What I mean is that we could call all donors before the appeal letter is sent, not to ask them for money, but to just update them on the organization and thank them for their past support. Then you send the letter. And of course, you would still likely do the follow up to those who haven't donated. But, I would be willing to bet that more people would donate right away and would possible donate more money. So, I'm curious if any organizations do this already and if they have found it is more effective? Or if there are other ways organizations have made their end of the year appeal stand out among the dozens of appeals people get?