Important Opportunity... IRA Giving

Oklahoma City Community Foundation explains the renewed tax provision that expands opportunities for IRA giving

As a reminder (since many seem unaware of it), the tax law that expanded IRA giving was renewed during the recent economic stimulus package.

Thanks to the Oklahoma City Community Foundation for this nice explanation:

Here it is in brief:

For the tax years 2008 and 2009, individuals age 70½ and older can transfer up to $100,000 per year from an individual retirement account (IRA) to a charitable organization without incurring income taxes today or estate tax in the future. If married, each spouse can transfer $100,000 per year from his or her IRA. Prior to this law all lifetime distributions from IRAs were taxed even if the distribution benefited a charitable cause. The provision is time-limited; it applies only to qualified distributions made before January 1, 2010.

Here it is in full, with some examples:

http://www.occf.org/retirement.html

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Urgent Advice: Send Email Appeal Today

Everyone wants a deal these days... even Santa

For years, marketers have been focused on Black Friday as the biggest shopping day of the year. If anyone watched the news over the weekend, the day after Thanksgiving held its ground as one of the most significant days on the shopping calendar.

But here is my prediction: Today will be the largest day in online shopping of the year, and it could be the largest day in online donatons if we fundraisers can get our act together!

Why does today have so much potential?

None of us want to be at the office today. After spending days in the company of friends and family, we are all reminded of what is most important in this world. Since we're also feeling guilty about how little we've done for our loved ones, we want to find a way to make this Christmas extra special... particularly during this economy, when we cannot afford the traditional presents we might give.

Go around your office today and sneak a peak at people's monitors. You'll see eBay, Amazon, and other sites ... everyone is looking for a deal. As we get closer and closer to the holidays, we're also aware that we have to order today in order to get the gifts in our hands on time.

This is an amazing opportunity for non-profits to encourage tribute gifts!

Here is what we should be doing on the Monday after Thanksgiving each year:

• Send an email to your entire list with a short, catchy subject like "Give the perfect gift this holiday season"
• Make the email BRIEF and to-the-point: "Make a gift in someone's honor today, and we will ensure that they get a personal letter the week of Christmas to let them know that a gift has been made in their honor."
• Consider getting your board to offer a challenge or matching grant to sweeten the offer

My guess would be that your open rates would be much higher than usual as people are sitting at their desk all day under the guise of "getting caught up from the holiday," and that your return rates will be higher than usual because of how much people prefer to take care of their holiday shopping list instead of work.

(By the way, emails are much more likely to get opened and read if you send them between 11:00 and 2:00 . . . so send them now!)

Like many people, I don't want anything this year. God help if my family buys me another sweater or tie that I don't need. The best thing that anyone could give me would be a gift in my name to one of the charities that I love. 

What better way to show me that you understand who I am and share my values? This is a message that I am going to convey to my family this year:

"Do not give me a gift. Instead, donate the amount that you would spend to one of the following organizations...."

If you are in the business of fundraising, I challenge you to do the same. Let us make live up to the highest standards of the noble calling that we have accepted. 

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Welcome, CBI Attendees!

Welcome to everyone who attended my presentation at today's Community Board Institute session, "How to Build Relationships Using Electronic Communications."

If you would like a copy of the handout that I provided, click here .

If you want the actual PowerPoint that I used, either email me or ask for it in a comment below and I can send it to you via www.YouSendIt.com/

I would greatly appreciate your feedback on the session. Please comment below!

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Stop Emailing and Start Listening: New Survey on Donor Interests

Sea Change Strategies, a fund-raising consulting company in Takoma Park, Md., just announed findings from a survey it conducted along with Convio, an Austin, Tex., company that provides Web-based software for nonprofit groups, and Edge Research in Arlington, Va., which does research and polling for nonprofit organizations.

The study finds that wealthy people want to increasingly give online, according to Philanthropy.com.

The survey was based on data from 3,443 donors who had made gifts of at least $1,000 to a single cause in the past 18 months and donated an average of more than $10,896 per year to charities.

Sixty-four percent of the donors were age 45 to 64, and 57 percent had incomes of at least $100,000. The donors’ names were provided by 23 organizations that represent an array of causes, including advocacy groups, health organizations, international relief groups, public television stations, and Christian ministries.

Among the key findings:

• Four out of five donors said they had made a charitable gift online, and a little more than half, 51 percent, said they prefer to use the Internet for their donations. Some 46 percent said that they expect to make a greater percentage of their charitable gifts online within the next five years.
  
• Fifty-six percent said that charities send too many e-mail messages, and 47 percent said they do not read as many messages from charities as they did in the past.
  
• Seventy-four percent said it’s inappropriate for a charity to obtain their e-mail address from a commercial database, while 82 percent said they don’t think it’s right for charities to send them messages about another organization.
  
• Ninety-two percent of donors like getting year-end tax receipts by e-mail, while 83 percent want to get electronic updates on a charity’s finances and spending. Seventy-four percent said e-mail messages are appropriate when notifying donors that it’s time to renew an annual gift or to explain how a donation has been spent.
  
• Eighty-one percent of donors dislike messages that take an urgent tone in seeking a repeat donation.
  
• Forty-six percent of donors said the charity’s messages do a good job of making them feel connected to the organization, whil 43 percent said the messages are well-written and inspiring.
  

In case you're wondering, the picture is not really related to this article. I just found it when I Googled "older donors," and thought it was hilarious.

What Makes People Give? - New York Times

I love this brilliant image from the New York Times' "What Makes People Give?"


