Reactionary Giving

2016 was a hell of a year that many would prefer to forget.  It featured a contentious presidential race featuring two of the least liked candidates in modern history, Donald Trump and Hillary Clinton, as well as some smaller party candidates that got little attention from the media.  There were accusations of wrong doing by both major party candidates, releases of hacked embarrassing communications, and fake news stories released by both sides of the political aisle.   As everybody knows, Trump won the Electoral College and the election, while Clinton won the popular vote, much to the surprise and chagrin of Progressives.

Since the election, something interesting has happened, and it continues to happen as a result.  Giving to Progressive causes has increased at an amazing rate.  Progressive favorites, like Planned Parenthood and the American Civil Liberties Union (ACLU), as well as many other nonprofits, large and small, saw year end support soar like never before.  In the six weeks following the election, Planned Parenthood received over 300,000 more donations than they normally received during that time period, and during that same time period, the ACLU received over $23,000,000 in just online donations alone.  Many of those donations came from first time donors. That’s amazing news for the employees and clients of those organizations.

More recently, since the Trump administration has announced its first budget which includes potential funding cuts, reactionary giving has done a great deal for another well known organization, Meals on Wheels, which brings meals to homebound seniors and other shut ins.  The new budget would cut or eliminate Federal grants to states which has been distributed to social service agencies since the Ford administration.  Since that announcement, Meals on Wheels America has received a healthy spurt of unsolicited online donations.

The inspiration of this surge in giving, in my opinion, seems to have little to do with actual philanthropy, but is more intended as a political poke in the eye of the current Trump administration.  Maria Godoy at NPR has referred to it as “Outrage Giving.”

While I don’t care what reason a person has to donate to the worthy cause of their choice, I do wonder some things about these reactionary donors.  Will these donors continue their gifts annually, or is this a one and done gift?  Will these donors increase their involvement with the organizations as volunteers for projects and events, or in the case of Meals on Wheels, will they spend time driving meals to seniors or prepare meals?  Will the donor only support the national umbrella groups, or will they act locally?

How will those organizations react to this situation?  Will the organizations take advantage of the opportunities and nurture these new donors for future gifts and support for their missions?  How will the organizations communicate with these new donors and what will be the tone of those communications?

I also wonder how the government will react to this burst of giving.  Will they see this new support for Meals on Wheels as a signal that they should rethink their cuts to the HHS grants, or will they think that so many people have stepped up to support the organization that they can leave the cuts in place?

The same thing can be asked about Planned Parenthood.  Congress has wanted to cut funding for that organization for years, and since Planned Parenthood has garnered a nice windfall, will Congress feel emboldened enough to cut its support for the women’s health provider?  I guess, time will tell.

Maybe President Trump will be good for the nonprofit sector.  A lot of organizations sure seem to be benefitting from his election, so far.  Any bets on which organization or cause will be the big winner and financially benefit from his next Twitter outburst? Only time will tell.

 

 

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Posted in Development, Fundraising, Nonprofit, Opinion, Politics | Tagged , , , , | 3 Comments

Toilet Seats and Piece of Mind

Many years ago, back when I was working in the field of Early Childhood Education, I met a woman who was the mother of one of my students.  She was a single mother working on her degree at Oregon State University.  She had recently moved into a new rental home, and had hired me to help her with some of her moving, as well as do some babysitting on the side.

Since I did not get paid a great deal for my work at the childcare center, I had no qualms about getting side work to supplement my meager wages.  After helping her carry and place furniture where she wanted it, and unpacking the contents some boxes onto shelves, she handed me a screwdriver and a new toilet seat she purchased at a local hardware store.After I removed the old toilet seat which was not damaged in any way, I installed the new one.

I asked her why she replaced the old seat.  She told me she didn’t know anything about the previous tenant, where they had been or what their cleaning regimen was like, and it made her feel better having her own toilet seat that nobody else had used previously.  She considered it a health precaution for herself and her young daughter.  I’m not sure it was necessary, but if it put her mind at ease, and that was the important thing.

Recently, I interviewed for the position Executive Director of a small local nonprofit.  If I had been hired, I would have replaced the founder of the organization, and hoped I would bring that nonprofit to the next level of success.  The interview went pretty well in my opinion, but because it was close to the winter holiday season, I had to wait several weeks for the full Board to meet to learn the next step in the hiring process.

