Podcast on new IRS Form 990s

If you don't know how the new Schedule G from the newly revised IRS Form 990 will effect your organization's fundraising reporting, you can now listen to a podcast with Geoffrey Peters, president of Creative Direct Response, who recently provided very useful information on how to get your organization ready to fill out the schedule.

Geoffrey Peters, a fundraiser and lawyer, is a noted legal expert on the regulation of nonprofits and their fundraisers. Download his complete bio.

Go to the Foundation Center to listen to the podcast.

Why the Bridge Conference really impresses me

You have to be impressed with the 2008 Bridge to Integrated Marketing & Fundraising Conference.
The award-wining event (which is being held this week in Washington, DC) has attracted more than 1,600 participants. The program guide boasts 14 separate tracks covering everything from direct response, major giving, marketing, creative, current issues, and many more. There are an unbelievable 75 sessions. They have more than 90 vendors in the exhibit hall.

...but wait, there's more.

They scheduled keynote speakers Jim Stovall and Lynn Price. They timed the DMAW MAXI Awards to be given out the night before. They've even set up their own LinkedIn Group, a Facebook Group, and a page on Twitter.

Don't forget... this was the conference that Beth Kanter's turned on it's head last year with her web 2.o coverage. Thanks to her trail blazing... the expected standard of online coverage for fundraising conferences will never be the same.

Four CRM case studies

Reed over at the AFP blog pointed out a great article yesterday by Anthony Pisapia and Brett Bonfield from Idealware:

"Managing Constituent Relationships: Four Case Studies" tries to explain how four organizations have implemented CRM and what their experiences can offer others. The authors take a complete look at the product, the cost, the implementation, the challenges, and the words of advice.

The examples they cite are the NY-NJ Trail Conference, which used a database software called ebase; Hispanics in Philanthropy selected Microsoft CRM 3.0; Washington Toxics Coalition recently migrated from ebase to Salesforce and finally, Easter Seals uses a combination of Convio and Team Approach.

The rest of the article is on the TechSoup website.

Where do mail recipients go for info on charity?

Mark Hrywna reported yesterday that The NonProfit Times engaged the Opinion Research Corporation (ORC) in Princeton, N.J., to repeat a study it performed three years ago for The NPT. ORC asked 1,000 people: "When you receive a mail solicitation from a charity, which of the following places on the Internet do you look at before deciding whether to give money?"

Here are the results:

Yup. I guess you can call that a dramatic shift. It seems just as soon as everyone was just beginning to understand that their website is their authoritative online voice...

Those rules have changed.

More than four out of ten people look up their information on an independant rating agency, an online discussion group, or a blog. That's quite a change from just 36 months ago.

What’s Eating The List Industry?

For the sixth month in a row, they published one of my columns on The NonProfit Times web editorial page. You should go read the entire post on their site... along with an articles by Eleanor Clift and Rick Cohen.

Here's a teaser:

"During the past year, the [list] industry has endured a combination of: shrinking list universes, a weakening economy, lots of bad publicity, increasingly organized backlash against “junk mail,” and the aggressive expansion of cooperative databases. More importantly, nonprofits with established mail programs are beginning to ask questions about the saturation of the shared donor universes and whether there are better ways to reach new donors."

I tried to explore each of those factors in the piece... although, admittedly I'm not really what you could call "knee-deep" in the list industry... so I'm observing many of these patterns from afar. If you disagree, I'd love to hear about it.

Convio uses Akido to redirect attacks

Rather than me posting yet another entry about Convio, I decided to lift this message that Robert L. Weiner from the Strategic Technology Advisors to Nonprofit and Educational Institutions posted to a fundraising listserve yesterday:

Convio just announced that they will be releasing a donor database, code-named Akido, on the SalesForce.com platform. This will be a separate product from their online Constituent Relationship Management suite -- you don't have to be a Convio CRM client to use the database. They also say it's not simply a new template for SalesForce, but a product built from the ground up. Info is at: http://www.convio.com/signup/crm-system.html

As of now, the database is only available through what they're calling their Charter Program (which I read as beta testers). The program announcement includes a FAQ (at the bottom of the page) about the database and the program, plus some promotional videos: http://www.convio.com/convio/news/charter-media-room.html

And if you want more, Gene Austin, their CEO, is blogging about the new database here: http://tinyurl.com/5uldng

They plan to release the product in the 2nd half of this year. They haven't announced pricing.

For those of you that are curious, Akido is a form of martial arts that combines sport, philosophy, and religious beliefs. The irony for me is that Akido is known for "blending with the motion of the attacker and redirecting the force of the attack rather than opposing it head-on." It can also be categorized under the general umbrella of "grappling arts."