For those who prefer words to pictures, go here.

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Partying for a Purpose: The future of fundraising?

In this business, I often find myself needing a drink at the end of the day. It's good to know that I might soon be able to drown my sorrows to the benefit of my organizations, thanks to Party4APurpose.com:

Party4APurpose.com - For the listing of every charitable and purposeful event in the country!

According to the site, "P4AP is the place where anyone can post, promote, invite and RSVP to any social event with purpose in the country."

Some more details....

Making Charity Fun, Free and Easy for Everyone
Party4APurpose.com is a free, user-generated event portal and community for the listing of every charitable and purposeful event in the country. Designed as a philanthropic catalyst for socializing through shared interest, the site allows anyone to easily post, create and explore event information (by price, type, purpose, and distance); promote purposeful activities; send customized event invitations and organically expand both personal and organizational networks - all for free, all the time.

Harnessing the Power of Purpose
4 out of 5 Americans born after 1979 (78 million strong!) feel a personal responsibility for making the world a better place. An astonishing 89% of this generation will even re-consider purchases when offered a comparable alternative that supports a cause they care about. Due to these trends and others, the opportunity for increasing charitable activity is enormous; businesses are paying more attention as well, with corporate donations in 2005 alone rising 18.5% to $13.8 billion.

Shifting the Paradigm and Creating Impact
Any activity from free happy hours to birthdays, poker nights and galas can be infused with an element of purpose, making them even more enjoyable and rewarding. By creating a platform that makes it easy to party with a purpose any day of the week, we believe that over time we can have a significant impact on the traditional paradigm of charitable engagement – both in how individuals socialize and how organizations communicate around their mission.

Working Together To Make a Difference
P4AP is working with a growing list of national charities, senior business leaders, young professional influencers and celebrity spokespeople to ensure maximum impact. Please contact us if you see ways we can work together!

What's YOUR Purpose?

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It's about the donor

In combing through the various feeds that I arrive in my inbox each morning, I came across this wonderful piece at the Donor Power Blog: "Is your fundraising a long, dull conversation?"

The blog cites a blog that is new to me -- Copyblogger, with their wonderful piece: "Why Great Copy is a Conversation, Not a Soliloquy."

(In reading a few of Copyblogger's other articles, I added it to my growing feed... alas, I could spend the entire day reading and getting nothing done! For shame, for shame, that we must all have day jobs...)

These articles reminded me of something very important:

It's not about you, Madam Fundraiser,
nor about you, Master Marketer;
it's about the donor.
Here is one simple way to improve your own approach to donors:

Look back at your most recent thank you letter to a donor. Circle every "I" or "we" (or the name of your organization) -- and then rewrite the letter so that you replace as many of those first person pronouns with the word "you," particularly when it's at the beginning of a sentence or a paragraph.

Force yourself to begin the letter with "You" instead of the boring "On behalf of the board, the staff and the thousands of starving, blind, crippled, poor orphans who somehow manage to wheel their way uphill, through the snow and into our office each day...."

See how the whole feel of the letter changes from being yet another bragadocious piece of fundraiser-marketer drivel to a relationship-building engagement piece.

Some organizations get it.

Some don't.

But sometimes, the ones that "get it" can get in trouble by taking it a bit too far.

Case in point: as a I blogged previously ("UT Southwestern: A Case Study in the Core Problem with Major Gift Fundraising"), UT Southwestern was recently torn up in local media because one of their more advanced fundraising practices leaked out: they have segmented their patient list so that top donors -- and even prospects -- are highlighted for "star treatment" when they arrive at the medical center.

Since I am sure that you, like me, was curious who made the list... I offer you this link to it (although I post the names below):

UT Southwestern list of high-profile people Dallas Morning News News for Dallas, Texas News for Dallas, Texas

SOME OF THE NAMES
UT Southwestern records information about well-to-do or well-known people to assure they receive select treatment during hospital visits. Here is a sampling of some of the people and their family members on the list, which was created in 2003, grouped by how they are known.

IN POLITICS

Vice President Dick Cheney (spouse)

Sen. Kay Bailey Hutchison (husband)

Rep. Ken Marchant (various family members)

State Rep. Barbara Mallory Caraway

Sen. Chris Harris (son)

State Rep. Tom Craddick (wife)

Former State Rep. Alvin Granoff

U.S. Dist. Judge Barefoot Sanders

State Rep. Tony Goolsby (spouse)

Former State Rep. Kenn George (spouse)

State Rep. Helen Giddings

Former Rep. Martin Frost

Former Secretary of Commerce Don Evans

Former Mayor Ron Kirk

Former Mayor Steve Bartlett

State Rep. Joe Driver

Congresswoman Eddie Bernice Johnson

Former Sen. Mike Moncrief (various family members), current Fort Worth mayor

Former Speaker of the House Gib Lewis (spouse)

Former Ambassador Robert Strauss (various family members)

Former Mayor Starke Taylor (family members and previous family members)

Former State Rep. Steve Wolens (mother, family members)

Former Mayor Laura Miller (listed as Laura Wolens, Dallas mayor 2002)

Former State Rep. James Horn (family members)