While I waited to hear from the Board, I spent a great deal of time researching the organization’s past, looking over the organization’s website, and investigating the organization’s social media presence.  Other things I didn’t have easy access to, including the financial information.  In case I was hired, I put together a 30/60/90 day plan of things I wanted to do.  I wanted to run reports on the donors who have given the largest gifts and donors who have supported the organization the longest, then set up appointments to interview those supporters to gain a better sense of why they donated money and what their passions about the organization truly were. I planned to meet with those the organization serves and with those the organization partners with, in order to get their opinions about what the organization was doing right, and what it could improve.  I looked into the chambers of commerce for the local communities to find out about business networking opportunities to increase business support for the organization’s programs.  I researched foundations and trusts that support the mission of the nonprofit so I could start looking into potential funders for the organization.

One last thing I planned on doing was to get the Board to agree to an audit of the organization’s finances.  I think this was my toilet seat moment.

My thoughts were, that due to its size and that it was founder run, this was an organization that could possibly have some issues, and for the sake of the organization and for my reputation, I believed it would be a good idea before the transition.  After all, I didn’t know what the founder’s financial record keeping habits were like, nor if he was the bookkeeper or if someone else was.  I have no reason to question his honesty, but one never knows about the one he/she is replacing.  I just think it is prudent to know where things stand before you take over.

I recall a story about a different nonprofit in another region in the country where the new Executive Director required an audit before he hired on for the position.  Fortunately for the new ED, the audit uncovered misappropriation by a former employee which could have been later blamed on the new hire, so it was worth the cost of the procedure.  At this point in time, I honestly don’t recall if that new hire chose to stay and clean up the mess from the previous administration or not, but either way, the decision to choose an audit was a good one for the employee and the organization.

Whether installing a new toilet seat when one moves into a new abode is truly a necessary health precaution or not, it can actually do a lot of good for one’s piece of mind, and that is important.  Whether requesting an audit before taking on the responsibilities as a new nonprofit leader is necessary, it’s hard to say, but it also gives one piece of mind and let’s one know the true standing of the organization’s finances, and that is important.  Nine out of ten times, you will discover nothing terrible, but just that one time that something comes of the investigation is enough to make it a worthwhile effort.

Are there any other precautions you might think are important but often overlooked?  Please share your thoughts in the comments. I and my other readers may benefit from your opinions.

 

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I’ll be Back in 2017

As many of you have noticed, it has been a while since I have posted. I needed some time off to deal with family health issues. Although many of those issues remain, I believe, I know, it is time to return to blogging.

Look forward to my return in the coming year.

Richard Freedlund

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In Praise of Small Events

Many of the people and organizations I talk to about development strategy think that fundraising is all about big events like walks, runs, and galas.  They do not seem to realize that these things take a great amount of time, manpower, and money, so the net returns are not as great as many would assume.   An organization must pay for their employees’ salaries who plan and work the events, the food and drink, T-shirts and gift bags, fees, space rentals, sound systems, etc.  Understand, I am not totally against these things, but I have enough experience to know that events are some of the least effective ways to raise money for a nonprofit organization, especially a small one with limited resources.

Yesterday, an old friend, I should say a long time friend, that I have known since seventh grade, posted on Facebook that she had a number of friends over for cocktails.  While they enjoyed drinks and conversation, she passed around an envelope asking for donations for Doctors Without Borders and raised a thousand dollars.  Not a bad result for an improptu ask for a good organization.  I am pleased by her actions and the generosity of her friends and associates.

More organizations should use this strategy to raise money for their programs.

Small, intimate events held by individuals, whether Board members or donors, can be quite successful.  Let me tell you why and how they can be exactly what your organization needs.

  1.  Large events don’t allow you to spend much time getting to know your donors and potential supporters.  Big events like galas usually last two to three hours, and the number of guests usually number in the hundreds.  The Executive Director and the Development Director cannot possibly have time to genuinely get to know people and find out what their interests are in the organization and its programs.  Conversations are short and impersonal, reminding me of going through the rush events of fraternities and sororities in college. “Hi, what’s your name?  What’s your major?  What’s your father do for a living?” Small events are more intimate, relaxed, and personal.  You have more time to find out what interests the potential supporter and use that information for further conversations in the future.
  2. Costs are far less than a big event.  A big gala or athletic event like a run or walk can cost the organization thousands of dollars.  A small get together of twenty or so people can cost a couple of hundred dollars in food and drinks, and can be held in a Board member’s or supporter’s home.  The host will generally provide the necessities, but an organization can certainly help pay for the party supplies.
  3. The hosts are in charge.  They do the heavy lifting, so to speak.  Let them take charge.  Planning is relatively simple and painless for the development staff.  The hosts know who they want to invite to their gathering and what to serve their friends.  They have a better idea what their guests’ interests are and the giving capabilities of their guests, far better than the Development Director would have.
  4. Since the hosts of the event are doing the planning, the ED and DD have time to think about the message they will be sharing and the stories of the organization’s successes they will tell.  They can talk about their plans for the future and how the guests can be a vital part of that future.  The talk can be informal.  Guests can ask questions, and the staff attending can answer them then and there to the best of their ability.
  5. Hosts have a great number of options for their events to choose from.  They can have a simple cocktail party like my friend, or they can go all out with a formal dinner party.  They can have a barbeque in the backyard, have a picnic at a park, or they can invite people over to watch a baseball game, football game, or watch a movie.
  6. These events can be for asking for financial support, or they can be an introduction to the organization and its mission.  Remember, the goal is not just about raising money.  It’s about building lasting relationships with potential partners to achieve your mission’s goals.  When you meet in smaller settings, the more intimate conversations shared over drinks and dinner can be far more productive in achieving this goal.

