RISK AND REWARD

Response to a Response (Unearthing Major Gift Donors BLOG): Yes, Gretchen, there is such a thing as risk (and reward) in major gift staffing.

All organizations should constantly do short-term and long-term cost-benefit analysis of various fundraising methods. Direct mail, high dollar mail, foundation grants, events, major gifts and other mechanisms carry different risk and response. Besides measuring staff and monetary performance versus budgetary risk, the hard part is making choices at the convergence points of performance and risk.

For example, direct mail may garner up to a 15 percent response rate, with one or two percent a great rate for new acquisitions. Annual mail and high dollar mail have a far better response rate and move supporters up the donor pyramid. A telephone call can have a 50 percent response rate when applied to the right program or for the right organization, although 15 – 25 percent is the normal range.

Major gifts, extremely generous gifts above and beyond annual support, are investments in the organization. Done with the respect such support merits, face-to-face solicitation can yield a 75 – 80 percent success rate.

The key to getting major gifts is asking for them. Face-to-face personal solicitations are 10 times as effective as mail and five times as effective as a personal phone call, which is why it is cost effective to have major gift officers on staff.

There are a few caveats for gauging major gift performance: The non-profit organization must have a compelling case and be operating in a professional manner. Sufficient prospects with significant potential must be identified and researched. Leadership volunteers, who demonstrate their commitment by asking their peers to join them in financial support, must be committed to the program. Supporters must be well-cultivated.

It’s all about nudging, which we’ll get to in a future BLOG.

If you’d like to discuss your major gifts program confidentially, feel free to call me.

UNEARTHING MAJOR GIFT DONORS

When I got off the phone with a certain special someone yesterday I thought about how major gift fundraising, the topic for most of my day, is rather like courtship – there has to be attraction, affection and ability – or the relationship won’t happen. Like dating and moving a relationship forward, a gift solicitation can go a few ways. The rejection, “I just want to be friends.” A simple date, nothing more. Or, yes, the commitment, signaling the beginning of a deeper extended bond.

Individuals are the more reliable source of charitable gifts and typically give the greater portion of nonprofit income. Securing a major gift is the result of a cultivation process. But who to cultivate is the million dollar question!

Your current donors are your best prospects to make future major gifts. Hank Rosso, founder of the Fund Raising School, said that every donor at one level is a prospect for a gift at a higher level. All too often prospect identification focuses exclusively on wealth, creating the false expectation that someone can be converted from a low level of support to a major gift only because they have the resources.

In the perpetual search for vital information to identify prospects, individuals should be qualified by three criteria – and they must meet these three criteria before a solicitation can be made:

Linkage to the organization or organizational leaders,
Interest in the organization’s work and
Ability to give gifts at significant levels.

Combine off-line and web-based techniques to gather data on a person’s current relationship with your organization. Donations to other organizations and service on non-profit boards indicate an active giver. When reviewing donor contribution records, consider recency and frequency of gifts, as well as the largest gift and total gifts. In determining an individual’s ability to give, consider discretionary assets and income, not gross income; consider liquid assets, not fixed, as in real estate.

With this information you can identify those people who require a more personal approach to make a dramatic move up your gift range chart. This information will help you prioritize your fundraising plan and initiate a measured cultivation program. Put all of this together and you will be able to develop personalized strategies for those people most likely to give a gift, give that gift to your organization, and give the size of gift you need to support your organization.

WHAT WOULD YOU TAKE Part 2

True Confessions: I had a serious computer dating relationship with Larry Downes, the Larry Downes of Killer Apps* fame. Larry and I met every Saturday morning at my office for months while he refined a donor management program to meet all my organization’s needs, was Kathy Miller friendly and easy to modify (at least for Larry). I was a technological virgin before I met him.

When thinking about what to retrieve in a natural disaster, I wondered what Larry would take personally and what he would advise professionally. “The really valuable items in my old childhood stamp and adult comic book collections are in a safe deposit box.” The important things in his house are Buster (his puppy), certain art and his estate planning documents. He adds “but the originals of those are kept by the lawyers anyway. I can happily live without anything else.” Note he didn’t mention taking any technology!