State Sen. Royce West

IN SPORTS
Dallas Cowboys owner Jerry Jones

Former Dallas Stars owner Norm Green

Former Dallas Cowboys quarterback Roger Staubach

Former Dallas Cowboys linebacker Chuck Howley

Former Cowboys wide receiver Lance Rentzel

Dallas Stars and Texas Rangers owner Tom Hicks

Former baseball player Mickey Mantle's family

Former Cowboys coach Tom Landry's family

Former Texas Rangers coach Bobby Jones

Former University of Texas football coach Darrell K. Royal

Former Dallas Mavericks general manager Norm Sonju

Astros owner Drayton McLane

CHEFS AND RESTAURATEURS
Dean Fearing

Shannon Wynne

Phil Vaccaro

Kevin Ascolese

Patrick Esquerre

Scott Ginsburg

IN MEDIA
Jim Moroney, publisher of The Dallas Morning News (and family)

Bob Mong, editor of The Dallas Morning News (spouse)

Robert Miller, columnist at The Dallas Morning News

Robert Decherd, chief executive officer and chairman of Belo Corp. (and family)

Wick Allison, publisher and editor of D Magazine

Prudence Mackintosh, contributor to D Magazine and Texas Monthly

Alan Peppard, columnist at The Dallas Morning News

Norm Hitzges, host for KTCK-AM (1310) (and spouse)

IN BUSINESS
John Albers, chief executive of Fairfield Enterprises

Ebby Halliday, founder of Ebby Halliday Realtors

Ron Anderson, president and chief executive of Parkland Health & Hospital System

Bruce Brookshire, owner of Brookshire Grocery Corp.

Don Buchholz, chairman SWS Group

Donald Carty, former chief executive of American Airlines (and family)

Comer Cottrell, founder of Pro-line International

Robert Crandall, former chief executive of American Airlines

Trammell Crow, developer

Thomas Engibous, chief executive of Texas Instruments

Jinger Heath, founder of BeautiControl.

Irvin Levy, chief executive of National Chemsearch

Kathleen Mason, chief executive of Tuesday Morning

Morton Myerson, chief executive of 2M Cos. (and family)

Lonnie Pilgrim, chairman of Pilgrim's Pride Corp.

Timothy Wallace, chief executive of Trinity Industries

IN ARTS AND SOCIETY
Magdalena Abakanowicz, sculptor

Jeremy Adams, screenwriter

Edith Baker, gallery owner

Emanuel Borok, concert violinist

Richard Hamburger, former executive director of Dallas Theatre Center

Pavlo Hunka, visiting Dallas Opera performer

Hilda Alsabrook, former Junior League president

Ann Corrigan, Sweetheart Ball, Crystal Charity Ball

Linda Gibbons, Sweetheart Ball

Marguerite Kirk, author

Marylyn Kelso, Cattle Baron's Ball

Jerry Naylor, former lead singer of Buddy Holly & The Crickets

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One Third Of Donors Skip Giving In Some Years

A new report released in The NonProfit Times helps shed some light on a phenomenon that should inform fundraisers' thinking on matters of how to approach lapsed donors:

Roughly six in 10 U.S. households contribute to charity routinely, according new findings from the Center on Philanthropy Panel Study (COPPS) at Indiana University.

The ongoing survey asked the same 8,000 families about their charitable gifts made in 2000, 2002 and 2004. While the total percentage of households that gave was similar in all three years (67 to 69 percent), it was not always the same households. The study found that a fairly large proportion of all U.S. households -- nearly one third -- shift between donating and not donating.

View the full report here:
http://www.nptimes.com/instantfund/08Jan/IF-080110-1.html

Ask a Philanthropist how to Raise Money

Some time ago, Phil Cubeta asked on his Gift Hub blog: What Do Billionaires Want?. The article led to an interesting discussion between me and Phil, which you can read here.

I've been asking myself this same question many times over the past few weeks. There was an interesting article recently in The Washington Post called "How Groups of the Rich Diverge in Philanthropy" that is worth your time if you are interested in learning about your donors.

I also would highly recommend asking your own philanthropists what they like about your organization, how you could improve your communications to them and what they think that you could do to secure donations from additional people like them. Trust your donors -- they know what they want.


Similarly, check out this advice from well-known philanthropist Lewis B. Cullman.

Mr. Cullman's site is a must-read, particularly his section on good and bad fundraising letters as well as his highly informative brochure:

HOW TO SUCCEED IN FUNDRAISING BY REALLY TRYING, by Lewis B. Cullman

I hope that these resources are helpful as you launch into 2008!

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So many reasons to say two simple words...

I have always hated the end of the year. Calling lapsed donors to beg for cash, calling foundations to see if their check would be arriving, etc.... all of it can become such a drag.

So this year, I did it differently.

I gave up on the idea of getting money today. I decided instead to focus on making friends.

I have probably called around 100 donors in the past few days to say something like this, "I am calling for many reasons, all of which result in the same two words.... Thank you."

It is amazing how many of our donors were shocked into a state of utter surprise by the fact that I was just calling to thank them and NOT ask for more money.

I am not telling this story because I think I've done anything particularly wonderful. I just wanted to share it as a way that we can all begin to realize that fundraising is not simply a matter of effective marketing, but also a matter of friendship building.

Getting money today is great, and we could not do our work without it. But the work that we do today is rarely about the money that we put in the bank at 5:00 p.m.; it's likely more about the money that the next generation of fundraisers will be putting into the bank.

As the company Seventh Generation puts it, "In our every deliberation, we must consider the impact of our decisions on the next seven generations."

(citing the belief of the Iroquois)

Happy new year, everyone! In 2008, let's all focus on building relationships with donors whose true value will be seen not only at the end of the year, but also the end of our careers, and those of the seven fundraisers to follow us.

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How much does the leadership of an Executive Director or C.E.O. effect fundraising?