If you are a small organization with limited means, small events can be the answer for your needs.  Even if you are a large organization, a small event with key donors and potential supporters can build new and lasting relationships.

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Greece, Illinois, and Lack of Common Sense

Does it make sense for a nonprofit arts organization to ask a homeless person to contribute to a fund to buy an expensive painting for a museum?  Does it make sense for a charity to ask a business that is going under to give a major gift to their organization?  Does it make sense to ask an individual who has lost their home to foreclosure for a donation for an animal sanctuary?  Does it make sense to ask a person who was recently downsized (laid off) at the end of their career to make a large pledge for a children’s summer program?

If you have read or watched the news over the past few months, you are aware that Greece is  in some financial hot water.  The country’s leaders have borrowed money to run their country for such a long time and at such an unsustainable rate, that they have dug themselves a hole so deep that they will probably never get themselves back in the black.  They spent more money than they had coming in, and now that spending has come back to haunt them.  They nearly left (or were forced out of) the Euro zone, and now they are  forced to comply with more austerity measures in order to borrow more money so they can make a payment to their lenders.  The fact is, they continued to spend more than they had, instead of making cuts and changes at an appropriate time, and now the chickens have come back to roost.  The Greek people are not happy, the other countries in the European Union are not happy, and the economy there will suffer for years.

The state of Illinois, my birthplace and current home, is in a similar predicament.   The irresponsible legislature and past governors have continued to spend money they did not have for years, signing contracts with scores of nonprofit organizations for human services, and provided grants for others, all the while skipping payments to their employee retirement system and taking out loans that they cannot pay back, and now their actions have come back to haunt the state.

Frustrated voters elected a new governor to turn things around, but also re-elected the same legislators who caused the mess in the first place, and problems continue here.  The Legislature proposed a new budget with a gap of over four billion dollars, and Governor Bruce Rauner refuses to sign it into law.  Many organizations have been informed that their contracts have been cancelled, and now many will have to reduce services and some will close their doors.

The financial messes in both, Greece and Illinois, have been going on for years, but many nonprofit organizations continued to exacerbate the problem by continuing to approach the governments for their financial support.  And sadly, many still do seek more support from governments that do not have money.  In Illinois, the state enacted a temporary tax hike that caused scores of businesses to leave the state for greener pastures, creating more unemployment and a lower revenue base.

I believe it is time for these nonprofit organizations to stop blaming the governor who is trying to fix a problem that has been brewing for years and years, and start blaming those who are truly responsible for their financial woes:  The irresponsible politicians in the state capitol and those who look back at them in the mirror.  They were aware of these financial issues, but refused to step away from the food trough.  In my opinion, their willful blindness has sealed their fate.

It’s something called common sense.

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Should Your Organization Keep Walking?

About forty years ago, I participated in my first fundraising walk.  I can’t remember which organization it was for, but I do remember getting the sponsorship form and going around my neighborhood and getting people to agree to donate a certain amount of money for each mile I walked.  I think I got a T-shirt for my effort, and I recall the good feeling I had for supporting a good cause.  I ended up participating in other walks and rides as I got older, so it was an early start to my desire to eventually raise money for other causes.

However, at that time, walks and rides were relatively new for fundraising events.   Since then, it seems that as nonprofits have proliferated, every organization has started having these events, and that has not been a really great thing.  It seems that there is a walk or a ride event just about every weekend for every cause under the sun.  There are so many that attendance has dropped, so fewer people are raising money for these organizations.  According to an article in the Chronicle of Philanthropy, results of these events have decreased by ten percent in recent years.  They are still raising money, but just not the amounts that they have in their more successful past.

The costs of holding these events have risen in recent years.  In a past post I wrote a few years ago, “Walks, Runs, and Rides: There’s Much You Should Know“, I discuss the costs of salaries and benefits for the staff members who put these events together, the swag the organizations provide their participants, the upgraded technology participants use to connect with their supporters, and the fees that many cities now require of the groups holding these events.  My eyes were opened during a discussion with city department in Portland, Oregon, that works with nonprofit organizations in the city which hold these types of fundraisers.  They are not cheap, let me tell you.