Larry is a fellow at the Center for Internet and Society (CIS), a public interest technology law and policy program at Stanford Law School and a part of the Law, Science and Technology Program at Stanford Law School. In the face of a disaster, he says “As Katrina demonstrated, most companies don’t plan at all. Increasingly, though, there is a move toward what is called “cloud computing” where large companies (and eventually medium and small ones, and consumers as well) keep their data and programs offsite to begin with, and run everything via the Internet and service providers who spread the information all around the world on large banks of computers. That solves some security and disaster-planning problems, and raises new ones. Apparently it also saves a lot of money, and space, and carbon emissions.”

Do not be unprotected. If you haven’t done so already, have a talk with the IT people at your organization about this today.

And visit Larry at his blog: http://cyberlaw.stanford.edu/blog/larry-downes

* Unleashing the Killer App: Digital Strategies for Market Dominance, Harvard Business School Press (1998)

WADE HENDERSON

This is a tip of my hat to Wade Henderson, President and CEO of the Leadership Conference on Civil Rights, who is a new addition to the Non-Profit Times’ “11th Annual Power and Influence Top 50” list, which celebrates the sector’s leaders.

Wade and I served on an affirmative action coalition following the Supreme Court’s 1978 decision in Bakke v. Board of Regents when he was with the Council on Legal Education Opportunity. Now, under his leadership the LCCR membership has grown to nearly 200 national organizations. Wade is one of the nation’s most effective defenders of federal affirmative action policy, one of the strongest advocates for reauthorization of the Voting Rights Act and passage of the Hate Crimes Prevention Act, one of the leaders in educating people facing foreclosure and one of the nicest people you'd ever want to meet. In receiving this recognition he follows in the footsteps of noted civil rights leaders Morris Dees of the Southern Poverty Law Center(2001) and Marian Wright Edelman (1998, 2001) of the Children’s Defense Fund.

Congratulations, Wade!

TRANSFER OF WEALTH

A friend incredulously asked me “Who are those people buying the megamansions?” I know it’s hard to believe in today’s economy that the ranks of the superwealthy are expanding.

Right now a tremendous amount of accumulated assets is being passed from one generation to another. In fact, we may be seeing the greatest transfer of wealth in the history of America. The economic boom of the 1990s created an unprecedented amount of personal wealth — currently estimated at more than $33 trillion.20Today's retirees constitute one of the wealthiest segments of the U.S. population with more personal wealth than any previous generation.

In June the New York Times Company Foundation hosted "Billionaires and Their Impact" for their Journalism Institute, a seminar offering prominent journalists information on important” and under-reported” issues. Matthew Miller, Editor of Forbes magazine’s annual “400 Richest Americans” list, said “Last September the minimum price to get on the “400 Richest Americans” list for the first time cost $1.3 billion. We left 82 billionaires behind.”

He went on to say that “We are seeing tremendous billionaire growth.” Forbes recorded 1,125 billionaires in the world this year, compared to 946 last year. The top one percent almost doubled their share of the national income since the 1970s.

Boston College researchers Paul Schervish and John Havens predict that in the next half century at least $41 trillion will be passed down to younger generations. Economists believe that bequests of this wealth will significantly boost the resources of the 76 million Baby Boomers. It has long been predicted that by the year 2052 an estimated $40.6 trillion in accumulated assets will change hands.

Schervish and Havens estimate that charities will benefit greatly from this by receiving bequests of $16 trillion to $53 trillion. Yes, trillion! In the face of this transfer of wealth, non-profit organizations have a real opportunity to further their missions if they start now to build meaningful relationships with their supporters.

Further, John Gotta, president and CEO for The Lincoln National Life Insurance Co. (Lincoln Life) has said, "Every seven seconds another Baby Boomer turns 50, bringing them that much closer to the time when they will be thinking about preserving their assets while they are alive and transferring their wealth to their heirs when they die." This fact also speaks to the need to beef up planned giving programs and to be aware of planned giving opportunities.

