Posts Tagged ‘Fundraising’
Posted by Gayle Gifford on January 21, 2011 in Fundraising, Research
I just discovered Grassroots Civil Society, the Scope and Dimensions of Small Public Charities, released in 2010 by the Urban Institute.
In the report, authors Elizabeth Boris and Katie Roeger hoped to shed a bit more light on the smallest reporting public charities. Accounting for three out of ten of all public charities, these small organizations weighed in with total revenues, expenses and assets below $100,000.
I’ve written a lot about the special role these tiny organizations can play in our social fabric. (Eg. See Hope Dignity and Quality of Life are also valuable outcomes, even when measured in hours.) While this report wasn’t designed to look at social impact, any nod toward this large segment of nonprofits is welcome as all attention lately seems to be focused on being or getting big.
What particularly struck me was the difference in the revenue types of these small organizations. Small public charities rely heavily on private contributions ( 52.7%) while the sector as a whole depends largely on fee for service revenues (67.1%).
Small charities also receive 16.8% of income from “other revenue” which includes net income from special events, gross profit from sale of inventory and other revenue (my guess is that those special events make up the bulk of this income) — the percentage for the category overall is 2.1%. According to the report, these patterns have been pretty consistent over the 10 years studied.
I’m infinitely interested in understanding how organizations grow. While an article like How Nonprofits Get Really Big helped shed a lot of light on nonprofit growth, it doesn’t address the path between start-up and reaching that qualifying $50 million in revenues.
I think it would be very interesting to understand how these revenue patterns shift by size of organization and also whether the numbers are consistent within particular types of organizations (arts, environment, social service) regardless of size or if the revenue proportions hold as size changes.
Why bother with all this data? I don’t think we do nonprofits a service by prescribing remedies that ignore the huge differences among us and act instead as if the sector were a monolith. I welcome more research that can help us better understand the similarities and the vast differences in the sector.
P.S. Check out other studies at the Urban Institute. You might want to start with Nonprofit Governance in the United States, an exhaustive look at our boards.
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Posted by Gayle Gifford on December 9, 2010 in Effectiveness, Fundraising, Strategic Thinking
How often do you think about financial sustainability? Have you found it yet? Can you?
I’m still thunderstruck by a concept that I bumped into a few years ago. I found it in a paper whose title is a mouthful: Supporting Financial Vibrancy in the Quest for Sustainability in the Nonprofit Sector. It was authored by Marilyn Struthers of The Ontario Trillium Foundation.
In the paper, Ms Struthers poses that we build financial vibrancy in our quest for organizational sustainability. The article outlines six capacities that contribute to financial vibrancy and the creation of resilient and adaptive organizations rather than merely stable ones.
But tucked away in all this very compelling analysis, under a box four pages into the study, was the sentence that left me speechless:
“Financial vibrancy is the capacity of an organization to make the transition from one sustainable moment to the next.”
I experienced a moment of ultimate clarity, marveling at the purity, the honesty of that statement.
When I share this marvelous saying with the participants in my workshops, I can see a great burden of guilt fall from their shoulders. Smiles emerge.
Nonprofit organizations exist in an incredibly dynamic world. The ground is shifting even as I write, with great uncertainty about the economy, about the future of employment, about cuts to government funding, unending technological innovation, coming shifts in our ecosystems, and even about our very security and survival.
“Experts” glibly chastise nonprofits for so many wrongs — chasing grant funding, for not having diverse revenue streams, for scorning individual giving, for lack of board fundraising. Yet, the reality is that there are no best or right answers for any nonprofit. Each must craft its way, unique to its own circumstances and opportunities.
I share the pain of my nonprofit colleagues, having shouldered that Sisyphean task of revenue generation myself. I marvel that there are any strong spirits left at the end of the day.
Me, I’m still humbled that given all the financial handcuffs nonprofits wear that so many have carved out, no matter how awkwardly, business models that enable their work to continue, some for decades, others for centuries.