The blog Nonprofit Leadership, Innovation, and Change is the host of the December Giving Carnival. Written by Christopher Scott, the blog asks:

"How much does the leadership of an Executive Director or C.E.O. (a)ffect fundraising?"

This begs a deeper question... the answer to which is, itself, the key to successful fundraising.

"Why do donors give money to your non-profit?"

The answer is far different than the answer to "Why do PC users buy Microsoft products?" or "Why do travelers fly on Southwest Airlines?"

While the leadership of CEOs like Bill Gates and Herb Kelleher have greatly influenced the sales of their respective organizations, the reality is that the leadership of CEOs in the for-profit world rarely drives as significant a percentage of overall revenues as the leadership of CEOs in the non-profit sector.

The reason is fairly simple:

The customers of Microsoft are buying a product and the customers of Southwest are buying a service; the donors to your organization are not buying anything.

Why then are people giving you money?

Because they trust you.

Because they love you.

Because, when it all comes down to it, they believe that your CEO is someone more like Jan Pruit from the North Texas Food Bank and not someone like Carl Yeckel, formerly of the Carl B. and Florence E. King Foundation.

Would Boone Pickens have donated $6M to Jubilee Park without Ana Maria Narro, the Executive Director, to oversee the administration and use of his funds?

Clearly, Mr. Pickens was also heavily influenced by the organization's chair, his friend Walter Humann, as well as Dallas Mayor Tom Leppert, who promised revitalization of such areas as Jubileee Park in his run for office.

But as I listened to his remarks at the groundbreaking, I could not help but realize that he was not investing in the bricks and mortar that would occupy the corner of Parry and Bank Street where we stood. Nor was he investing in the plans to operate that center as a source of hope and support for this rebounding community.

He was investing in the leaders who would bring that plan to fruition, and whose spirits would fill that building with life.

The CEO of Central Dallas Ministries, Larry James, has frequently told me:

"Money follows people and ideas."

Mostly, money follows people who can bring those ideas into reality.

Bill Gates and Herb Kelleher are CEOs who have done this in the for-profit world. Jan Pruitt and Larry James are CEOs who have done this in the non-profit world without the benefit of revolutionary technology or favorable market conditions.

I think that every non-profiteer -- particularly those in the CEO role -- should read "Good to Great and the Social Sectors: A Monograph to Accompany Good to Great" by author Jim Collins. In the book, Mr. Collins argues that "true leadership is more prevalent" in the non-profit sector than in the business sector for these same reasons.

There are few things that can have a greater effect on fundraising than the leadership of a CEO. If your CEO doesn't get this, I'd suggest you have three options:

• Work on getting your Board to take its fiscal responsibility seriously so that they will provide the leadership that you need;
  
• Send her/him over to Phil Cubeta for some smacking around;
  
• Dust off your resume and head over to Opportunity501.org

Does (gift) size matter?

Thanks to Unfair Park, GiftHub and The Chronicle of Philanthropy for linking to my last post: Would you rather have one $100,000 donor or 2,000 $50 donors?

There are some interesting comments on those three blogs, and I encourage you to visit them for some perspective on what I hope will become an ongoing discussion in fundraising offices around the country:

"Are we pursuing the right donors?"

On the The Chronicle of Philanthropy blog, there was a comment from Susan Racanelli that stated the obvious: "healthy nonprofit needs both types of donors in the appropriate measure." I agree fully, and don't think that either I or the anonymous donor at
Don't Tell the Donor.org -- whose blog initially started this discussion -- intended to imply that an organization should intentionally choose between the two.

In reality, very few of us would turn down a six-figure gift or turn away 2,000 small donors. This was not the debate.

(Although I did enjoy finding the images of "Giants among us" at Worth1000.com).

What the aforementioned blogs were trying to portray were the considerations that fundraisers must make when pursuing either. There are some unique differences between how you sustain a relationship with a single, six-figure donor vs. a swarm of two-figure donors.

The real strength of any development program is, of course, its ability to sustain both.

I am currently working on my department's 2008 Strategic Plan as well as our 2008 Annual Operations Plan (AOP). One of the most crucial elements of these plans is that they work together: activities that are not tied to a broader strategy will not help a development department to achieve its goals, and strategies that are unrelated to the daily operations of a fundraising program are worth less than the ink they take up on the paper.

Here are some of the broad goals that I am considering including in this Strategic Plan:

• Decrease the lapsed donors rate (by comparing the percentage of 2007 donors who lapse in 2008 to the percentage of 2006 donors who lapsed in 2007)


• Increase renewal rate of lapsed donors (by comparing the percentage of donors who gave in 2005, lapsed in 2006 and came back in 2007 to the percentage of donors who gave in 2006, lapsed in 2007 and came back in 2008)


• Increase average gifts from existing donors (by comparing the average gifts of donors who gave in both 2007 and 2008)


• Increase number of new donors acquired in 2008 compared to 2007

These are goals that apply to both our $50 donors as well as our $100,000 donors. The AOP will likely include significantly different activities for these two types of donors, but the fundamental goal remains the same.

Regardless of the size of your organization's budget, you should have a clearly outlined strategy for soliciting donors. Even if you are part of a smaller organization that does not have a full-time development officer, you should try to set up a clear set of expectations for revenue generation that are not purely financial (i.e. "raise $_____ from individuals."). By focusing on outcomes such as those mentioned above, you will almost invariably achieve better financial results for your organization than if you simply focused on dollars raised.

