FUNDRAISING COSTS

It’s not always easy to explain in a sound bite why certain fundraising costs are necessary for long-term growth or why the return on investment (ROI) for a specific fundraising campaign or event may be low in terms of dollars earned. In an effort to inform charities and the public at large about properly measuring ROI in fundraising, the Association of Fundraising Professionals has a new report out addressing fundraising cost ratios to ensure strategic growth and to equip advocates with information to discuss this with donors and potential supporters.

With thorough recordkeeping, it should be little effort to create full transparency about your fundraising program -- what types of programs you are investing in now to get big rewards in upcoming months and years. Evaluation, accountability, transparency and professionalism should be a part of every fundraising program. The goal is to prove effectiveness and show donors that their money is being well spent.

For example, direct mail aimed at donor acquisition is going to have lower returns to start out. That’s a good reason to focus on renewing and upgrading donors first, but acquisition is still necessary for the base of the donor pyramid. A special event may bring in less than what you spend the first time it is held, but if you are building new contacts and supporters, the investment may be well worth it.

While professional fundraisers may know the particulars of fundraising costs, most boards and donors do not. As the AFP report says, being able to answer those questions “is the best way to assure they will see beyond the simple cost-ratio dial on their dashboard and check under the hood for a more complete assessment. The transparency that keeps their hands steady at the controls will also keep their foot pressed firmly on the gas in soliciting support and backing overall mission.”

“There are a lot of complexities that nonprofit board members need to understand, and unfortunately it’s often a lone chief development officer who has to make the case for fundraising expenditures,” says Leslie Weir, CFRE, ACFRE, director of family philanthropy at The Winnipeg Foundation in Winnipeg, Manitoba.

The document lists six key guidelines in making decisions about fundraising costs and return on investment:

1) Measure fundraising expenses, number of gifts and amount of gifts by fundraising activity and calculate the return on investment for each activity each year.

2) Determine priorities for resource allocation based on the outcomes envisioned in your organization’s strategic plan. Social Return on Investment (SROI), quantifying the added non-financial value created by organizations, obviously informs strategies and decisions.

3) Calculate fundraising costs and revenues using rolling averages over a period of three to five years. Evaluating performance over a period of years allows you to better forecast results of each type of fundraising activity and decide how to allocate fundraising resources, including staff and dollars, most effectively.

4) Develop benchmarks and targets for your organization’s return on investment for various fundraising activities based on past performance and your best estimate of what you can accomplish in the future.

5) Consider increasing your organization’s overall investment in fundraising. If spending more for development costs allows your organization to develop its capacity to generate more net revenue, it could be a wise decision in the long run – even if the cost per dollar raised increases.

6) Remember a basic tenet related to fundraising return on investment: It is much less expensive to renew or increase a donor’s support than to acquire a new donor.

UH OH - POLITICAL ACTION

I have greeting cards of me standing with a certain presidential candidate that are fun to send out in this political season. But, I can detect a slight tremor of hesitation in my hand when stuffing one of those cards into an envelope addressed to a nonprofit executive. Have the prohibitions placed on nonprofit involvement in politics, enacted in the 1950s, become so intimidating that they threaten a vital sector of America?

It should come as no surprise that I believe nonprofit organizations, operating in a free society, must not only be allowed to address issues of public policy that are determined by the political process, they must exercise their right to be heard. Lobbying in the public interest goes to the heart of free expression. So, too, nonprofit organizations’ political expression should not be muzzled, especially in an election year where much is at stake.

Robert Egger, Founder and President of the DC Central Kitchen, points out that “The stakes for America are too high for nonprofit leaders to allow themselves to be bullied into silence by the perceived or often overt threat that any talk about politics will cause a charity to lose its tax-exempt status. It is time for charities not just to get involved in this historic race, but also to urge candidates for the White House to make it a priority, once elected, to rethink how nonprofit groups are regarded and regulated. Furthermore, nonprofit leaders must also stimulate a discussion about changing the rules that prohibit charitable organizations from getting involved in partisan politics.”

