Cash Crunch — Clearly this started with local government which became cash strapped due to lower tax collections, less funding from the State and huge cuts in Federal funding – a perfect storm.  Nonprofits from the arts to zoos had to dip into cash reserves, conduct emergency appeals and in some cases invade their endowments.  The social service sector saw demand for its services reach record levels.  Social media, like Facebook, kicked into high gear at many organizations.  Special requests for additional major gifts from longtime individual donors spiked.  It was a dash for cash.

Collaboration — In some situations, nonprofit leaders turned to grant making foundations for a special one-time grant to make it through the tough times.  A few succeeded.  However, many were quizzed by foundation executives as to why they hadn’t done a better job of seeing the cash crunch coming and were told they now need to consider collaborating with a similar agency if they expect a grant.  Collaboration is here to stay.

Consolidation — Those that did not give serious consideration to collaboration, found themselves facing consolidation of programs and services due to dwindling resources.  In other words, more focus on the core mission.  In some cases, even layoffs of staff.

Lessons Learned/Suggestions for Success in 2012

• Don’t let your organization get caught in a similar cash crunch in the years ahead. We have heard from dozens of board members during this recession and they are quite burned out and can’t wait until their term is up.  As they verbalize their experience to others, this will make enlistment of new board leaders a real challenge in 2012 and beyond.  The most common remark, “If only we had done a better job of strategic planning and building up our endowment to weather such ups and downs in the economy.”
• Follow the money.  Keep in mind 85% of all giving in the U.S. is from individuals.  It’s so easy to become dependent on that county grant of $100,000 each year and not have to organize a donor club of 100 friends at $1,000 each.  We call this kind of donor club a Living Endowment, as the 100 friends are giving $100,000 or the equivalent of the earnings from a permanent endowment that can generate this amount.  At today’s interest rates it would take an endowed fund of several million dollars to generate $100,000.
• Update your case for giving. Make it more compelling, urgent and relevant.  Test it, tweak it with donors, potential donors and friends. Make sure your case is about worthiness, not neediness.  Explain why your organization is worthy of the donor’s gift.  Donors respond to the former.

Call a Time Out

Step back and reflect. If there ever was a time to assess the past and think strategically about the future, now is the time.  No matter how busy your organization is keeping up, struggling to survive, there is always time to hold a retreat and ask these five key questions:

1. Where do our philanthropic resources come from now?
2. Where must they come from in the future?
3. What is our plan to keep the donors we’ve got, upgrade them and to obtain new donors?
4. What human and financial resources do we need to attract increased philanthropic support?
5. Where can we get assistance in securing those resources?

Consider Outside Assistance to:

• Conduct prospect research, a screening/wealth analysis of your current donors
• Conduct a Rapid Organizational Assessment to determine what is working and what needs fixing
• Plan and facilitate a day long board retreat to set strategic goals
• Conduct an Online Donor Satisfaction Survey
• Conduct a study to test the feasibility of your plan to increase philanthropic support
• Train volunteers and staff on how to solicit major and donor club gifts
• Ratchet up your planned giving efforts to take advantage of the trillion dollar transfer of wealth

All the best for a prosperous 2012.

          Jim Donovan                                                             Bill Carlton                                                                                                                  

Collaborating To Bring a Half Century of
Best Practice Experience to the Nonprofit Sector

For a free no obligation consultation, call or email us:

In Florida Jim Donovan at 407-321-0024 or email us at:  dmimgt@aol.com

In Colorado Prospect Screening, Barry Donovan at: 303-346-9001 dmimgt@aol.com

In the Northeast/New England Bill Carlton at: 1-800-622-0194.  Wlcarlton@aol.com

Twenty-five years ago, when I started my consulting business with other partners, we held week long classes on successful fund raising techniques.  At the end of the week each participant received a certificate of completion and then Lee would give closing remarks to the class.

Lee was so exciting and animated that he made Steve Martin of a Wild and Crazy Guy fame, look dull.  After being introduced he would sprint to the podium, raise his hands and start yelling, “Five seconds on the clock, fourth and goal, score tied 7-7, let’s go!” His enthusiasm was more contagious than measles.

Well, I caught up with Lee recently and he was kind enough to let me ask him what advice he would give fund raisers in today’s economic climate, especially with year-end giving. Here you go.

First- Be passionate about your cause.

Whether you are working to preserve the planet, save wildlife, cure the sick, preventing abuse, caring for the elderly, feeding the poor — you must be passionate, says Lee.  He asks, “If you can’t be excited about the mission you are on, how do you expect others to be?” Don’t be afraid to show your emotions.  After all, most donors give out of emotion rather than reason or logic.

