Big splash across the pond

About a month ago, a website called Intelligent Giving ran an article warning potential donors away from Children in Need just two days before its annual telethon on BBC. They claimed it was "a lazy and inefficient way of giving", largely because the charity is a grant-giver. In other words, it passes on donors' money to other charities which means donors lose control of where their money goes and pay a double set admin costs.

Given the recent whirlwind surrounding the Toronto Star's hit job on MADD, I thought it would be interesting to look at the fallout from this publicity splash.

By November 29th (two weeks after the story broke), the Guardian ran an article titled, "Pudsey's worst nightmare" in a reference to the stuffed bear Children in Need uses as their mascot. The paper describes Intelligent Giving as a self-appointed watchdog.

Marketing itself as a website run by donors for donors, Intelligent Giving was launched in October by two former journalists. It ranks the effectiveness of charities by analysing their financial reports and giving them percentage scores for criteria such as transparency and administration costs.

However, the Guardian article also raised questions about the methodology used for Intelligent Giving's ranking system. Peter Heywood, who launched Intelligent Giving in October 2006 with his own financial backing, fired back with a response on his blog.

After two weeks of national media coverage in the UK, it appears that BOTH sides won. The Intelligent Giving site claimed to be receiving 10,000 hits a day and clearly got the publicity it was looking for. However, Children in Need also pulled in a pulled in a record £18.3m on the night of the appeal.

MADD board fights back

They are steaming mad. MADD published a statement from the National Board and also sent out an open letter to the editor of the Toronto Star. The main criticism of the fundraising program centers on joint allocation of expenses based on a "word count" system. MADD claims that they were specifically told how to allocate costs by a representative of the Canada Revenue Agency (CRA). They even point to a conversation with Mr. G. Garcia from an audit more than four years ago.

In a face-to-face meeting held in MADD Canada’s National Office on July 16, 2002, Mr. Garcia recommended that a word-allocation approach be adopted in assigning expenditures between the purely fundraising activities of MADD Canada and its victim services, public education and awareness, and chapter services. Mr. Garcia then demonstrated how this word-allocation system would apply. MADD Canada took immediate steps to follow-up on the recommendation made by Mr. Garcia.

The organization also defends the CEO's decision not to meet with the Star reporter by saying, "the reporter had made his biases clear from the outset, and it was his aggressive and threatening attitude that led Mr. Murie to decide that it would be prudent to have a written copy of the reporter’s questions and a written copy of his responses."

I know for a fact that lots (and lots and lots) of other charities use joint allocation of costs in both Canada AND the United States. Some use a word count method and some take direct mail letters and count the amount of square inches used by fundraising text in order to allocate costs. Yeah, it's crazy. But, if we are going to talk reasonably about it, we should know all the facts and we should also talk about the huge problems involved with using these measures to evaluate effectiveness in the first place.

Who remembers when the Sacramento Bee went after Defenders of Wildlife and other environmental groups in 2001 over joint allocation of fundraising costs?

Regular readers will see I added an UPDATE to an article from earlier today and reading the a spokeswoman denies the Star's report that MADD has suspended it's fundraising program.

Donating to promote movies, part II

Jada Pinkett Smith has donated $1 million to the Baltimore School for the Arts, asking that its new theater be dedicated to classmate Tupac Shakur - according to reports filed by the AP on Monday. The gift was made by Will and Jada Smith Family Foundation and will be used for renovation and expansion.

Unlike when Dwayne "The Rock" Johnson gave $2 million to Miami University timed to promote his movie Gridiron Gang, I actually want to go see Will Smith's new movie, The Pursuit of Happyness, which opens Friday.

Toronto Star reports MADD Canada suspends fundraising

The Toronto Star reported shocking news on Wednesday morning. After a series of scathing articles aimed at the fundraising practices of Mothers Against Drunk Driving (MADD) in Canada - the newspaper claimed the nonprofit has suspended fundraising operations. The move comes days after CEO Andrew Murie defended the organizations fundraising practices.

A Star investigation published Saturday delved into MADD's internal financial statements and revealed that only about 19 cents of every dollar goes to victim services and the fight against drunk driving. The charity, which has for many years been telling the public that most of its money is spent on charitable programs, has been counting as charity the work of professional telemarketers and other fundraisers. MADD does this, Murie has said, on the theory that their calls for cash are also spreading the message that drinking and driving is a criminal offence with sometimes fatal consequences. The federal charity regulator does not condone this practice.