Another issue to consider is that creative organizations have found other ways people can use to gain support for their missions.  NPR recently reported that many organizations are turning to other ideas to raise money for their missions.  St. Baldrick’s Foundation has raised a great deal of money holding “shave-a-thons” to raise money for pediatric cancer research, and who can forget the ALS Ice Bucket Challenge that brought in over $200 million last year?

Personally, I don’t think walks, rides, and runs will completely disappear, but I do think that some groups should consider looking for alternatives that will help them stand out among the crowd. Being different can be an advantage when it comes to fundraising, but being the same as everyone else may not.

It’s a matter of supply and demand.  With the vast growth in the nonprofit sector in recent years, and the number of organizations that duplicate their services and fundraising methods, I believe the financial results of these athletic events will continue to drop.  Their excessive numbers are unsustainable.  Some organizations will be winners, but unfortunately, others will be losers.

 

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Where Does the Money Really Go?

I was sitting in one of my favorite watering holes recently and needed to use the cash machine which doubles as a redemption machine for the video slot machines.  I stood behind someone who was cashing in a ticket from one of the video gaming machines, and I noticed something that caught my eye.  The individual had some change coming to them as part of their winnings, and the machine “asked” if they wanted to donate the change to charity.  The options were “helping needy children” or “helping needy children and families.”  It didn’t mention the names of the organizations that would be recipients of the gambler’s largesse, and that concerned me.

When I sat back down at the bar after my transaction, I asked the bartender if she knew where that money was going to.  She had no idea and told me that it was the vendor that supplied the machines that was in charge of the donations.  I asked her to ask the vendor the next time he came in, because I really would like to know.

A couple years ago, I got a request to write some content for the website of a “nonprofit” organization in another state.  I called the individual who contacted me and asked for more information.  According to my contact, the “group” supports those who suffer from two completely unrelated diseases, and they solicit businesses and individuals for support.  He thought that my content could persuade more people to contribute.  But something didn’t feel right to me, so I politely asked for some time to do a little research and I would get back to him with a decision.  I thought it was prudent to look into who I would be helping, and I am glad that I made the effort.

The first thing I did was to check with Charity Navigator, Guidestar, and the the BBB Wise Giving Alliance, and I was surprised to find that none of those organizations had any information on the “organization.” I then used several different search engines to find any information I could.  After several different searches, I found some information about a group that had registered a nonprofit with that name, but the 501(C)(3) had been expired for several years.  I finally contacted the state where the group was located and found that it was not registered with the Secretary of State’s office as required by law.  I explained to the individual who I spoke to at the Secretary of States office my concerns, and this prompted an investigation.   Considering what I found, or did not find actually, I contacted the individual who contacted me and declined his request.

A few weeks later, I received a call from the investigator in the other state.  He told me that he made contact with the “nonprofit” and told me that he talked to the individual who contacted me.  He said that the group was not a valid charity, but because the group took in a limited amount of donations (under $20,000 annually), the state would not prosecute them.  He thanked me for reporting the issue, and then ended the call.  To be honest, I am not sure what bothers me more, a group masquerading as a charity or the state that doesn’t prosecute them because they don’t con more people out of their money.

Recently, four “charities” made national news for similar actions, but apparently the amount they took in was enough for the government to notice and to take action.  The charities, Cancer Fund of America, Children’s Cancer Fund of America, Cancer Support Services, and Breast Cancer Society were all controlled by James T. Reynold Sr., his son, and other family members, and took in $187 million, but only a miniscule amount went to cancer patients.  The rest was spent on themselves and their friends.  The organizations have now been closed down, but in some cases, the money will not be returned by the fraudsters because of settlements with the government.

Although the percentage of charities who do this kind of thing is quite small, it is large enough to effect giving to valid organizations.  Stories like these make big news, and every time they are told, people think twice about giving, and really, who can blame them?

We in the nonprofit sector must do more to make sure that we do more to prevent this kind of misuse of donor funding.  Surely, those who worked in these “charities” were aware of the problems its leadership spending of organizational funding for personal use, yet it continued for years.  There are laws that protect whistle-blowers, so if you know or suspect that wrong doing is occurring, report it to the proper authorities.

Seth Godin said it well in his post today, “Kneejerks“:

“The most powerful thing we can do to earn respect from those around us, though, is to call out one of our own when he crosses the line. “People like us, we don’t do things like that.” This is when real change starts to happen, and when others start to believe that we really care about something more than scoring points.”

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