The last week of the calendar year is one of the busiest times of the year for nonprofit fundraisers. Even if, like many nonprofits, your fiscal year goes from July 1st to June 30th - the holiday season is still critical for fundraising success.
For the past week, "a fundraiser" has been too busy counting money and eating fruit cake to write on this blog. I apologize to all the fundraising fans out there.
I'd like to wish a Happy New Year to all of the loyal readers of this blog. We've got an exciting year planned, so if you haven't signed up to receive updates by email or to receive Don't Tell the Donor stories by RSS feed make sure to put that on your list of resolutions for 2008.
Monday, December 31
The last week of the calendar year is one of the busiest times of the year for nonprofit fundraisers. Even if, like many nonprofits, your fiscal year goes from July 1st to June 30th - the holiday season is still critical for fundraising success.
Tuesday, December 25
Meghan Goss, blog editor at the Humane Society of the United States, emailed me last week with this note:
I thought you might be interested in today’s blog entry from Wayne Pacelle, president and CEO of The Humane Society of the United States. He writes about animal protection’s role in philanthropy and discusses the options available to donors for evaluating charities.The blog points out HSUS's four-star rating from Charity Navigator as well as explaining how they pride themselves on being effective advocates and demonstrating a return on donors' investments.
Saturday, December 22
Look. I'm not here to waste your time.
Most people don't know this, but I have a magic crystal ball in my desk drawer. It has special powers that allow me to predict the future. Not only that, but I read a shit load of news stories everyday about fundraising in order to hopefully share some observations of what trends will influence our industry.
I'm not trying to scare you. I only want to warn you - so pay attention.
Small nonprofits seem to be in trouble... and it may only be a matter of time before larger groups start to see the same fundraising weakness creep into their programs.
The AFP published the results of an online fundraising survey today.
In general, larger organizations are faring better than smaller charities. Two-thirds of organizations with budgets greater than $50 million have raised more money during the last quarter of 2007 than in 2006, as are more than half (52.4 percent) of charities with budgets between $10 million and $50 million. In contrast, only about one-third (32.7 percent) of organizations with budgets smaller than $500,000 have raised more money during the last quarter of 2007 then they did during the same period in 2006.Now, I know what you are thinking... fundraising is not an easy job. This is a very tough profession and if charities can't retain top quality talent and invest in fundraising, they aren't going to make it over the long run.
But if there is a recession looming which could cause an industry wide fundraising slump, there is no doubt smaller charities would be affected first. If you are a Development Director you might want to consider buying a canary for your coal mine in 2008.
Thursday, December 20
Another local Salvation Army might have to extend its kettle drive to meet its goal. With just six days left, the Fergus Falls Daily Journal reports that local officials are considering putting the kettles out for another week past the Dec. 24 deadline. Go here to read more.
Maybe they need a miracle like what happened in Exton, PA where an Army veteran who remembered getting free coffee and doughnuts from the Salvation Army decades ago gave a $10,000 check to a dumbfounded bell-ringer.
But honestly, even if expensive coins were dropped in kettles across the country, there is still bad news brewing... I can feel it in my bones.
Wednesday, December 19
Channel 15 in Madison, WI says the Salvation Army needs a miracle:
Currently, the Salvation Army is about $70,000 behind where it was this time last year. There's also about 400 bell ringers short of last years volunteers as well. The Salvation Army's goal is $480,000 for its red kettle campaign. Right now its at $275,000 which means its $205,000 short.And in Minneapolis - St. Paul the news seems to be even worse:
However, agencies that depend in part on United Way, businesses and individual donors -- such as Catholic Charities, the Emergency FoodShelf Network and Salvation Army -- report that fundraising is lagging while demand for food, shelter, clothing and other support has risen. Those seeking help range from the chronic homeless to folks who can't make mortgage payments.Bad fundraisers are always looking for an excuse for missing their numbers. I've been doing this long enough to remember when groups used 9/11 or Katrina donation fatigue in past years... but I really think the Chronicle of Philanthropy is on to something when they point out the growing economic divide between charities.
In May 2006, the Oregon Volunteer Firefighters Association opened a call center in downtown Coos Bay. Employees called residents all across the state, asking for donations to fund programs provided by the firefighters organization.