Worth noting: The Center on Wealth and Philanthropy at Boston College and the Association of Fundraising Professionals (AFP) are going to host a conference entitled “The Supply and Demand of Philanthropy in the 21st Century: Strategies for Fundraising and Financial Planning” at Boston College on October 7 and 8, 2008 designed for fundraising professionals, wealth advisors, estate planners, CEO's and board members of nonprofit organizations.

Worth reading: Robert Frank’s “Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich” and “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill).”

Cerca Trova!

WHAT WOULD YOU TAKE? Pt. I

The Basin Complex Fire near Big Sur is 100 percent contained after a fire started by lightning on June 21 burned nearly 163,000 acres in the Los Padres National Forest. The fire fighting suppression cost to date is estimated at $77.2 million.

This natural disaster brought to mind what I would do if an emergency greater than just the neighbor’s tree landing on my house happens to my home, my neighborhood, my business.

The picturesque view of the coastline from the Weather-Cam on the deck at Nepenthe Restaurant in Big Sur is shrouded in clouds today, clouds as thick as smoke. It’s in the 70’s right now – degrees, not frame of mind. Kirk Gafill, general manager of the popular cliffside restaurant that his grandparents built in 1949, defied evacuation orders and, along with five employees, stamped out embers the size of dinner plates. "We know fire officials don't have the manpower to secure our properties," Gafill said. "…(b)ased on what we saw during Katrina and other disasters, we know we can only rely on ourselves and our neighbors."

He points out that Highway 1 has been closed before for rock slides and mud and other fires. However, this time, for the first time, authorities issued a mandatory evacuation order that was interpreted and used to get people out of their homes and off local roadways. On July 3rd residents were prohibited from access to the highway right of way, which meant they weren’t allowed to set foot on the road. This is a reminder that if an emergency struck next door, authorities could cordon off access to neighboring homes or offices.

Sula Nichols, a Big Sur artist who lost her main house and guest house in the wildfire, said people really came together. They initially scrambled getting trailers for the animals. Friends down south took them in. She points out that she only lost material possessions. She is ready to rebuild. “The land remains. What we put on it comes and goes, but land is there. Sadness will come and go, but this is an opportunity.” What an indomitable spirit!

The redwoods are still there, but this incredible natural event has created a huge need for donations, supplies and volunteers. Your biggest gift to Big Sur right now would be to visit, to support the lodging and restaurant businesses in this tourist area. Get a massage, feed your art collection, enjoy the awe of what nature provides. Gafill, head of the Big Sur Chamber of Commerce, encourages those interested in coming to Big Sur to feel free to call places you'd like to visit because with earlier cancellations they now have space available, which is very rare for July and August.

If there was a mandatory evacuation order for your neighborhood, would you leave? If not, why not?

I asked my friends what they would take with them if they only had 15 minutes to get family, friends, pets and personal belongs out of the house and the area. Answers ran from beloved family objects that are irreplaceable and full of history to practical things like matches, duct tape and water. This is the first response of a series:

Patricia Miller, my sister: “Having faced potential threats from earthquake, fire and hurricane over the years, I know this drill. Of course the breathing ones first, then the 30 year old $2.95 ceramic giraffe that lives in the kitchen and holds the wooden spoons and things, the (Peter) Shire vase, the home wrecker painting and then, if there is time and room, jewelry and paperwork. On more occasions than I can count, the vase would be in my hand before the rocking stopped.”

Judith, fellow artist: “Of course, I would make sure that my family, friends and dog were safe first. As far as saving possessions, photo albums (my kids' baby pictures, our wedding, etc.) would come first. Next, I would grab my jewelry box, which has precious, sentimental things given to me by my husband, mother, and beloved mother-in-law, who passed away. My mother has made afghans and quilts over the years, and they are treasures to me, so I would grab as many as possible. There are some pieces of wood sculpture in our house, and a pair of antique Russian candlesticks that my mother bought in Jerusalem on our family trip there and later gave to me, that I would save, and some antique heirlooms from my husband's grandmother. I'm fast when I need to be, but by now, I think I've used up my 15 minutes.”