Shortly after the story was published, the national charity's fundraising campaigns were suspended, Murie announced Monday evening, according to MADD volunteers on the national conference call. "We've been off the phones since Saturday morning," Murie said during the call.

The article goes on to say local chapters are claiming it's not enough and they want to bring in an outside firm to scour the $12 million-a-year charity's books.

UPDATE (8:56pm): A representative of MADD Canada went on Talk Radio 650 AM today to refute the Star's claim. Louise Knox, MADD's Western Chapter Services Manager, says the charity has not suspended fund raising, and does not need to. She says they fall within Canada Revenue guidelines, and keep in close contact with the government.

Precious coin dropped in bucket

An anonymous donor dropped a single coin into a Salvation Army holiday collection kettle in Barre, Vermont which may be worth as much as $14,000. The donated 1908 Indian head coin has a face value of US$2.50, said Capt. Louis Patrick. But it's worth at least $250 and possibly as much as $14,000, according to a preliminary analysis. Apparently, it's not the only surprise to show up in those kettles this season.

I once tipped a cabbie $20 by mistake because it was dark and I wasn't sure which bill I handed him... and by the time I realized it, I decided it would have been rude to ask for the tip back. While it's unclear if the donor knew the full value of the coin, it was in a protective plastic case.

Anger at MADD in Canada

This weekend the Toronto Star launched a series of scathing articles claiming Mothers Against Drunk Driving (MADD) Canada is not accurately reporting the percentage of expenses spent on fundraising.

Since the organization uses fundraising pitches that say "83.6 per cent of your donation is spent directly on MADD Canada programs," the newspaper was outraged when it calculated that only 19 cents of every dollar goes to victim services and the fight against drunk driving. The Toronto Star's investigation found of the almost $12 million raised - more than $6.1 million was spent on fundraising and $2.7 million spent on salaries and administration.

At the heart of the controversy is the formula MADD uses to allocate the cost of paid fundraisers through a word count method. This involves dividing the costs of fundraising letters and scripts between education and fundraising based on the percentage of words used to ask for money.

MADD chief executive officer Andrew Murie defends the expenses, saying the paid telemarketers and door-knockers are actually performing good works because they educate the public as they ask for cash.
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Charity in Canada is regulated by the Canada Revenue Agency's Charities Directorate, run by director-general Elizabeth Tromp.

This week, the Star told Tromp that MADD was counting the work of professional fundraisers as charity. Tromp is not allowed to comment on individual charities but she said the practice is definitely not allowed. "When a professional fundraiser has been retained, it can reasonably be inferred that the intent of the expenditure is fundraising."

The paper uses quotes from the founder of MADD Canada, former volunteers, and families drunk driving victims to fill out it's negative portrayal of the "fundraising machine." It even contacted 100 donors of MADD on its own! The Star ran a follow-up article with MADD's response on Sunday and today it ran a letter to the editor that was equally critical of head office salaries.

Regardless of whether fundraisers think this was an unfair hit job on MADD... the question this story drives home is the extent to which donors understand the widespread process of "joint allocation" used in Canada or the USA. Personally, this does not seem like a question of whether everyone is doing it (they are) or whether auditors allow it (they do), but whether your donors know how and why your organization uses this accounting methodology.

Donor centered publications

Sean Stannard-Stockton over at Tactical Philanthropy posted yesterday on the recent birth of several print publications geared toward donors. He notes that there are 154 publications covering the fashion industry. However, the fashion industry is a $30 billion a year business while donors give $260 billion a year.

Sean sites four publications (Benefit, Generocity, Good and Contribute). I agree that these four publications are pioneers and that they’re creating a new category of magazine.

Fundraising to erase debt

How many nonprofits do you know that could spend themselves into millions of dollars worth of debt and than launch a fundraising campaigns to ask donors to help them fix it? That's exactly what both political parties are doing this week.

Patrick O'Connor at The Hill reports that the National Republican Congressional Committee (NRCC) is trying to retire nearly $2 million of debt in the wake of the party’s heavy loss in last month’s midterm elections, according to a fundraising letter from the group’s executive director.

Last week it was also reported that Sen. Elizabeth Dole of North Carolina, the outgoing head of the NRSC, appealed for money in a fundraising letter to GOP donors last month. The NRSC teamed up with the Republican National Committee in a futile attempt to hold onto the GOP's Senate majority.