However, within the past month, the group’s Board of Directors decided to close the facility two days after Christmas. As a result, about 20 to 25 employees will lose their jobs.
Spokesman for OVFA Steve Schneiderman says it was an effective fundraiser, but scam artists used that to their benefit with many instances of impersonators posing as call center employees to make their own financial gain.
"There were some new laws that went into effect for fundraising and telemarketing in Oregon and that did show a decrease in the donations available. This is generally the major fundraising program that we do, so we are going to have to look for another way to raise the funds to support our programs."
That exploitation and the negative public view of telemarketing are the ultimate reasons Schneiderman believes the center went under.
My personal note to telemarketing scammers who impersonated the volunteer firefighters in Christmas and took away this source of funding AND these jobs - I hope your Christmas lights short-circuit and your house burns down.
UPDATE: This story from the Associated Press that appeared in The Register-Guard on December 29th paints a different picture of the story.
It appears there was an "investigation by the Oregon attorney general’s office into a New Jersey telemarketing company the state says takes the lion’s share of the money it raises." Under an agreement reached in November, "the telemarketing firm’s activities are restricted for five years, although it can operate charitable or nonprofit call centers under the terms of state law."
Tuesday, December 18
The Association of Fundraising Professionals (AFP) has a Code of Ethics that specifically bans the practice of percentage-based fundraising. They consider the practice unethical and have developed a position paper outlining why it hurts the industry.
Last week, the AFP went even further by calling on Congress to ban the practice.
On Thursday, Dec. 13, the House Oversight and Government Reform Committee held a hearing that examined the fundraising and spending habits of charities that serve veterans.
“If you examine the charities that have extremely high fundraising costs, including several of the groups highlighted during the hearing, you’ll almost always find that these organizations pay their fundraising firms on a percentage basis,” says Paulette V. Maehara, CFRE, CAE, president and CEO. “The one single reform proposal that would make the most difference in stopping fraud and strengthening public trust in the charitable sector would be for Congress to ban percentage-based fundraising.”The AFP maintains that percentage based fundraising is unethical because:
* charitable mission becomes secondary to personal gain
* donor trust can be unalterably damaged
* there is incentive for self-dealing to prevail over donors' best interests
* the very philanthropic values on which the voluntary sector is based are undermined.
Even if you agree, do you think asking Congress to ban the practice is the right thing to do?
Monday, December 17
Back in August when the sub prime housing bubble sparked a sell-off in the stock market, the New York Sun wrote an article asking if year-end fundraising would get caught in the downdraft.
"The credit crisis and the stock market turmoil are having a preliminary impact on the nonprofit sector and concern is growing that fund-raising could be hurt if the downturn continues to gain steam."Yet before fundraisers could blink, the market rallied and stocks hit multi-year highs in the early fall and everything seemed fine again.
And then November happened. Investors began to see that the impacts of the housing "bubble" were beginning to spread and infect consumer spending. Huge financial institutions began to write off billions of dollars in bad debt. As a result, the stock market appears poised for another precipitous decline - one that could threaten to wipe out most of the gains from 2007 in the Dow and the S&P index.
If stocks suffer, year-end bonuses will suffer, and therefore, year-end giving will also suffer.
I know some fundraisers who dug out that newspaper article from August and are already preparing their excuses in case they don't hit their year end numbers. I've joked before about creating a major donor fundraiser anxiety index and selling it to the guys on Wall Street who would use it as a leading market indicator of consumer confidence.
Fundraisers don't need Morgan Stanley to tell them that the country will enter a recession in 2008... the smart development directors see it happening already.Two more articles on Monday finally confirmed for me that Santa Claus might be having trouble making his adjustable rate jumbo mortgage and therefore won't be bringing many year-end presents.
First, MasterCard announced that sales of women’s clothing, a traditional pillar of the holiday shopping season, are unusually bleak so far this year. "From high-end dresses to bargain coats, spending on women’s apparel dropped nearly 6 percent during the first half of the Christmas season, compared with the same period last year."
The second ominous sign came from Tracie McMillan who published an article on MSNBC this morning profiling the fundraising worries at the National Wildlife Federation where fears of a donor drain have made it difficult to replace departing benefactors.