It is also critical that any development program have a plan for its annual activities; again, this is regardless of an organization's size. Even if it is nothing more than a calendar of the various print and electronic communications that you will send in 2008, this plan will enable you to look at your overall activities costs related to sustaining donor relationships.

This will help you to be a good stewards of your own time and the resources that your organization dedicates to fundraising.

QUESTION: What are the additional goals that should be a part of any fundraising program?

Would you rather have one $100,000 donor or 2,000 $50 donors?

UPDATE: Thanks to Unfair Park, GiftHub and The Chronicle of Philanthropy for linking to this post.

The anonymous blogger at Don't Tell the Donor.org makes some interesting points but overlooks some important details in their recent blog, "The difference between philanthropy and fundraising."

In summary for those who read this blog through syndication, the blog states that:

"I know some nonprofits that rely on big gifts from a small group of philanthropists in order to keep their doors open, however I personally feel better when an organization has hundreds (maybe thousands) of individual members who give provide many nonprofits with their mandate to exist."

We could argue pretty fruitlessly about the issue of needing to validate the organization's mandate (which I only see as relevant in order to satisfy the IRS' private vs. public charity test; it's a matter of tax benefits, not public good). However, I think that some valid points can be made on the matter of how these two scenarios impact non-profit organizations (and fundraising offices in particular).

In many ways, the anonymous blogger is right that it is better to have 2,000 gifts of $50 rather than a single gift of $100,000.

First of all, this situation is more sustainable. Making a political mistake with a donor in scenario one costs you $50, rather than $100K in scenario two.

And yes, as a fundraiser whose organization relies on major donors, I can tell you that there are people who have given upwards of $100,000 per year who suddenly stopped giving because we invited the wrong speaker to an event or our CEO made a comment with which they disagreed.

This is the downside of major gift programs: the tyranny of the donors.

(See this blog from Larry James, CEO of our organization, about Justin Hudnall's fabulous article, "Giver's Greed")

Second, the mission is more likely to be the focus rather than the donors if you receive lots of small gifts rather than a few large ones. As much as I support the sort of donor-centered fundraising advocated by Jeff Brooks at the Donor Power Blog or Phil Cubeta at GiftHub, major donors can wield undue influence over organizations that can frequently distract these organizations from their mission.

And yes, in the same way that I can give you examples of major donors who have pulled their giving to Central Dallas Ministries because of silly faux pas, I can also cite several instances in which we have been driven to make unwise decisions because a large checkbook was behind them.

I am proud to say that we have also turned down lots of money along the way because it would have pulled us off strategy. And I mean 6-figure and 7-figure gifts... nothing to balk at. We've maintained our integrity in key moments when donors were pushing the organization in the wrong direction.

But we are not perfect, and major donors have wielded disproportionate influence over our work at times.

And yes, we have at times been guilty of chasing money.... writing and securing grants for new programming because the money was available, not because we had the program in place and needed to fund it.

Again, these are problems that you would not have in the scenario of relying on many small gifts rather than a few large ones.

And if you're the Salvation Army, with a bucket on every corner soliciting pennies from the public, you don't have even to worry about filing a Form 990.

There are some problems, though, with relying on the masses for the bulk of your support.

First, some practical problems for the fundraising officers:

1. If you believe in good stewardship, you send a receipt for every gift that you receive regardless of size. At $0.41, receipting 2,000 gifts is over $800 in postage. Factor in the costs of paper and printing, and your spending 1% of your gift just on bare-bones stewardship.


2. Someone has to enter that information into your database and print those letters. Assuming it takes 2 minutes per acknowledgment (likely a very conservative estimate), that's nearly 67 hours in staff time. At a minimum wage of $5.85 per hour, that's an additional $4,000. Since most development officers make at least twice that, you're now talking about an additional 1% of your gifts on just bare-bones processing.


3. Someone has to spend time depositing those gifts. That's more staff time, and possibly fuel costs. Likely, this is another 1% of your gift.


4. Many of those $50 gifts will come in via credit card. That's another 3-5% cut off the top.


5. You can therefore conservatively estimate that you will receive $6,000 to $8,000 less in the scenario of 2,000 $50 gifts rather than a single $100,000 gift.

These are just a few of the immediate costs associated with receiving lots of small gifts rather than a few large gifts. This doesn't even begin to include the costs of newsletters, event invitations, annual reports and other communications mailed to these donors. The costs can quickly grow to the point where these thousands of small gifts begin to contribute less and less to your organization's mission.

Let's take it to the next level: It is nearly impossible to build relationships with 2,000 donors who give you $50 compared to single donors capable of giving you $100,000. The return on investment of spending time calling $50 donors, sending them personal notes and meeting with them to tour programs is simply not there compared to cultivating major donors.

Are there people donating $50 to your organization who are capable of donating $100,000? Certainly. In fact, my organization recently received a commitment of $5,000,000 from a donor whose first gift was $100.

But this was a very rare exception to the rule. Although we eventually did a very good job cultivating this donor, his initial gift brought forth no such stewardship. In fact, he would have gone completely unnoticed without the help of an outsider -- who did not even know about his first $100 gift -- who referred him to us as a place to donate $50,000 at the end of last year.

This gift got our attention... which helped us to then add two more zeroes to that commitment within 12 months by stewarding the relationship.

We never would have done this for someone who donated $50 unless we realized that they were capable of the major gift.