I like the tack the Pennsylvania Association of Nonprofit Organizations is taking. PANO is a 501 (c) 3 statewide membership organization representing over 700 charities to advance the charitable nonprofit sector through leadership, education and advocacy in order to improve the quality of life in my former home state. Advocacy is a central part of PANO’s charitable mission.

PANO has taken a front row seat in criticizing proposed rulemaking for their state’s Lobbying Disclosure Act. While PANO supports transparency and accountability through lobbying disclosure, they believe proposed regulations have created an obstacle to public participation in advocacy that is fundamentally contrary to the public interest and, thus, they have offered constructive recommendations and comments to change the proposed rulemaking and are urging further public comment.

In June of this year PANO and the United Way of PA were instrumental in getting members of the Pennsylvania General Assembly to launch the Pennsylvania Charitable Nonprofit Caucus, a bipartisan, bicameral forum for state lawmakers to collaborate on legislative and regulatory issues impacting charity and philanthropy in their state. The goal of the caucus is to enhance the ability of nonprofits to achieve their missions on behalf of the Commonwealth. Over 30 statewide charities and foundations representing arts and culture, education, religion, health care, human services, and other nonprofit subsectors will serve as a resource to the Caucus for information, education, vision and advocacy.

Way to go Keystone State!

SHUSHERS

Ravinia Festival, our outdoor music venue on Chicago's North Shore, employs “Shushers” for special performances. “Shushers” carry clearly worded signs asking concertgoers to respect their fellow audience members and to supervise their children. “Shushers” disappeared halfway through a Chicago Symphony Orchestra performance this summer when James Conlon conducted Mahler’s Symphony No. 8 -- the “Symphony of a Thousand.” He synchronized 374 people on stage: three choruses – Chicago Symphony Chorus, Milwaukee Symphony Chorus and Chicago Children’s Choir – eight vocal soloists and an expanded orchestra.

Who would expect to need “Shushers” for a self-selected heavy listening crowd? I can’t imagine subjecting children to such an experience to begin with - well, maybe a juvenile Yoyo Ma - there are exceptions to every rule. Unfortunately, we parked our picnic in front of a group of card-playing children. By the second half of the evening’s performance, the kids were getting restless.

I was fascinated with their parents on a certain level. They didn’t seem to notice the “Shushers” or the should be Shushees. Had the four sets of parents failed to plan for babysitting? Did their babysitter cancel at the last minute? Why weren’t they sitting next to their children? How could they be so oblivious while surrounded by listeners?

Mulling over the neglectful parents reminded me of negligent parents of one of my favorite local organizations. Those parents, the Board of Directors, have no fundraising requirements for Board membership, not even an expectation of a personal gift. Some members feel their names are an important enough contribution to the organization. Like the parents at Ravinia, they are oblivious to their responsibility. The reality of fundraising for nonprofit organizations is the necessity for the Board to help solicit gifts. They might be averse, aloof or apprehensive, but if the leaders of the organization won’t ask for support, who will?

Today’s supporters have expectations of organizational leaders. I’m pleased to cite one organization as a model: Community Health Net of Erie, PA, which provides primary health care and a variety of other medical services, including dental and vision care, to the needy. They have announced a $100,000 fundraising campaign to buy a handicap-accessible van and a handicap-accessible dental chair, among other needs. The agency's 11-person board has pledged to support this drive with its own dollars, 100 percent! This small-scale fundraising effort won't solve the national dilemma of broadening access to health care, but it can make a difference in Erie!

How can you excite your board about getting involved in the development process? How can you persuade board members to assist? Use guerilla tactics! Call me for how to attack this.

Oh, and Mahler, absent the “Shushers,” still a stunning performance under the stars!

BOY, OH, BOY!