Too funny.

From the stories I've heard of people who have tried to integrate online and offline data from their eCRM provider... it sounds like they picked the perfect name to redirect one of their biggest criticism into a new business opportunity.

Bloggers react to the first year of fundraising numbers from Facebook Causes App

I've been reading several blog postings about the fact that May 30th marked the first anniversary for Facebook's toolkit that enables the development of 3rd party Applications (Apps) that integrate directly with Facebook user data.

The Giving in a Digital World blog provides some interesting statistics on the biggest non-profit Facebook App, ‘Causes’ from Project Agape (now also available on MySpace). The allure to nonprofits is strong since they now have a total of 12 million registered users supporting over 80,000 US and Canadian non-profit organisations.

Over the last 12 months, $2.5 million has been raised through Causes for 19,445 organisations - equating to an average of just $126 per organisation. No donations at all have been made to 75% of the 80,000 organisations being ’supported’.

This leaves blogger Bryan Miller wonders if there is a greater potential. Caroline Preston at the Chronicle of Philanthropy's Give and Take blog also wrote about the underwhelming response to the news from people over at TechCrunch.

Adam Hyman points out on TechCrunch that the $2.5-million total works out to being only $0.21 per user. “How can anyone call this a success?” he asks.

The TechCrunch reaction is likely to shape the industry's reaction to the fundraising news because Michael Arrington published this article at the Washington Post. However, Allan Benamer at the Non-Profit Tech Blog took issue with the idea that the fundraising revenue was low. Benamer reminds readers:

"...the amount is actually greater than the first year revenue for Kiva, GlobalGiving and DonorsChoose COMBINED."

My own personal reaction is that the success of the Causes App should not be judged based on the dollar amount raised. Rather a more important metric should be the number of users who agree to share their name and contact information with their favorite nonprofits through this feature. That's why this is a revolutionary development.

For too many years, nonprofits have settled for the "cash bucket" mentality of fundraising where they failed to see the future value of collecting the names (and contact information) from people who threw donations into a bucket.

I'm happy to see social networking sites recognize that it's not enough just to raise money as a one time donation... the question for me will be whether nonprofit fundraisers figure out how to develop appropriate follow-up strategies to continue engaging this new breed of donor.

Fundraising body releases code of practice for "chuggers"

The Institute of Fundraising (IoF) is the professional body that represents 4500 individual fundraisers and 250 organizational members in the UK.

The IoF just released a new draft code of practice on face-to-face fundraising, a practice known to some as "chugging" because it can be perceived as charity mugging on the street.

For the first time, the code includes rules on the practice of prospecting - where fundraisers take down potential donors' details but not initially their money.

"Previously, only those who took money or were active in getting people to sign up for direct debits were required to follow the IoF code. During the initial F2F conversation, fundraisers are now required to "acknowledge the possibility of a subsequent financial commitment request".

Mick Aldridge, Chief Executive of the Public Fundraising Regulatory Association, said that the body had seen a desire from local authorities who claimed that prospecting "looks like fundraising" and therefore needed to be included under regulatory guidelines."

Now that the draft is released, the IoF will begin a 12 week public consultation period until August 8th. If you want to give your input, go here.

"Donor advised funds" used to hide anonymous donors

Back in January, the Wall Street Journal argued that:

...nonprofits are coming under increased pressure to reveal the names of some of their most generous donors. Proponents of greater disclosure by charities, including some lawmakers and consumer groups, argue that keeping givers' identities secret can mask efforts by wealthy individuals and corporations to use philanthropy as a tool of undue influence.

I've also seen this increasing pressure in the political debates over whether the Clinton's should reveal anonymous donors to their Presidential Library. But there is more evidence at colleges around the country. A state Supreme Court in Kentucky is weighing a lawsuit from a local newspaper that seeks to compel the University of Louisville Foundation to reveal the identities of 62 anonymous donors.

The truth is donors who give over $5,000 and try to claim a deduction must be listed on a group's Form 990.

Wealthy philanthropists last year made 37 gifts of $5 million or more without publicly revealing their names. That's up from 27 such gifts in 2006, and just 13 in 2004, according to an analysis by the Center on Philanthropy at Indiana University. Such publicity-shy donors say they want to give back to their communities but avoid the headaches of a high public profile, including pushy fund-raisers, jealous relatives and even risks to their personal safety.

One way around this problem is the donor advised funds, "which allow donors to give to a charity in the name of the entity that runs the fund, often a financial-services firm. What's more, donor-advised funds come with attractive tax breaks -- up to 50% compared to a maximum 30% when giving through a private foundation."