Bill Levis, the author of a new pilot survey by the Urban Institute that documents the trend. Levis’ survey shows that most nonprofits post an average gain of just 10 percent each year: they lose 52 percent of their donations, which is then offset by a 62 percent gain in new or upgraded donations. In short, says Levis, nonprofits are losing almost as much as they’re gaining, pouring a river of money into a nearly open drain.You could make an argument that different nonprofits have different fundraising structures. Some cash strapped organizations are dependant on aggressive short term revenue targets at the expense of growing a more sustainable long term donor value... but that misses the point.
If the economy is about to hit a recession, nonprofit fundraisers will be among the first to know it.
UPDATE: I can't imagine what it must be like to live in Manhattan and be surrounded by this shit all the time - but a Wall Street blog is reporting that Morgan Stanley and Bear Sterns are "much lower" than last years.
Sunday, December 16
Trevor Lyman is a 37-year-old musician and Internet entrepreneur who didn't finish college.
He was running a website called musicsubmit.com that enables artists to bypass major record labels and market their songs. He was a political novice who never bothered to vote in the past.
However, when the new Democratic majority in Congress didn't pull the troops out of Iraq, Lyman was drawn to Paul because of his promise to end the war immediately.
Despite the fact that he has never met Ron Paul, he was profiled by Dan Morain at the Los Angeles Times as "the man behind Paul's fundraising curtain" who helped the Republican candidate raise millions in online donations.Much has been written about Ron Paul's surprising fundraising success... and given the early results from his Tea Party event on Sunday, plenty more attention will be directed toward the maverick's campaign.
I believe viral online fundraising can really work for all nonprofits... but it's not simply the technology that makes it work, it's a willingness to allow a decentralize structure... and a willing of fundraising staff to understand what motivates people like Lyman.
Wednesday, December 12
Last week, the USA TODAY reported on the financial questions surrounding Mike Ditka's charity fundraising.
Twice this year, pro football legend Mike Ditka has blasted the National Football League and its players union, telling Congress that both groups are "delaying or denying" requests by needy retired players for help.The net looks low because the charity spent $715,000, the bulk of the money it raised, to put on three annual golf tournaments. That figure includes payments of about $280,000 to a Chicago firm that organized the tournaments and at least $65,000 in honoraria to ex-stars.
Ditka formed a charity in 2004 to aid those players. The Mike Ditka Hall of Fame Assistance Trust Fund has collected $1.3 million and netted about $315,000 after expenses. But it has given only $57,000 to former players in need, according to federal and Illinois tax records.
The trust paid more in fees to induce former stars to appear at a 2005 fundraiser than it gave needy ex-players in its first 3 years.
Ditka is the outspoken former Hall of Fame player and coach for the Chicago Bears. In June, he told a House panel that injured and needy ex-players are "treated like dogs" while the union "does nothing material to help these guys." His charity, he said then, was created to redress "this grave injustice."Carl Francis, a spokesman for the players union, that Ditka frequently targeted, used the story to point out the potential hypocrisy in Ditka's criticisms.
The charity, recognized by the Internal Revenue Service as a tax-exempt organization, gave nothing to players during its first two years. It aided 10 ex-players in 2006.
"At some point it's got to be about more than holding yet another press conference and blasting people," Francis said. "You ought to be announcing 'We just gave away a half a million.' Unless, of course, you didn't."
Now, the former NFL legend is paying more attention.
Ditka said he had paid little attention to his charity's numbers until this year. He has begun cutting fundraising costs and will insist that half of the annual tournament's proceeds be paid out, he said, adding that the trustees have been told to pay needy players first before requiring them to fill out forms.This isn't the first time celebrities seemed surprised to hear that lending their name to charity fund can go badly unless you pay attention to the important things - like money.
Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog, said the Ditka trust may have underestimated the charity's workload by naming only two volunteer trustees — three fewer than the minimum the institute recommends.
The group, he said, appears to have underestimated the cost of putting on golf tournaments, which are typically among the most expensive types of fundraiser.
Now the Chicago Sun Times and others are starting to ask hard questions.
“Now the money sucks for two reasons. People are mad at the president; they are mad at the party. And then [there is] this whole immigration fight. People just turned off the spigot.”
- House Minority Leader John A. Boehner (R-Oh). Quoted in a Politico interview.