Current research says there are between 25,000 and 30,000 genes in both the human and mouse genomes, with no more than 500 genes separating the two mammals -- but what a world of difference. While overdosing on political convention coverage, I wondered what we would get if we genetically crossed Sarah Palin, John McCain’s self-described “Pitbull with Lipstick” running mate, with Senator Hillary Rodham Clinton. A LOT of attention, that’s for sure!

These two women, 44 and 61 years old, are examples of where non-profit fundraisers should focus attention. Women are working more, earning more and controlling more purchasing decisions. We are being referred to as the Spender Gender. Marketing studies show that in 80 percent to 85 percent of all consumer-buying decisions, women are considered the primary decision-makers. It follows that women make decisions about charitable giving.

Rising female charitable giving may mean charitable organizations must alter the way they design, market and implement their fundraising programs. Female donors value a relationship with the organization to which they contribute. Cultivation of deeper-pocketed women donors requires frequent contact, creating opportunities for involvement and building personal connections.

Word of caution: Much is being made of the youth market of givers to on-line fundraising. It is worthwhile to review donor rolls for women over 50 -- a noticeable portion of that group is well-educated, wealthy, and likely to inherit money from both their parents and their husbands as they age. Because women live longer than men, they will end up in charge of much of the $41 trillion transfer of wealth from generation to generation over the next 50 years. Organizations that ignore them will leave big bucks on the table.

Changing your fundraising culture to pay greater attention to the female giver, whether that would involve retraining staff or redesigning materials or events, could mean hitting the mother lode.* Call me if you’d like to audit your capacity for cultivating female donors.

* (I know, I know, I know….)

INSTIGATORS

My mother used to refer to me as an "instigator," not always in a kind way. This week a new acquaintance referred to me as such because with a few phone calls a new organization was spawned on Chicago's North Shore.

IL State Senator Rev. James Meeks, pastor at Salem Baptist Church, is encouraging Chicago Public School students to boycott their first day of school on Tuesday, Sept. 2nd in an effort to highlight inequities in public school funding. He is bringing busloads of children to register for school at either New Trier High School or Sunset Ridge Elementary in the leafy suburb of Northfield.

Illinois school funding is largely based on local property taxes. Consequently, since property values differ throughout the state, school quality and amenities vary dramatically based on where one lives.

Residents of New Trier school district communities have always valued good education and children. CPS students are coming to New Trier to demonstrate their interest in a good education that will give them the best shot at a bright future -- we want to respect that and welcome them.

A week ago press coverage portrayed New Trier’s response as solely a police presence to provide order and minimize disruption at school. So, last Monday morning I made some phone calls to find out who was working on the welcoming committee.

The Asst. Police Chief of Winnetka was the designated government point person. Not a good sign. The New Trier High School Superintendent wasn’t returning phone calls. Not good. The New Trier Parent Association co-chairs didn’t respond. Hhmmm.

So I called Gail Schechter, Executive Director of the Interfaith Housing Center. Interfaith is a civil rights organization with a focus on diversity, equal housing, and integration. It was formed by folks who organized the Summer Project that brought Martin Luther King to speak to 10,000 people on Winnetka’s Village Green in July of 1965. According to her, welcoming was not on the Interfaith agenda. My next call was to Katie Seigenthaler, my former neighbor and a mom of New Trier students who is the Chair of Interfaith’s Communications Committee. All three of us decided to be sure the Chicago students received a warm welcome.

What followed was massive outreach. Within three days we organized a "core group" of concerned parents, teachers and religious and community leaders who formed a new organization: United We Learn! Not only will we provide a warm welcome, we’re going to use Rev. Week’s visit as an opportunity for a “teachable moment,” to set an example for our kids and engage them and the broader community in a constructive dialogue on educational equity. We presented to the New Trier School Board. We met with school administrators. We’ve talked with the police and the press. We have an e-mail/phone tree for volunteers. We have a site: United-We-Learn@googlegroups.com. We’re ready for the children and we’re ready for the future.

Instigators know who to call!