Second – Focus on the fundamentals. According to Lee, “the close games in college football are won by coaches and players who stick to the basics.” In a tight competition or tough fund raising climate, don’t try to get fancy.  Stick to what works.

Third – Do your homework.  Before every football season starts Lee heads to a little fishing village on the west coast of Florida and studies dozens of pages of statistics, charts and pre-season team rankings so he can be prepared on College Game Day to predict the winner.

Fourth- Get out of the office and in front of donors. Lee says, in doing so “use the three P’s of successful football — persistence, practice and patience.” Be persistent about getting the appointment, practice the ask, be patient when the donor needs more time before making a decision.  Don’t rush the process.

When Lee’s fellow commentators are making their predictions about who will win the game, he is fond of saying to them — “Not so fast my friends.” Good advice. Don’t be too fast to keep fund raising the way you have.  Heed Lee’s advice.

If you live in Central Florida, you might run into Lee in Heathrow where he serves in the off season as Director of Business Development for Dixon Ticonderoga, a pencil manufacturing company.

In 1985 Lee Corso was the head coach for the Orlando Renegades.  Born in Cicero, Illinois, he was quarterback for Miami Jackson Senior High and went on to play football for Florida State University where his football roommate was Burt Reynolds.

As always, your comments are always welcome.

All the best for success.

Jim

P.S.   Our books, Take the Fear Out of Asking for Major Gifts and 50 Ways to Motivate Your Board, make great holiday gifts. Learn more click here.

In an informal poll of fund raising clients it was not surprising to learn that a major challenge in the current economy is donor retention.  In addition, this is the #1 question we get in emails and telephone calls each week.  Here is what we have learned from donors we have interviewed over the years, and of late, in recent studies about their continued giving.

We have classified the donors as follows:

Activists – these are younger donors, 30-40 years old who spend a lot of time getting their news from the internet and want to do something about the latest crisis somewhere around the world.  They are very emotional about earthquake victims in Haiti or China.  They thrive on the immediacy of sending their support so they click and give.  They love the online eNews updates. Traditional charities do not appeal to them.  “My parents gave to the American Red Cross,” is a typical response.

Loyalists – they are just that, loyal year after year and inclined to keep giving provided there is frequent communication to them from the organization. “We always hear about how our gifts are being used and that is important to us,” is often the way Loyalists describe their reason for being so.  Most loyalists are college and university donors, as it has been drilled into them to “give back.”

Traditionalists – are the opposite of activists, as they are not internet savvy, prefer direct mail requests and support long established American charities and nonprofits like the American Red Cross, Big Brothers & Big Sisters, The Salvation Army, UNICEF or the YMCA.  Many traditionalists served in World War II, experienced the depression, know hard times, lived in the same community for years and don’t believe there is a need for so many new nonprofit groups.  And, they don’t trust online giving.

So, how does one retain these donors?

Let me suggest three ways that cover all three categories and the rationale.

1.  Increase your communication about how the donor’s most recent gift was used, made a difference and how grateful your organization is to them for helping to meet your mission.

Why?  The number one complaint we hear in study interviews is, “I give and never hear anything back, until it’s time for another contribution.”

2.  Ask donors why they give to your organization and what they think.  When is the last time you did a mail and/or online survey?  Surveys are a great engagement tool.  They send a message when you send them out that you want to do a better job and that the input from your donors is a top priority in doing that.

When facilitating a board retreat I often conduct a pre-retreat survey to identify in advance the issues/concerns facing the board.  I get more candid opinions this way than if I did this in an open session.  In addition, it saves time at the retreat and allows me to begin with a discussion of the issues facing the organization as they see them.

Why? Look at the Five Star hotels and how over the years they have perfected this.  As many a hotel executive has told me, “We live and die by those surveys.  Some get fired over them.” Sure many folks do not take the time to complete the survey.  However, you were given the opportunity to chime in or sound off.  And if you are like me, I say to myself, “They can’t fix it if they don’t know about it — complete the survey dummy.”

3.  Tweak your case by emphasizing worthiness rather than the neediness of your organization. In this competitive and tight economy, you have to stay sharp.  Donors can drift away to organizations that appear more appealing or timely in their mission/work.  Are you tying your case to the times?  Does your organization help those most affected by the tough times?  Can you give examples?

Why?  Dozens of new nonprofits are being established every day.  A businessman who watched the evening news had an idea on how to help the poor and created the water brick.  Now he is featured on the national news demonstrating his unique plastic brick that holds water and food and when emptied serves as an actual building block to construct a home.   Check out: www.waterbrick.org.  When was the last time you tweaked your case AND got press coverage of it?