Tuesday, December 11
The 2007 Santa Run attracted more than 400 people dressed as Santa to run the annual charity fund raiser in Newtown, Powys (located in Wales).
“We still had up to 400 santas running the four-and-a-half-mile course which was marvellous,” said organiser Michael Jones.
Event organizers are disputing reports that bad weather kept more people away. To check out more photos from past events, go here... and be sure to check out this story about the Santas arrested for starting a street brawl in 2004.
The Baltimore Sun reported yesterday that the National Organization of Deputy Sheriffs was ordered to immediately stop all fundraising in the state of Maryland.
Last Thursday, Maryland's secretary of state told the North Carolina-based organization it had committed nine violations of state charity regulations.
According to the state, violations include misleading potential contributors, implying that the state has endorsed the organization, using unregistered professional solicitors, submitting false statements to the state and misrepresenting the reasons why funds are being solicited.Here is a funny video of a resident in Maryland confronting a door-to-door canvasser from the organization. It's funny to the fundraisers reaction to being asked if he is running a scam.
If you look at the website for the National Organization of Deputy Sheriffs, you won't see any mention of the ban in the state of Maryland. However, if you Google the organization, you will see that the state of Virginia has been warning its citizens away from the group since last year.
It's a shame these kinds of warnings are only offered state by state. Perhaps its time we start thinking about a federal agency with enforcement powers. Sure, it might seem scary, but any fundraiser who has had to fill out dozens of different state registration forms might be willing to consider one federal registration process.
Posted by "a fundraiser" at 7:46 AM
Monday, December 10
For years, Guidestar has been the accepted source for information on nonprofits. Sure, they make it a little difficult to get a .pdf of 990s from several years back... but if you (or your organization) has a login, it is has always been the "leading source of information."
In fact, recently they even launched a way to donate directly to your favorite nonprofit.
One reader emailed me over the weekend to say that she was searching for information on the American Red Cross and she was surprised to find this page on the Google Finance website. The profile contains a summary, top news stories, top staff listing, a simplified balance sheet, and a list of similar organizations.
I did a quick search and found several dozen other nonprofits... and I must admit... I never knew these pages existed.
Meanwhile, I saw Trent Stamp linked to an article by Ben Gose at the Chronicle of Philanthropy which reports:
Mark W. Everson, the former president of the American Red Cross, did not improperly use the charity’s money while having an affair with the head of a Red Cross chapter in Mississippi, the Red Cross has announced.Interesting to note that the Chronicle dedicated not to publish Paige Roberts name.
The review of Mr. Everson’s spending focused on travel costs and expense reports, according to Carrie Martin, a Red Cross spokeswoman. It was conducted by the charity’s office of investigations, compliance and ethics, under the direction of the general counsel.
“This was just a matter of due diligence,” Ms Martin said. “We started looking into this as soon as we heard the news. It’s a question that is immediately raised in any kind of situation like this, and the Red Cross has a responsibility to determine that there was no misuse of donor dollars.”
Friday, December 7
Nancy Schwartz's blog, Getting Attention is one of the best free resources for nonprofit marketers who are looking for ideas, tactics, and tips in order to communicate more effectively.
Recently, she posted about the importance of a nonprofit tagline by saying, "Your tagline is one of the most powerful marketing tools you have. That's why I'm making a special effort in 2008 to help nonprofits like yours craft better taglines."
So, she is asking for input from readers:
Please help me launch this research project by taking less than 3 minutes of your time to complete this short survey.If you have three minutes, go fill out her survey.
In return for your valuable time, you'll get guidance on best practices and tips for improving your tagline when the Getting Attention Tagline Report is published in early 2008. I'd like to send you a copy of the report. If you're interested, please provide your email where requested.
Sen. Charles Grassley, the ranking member of the Senate Finance Committee, sent lengthy questionnaires a month ago to six ministries so he could review whether pastors were complying with IRS rules that bar excessive personal gain through tax-exempt work.
However, two of those televangelists ignored Thursday's deadline to turn over information.
Benny Hinn of World Healing Center Church Inc. and Benny Hinn Ministries of Grapevine, Texas, said in a statement to the AP on Thursday that he will not respond to the inquiry until next year.
A lawyer for preacher Creflo Dollar of World Changers Church International in suburban Atlanta had said Wednesday that the investigation should be referred to the IRS or the Senate panel should get a subpoena for the documents.