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Posted by Gayle Gifford on October 22, 2010 in Research
A recent report by the Nonprofit Finance Fund confirms what I’ve been saying about the need for significant investments in nonprofit revenue development for some time. In their words,
“Many nonprofits with strong programs and great results fail to thrive. One reason is the way the sector is currently financed. Nonprofits are rewarded for keeping margins tight, and few have access to the type of capital needed to explore better business models, scale impact, and create lasting change. In contrast to the money needed to fund “business as usual,” philanthropic equity can radically improve our ability to address society’s critical needs.”
What’s philanthropic equity? It’s big high stakes, high risk “investments” which are designed to enable nonprofits to make significant leaps forward in their program delivery and/or their business model. The report calls these kinds of investors “Builders.”
The report distinguishes Builders from “Buyers” who support the ongoing programs or operations of a nonprofit. As I read the report, Builders understand that there are no guarantees, that they are taking a risk to help the organization undertake significant change. The payoff, if it arrives, is vastly scaled or improved program impact and sustainable growth.
The Nonprofit Finance Fund was able to collect multiyear data on nine organizations. The payoff: program delivery grew 3.1x and business model revenues grew by 2.0x in the organizations that received this philanthropic equity.
Here’s my layperson’s take on the report.
If you pump a lot of money (underscore “a lot”) into nonprofits over a few years, and they use it to make smart investments in transforming programs or business models, you might just get a big payoff in social impact and revenue enhancement.
To everyone thinking about replicating this out there, note that the amount of philanthropic equity invested in these organizations was pretty significant, ranging from a low of $3 million to upwards of $22 million (though not all of that money was spent by the receiving organizations at the time of the report).
For nonprofits: Here’s a great report to help you justify a growth campaign to prospective Builders that will radically improve your business model and/or transform your social impact.
For institutional funders: If you want to see significant increases in an organization’s philanthropic revenues, you’ve got to think at a much larger scale. Funding just one development director, with no other support, doesn’t really help organizations make the big leaps, in my opinion. But funding an entire staff in development, that would be a great take-away from this study.
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Posted by Gayle Gifford on October 12, 2010 in Fundraising
My rules encounter
A few months ago, I ran a training session for the board and staff of a local nonprofit on evaluating outcomes. Because I like the organization and its leadership a whole lot but it isn’t in the inner circle of charities I support with cash donations, I didn’t charge for my services.
A few days later, I received a email notice from the microlending nonprofit Kiva that a gift certificate was given in my name from the board chair. I was touched.
Kiva told me the amount of the gift certificate and that I could use it to make a microloan. Because there was some effort involved, I put the action into my pending basket of not urgent items and promptly forgot to “redeem” the gift certificate.
In a few weeks, Kiva sent me an email reminding me that I hadn’t redeemed my gift certificate. All good. But then the reminder told me that I could 1) redeem my gift certificate (by making a micro loan) or 2) do nothing and the gift would convert to a donation to Kiva.
Because I wasn’t really terribly interested in making a micro-loan and because I know how much nonprofits can use the unrestricted funds, I wanted option 2.
Unfortunately, there was a catch. I had to wait ONE YEAR from the time the gift certificate was purchased until Kiva could convert the gift certificate into a donation.
Well, I thought, I’ll just email Kiva’s customer support and tell them that they didn’t have to wait a year. I’d just donate the gift certificate right now so they could put the money immediately to work.
I promptly got an email back explaining the following to me:
Kiva tries to encourage people to make loans with their gift certificates because if they enjoy the experience and continue to lend, we can have a greater impact on global poverty. This is why we don’t encourage people to donate their gift certificates, but we do process them as a donation after one year so the money doesn’t get wasted. (Emphasis added) Read More >>
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Posted by Gayle Gifford on October 4, 2010 in Better Boards, Fundraising
Last week I found myself in a very interesting conversation about the “profession” of fundraising.
A colleague was sharing ideas from a workshop she attended. The presenter had described a common situation that many directors of development experience.