Finally a word about mission drift – nothing will hurt your chances of keeping the donors you’ve got more than drifting away from your mission.  Donors know that without their money you have NO mission.  Money follows mission.  Too often nonprofit groups fail to constantly communicate their mission to their constituency and in a concise way.

Regardless of how precise your mission statement, nothing enhances it more than a great theme right after it.  Of course, my all time favorite theme is from my former employer of years ago — The United Negro College Fund – A Mind is a Terrible Thing to Waste.

If you would like us to help you keep the donors you got or engage your board more in fund raising, we would be happy to discuss a seminar with you or click on our publications at our web site.

As always, let us hear from you about this most recent Blog.

All the best for continued $ucce$$.

Jim Donovan, President, Donovan Management, Inc.

Remember…It’s Not About You – It’s About Your Donors

Update your website with a ThanksforGiving theme. Keep in mind your donors enabled your organization to meet its mission thus far this year.

Show prospects who have already given the Faces of Philanthropy in your Honor Roll thus far this year.  Display pictures of a cross section of donors.

Showcase your Mission and how it is helping those affected in these tough times. Post photos of the smiling faces of those you have helped.

Add a page to your website – Look Who Is Talking About Us, testimonials from community leaders about your effectiveness in meeting your mission.

Demonstrate the consequences of not meeting your giving goal and how that affects your mission.

Encourage pledges if prospects can’t make a year-end cash gift and allow them to give on their terms.  Most prospects feel all your organization wants is cash now.  Yes, you need it, but give donors the option to pledge now and pay later, when their financial situation improves.

Divide and Conquer

Split your LYBUNTS into three categories as follows:

Send a renewal reminder to donors under $100 via an eye catching post card on where to send a check or how to give online at your website.

Send a first class letter to those who gave $100 to $999, a personal salutation and P.S. note signed by a board member or another person the donor will know.

Meet in person with LYBUNTS of $1,000 or more and ask in person. Enlist a team of volunteers to get this done.

When Making the Ask (From my book: Take the Fear Out of Asking for Major Gifts)

Change your mindset from asking to inviting your major gift prospect to come along for the ride, make a difference, by helping your organization meet its mission.

Take a donor or board member with you when extending the invitation to give. One of you makes the case, as noted below, the other answers objections as they come up.

Give the prospect a sense of urgency.  Why is his/her gift needed NOW?

Engage the prospect when you meet with him/her. Don’t skip the social amenities.  Thank the prospect for seeing/meeting with you and promise to be brief and to the point.

Present your case to the prospect by answering these four key questions every donor deserves to have answered by your organization:

Where we have been…
Where we are today…
Where we are going in the future…
And what philanthropic investments/gifts are needed to get there NOW

Then stop talking.  Listen and be prepared to answer any objections.

Overcome Objections to Giving Now

“I am waiting for the economy to turn around before I give.  Times are tough right now.”

I couldn’t agree with you more. Times are tough, we see it in the demand for our programs and services, our numbers have never been higher. For example…

“I can’t afford to give now.”

I understand, many others have told us this as well.  Will you consider a pledge which you can pay in 2010?

“I have so many requests sitting on my desk — why should I give to your organization?”

We are very effective at what we do.  We stretch the dollar.  We are well run.  We keep costs down.

“I think I will wait until 2010 to give, see what happens.”

That’s fine if you don’t need or want the tax deduction for your gift THIS year. Most of our donors are glad we are reminding them to make their gift now so they can take the deduction this year.

“I am not sure my gift will make a difference.”

I can assure you it does in two ways.  First, it helps us meet our mission to….

And second, it inspires others to give, as people notice who supports us and that in turn encourages their friends/peers to give as well.

Happy ThanksforGiving

Jim Donovan

P.S.  This Holiday Season give the gift that raises Major Gifts.  Purchase and save $5:  Take the Fear Out of Asking for Major Gifts for $25 inclusive of shipping by Priority Mail and send your check to Donovan Management, Inc. P.O. Box 471438 Lake Monroe, FL  32747-1438 or email your order to dmimgt@aol.com and we will invoice you.  Click here to read more about the book.

Second, we ask the CEO and board how the organization is earning income.  Is there something they can do to generate more “retail” dollars? (Not another special event.) Sell more products, for example, or expand services, review their fee structure, as most organizations set their fees too low and they can often be increased.

Third, we ask about income from investments from the organization’s savings, reserves or endowments.  If returns are poor, we suggest that a review might be in order.  Given the present economy, many organizations are trying to augment the decrease in giving with an increase in investment income.  No small task given the swings in the stock market of late.