All the ministries preach a form of "Word of Faith" theology, known as prosperity gospel, which teaches that God wants believers to reap material rewards for their faith.
Because they have tax status as churches, the ministries do not have to file IRS 990 forms like other non-profit organizations - leaving much financial information largely behind closed doors.
The letters sent Monday were the culmination of a long investigation fueled in part by complaints from Ole Anthony, a crusader against religious fraud who operates the Dallas-based Trinity Foundation, which describes itself as a watchdog monitoring religious media, fraud and abuse. "We've been working with them for two years," Anthony told CBS News. "We have furnished them with enough information to fill a small Volkswagen."
The other ministries targeted in the inquiry are Bishop Eddie Long of New Birth Missionary Baptist Church and Bishop Eddie Long Ministries of Lithonia, Ga.; Randy and Paula White of Without Walls International Church and Paula White Ministries of Tampa, Fla.; and Kenneth and Gloria Copeland of Kenneth Copeland Ministries of Newark, Texas.
Wednesday, December 5
Two Houston brothers were each sentenced this week to more than eight years in prison for wire fraud and aggravated identify theft in connection with operating a Web site that purported to raise money for the Salvation Army to help Hurricane Katrina victims.
The brothers were convicted in June after a four-day trial. According to the U.S. Attorney's Office, they registered a Web site called www.salvationarmyonline.org on Sept. 3, 2005 - less than a week after the hurricane hit the gulf coast.
More than 250 people donated over $48,000 before the corresponding PayPal accounts were frozen because of reports of fraud, according to the prosecution.
U.S. District Judge David Hittner sentenced Steven Stephens, 24, to 63 months each on six convictions of wire fraud, prosecutors said Wednesday. U. S. Attorney Don. DeGabrielle told the Houston Chronicle that Hittner sentenced Bartholomew Stephens, 27, to concurrent 57-month prison terms on each of his six wire fraud convictions.
Tuesday, December 4
In a Form 4 filed with the SEC last Friday, Timothy V. Williams (chief financial officer and senior vice president of Blackbaud Inc) reported he exercised options for 40,000 shares Wednesday for $4.80 apiece and then sold all of them the same day for $28.02 to $28.31 apiece.
Ironically, while Williams was cashing in, Blackbaud Chief Executive Marc Chardon gave an extensive interview which appeared in Investor's Business Daily and CNN Money this week.
The company started in 1981 as an early accounting program for educators. Today, Blackbaud has 19,000 customers. They include the National Baseball Hall of Fame, the Chesapeake Bay Foundation, the Make-A-Wish Foundation of Michigan, and the Catholic Diocese of Dallas.When asked who else competes in their market, Chardon said this:
Blackbaud's year-over-year sales growth has risen each of the last three quarters, from 15% to 27%, 32% and 36%. Analysts expect 38% growth this quarter.
Today there are three main kinds of fundraising. In high-touch fundraising, one competitor for us is the BSR part of Sungard Data Systems. Occasionally, the largest organizations might use Siebel (a unit of Oracle ORCL) or Salesforce.com CRM.Previously, this blog has reported on rumors that Oracle might be interested in buying Blackbaud... however, I have no reason to think there is any specific truth to that rumor.
The second kind of fundraising is direct marketing, like for the March of Dimes or Easter Seals. Those groups raise smaller funds, but from a huge database of donors. In January we acquired a company named Target Software, which is a leading provider of that software. Our competitors there include service bureaus (database marketing firms) such as Merkle in the U.S.
The third kind of fundraising involves online fundraising from family and friends for events such as walk-a-thons. In this area, our Blackbaud NetCommunity product competes against Convio and Kintera.
When I submitted my entry to Sean's "One Post Challenge" it wasn't my intention to hijack the contest.
Fourteen months ago when I started my Don't Tell the Donor blog, I was one of only a handful of fundraising bloggers. Over the past year, I was initially excited to see so many more bloggers add to the online conversation.
Unfortunately, the proliferation of websites has all too often produced an incestuous conversation. For this medium to reach its strongest potential and serve as a true benefit to the nonprofits we serve, we must find a way to reach out beyond a limited number of fundraisers and foundation staffers to engage directly with individual donors.