Diane Lupke, economic development specialist: “First I would grab Ron, my husband, and make sure he was safe; then the second group would be about essentials---laptop computer, phone, chargers, identification, and any cash / credit cards I have easily accessible (hoping that we would have the systems working that support them); the third group would be mementoes of some sort, our wedding picture, pictures of family and friends, and other easy to transport things from my family’s history; next would be a few comfortable and serviceable garments; about this time--- when I am running out of time--- I would realize that what I really need is probably something much more practical like matches, a knife, duct tape, water, a battery operated radio, tent and other survival tools I really have no experience with.

“So, the answer is I am not prepared for a real emergency. And, would be woefully unprepared to live outside of my carefully crafted and comfortable existence.”

Dan Sheridan, journalist: “I'd take my old orange cat, camera, phone and beat-up guitar immediately. Then, if there were time, or room, I'd grab the external computer hard drive on which I backed up my work, a laptop and maybe some papers. I wouldn't worry about my daughter because she's 800 miles away in Chicago.”

Mark Newman, humanities professor and the neighbor whose tree fell on my house: “In this order, I would take family members; pets, photos and keepsakes and computers, including back-up devices; and then other valuables.

“Why? Family and pets are obvious. Photos and keepsakes, including jewelry are memories and items that cannot be replaced. These are often one of a kind items. The computers often have photos and also contain valuable professional and personal information and so can also be irreplaceable. Other valuables are miscellaneous items that may or may not have high dollar values.”

What would you take?

ADVOCACY

In a previous career I was a registered lobbyist in Washington for a great cause. I have no compunction about sharing my views with my legislator at the neighborhood block party.

A report by The Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies makes me think not enough people are raising their voices. In its latest communiqué, “Nonprofit America: A Force for Democracy?,” the Center reports that 48 percent of the groups that reported some advocacy, but no lobbying, said they were worried about violating the law, with some mistakenly believing they were barred from all lobbying.* Federal law prohibits tax-exempt charities from supporting political candidates.** However, it allows them to conduct an unlimited amount of advocacy (promoting an issue or cause unrelated to a candidate’s election) and a limited amount of lobbying (efforts to influence specific pieces of legislation).***

Eighty-four percent of organizations the Center surveyed had little doubt that legislative decisions have important implications for their work. A major factor standing in their way is staffing. One answer is for organizations to partner to fund a dedicated public policy specialist who can provide direct service, while serving as an information clearinghouse and mentoring partner to improve and expand involvement in public policy advocacy.

My experience has been that donors are also glad to be involved in advocacy as part of their engagement with an organization’s program. Such involvement increases their passion and strengthens their attachment.

Certainly, when we are talking about reinvigorating America’s civic spirit, nonprofits, as citizen supported organizations, should lead the way. Advocacy is one important way.

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* 872 organizations were surveyed and 311, or 36 percent, responded.
** Fact Sheet 2006-17 issued by the IRS lays out specific guidelines related to candidates and elections for nonprofit organizations that are tax exempt under Section 501(c)(3).
*** Policy advocacy involves identifying, embracing, and promoting an issue or cause. It aims to influence government policy at the federal, state, or local level and can encompass a range of activities, including conducting research on public problems, writing Op-Ed pieces on issues of public policy, building coalitions, or participating in a group working to formulate a position on a matter of policy. Lobbying is a specific form of advocacy, which involves either (1) stating an organization’s position on specific legislation to legislative officials and/or asking them to support this position (defined as direct lobbying); or (2) stating an organization’s position on specific legislation to the general public and asking them to communicate this position to legislative officials (defined as grassroots lobbying). The key difference between lobbying and other forms of advocacy is that lobbying involves taking and promoting a position on specific legislation.