In the early 80′s, when I was the Executive Director of the UCF Foundation, I remember when the President of the University wanted me to hire more staff so we could raise more money.  I disagreed.  I felt it was time for the Foundation to establish an investment committee, as I was concerned about the stewardship of the endowed professorships we were obtaining through a combination of donor gifts and state matching funds — keeping it safe, doing a better job of investing.  Fortunately he agreed with me and we hired our first ever Business Manager who later took a leadership role in enlisting an investment committee that did a remarkable job.

In this Blog I thought it would be timely to discuss enhancing your investment returns.  So I turned to Tom Carhart of South Street Advisors in New York with whom we have collaborated over the years.  The firm, established in 1996, is independent and specializes in managing endowments of nonprofit organizations including some here in Florida.  Here are four suggestions from Mr. Carhart for improving your investment income.

1. Research, identify and enlist investment committee members who have a strong background in endowment management with a nonprofit organization similar in size to your own. Be sure they know and understand that the dollars you invest are donor dollars and you have a special obligation of stewarding donor gifts.
2. Prepare a policy statement that clearly describes the organization’s investment goals and expectations for return on investments.
3. Select an investment manager with a proven track record who will tailor investments to your organization’s financial requirements.
4. Insist on frequent “face time” update meetings with your investment advisors so your investment committee can have all your questions and concerns addressed.

Today, the competition among investment managers to obtain new accounts is quite competitive.  The recent decline in endowment portfolios has resulted in many nonprofits issuing new RFP’s in hopes of finding a firm that will get them back or close to pre-market decline levels.

We always encourage clients to keep their selection process wide in scope.  For example, don’t limit your RFP to just local firms. Resist the pressure to keep the local donated money invested locally.  Go where you get the best advice, return and service as the bottom line is just that, the bottom line.

Finally, we suggest that your organization be clear and forthright about investing donor dollars.  It is surprising how many nonprofit websites have little information on how their investments are handled.  We suggest a page, tab or click that includes these headings and a subsequent statement for each:

• Stewardship of Donor Gifts

Why is it so important to your organization?

• Investment Committee Oversight

What’s their purpose?

• Investment Committee Members and Affiliations

What are their qualifications and credentials?

• Investment Management Firm

What’s their track record with nonprofits, returns and service?

What distinguishes them from other firms?

• Investment Strategy

What investment products are being used?

What is the strategy for asset allocation?

In two weeks we will begin the final quarter of 2009.  Take time now to review your investment income so far this year.  Make plans now to maximize your investment income in 2010.  You owe it to your donors, organization and those you serve be they — people, pets or the planet.

Please let me hear from you, especially about our revised website.

All the best for continued success.

Jim Donovan

In this Blog, some tips on how to do just that from three accomplished American leaders:

Peter F. Drucker, Management Author and Consultant to the Fortune 500

Rabbi Herbert A. Friedman, Pioneer of United Jewish Appeal

James A. Baker III, Former Secretary of State and Advisor to three U.S. Presidents

In 1972 I started my career at the United Way of Utica, New York. The first week on the job I read The Effective Executive by Drucker. It’s a classic. Drucker offers this sage advice, “It’s not important to get things done. It’s important to get the right things done.”

Today with Email consuming most of us, Drucker’s advice is more relevant than ever. I have followed Drucker’s advice over the years by starting my day with a long “to do” list. Then I ask myself, ‘What are the right things I must get done today?’ By addressing strategic tasks, the smaller ones get done as well and in less time.

Fast forward to 2009 and the latest Drucker book, The Five Most Important Questions You Will Ever Ask About Your Organization. In it the late Drucker, with other authors, offers five strategic organizational questions that could set a new post recession direction for your organization.

What is our mission?

Who is our customer?

What does the customer value?

What are our results?

What is our plan?

As we pull out of the recession, maybe your board should ponder each question to better position your organization as we head, in less than five months, into 2010.

Rabbi Friedman, author of Roots of the Future, tells his life story as a rabbi in World War II, rescuing Jews from Hitler’s death camps and then transitioning into fundraising for displaced Jews throughout Europe and finally his role in creating the United Jewish Appeal in America. In the chapter How To Raise Billions, he lists the “five significant assets in the fundraiser’s arsenal”:

Knowledge of the cause he/she is representing

A passionate belief in that cause

Strong self-confidence that produces clear articulation

An easy manner

An ability to rebound from rejection

When asked the secret of his success in raising billions throughout his career, Rabbi Friedman writes:

“Raising people (first). People raise money and if you develop a cadre of workers, knowledgeable about and dedicated to the cause they espouse, they will do the job successfully.”