On a related note, there is an insightful blog about at the Donor Power Blogcalled "The secretly wealthy donor fantasy." This blog debunks the myth of the $90,450 Direct Mail donor (in brief, they criticize that justify continually mailing the small-gift donor by saying that they may leave them money in their will when they die).

I do not believe that major giving programs should fully replace all other forms of fundraising (in fact, I previously blogged about some the problems of major gift fundraising in my November 10 blog, "UT Southwestern: A Case Study in the Core Problem with Major Gift Fundraising.").

However, if I had to choose between $100,000 from one person vs. $50 from 2,000 people, I would realize that there would be far more ramifications to my choice than simply the validation of my organization's mandate to exist.

I am thankful for the Don't Tell the Donor.org blog. At the end of the day, I think that any successful fundraising program needs to integrate both a high-volume, low-dollar annual gift program alongside a major giving program driven around a small number of high-dollar gifts.

All I want for Christmas is a few good donors...

In honor of the recent Thanksgiving holiday, and some thoughts that I had in response to Charity Navigator's Holiday Giving Guide 2007, I'd like to offer my own thanks for the donors of the world who give wisely.

Of course, as the desperate fundraiser that I am, I appreciate any and all donors. I will not be so bold as to say that I have never bent over backwards to take some fool's charity. I have certainly done so, and will likely do so again as we approach the year's end and my concern for reaching a surplus overrides my better sense of how to build my organization's long-term sustainability.

But as I prepare for December, when we receive in excess of 1/3 of our gifts from individuals, I would like to offer thanks for the elite few whom I see as wise givers.

What makes for a wise giver?

• They take time to get to know the organizations that they support -- whether through conducting their own online research, having conversations with staff or visiting in person, they ensure that their gifts are made to worthy organizations.
  
• They either enroll in the organization's recurring gifts program (i.e. monthly charges to their credit card) or they send checks throughout the year... not just at the year's end.
  
• They give without restrictions, and invest in the overall organization rather than in one of its projects.
  
• They opt out of receiving print communications, including printed receipts for their gifts, in order to save the organization money.
  
• They help introduce people to the organization who might be interested in supporting it.
  
• They get involved in advocating on behalf of the organization's mission.

There are likely many other things that donors could do to be a wise giver. For example, for some organizations, it might be very important for a donor to be involved as a volunteer in the delivery of the organization's mission. For others, though, there is no such need for volunteers -- in fact, outside volunteers can frequently be a distraction imposed on programs by the development office in order to cultivate gifts.

But these items above are what I consider the gold standard of wise giving. I would rather have a donor give me half as much money while meeting this standard than twice as much money while falling short of these bars. Perhaps I am myself a grand fool, but I believe that I have one true goal as a fundraiser:

"To put myself out a job."

I know that, in reality, this is not a likely possibility. But we as fundraisers must strive to build a core group of committed donors who do not need a professional fundraiser to cultivate their gifts -- they are firmly committed to the organization, and draw other committed donors into their orbit. By focusing on creating this kind of momentum, fundraisers can move their organizations closer to that day when they no longer need to rely on professional development staff to help pay the bills.

Until we get there, we have much to do. For every wise giver, there are hordes of charitymongers who need counseling. Here is some advice on how you can impart wisdom unto the masses:

• Don't fear the reaper. Put your financials and Form 990s directly on your Web site for easy downloading, as well as links to your listing on Charity Navigator or Guidestar. If you're on it, be sure to link to your listing on Charity Watch.
  
• In every receipt letter, offer to meet with donors to take a tour of your organization to see their dollars at work.
  
• Call every donor who makes a gift to your organization. If that sounds like too much to do on a daily basis, set aside one day per month in which you and a handful of other staffers/board members make calls to the last month's donors just to say thank you and to invite them on a tour. Be sure that they know that you are not calling to ask for money.
  
• Offer free events that are easy for donors to attend, meet staff, learn more about the organization and invite others without feeling pressured to make a gift. At Central Dallas Ministries, we have a free monthly book club that attracts around 80-100 people each month to our ministry; this has been a great way to meet people and to get to know our donors better.
  
• As much as I hate special events, you should offer at least big fundraiser per year that provides your closest donors with an opportunity to engage their contacts in supporting your organization. Remember that there are many ways to evaulate such events beyond their own bottom line: there is great value in making your top donors more committed to your organization, and in attracting new donors to you (particularly if you follow up with phone calls and invitations to tours).
  
• Offer a recurring gifts program that includes both monthly charges to credit cards as well as monthly transfers from banks. Promote this program in your communications with donors (including finding a way to mention it in receipt letters without directly asking for more money... cite it as a convenience for busy donors).
  
• Let donors know that you need funds throughout the year, not just at the year's end. Find ways to educate them on the cash flow of your organization in your communications pieces. Many donors do not realize how difficult it is for organizations that rely on the "feast or famine" style of year-end fundraising.
  
• Offer options for designations, but show the benefit of giving without restrictions. In your communications, feature stories about donors who invested in the overall organization rather than grants to one project.
  
• Provide donors with the ability to opt out of receiving print communications, including printed receipts for their gifts, in order to save your organization money. Ensure that you have the ability to follow through with this promise, if you offer it.
  
• Provide donors with meaningful ways to introduce people to the organization who might be interested in supporting it. In addition to public events, let your firmly committed donors know that you would be able to host a tour for any of their contacts that they might be interested in introducing to your organization. At board meetings, highlight the contributions of board members who have successfully brought new donors to the table.
  
• Explore ways for donors to set up their own fundraising site for your organization. There are many tools out there that can help with this. Here is an example of one that we use at Central Dallas Ministries.
  