You know the one. The development director has just laid out a carefully crafted strategy based on best practices and research. Immediately a board member or other leadership volunteer challenges the elements of the plan.
I’ve found that this scenario is very common when planning events or personal solicitation campaigns.
Usually, the challenge reflects the anxiety of the volunteer at being asked to step outside of his or her comfort zone. The volunteer/board member, fearful of the task ahead, comes up with dozens of reasons why the carefully developed strategy won’t work. Why, another organization he volunteered at just sent out a glossy letter instead of asking him to make phone calls.
So my colleague noted that the workshop presenter made the case that fundraising is a profession. One of the ways to tell a true profession is whether or not it has a body of knowledge that is “unique and specific to its practice and function.” (AFP). She made the case that fundraising does in fact have an established and growing body of knowledge.
The presenter then described a few scenarios of other professions with established bodies of knowledge where it would be unimaginable to find the amateur telling the professional how to do that job. Here are two that came to mind:
- Could you imagine a board member telling the chief of surgery at a nonprofit hospital a better way to perform an upcoming operation?
- Or a committee chair telling the head coach at an independent school a better way to train his basketball players? (Well, maybe you could imagine that, but you get the picture.)
So why do board members feel they can tell fundraising “professionals” how to do their job?
But here was my counterpoint.
Before we get a little self-righteous about all that profession stuff, maybe we need to look into the mirror.
Perhaps our board members don’t treat us as the professionals we are because we act like amateurs can do our jobs.
Case in point:
Why do development directors and executive directors act like their board members rose from the primordial ooze as trained fundraisers?
I find way too much agony and even anger in this profession at board members about fundraising. I’ve written about this time and again (see Banishing your expectation of board fundraising). How, if we believe that fund development is a profession, can we expect good-hearted people with no fund development background to spontaneously do our jobs for us?
We can’t both complain that we aren’t respected for the professionals we are and then simultaneously gripe and moan when the amateurs on our boards don’t act like professional fundraisers.
Find the willing, equip them with compelling cases for support, train them, and hold their hands all the way through the process. In essence, put those professional skills to work.
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Posted by Gayle Gifford on September 10, 2010 in Fundraising
This Tweet caught my eye this week:
The link took me to a SFGate San Francisco Chronicle story about a serendipitous $1.3 million gift that the online charity DonorsChoose.org received last Tuesday.
In case you don’t know, DonorsChoose.org is an online nonprofit where individual classroom teachers from across the U.S. can list projects that they need funded. The site includes a comprehensive description of the project with a complete budget. For example, I searched the site for the charter school on whose board I sit and found this request for $903 from a teacher at Blackstone Academy Charter School in Pawtucket, RI. (The request includes an option for a donation to DonorsChoose.org).
To get back to the SFGate story, the CEO of DonorsChoose.org related how he had received a phone call where he was asked how much it would take to fund all the requests from California teachers. You can read the story for all the details, but it turned out the phone call was from the ED of a local foundation. Read More >>
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Posted by Gayle Gifford on July 14, 2010 in Fundraising
The Institute for Conservation Leadership has just done small organizations a great service by releasing a study of the online fundraising experiences of 16 grassroots organizations. And a hearty thank you to those organizations that were willing to share their experiences in this report.
The study was compiled by consultant, author and trainer extraordinaire Andy Robinson (if you haven’t, you should check out Andy’s wonderful books through our mutual publisher Emerson & Church ).
Andy’s title cues us up for what’s inside: “Reality Check: How Grassroots Environmental Organizations are (or are not) raising money online.”
Some of the lessons learned by small organizations:
- “Personal contact and relationship-building trumps everything – and will become more valuable because fewer people will be doing it.”
- “Websites are still essential for effective fundraising.”
- “Social networks like Facebook remain a lower -tier for fundraising strategy – at least for now.”
- “Many online strategies won’t pay off for awhile, but try them anyway as time and money are available.”
One particularly interesting finding came from the Ohio Environmental Council. While most of their membership giving came offline, those donors who had email and received ongoing contact through a robust online program gave twice as much annually as their no-email counterparts.