James A. Baker III was given advice by his grandfather early in life –Work Hard, Study and Keep Out of Politics. That is the title of Baker’s recent book which he subtitled, Adventures and Lessons from an Unexpected Public Life. Obviously he didn’t heed grandpa’s advice.

Baker went on to serve three U.S. Presidents — Gerald Ford, George H.W. Bush and Ronald Reagan — in capacities ranging from Campaign Manager to Chief of Staff to Secretary of State and Treasury. A lawyer by training, he notes early in his life his father also gave him some advice, which he did listen to. It was the Five P’s:

Prior Preparation Prevents Poor Performance.

As you read about the complex issues Baker had to work through in his various roles he keeps coming back to the challenge of preparation. He clearly makes the case for doing your homework. He was especially disciplined when it came to communicating the case for whatever issue or legislation was being debated before Congress and in the media.

In the early 90′s I recall being told by a client just how good Baker was at stating a case. Prior to becoming a fundraiser, my client spent many years as a local television anchor. One day at lunch he said to me, “Did you see Jim Baker on Meet the Press Sunday?” I told him I had not.

My client said — “I was in television news for over twenty-five years and I have never seen anyone more prepared, articulate and precise in making his case.” We can all learn from that, especially when it comes to making and stating the case for fundraising. Today is the age of the 30, 90 and 120 second sound bite. You have to get the public’s attention and keep it. There isn’t a lot of time for rambling or generalities.

As we head into the best time of the year to raise money, take time to improve your professional and organizational performance by heeding the wise counsel of these three accomplished leaders in management, fund raising and communication.

Ask the right questions so you focus on the right tasks.

Raise people first. Money second.

Prepare before making the case for your organization. Then state your case in 90 seconds or less.

Please let me hear from you. If you have a question or need assistance with an issue facing your organization, feel free to contact me at no obligation. By the way, we would love to hear your feedback on our new and improved website.

All the best for continued success.

Jim Donovan, President & CEO, Donovan Management, Inc.

* Most wealthy donors will continue to give even if the charitable tax deduction was taken away. Nearly 52% of 700 households with a net worth of at least $1 million and an income of $200,000 indicated in a joint study by Bank of America and the University of Indiana Center on Philanthropy that their giving would remain the same even if the tax deduction was reduced or eliminated. While the remainder of the sampling said they would give less if deductions were wiped out, a third of them would somewhat decrease their giving.

* Over 92% of Americans are employed

* 70% of U.S. households give to charity, even in tough times

* Foundation portfolios are down an average of 30% or more. However, by law, they must give away 5% of their assets annually

* 94% of individuals in the U.S. have yet to make a bequest to a nonprofit

* Trillions of dollars will pass from one generation to the next in decades to come

* Gifts of stock, whether appreciated or depreciated, can be gifted to a bona fide nonprofit that has a Letter of Determination from the IRS. In this down market, donors can sell their depreciated stock, trigger a taxable loss and give the cash to charity. Donors get a charitable deduction for the cash gift and usually incur a second taxable loss (a second deduction) equal to the difference between the stock’s taxable cost basis and its fair market value at the date of sale. Always encourage donors to consult their own tax advisor on such matters.

Sources: University of Indiana Center on Philanthropy, Foundation Center, Chronicle of Philanthropy

Ten Questions for Your Organization to Ponder in this Economy

1. Have you assessed your situation, adjusted or re-tooled your fund raising program/strategy? (Does your fund raising effort need a Second Opinion?)

2. Do you have a contingency plan or fund?

3. Have you done an inventory of what you must do to compete in this highly competitive fund raising environment, especially for the shrinking number of foundation grants and individual major gifts?

4. Have you tweaked your case by making it known how your organization is assisting those most affected by tough times?

5. Have you prepared a list of possible donor objections to giving in tough times and responses to the objections?

6. Have you devoted more time to training volunteers on how to ask for major gifts to bolster their confidence when making the ask?

7. Is it time to consider the feasibility of a merger with an organization with a similar mission?

8. Do you have a Stimulus Package shovel ready project and a special Board Task Force that can make the case for it with your legislative delegation?

9. Holding off on that capital campaign? Now is a good time to plan and prepare for that campaign. Have you considered a pre-campaign online survey to test the campaign project list among your constituency and ask them when they think the time is right to launch a campaign?

10. Finally, keep in mind the number one reason why people give money in good times and bad — because they are asked (invited) to do so. How many invitations have you extended this month?

Please let me hear from you.

A special thanks to my friend and colleague, Mark J. Wolff, Professor of Law at St. Thomas University School of Law, Miami Gardens for his advice and counsel on this Blog.

All the best for continued $ucce$$.

Jim Donovan