LISTEN UP, GAMBLERS

Illinois Governor Pat Quinn has a bill on his desk that will expand gambling. The sponsor of the measure predicts this could raise between $300 million to over $1 billion for the state each year in addition to sales tax revenue from spin-offs -- serious money for a cash-strapped state. The Governor says he plans to veto the bill. He’s Catholic; he’s familiar with the sin of bingo. However, he gambles every January when he proposes a state budget that doesn't include enough revenue to provide for the level of services we need. The organizations that provide the education, healthcare and human services also gamble that they might be paid in 18 months!

Times are tough and we don't want them to become any tougher. So, for those of you who host gaming-related fundraising events, you might want to turn to a higher authority for some guidance, too. 

On July 18 the IRS is offering a phone conference on exempt organizations and gaming. Their Exempt Organizations specialists will lead a discussion on six gaming topics: The impact of gaming on tax-exempt status, internal controls and recordkeeping, Form 990 filing requirements, unrelated business income tax, filing requirements for payments made to individuals and wagering/excise taxes. This is part of the IRS’ on-line educational programs available at www.stayexempt.irs.gov 

As the Help Line says: Gamble responsibly! 

FALLING LEAVES

Fall is that time when we clean up the yard, put the garden to sleep, and take stock of the coming winter. In the fundraising world, fall is for reviewing results to date and raking up the leaves of various fundraising programs. To help us out, Target Analytics, which reports on direct mail giving, including web acquisition, but not individual gifts over $10,000, released its “Q2 2011 Index of National Fundraising Performance” findings. This report includes results through June 2011 based on analysis of actual donor transactions. It does not include university or hospital responses, but it does have the nonprofit organizations that I know do direct mail well, in a big way: Morris Dees’ Southern Poverty Law Center, the American Civil Liberties Union, NARAL, Planned Parenthood, and Anti-Defamation League. In a nutshell, even though donors are giving larger gifts, that isn’t balancing out revenue losses from fewer donors.

Only 43 percent of the organizations in the Index had year-over-year revenue increases in the first half of 2011. While revenue declined only slightly, donor numbers dropped noticeably. Index donors declined a median 4.2 percent from the second quarter 2010 to second quarter 2011. Only 31 percent of the organizations in the Index had year-over-year donor increases in the first half of 2011.

This continues a trend that predates the recession. Direct mail donor populations have been shrinking for the past five years, primarily due to declines in new donor acquisition. Falling donor populations may be due to a mix of factors: The recession, aging population of givers, shifting attitudes of donors about giving, and a change in focus by fundraisers toward high dollar donors.

Giving USA Foundation indicates that once a recession is over, it has taken an average of three to four years for inflation-adjusted charitable giving to rise back up to pre-recession levels. This recession, which is a doozy, wasn’t considered “over” by the economists until June, 2009.

Does this information help you determine your 2012 budget? Plan your 2012 fundraising calendar?

Wake Up, NY Times!

We have been dealing with an economic crisis for three years that reminds me of Washington, D.C.’s travails this August – earthquake, hurricane, political turmoil. Today’s Jobs Report is more of the same. Today, many nonprofits are suffering the effects of the recession -- they find themselves in a liquidity trap!
Wednesday’s NY Times business section carried an article entitled “A Philanthropic Recession” – yoo hoo, where have you been living these last few years, under a rock? The focus of the article was John Hope Bryant, who founded Operation Hope, a nonprofit organization supporting financial education centers. Mr. Bryant, who has a salary of $300,000, laid off 14 staff people in response to a short fall in corporate donations. The same yoo hoo question could have been asked of Mr.Bryant. In 2008, I and nonprofit advisers world-wide were warning of “Recession Suicide.” http://publicinterestfundraising.blogspot.com/2008_10_01_archive.html
To bear real fruit — in the way it took Amazon six years to turn a profit — charities must invest more time, talent, effort and money in fundraising, not less. Does every body hear this?

Listen up: Below is the first batch of free advice from my professional fundraising colleagues: What four tips about fundraising would you give in today’s economy?

1. Speak from the heart when asking for donations. (If you don't care about your cause, no one else will.)

2. Diversify your donor-base. What market area have you missed?

3. Utilize some sort of online donation system. Convenience for donors is essential.

4. Don't despair. Donors understand development work must continue regardless of the recession!

ooo Google

Google for Nonprofits offers free or discounted versions of its apps, increased uploads on YouTube, free licensing for mapping technologies, and more to non-profit organizations. Google grant guidelines have caused a recent brouhaha regarding religious applicants.

Google precludes communities or groups that require "membership and/or provid[e] benefit solely to members;" that have "religious content or proselytizing on their websites as well as organizations that use religion or sexual orientation as factors in hiring or populations served...."

Under the First Amendment's Free Exercise and Establishment clauses, churches that discriminate in hiring or firing for religious reasons are protected as a matter of religious freedom. Google, however, as a private organization, does not have to support discrimination against homosexuals. Google's restrictions should come as no surprise -- all funders have guidelines and priorities -- things they fund and things they don't.

YOO HOO, BOARD MEMBERS!

Kelly Kleiman, respected fundraising consultant and theater critic, caused a bit of a stir this week with a piece she wrote for the Stanford Social Innovation Review blog about another smarty pants group of for-profit executives running to the rescue of not-for-profit management.

Sour subject, but a fun read: “This approach ignores the fact that nonprofit markets usually consist of clients who are not profitable to serve—because if they were profitable to serve, the for-profit sector would be serving them.”

I won’t repeat her observations. You can find her here: http://www.ssireview.org/opinion/entry/everything_old_is_new_again_and_nonprofits_should_stay_that_way/

The group Kelly cites, Palindrome Advisors, is a match.com for nonprofit board member acquisition. The Chicago Foundation for Women is doing something similar with “Board Boot Camp,” with two important distinctions: CFW is training women in nonprofit governance before the match and they aren’t requiring a major contribution.

Get this: Palindrome “Advisors” have to serve on a nonprofit board of directors for 1 year – an appreciation for stability, I presume. Further, Palindrome requires those volunteers to have “skin in the game” to the tune of at least $1,000.* “Founding Palindrome Advisors and Palindrome Hubs (those donating over $5k or taking leadership roles) will be acknowledged throughout the Palindrome program and in our national press initiatives. Remember, Palindrome is also a nonprofit (501c3), so this is tax-deductible.” Does that sound familiar?

Thanks once again, Big Business Geniuses!

*Palindrome Advisors plans to hold those funds in escrow and will contribute a portion of the initial pledge to the non-profit depending on the wish of the volunteer board member once a match with a nonprofit is made.