You can download a free copy of the report here from ICL, though you will need to register.
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Posted by Jon Howard on June 17, 2010 in Communicating, Fundraising
At first glance, I don’t welcome the email from Christina Wellington Traister. The body reminds me that I haven’t sent in my pledge to Bates. Not a word about what amount I had pledged, which I’ve long forgotten. Righteous annoyance almost cancels appropriate guilt.
But the PS grabbed me. (And yes, I read the PS first. I quickly see that the main message holds bad news for me).
“P.S. Have you heard the Bates parking meter story? It’s two minutes and guaranteed to make you smile…this was sent to alumni (who hadn’t made a Bates Fund gift or pledge) two weeks ago.”
I can’t imagine a parking meter on the leafy Bates quad of my memory, nor even on the surrounding streets of sleepy Lewiston, Maine, so “the parking meter story” monicker raises a question I can’t answer without clicking on the link, a classic teaser trope. Christina promises to answer the question in two minutes or less and amuse me in the process.
I like the quick and indirect way Christina clues me in that this is not just a funny story. She tells me this story was sent to non-contributing alums a couple of weeks ago. That truth-in-advertising builds vital trust and gently reminds me that I’m a delinquent, too. I click on the link. Read More >>
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Posted by Gayle Gifford on February 23, 2010 in Fundraising
Dear Gayle and Jon,
I just wanted to take a moment to thank you for the Workshop “Getting the Most from your Annual Appeal” that you gave on Oct. 8th for the Land and Water Partnership at the Audubon Society of RI. I think that our letter was not as good as what you had presented, but it was a big improvement from previous ventures.
But the proof is in the pudding, right?!
So, the bottom line, proof of the pudding is that last year we raised $31,365 through 88 gifts with our single page, tear off and send back approach.
This year, we received 173 gifts for a total of $62,570 for our two page, bulleted, story telling approach to support stewardship with the envelope provided!
So, we are giving you a ’soft’ credit (as they say in our business!) for doubling our gifts! We are so grateful!
I think Jon got me when he said he knew there were some people who just threw these letters in the trash, but for those who really care and want to know, give them something worth reading. I know many of our members in the land trust are the latter types, and I appreciate so much that you brought this to my attention.
I truly appreciate a good teacher, and this deserves recognition all its own. Many heartfelt thanks from the South Kingstown Land Trust!
Ever,
Claudia E. Swain
Director of Development
South Kingstown Land Trust
*************************************************************************************
Claudia, We’re blushing! But how could anyone resist those gorgeous Scottish Highlander cattle!
Thank you so for sharing this with us and letting us share your letter with our readers. You can read the full letter here.
And continued good fundraising for the South Kingstown Land Trust. Local land trusts like yours absolutely prove the Margaret Mead quote:
“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
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Posted by Gayle Gifford on February 10, 2010 in 100 Things We've Learned, Fundraising
In How we got the grant – Part I, I started telling you the story of how one organization overcame a long history of rejections to finally receive a grant from a very desired funder.
To quickly summarize:
The international child sponsorshop and development organization I worked for had tried and failed many times to receive a development education grant from the US Agency for International Development.
We learned that one of the reasons for this was that our donor-to-sponsored child and family communications were not taken seriously by the funder and undercut our credibility.
We initiated a process to explain the theory and practice behind our communications program to USAID. As a result of that, the door opened a crack.
Our first three lessons learned:
- Get involved with your colleagues
- Find out what funders think about you
- You have to have and discuss a theory of change
That’s were I left off. On to the next set of lessons.
So, I now had the task of designing a development education program that would win funding and achieve our desired mission impact.
Lesson Four: Build your new program on your existing assets
Because our experience showed that people-to-people contact helped North Americans care about other parts of the world, we knew our development education program could take advantage of our 50 year history of direct communications. Our office was rich with the stories, photos, drawings and reports from sponsored children, their families, our international staff and town or village leaders. Read More >>
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