I'm going to focus on donor advised funds (DAFs) all at Don't Tell the Donor. If you have story ideas let me know.

AFP lobbies to extend IRA rollover provision

From the Association of Fundraising Professionals website:

Earlier this year, AFP submitted a written statement to the Senate Finance Committee, urging senators to include an extension of the Individual Retirement Account (IRA) Rollover provision in the economic stimulus package. Unfortunately, the IRA Rollover provision was not included in that legislation.

AFP continues to look for opportunities to pass an extension of the IRA Rollover provision. If you have not done so already, please write or call your Members of Congress. You can find talking points, draft letters and other instructions here.

The current provision expired on Dec. 31, 2007, due to Congress’ inaction.

We don't know what it is, but we don't like it

The Association of Fundraising Professionals recently asked Ellison Research to conduct a survey on American attitudes toward nonprofit overhead expenses. Here are some excerpts from an article in Fundraising Success Magazine on the study.

Sixty-two percent of Americans believe the typical nonprofit organization spends more than what is reasonable on overhead expenses such as administration and fundraising, according to a new survey.

When respondents were asked what is a reasonable level of overhead costs for nonprofits, the average figure was 22.4 cents for every dollar collected. However, when asked what they thought the typical nonprofit actually spends on overhead costs, the figure was 36.3 cents per dollar.

The findings, gleaned from a survey developed and conducted by Ellison Research involving more than 1,000 American adults, found that while respondents were fairly consistent in their thinking about how much charities should spend, their thoughts on how much charities actually spend were more diverse.

Go here to read the rest of the article - there are some interesting differences in attitude by age and race.

Taking Out The Trash – Voluntarily

On March 1st, The NonProfit Times published my second column as part of their new exclusive web editorial section. I decided to bring March in like a lion and I used the opportunity to explore how the DMA and others has reacted to growing calls for increased self-regulation.

Taking Out The Trash – Voluntarily

When I was growing up, my mom used to say to me:

“Little fundraiser. I told you to clean your room. Go in there and do it right now or else, I will take this garbage bag and go clean it myself – and you won’t like what I’m going to throw away!”

It was the scariest threat my mom ever made. Yet, I never found out if she was bluffing or not because nothing motivated me more than the fear of my mom rampaging through my room throwing my beloved toys in the trash.

I’ve been thinking of this personal experience during the past few years as I’ve listened to Congress’s threats that if the nonprofit sector failed to regulate itself then government will stage its own intervention. We all know there are some bad apples within the nonprofit sector. But, there should be a way for the industry to clean its own room first before a bunch of bureaucrats get involved.

...[read more]

You can go here to read the rest of the column on The NonProfit Times website.

Paralyzed Veterans of America fights Washington Post on negative fundraising coverage

Last December, the Washington Post ran a Page 1 story the used an American Institute of Philanthropy report to criticize veterans charities for being inefficient fundraisers.

Paralyzed Veterans of America received an "F" grade and was listed in a chart, which said: "Letter grades were based largely on the charities' fundraising costs and the percentages of money raised that was spent on charitable activities."

Well... PVA fought back and Homer S. Townsend Jr., the PVA's acting executive director, complained to the newspaper by saying the Post's publication of those grades "without an explanation of how they were derived is a disservice to readers and the affected charities."

Last Sunday, the Post's ombudsman agreed with some of PVA's criticisms.

Townsend said the organization lost $500,000 from a donor who didn't like the "bad publicity." Townsend said that by running the story on Page 1, The Post "gave those ratings unquestioned legitimacy. Your readers deserve explanations of this complex subject." And complex it is. My reporting found that charity watchdogs compete with one another and don't agree on standards.

I think it's a good case study for how charities should respond whenever reporters try to write these simplistic "charity efficiency ratings" stories.

Important findings from the COPPS study on SYBUNT trends

If you are a fundraiser that uses DonorPerfect or Raiser's Edge as your fundraising software database, you know the power of the SYBUNT report which can help target donors who give "Some Years But Unfortunately Not This" (year).

Most successful fundraisers know that inconsistent donors have a significantly lower lifetime value than donors who give annually. As a result, it is important to segment Annual Fund mailings to ensure too many resources aren't spent on these "occasional donors" at the expense of not soliciting committed donors enough.

It's just as important to understand the broader trends of individual donor giving and the body of research available to help fundraisers understand the big picture.

The NonProfit Times published an excellent review last week of an ongoing study conducted by the Center on Philanthropy Panel Study (COPPS) at Indiana University.