As I wrote in my initial post, "blogging is not about talking AT PEOPLE, it’s about making readers part of the story and giving them a reason to be engaged."
Engaged was a bit of an understatement. Within the first 24 hours my post generated 57 comments, which by itself would have been enough to win the contest.
Sean himself noted that the deluge of hopeful supporters leaving comments for their cause generated more traffic to the website than his mentions in both the Chronicle of Philanthropy and the New York Times. That single comment proved my point more than the huge number of posts that came in.
...oh, but by the way... there were a heckuva a lot of comments. As I write this now, it looks like there are 683 total comments. I will leave it to Sean to see if he thinks their was any cheating with multiple votes coming from the same IP address... but here is how I saw the horserace unfold:
A total of ten nonprofits tried to lobby for votes. The early leader, Pride at Work after generating more than 60 votes within the first 36 hours. Thanks to one dedicated activist who was able to use his own site to reach out to more people, Pride at Work built a commanding lead... so much of a lead, they stopped thinking about the contest.
Then, on November 26th, someone who went by the name "Kjerstein" posted comment #75 - the first vote for Forge. That was followed by more than 50 more votes for Forge within the next couple hours... and the battle lines were drawn.
For the last week, votes poured in from both charities. It wasn't until late on December 3rd when Pride at Work must have thought the voting was over when Forge moved in for their final push. The refugee assistance group poured on more than 250 votes in the final day and won the contest by a final vote (through 683 total votes) by a score of 423-231.
Truth be told, I had never heard of either group when this contest started, but I have learned a lot about them in the past couple weeks... I hope others have. Both groups did an excellent outreach marketing job... and I would suggest that even though I want to donate the $500 gift card I won to Forge, I would like to suggest that Sean award his second $250 award to the second place group in this contest, Pride at Work.
My work here is done. This "fundraiser" is off to run a couple victory laps around the blogosphere. Congratulations to Sean and to Forge (who apparently only live about an hour away from each hour). I would encourage other bloggers to organize these challenges... it seems much more effective than those bland carnivals.
Thanks again for letting me be a part.
Monday, December 3
Most nonprofit development offices are divided so that the responsibility of working with low dollar donors is separated from the staff who cultivate corporation, foundations, and major donors.
I know some nonprofits that rely on big gifts from a small group of philanthropists in order to keep their doors open, however I personally feel better when an organization has hundreds (maybe thousands) of individual members who give provide many nonprofits with their mandate to exist.
Sure, one donor could write a $100,000 check and provide more operating assistance than 2,000 donors who give $50 each through direct mail. However, low dollar donors provide an important endorsement that the nonprofit's work matters. On the other side, all too often it can seem as if major donors are more interested in using their gift to avoid taxes on their wealth or to advance their own social status.
A long time reader sent me two links to the New York Times yesterday that reminded me of my personal fundraising bias:
Stephanie Strom writes about an I.R.S. investigation of the Maddox Foundation of Hernando, Miss. who agreed to transfer millions of dollars in assets to the Dan and Margaret Maddox Charitable Trust in Nashville, TN.
Tennessee went to court in an effort to bring the foundation’s assets back to the state after its directors moved it to Mississippi without seeking court approval. It argued that Dan Maddox, who left more than $100 million when he and his wife died in a freakish boating accident in 1998, had little connection to Mississippi and had intended that the bulk of the money be used for charities in Tennessee.Charles Isherwood writes a piece about the graffiti of the philanthropic class after visiting the Shakespeare Theater Company in Washington and finding names on everything. He observes:
After the move, the foundation began paying Robin G. Costa, its president and the executor of Mr. Maddox’s estate, handsomely and covering a variety of her travel expenses. The foundation bought a minor league hockey team and an Arena Football League team, contending that the purchases were charitable in nature because they encouraged local economic development.
But once upon a time a discreet collective plaque or a name in the program seemed to suffice. We live now in a different age. Celebrity has become a luxury product like any other, and the wealthy can purchase a tasteful morsel of the respectable kind through charitable largess.
I'm sure some bloggers like Phil at the GiftHub or Sean at Tactical Philanthropy could offer different opinions of this difference between fundraising and philanthropy. I'm also curious what others think.
(Photo credit to Stephanie Kuykendal for The New York Times.)