Generous or Not?

Philip Cubeta directed me to a relatively new blog called Philanthromedia which is run by Susan Herr. While surfing around on the site, I found a link to a blog called Generous or Not. It describes itself by proclaiming:

If companies want to promise that our purchases will do good in the world, we think they should say exactly what they’ll do. What percent of sales, what percent of profits, or what amount per purchase? We did the research. Read on to find the info you need.

Well put. I'm adding both sites to my blogroll and to my RSS feeds.

Fundraisers who aren't donors

Jeff at Donor Power Blog pointed me in the direction of Katya's Nonprofit Marketing Blog who posted something: "Be your donor" day.

The idea: Find out first-hand what it's like to be a donor to your organization. You might be surprised. What you believe is happening could be a long way from what's actually happening.

I could not agree more that nonprofit fundraisers need to test all aspects of their program from the donor's perspective. On more than one occasion I've discussed that our acknowledgement process was painfully slow.

But what I don't understand is why someone would need to "pretend" to be donor.

If you are a fundraiser and not a donor... what does that mean? What are the possible excuses you give? You can't afford it? You don't think the money is well spent? You think you can get away being a "free rider"?

I don't mean to sound rude, but there is really no excuse. Fundraisers who aren't donors to the organizations they work for can only be explained by the fact that they have failed to convince themselves. However, on the bright side... if you can figure out WHY exactly you aren't a donor - it would probably make you a much better fundraiser.

Once bitten, twice shy...

Two years ago, NYU received a $21 million pledge from the Yalincak Family Foundation - run by the family of then senior Hakan Yalincak. The university planned to build a lecture hall and create a scholarship fund and an Ottoman Studies professorship.

Unfortunately, Yalincak was later arrested and put in jail after attempting to cash a forged $25 million check. Authorities investigated and alledged that his money was illegally gained by various frauds. NYU never got the $21 million and was left with lots of egg on its face.

According to Ali Weinberg at the Washington Square News, NYU will now require donors who pledge large sums of money to pay some cash upfront.

The university will not change its pledge policy outright, but it is considering creating a stipulation that pledges must give NYU part of their pledge before the university starts outlining how it plans to use the funds, said Debra LaMorte, NYU's senior vice president for development and alumni relations. Donors often make requests about how their pledges and donations are to be used; now, the university will not allow projects to go forward without the money promised for those projects has been paid.

But Yalincak's pledge wasn't the first to backfire for NYU.

In 2001, former investor Alberto Vilar pledged $22.3 million to the university but never paid after he was charged with fraud. Vilar also never paid pledges of millions of dollars to New York's Metropolitan Opera, the Kennedy Center in Washington and Columbia University.

If you like reading about high profile pledges that were never paid, you might like this article from the Wall Street Journal.

When big corporate donors get bought out

An announcement was made earlier this week that Mellon Financial Corp. was changing its name and its headquarters address after being acquired by the Bank of New York.

As if the people of Pittsburgh haven't suffered enough this fall because of the Steelers disappointing football season... now they face the prospect of losing one of the cities biggest philanthropic institutions.

Those concerns, in large part, help explain why Mellon Chief Executive Officer Robert P. Kelly went out of his way to pledge that the merger would benefit Pittsburgh, both in jobs and in the combined company's involvement in to the region.
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Mellon announced the creation of a new $80 million Mellon Financial Foundation that will give out twice as much money to southwestern Pennsylvania as the previous foundation did -- $4 million a year, double the previous $2 million. It also pledged that the $1 million that it currently spends per year on area sponsorships and nonprofits will not change.

Despite these promises, Pittsburghers are wary.

"Every bank says that because it's the right thing to say," Ken Thomas, a Miami-based banking expert, said of Mellon's stated commitment to local philanthropy. "But if A buys B, A calls the shots. Their primary goal is to serve the shareholders of the Bank of New York, period, and not in other markets."

Mr. Thomas said that institutions such as the Orange Bowl parade and the University of Miami noticed drop-offs in financial support after SouthEast Bank was acquired first by First Union, and then by Wachovia.

"It's not just the philanthropy," he said. "When you lose a lot of chief executive officers and board members, their role in the community drops some. They lose some of their stature."