The COPPS survey talks to 8,000 families about their nonprofit giving. According to this report, "while the total percentage of households that gave was similar in all three years (67 to 69 percent), it was not always the same households - in fact, it appears that a third of U.S. households appear to shift between donating and not donating.

COPPS researchers found that 56 percent of households gave donations in each of the three years. Another three in 10 households (29 percent) contributed to charity in some but not all years studied. Just under 15 percent did not contribute at all in any of the years studied.

COPPS is conducted every two years (beginning in 2001) in conjunction with the Panel Study of Income Dynamics (PSID), a landmark recurring survey by the University of Michigan’s Institute for Social Research initiated in 1968.

It's a shame the survey results aren't made public in a more timely manner, but if you would like to read a recent report from January 2008 on the key findings from the survey conducted in 2005 (which covers giving in 2004) you can go here.

A special thanks to the NonProfit Times for publishing this critical link (which all fundraisers should bookmark) to the Center on Philanthropy for quick reference to a dozen major donor research studies.

The big business of college football

Yesterday, I found myself watching some boring college football Bowl games... so I tried to pass the time by arguing with friends about the largess of NCAA coaches. If you want to impress your friends with some facts and figures, here is some quick research I pulled together from other sources.

The USA Today reported last month that "the number of million-dollar coaches has soared from five in 1999 to 50 today."

The truth is that the games on New Years Day are only part of college football's larger $400 million bowl industry. Fox Business reports that each of the BCS bowl games pays out $17 million to the conferences represented. The conferences, based on their own rules, divide the payout among all of the teams in the conference. If an additional team from a conference is lucky enough to make a BCS bowl, the conference receives an extra $4.5 million.

The Atlanta Journal-Constitution had a great article last week outlining the huge bonuses given to coaches for winning their bowl game. The biggest bonus seems to await Les Miles if LSU can win next week's National Championship game. Others earn the right to renegotiate contracts if their team hits overall goals.

Alumni boosters at Hawaii ran a campaign to raise $114,000 for the team’s head coach, June S. Jones III when they grew worried he might leave the university when his contract expires in six months.

According to Forbes magazine, Ohio State has the biggest athletic department budget in the U.S. at a whopping $104.7 million for the year ending June 30, 2006. Texas was second at $97.8 million.

Then again, we are living in the age where 31 universities are seeking to raise at least a billion dollars.

In December, Ohio State President E. Gordon Gee tapped Peter Weiler to head up all of OSU’s fund-raising efforts, including a possible $2.5 billion capital campaign. Weiler will begin his new job in early 2008 as senior vice president for university development and president of the Ohio State University Foundation.

Just hours after OSU's announcement, the University of Georgia named longtime administrator Tom Landrum the permanent senior vice president for external affairs, the administrator in charge of fundraising, public affairs and alumni relations.

With Landrum in the vice president's office this year, fundraisers shot past their five-year fundraising goal to collect $500 million for the Archways to Excellence campaign. The campaign is set to conclude June 30, but already has collected $580 million, according to Landrum.

As vice president, Landrum will make $252,000 a year, the 13th highest salary among UGA administrators and faculty, according to university spokesman Tom Jackson.

Did public radio put pledge drive before breaking news?

On December 27th, Benazir Bhutto was assassinated as she left a rally for the Pakistan Peoples Party. The Opposition leader's death is a major news story since many observers predict it could spell uncertainty for Pakistan's future.

While almost all news outlets gave the story breaking news coverage, the public radio station WNYC in New York decided to to go ahead with a one-day fundraiser that day.

FishbowlNY, the media news and gossip blog, clipped a couple angry listener comments from WNYC's message board and ran a story with the title, "WNYC Listeners Fume Over Fundraising That Interrupts Bhutto Coverage."

One comment from a listener named Evan Robinson puts it this way:

I too am shocked and dismayed at WNYC's continuing the pledge drive during this tragic and important event. The WNYC I used to know was the one that suspended a pledge drive when Leonard Bernstein passed away. The management at that time recognized the importance of the event to the culture, the city and the world, and saw fit to honor an important figure rather than beg for money. Laura Walker owes all of WNYC's listeners an apology for such a crass demonstration.

Even if Evan's comments are a bit over the top, the reaction does highlight the difficult decision all fundraisers face when major news events or natural disasters interrupt our campaign plans.

AFP publishes more proof of fundraising divide

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.

AFP asks Congress to ban percentage-based fundraising

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?

Did the credit crisis kill Santa Claus?

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.

What if Google made a play at Guidestar

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.

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.”

Interesting to note that the Chronicle dedicated not to publish Paige Roberts name.