• Educate your donors on how they can advocate on behalf of your organization's mission. Let them know about the public policy ramifications of your work, the barriers that you face and how public representatives could be engaged to help your organization. Regardless of what comes from these actions, providing your donors with the ability to get more engaged in your mission will strengthen your relationship to them.
  
• Provide meaningful ways to get involved as a volunteer on a case-by-case basis. Get to know your donors and their interests, and then map those interests to your needs -- and be sure that it is a genuine need. Do not create something for donors to do simply for the sake of giving them something to do. It will inevitably erode your relationship because they you will both realize that they are not helping you.
  

A belated Happy Thanksgiving to everyone who reads this blog. I hope that you are well and warm, and that this blog continues to be useful to you. As always, I welcome your feedback on how I can improve it.

Good luck with the rest of your year! As we approach 2008, I hope that you can avoid the fate of this poor Santa...

The two words every donor needs to hear

In the business of raising money, it's important to remember that saying "thank you" is often more important than asking for money. I've often heard it said that you should say thank you seven times for every one time that you ask for money.

That's a difficult ratio to achieve. Particularly since you should consider newsletters that include remittance envelopes and emails that include a Donate Now button to both be forms of an ask, regardless of how "thankful" their content is. I also don't think that annual reports that include lists of donor names are an effective thank you, at least not in terms of building relationships (particularly if the annual reports include an envelope and a cover letter that asks for money).

Here are some ways that you can express your thanks to your donors without asking for money (knowing that doing so may actually help raise you more money in the future):

• Send them a personalized receipt letter that is hand-signed by both the CEO and Development Director within 2-3 business days of depositing their gift; if these two people don't have time to sign thank you letters to donors, they likely have the wrong priorities. If the gifts are designated to a particular program, try to have the program director sign the letter instead of the development director. At least one signature should always have a brief handwritten note -- even a simple "Thank you!" -- next to it, regardless of the size of the gift. Always feature two signatures so that donors understand that a team of people is aware of their gift. Very significant gifts, such as capital campaign contributions, should be co-signed by a board member. Never use a fake signature for a receipt. You can justify fake signatures on appeal letters to thousands of people, but no organization should be too busy that a real person cannot take a few minutes out of their day to sign thank you letters.
  
• Receipts should never include an envelope.
  
• Follow this receipt within a few weeks with a handwritten note for major gifts; let the donor know how their funds were spent and how they are an important partner with you in your work. Consider inviting them on a tour or for a personal meeting just to say thank you.
  
• Say thank you at least two times at each public event that you hold. If possible, try to publicly thank the sponsors by name each time.
  
• Feature a donor profile in each newsletter that you send. This will make that donor feel very special, but will also let other donors know that they're appreciated.
  
• Similarly, feature donor profiles on your Web site.
  
• After you wrap up an event, send the sponsors/attendees a "thank you" letter that does not include a remittance envelope. Consider including pictures from the event.
  
• Consider sending postcards that express your thanks to donors by featuring a success story that their support helped create. Postcards are cheap to print and to mail, and you don't have to worry about open rates. Make the front image compelling, and keep the copy short and focused on saying thank you.
  
• Send an annual thank you letter from the CEO to the previous year's donors on the first week of the year. Make the letter as personal as possible -- definitely cite the amount that they donated in the past year (i.e. "We appreciate your two gifts for a total of $135 last year."), and try to segment the letters as much as possible by gift amount and donor type (i.e. individual vs. institution). Give examples of how their money was used.

Your goal as a fundraiser is to build a relationship that makes your donors ecstactically happy with their decision to support your organization.

Here's an idea. Focus on trying to get this reaction from your donors when they open a package from you:

Important news for your older donors

This is the last year that donors can qualify for special tax advantages through the Pension Protection Act of 2006. Until December 31, 2007, donors over age 70 1/2 can make tax-free distributions of up to $100,000 to 501(c)(3) non-profit organizations directly from their traditional and Roth IRA accounts.

Distributions must be made DIRECTLY to your organization, not to the donor. Otherwise, they will be taxed for this income.

Donors over 59 1/2 can make withdrawals and donate them to an organization without the 10% penalty for early withdrawal (although they must report this as part of their income, they can claim it as a deduction). This is especially advantageous for donors who must make mandatory withdrawals from their IRAs, and those who want to avoid additional taxes on their Social Security benefits.

Thank you to the wonderful work of the Sharpe Group for educating all of us on this issue, and for producing some WONDERFUL brochures that organizations can send to their donors.

You can view these here:
http://www.sharpenet.com/irarollover/

$3.5M donated to fight homelessness in Dallas

I had the great pleasure of attending this press conference in place of my dear boss and friend, Larry James. I knew about the County's commitment of $1 million in funding per year to support the operations of the new Homeless Assistance Center (HAC), but the additional commitments were refreshing news to me:

• $1.5 million from The Meadows Foundation,
  
  
• $1 million from the Rees-Jones Foundation,
  
  
• $500,000 from the Mike and Mary Terry Foundation and
  
  
• $500,000 from Pam and Gary Patsley.

I also encourage you to get involved in the Homeless Walk this Saturday, November 17:
http://www.helpthehomelessdallas.org/

Since Belo's pop-ups and pop-unders are gettting worse every day, let me post the full text:

---

$3.5M donated to fight homelessness in Dallas
03:12 PM CST on Monday, November 12, 2007
By KIM HORNER / The Dallas Morning News
khorner@dallasnews.com

Dallas’ fund-raising campaign to help the homeless got off to a $3.5 million start on Monday.