It's not the first time Pittsburgh has dealt with the lose of a Fortune 500 company. While it remains to be seen if Mellon is serious or if it is simply trying to avoid telling the donor that the party is over... but I've already heard from a couple very nervous grant recipients in the Steel City.

Hillary Clinton hires fundraiser

Not even 24 hours after George Pataki hired a fundraiser, Hillary Clinton signed a national finance director, veteran Democratic fundraiser Jonathan Mantz. Some of you may recall Mantz worked for the DCCC and most recently was a fundraiser for Gov. Jon Corzine of New Jersey.

Hey Senator Obama... if you are reading this... I can be reached at donttellthedonor@gmail.com

Nearly naked fundraising

Jamie Hooper of Junction City, Oregon is a 62-year old man with perhaps the most unusual fundraising niche that I have seen in some time. He photographs nearly naked men as a "beefcake" spoof in order to help groups raise money.

Karen McCowan at the Register-Guard reports that in 2003 Hooper shot a calendar full of nearly naked men for the Long Tom Grange after Danuta Pfeiffer came up with the idea. Since then he has raised more than $650,000 for local schools and charities.

He deliberately uses poses and settings that are polar opposites of body-conscious beefcake shots. In the Men of the Willamette Valley calendar, his groups of nearly nude subjects appear caught in the acts of everyday life - fishing, reading X-rays in a medical office, casting ballots at a voting booth.

Hooper briefly considered using the term "dudedoir" to describe his work as a play on the boudoir portraits that were a popular gift from women to husbands or boyfriends in the late 1980s.

"But that wasn't quite right - those were usually soft-focus, alluring portraits using negligees and things like that," Hooper said. "And I don't think you can call it `beefcake' with men this old. That's usually guys in their early to mid-20s, greased up and looking good. None of these calendars are about the nudity or titillation."

I briefly tried to think what such a calendar would look like if we did it at the charity where I work. If I live another 100 years it may be impossible to erase the image of our programs director posing in his office. Yuck.

The coverage we deserve...

Peter Panepento at the Chronicle of Philanthropy has an article out on the rise of blogs about fundraising. It would be an understatement to say that I'm crushed for not being included.

However, because so many of our friends at other great sites were included, I have decided to paste parts of the article below. I'll take up my beef with Mr. Panepento on my own.

Some charity bloggers say that the online forums have yet to reach their full potential because few readers participate in a back-and-forth discussion by posting their own comments. For example, Mr. Ruesga's blog attracts about 100 regular readers — a fraction of whom add their own comments or responses to his posts.

Nobody knows for sure how many blogs are devoted to nonprofit issues, but the best guess by people who write blogs is that about 100 are now in operation. That is an infinitesimal fraction of the estimated 12 million blogs available on the Internet, according to the Pew Internet & American Life Project, in Washington.
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A handful of other blogs — including the Charity Governance Blog and Where Most Needed — take a watchdog approach. These entries attempt to shed light on misdeeds, challenge actions, and spotlight questionable practices in the nonprofit world.
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Whatever their purpose, those who write philanthropy-related blogs share an optimism that the online forums will become a significant part of the nonprofit landscape. In particular, say some writers, they help nonprofit officials figure out how to convey messages and see how the public responds.

The entire article can be read here (subscription required).

UPDATE: I've received a couple emails to say that Don't Tell the Donor was still included in an insert list of blogs that get attention. Ok... I feel a little better now.

Perks for political fundraising?

It's not like any of us ever doubted that politicians who raise a lot of money are rewarded by the party... but the San Francisco Chronicle seems to tie several big fundraising in California to "choice committee assignments."

Take Assemblyman Mark Leno of San Francisco. He's chairing the powerful Appropriations Committee when the new legislative session starts today, after having funneled an estimated $400,000 in unused campaign contributions to candidates and causes backed by Speaker Fabian Núñez, D-Los Angeles, over the past two years.

From the East Bay, Assemblyman Alberto Torrico of Newark, incoming chairman of the Government Operations Committee, which oversees gambling, alcohol and other "juice" legislation, kicked in an estimated $400,000 of his campaign war chest for state Democratic causes.

Sigh... I've got a birthday coming up in two weeks and I'm afraid that stories like these make me less naive and more pessimistic about fundraising (and politics)... and not in a good way.

Pataki hires fundraiser

Let's be honest... in order to be president of the United States you need a kick-ass fundraising director. Now, I know the Republican governor in New York, George Pataki really wants to be President. Therefore, it was interesting to see hire a former aid to Dick Cheney as finance director for his Virginia-based 21st Century Freedom PAC. The Boston Globe reports:

A former political director for Cheney, [Kara] Ahern was northeast finance director for the Bush-Cheney re-election campaign in 2004 and was a chief fundraiser for Lt. Gov. Kerry Healey's unsuccessful run for governor this year in Massachusetts.

The PAC pays for Pataki's travel around the country and makes donations to other GOP candidates.

Gates Foundation to $0 in 50 years

The Bill & Melinda Gates Foundation, announced yesterday that all assets of the organization will be spent no later than 50 years following the death of the longest serving trustee. The Wall Street Journal describes it as a "decisive move in a continuing debate in philanthropy about whether such groups should live on forever."

The foundation said the move reflected a decision by its three trustees, Bill Gates, 51 years old, Melinda Gates, 42, and investor Warren Buffett, 76, to do "as much as possible, as soon as possible" to further its work. Its main programs involve improving health and economic development globally, and improving education and increasing access to technology in libraries in the U.S. In June, Mr. Buffett pledged $31 billion to the foundation.

The decision is expected to influence other charities to consider following suit. The Seattle-based foundation separately plans to increase spending to about $3.5 billion a year beginning in 2009 and continuing through the next decade, up from about $1.75 billion this year.

The foundation's Chief Executive Patty Stonesifer also announced that while they have no plans to solicit money... and they prefer people give directly to charities working in related areas... those who want to donate to the foundation shouldn't be turned away.

The Seattle Times also reports that next year the foundation will create three advisory panels — one for each of its program areas — to seek outside opinions from academics, nonprofit leaders and others. The foundation has also started doing anonymous surveys of its grantees.

Tapping the Giving Spirit?

The New York Times published an article yesterday entitled, 'Retailers Tap Holiday Giving Spirit." In it, the author discusses the online criticism that has dogged campaigns like Product Red:

More than a few bloggers have pointed to the crassness of companies using a deadly disease as a marketing vehicle to sell more clothes and electronics. Radio talk show host Michael Medved has charged on his blog that companies have used the campaign as an excuse to hike prices and make more money for themselves.

''A Gap long-sleeved T-shirt that last week cost $14.50, now goes for $45... meaning the company still gets an extra $8 of your money on an absurdly overpriced piece of cloth,'' Medved writes.

Other online critics point out that since most of the money from red products will go toward buying medicine for AIDS victims in Africa, the campaign will help bankroll pharmaceutical companies who are unwilling to distribute their drugs for free.

I wonder if they read Don't Tell the Donor at the New York Times?

Projections, predictions, and the problem of past performance

It's Friday, December 1st - the first day of the last month of the year.

Which means in 31 days all of 2006 will be closed. Except for those first few days in January 2007 that we plan to continue logging gifts into Raiser's Edge and hoping the auditors will let us book late deposits back to 2006.

Without cheating can you write down your 2006 gross fundraising goal off the top of your head? Can you write it down to the dollar or do you have "rounded zeros" budgeting? What about your expenses? Or can you remember your annual budgeted net... and can you back into the last number if given the first two?

What about your best guess projections for 2006 against those budget guesses... Can you guess - within $1,000 - how close you are going to be at the end of the year? Do you have the ability to constantly compare this year to last year at this time? Should you be able to?

I have a fundraising friend who tracks daily trends in website giving, but even on Christmas Eve, he says his guess can be $100,000 or more off because he can't estimate the spikes he hopes for during the last 7 days of the year. I know another major donor fundraiser who gets 85% of his annual budget in December... and when I saw him last he looked pretty worried. "Hopefully I get a couple of those IRA rollover gifts this year because of the tax law change... but who knows."

My point is... sure, I so there are some things that we can control up to a point and then after that "luck" takes over. But that is such a minor part of what we do.

Too often I hear of fundraising departments that believe it is their job to analyze past campaigns after they happen in order to analyze which techniques worked best. But, it discourages me when I hear fundraising who feel they do not have a responsibility to provide cash flow prejections and predictions to the finance teams.

Even if you work in a development office where there are several different types of appeals, renewals, and acqusition mail campaigns going on at the same time... and if you also have board events, grants pending, major donor dinners coming up, and maybe even telemarketing... I hope you'd be able to pencil out where your year is going to finish within a $1,000.