Officials announced four major donations, considered the largest given locally to address homelessness, as part of Help the Homeless Week.

The contributions launched a $20 million campaign by the Metro Dallas Homeless Alliance to raise private funds to help cover operating costs at the assistance center set to open downtown in April.

“I’m excited, because what you’re seeing is a city coming together,” Mayor Tom Leppert said at a news conference. “I am proud of what’s happening in this city.”

The donations include $1.5 million from The Meadows Foundation, $1 million from the Rees-Jones Foundation, $500,000 from the Mike and Mary Terry Foundation and $500,000 from Pam and Gary Patsley.

The money will help the city reach its goal of ending chronic homelessness by 2014, the city’s appointed homeless czar, Mike Rawlings, said.

According to a 2007 count, Dallas has more than 5,000 homeless people, with nearly 600 considered chronic homeless, the most visible population that has been on the streets long-term and suffers from mental illness or addictions.

Officials estimate the new center will cost $6.4 million a year to operate. The city has committed to paying half of that, and the county will chip in another $1 million.

“It’s the right thing to do, and it’s a great investment,” Dallas County commissioner Kenneth Mayfield said. He added that other cities in the county should step up to help the homeless.

“They gravitate here, and it’s in everybody’s best interest that it [the center] succeed,” he said.

UT Southwestern: A Case Study in the Core Problem with Major Gift Fundraising

The Dallas Morning News recently ran a series of articles about how "UT Southwestern Medical Center at Dallas keeps a detailed list of wealthy, high-profile and influential people and their family members to ensure that they get favored treatment if they become patients."

This 'favored treatment' is getting the University into some very hot water, particularly with implications that people on the "A-List" are getting better medical care than people off the list (which the Medical Center denies here).

Read the latest story here.

The DMN's James Ragland wrote an interesting follow-on piece for this article entitled, "Hospital can offer extra courtesy, not better care." In the piece, Mr. Ragland states that, "UT Southwestern's operating budget in 2005-06... was $1.27 billion, of which 11 percent came from the state and another 16 percent came from federal grants and contracts. (Grants, gifts and other income account for 31%). That's why UT Southwestern is busy courting potential donors and why its Special Assistance Office is shamelessly using its growing list to make sure no one with special needs leaves disappointed."

Several observations about all this mess:

• Every non-profit treats their donor differently than non-donors. Highlighting top prospects for "star treatment" is considered a best practice among fundraisers. Since the majority of donations are provided by a minority of an organization's donors, that minority gets disproportionately better treatment per capita. This is simply good fundraising.
  
• Such a practice is considered "good business" in other fields. For-profit corporations roll out the red carpet for their shareholders. When I was a waiter at a restaurant, we were always put "on alert" when the owner came in for a meal. Companies like Neiman-Marcus have excelled by knowing when one of their elite customers is in the store and having their staff treat them appropriately. UT Southwestern is simply cultivating stronger relationships among its top donors; the problem, which I describe below this list, is that this practice makes the rest of us feel less valuable once we are aware of it.
  
• The fact that this list was "secret" should be no surprise. As much as they might enjoy the star treatment, wealthy donors do not like to think that they have a target on their back. The perception that you are being "watched" makes most people uncomfortable, even if its for the purpose of treating you well. More on this below, as well.
  
• Similarly, think of the common Internet practice of tracking a Web site visitor's reading habits so that the most relevant content can be put on the screen. When I go to Amazon, the Web site puts content in front of me that I am interested in. Do I like being tracked? Of course not. Do I enjoy the experience more because Amazon shows me what I like rather than showing me the same thing it shows everyone? Of course I do. UT Southwestern is simply tracking its donors the way that effective sales programs track their customers.
  
• UT Southwestern's core mission happens to be providing a service that its top donors can utilize (healthcare services). By contrast, look at my organization (Central Dallas Ministries). Our mission is about providing services to the poor -- food pantries, health clinics, housing programs, etc. By virtue of their wealth, our top donors will never utilize our services. For me to criticize UT Southwestern by saying I would never implement their practice of giving preferred service to donors is ludicrous. The fact is, UT Southwestern should be praised by its peers for its advanced donor stewardship practices. They realize that their donors are not bank accounts: they are people.
  
• By comparison, think about how universities and schools give preference to the children of alumni and donors in the admissions process. This is no revelation, and yet there are no "expose" articles in The Dallas Morning News about such practices. Again, it is simply considered good business practice for the universities.
  
• Perhaps the reason for this backlash is that, whereas education has historically been more accessible only to the wealthy, access to healthcare is seen as a much more universal right. The idea that the wealthy would receive better treatment within the context of a healthcare system is therefore much less acceptable to us than in the educational environment. This is exacerbated by the fact that, in healthcare, lives are on the line.

Last night, I watched Michael Moore's film "SiCKO." Although I greatly enjoyed the film, and agree that we need universal health care, I am sure that Mr. Moore would have differing opinions on this issue than I do. I am sure that he would see this as another example of the rich beating down the poor.

And perhaps he would be right.

But the problem is not UT Southwestern. It is the American healthcare system's finance model.

UT Southwestern should not be blamed for acknowledging that their resource engine is driven by charitable contributions, and then implementing a system that would strengthen this engine. They should not become a scapegoat for the fact that, in America, poor people do not have access to quality healthcare.

The reality is that UT Southwestern needs donations to do its work, and those donations primarily come from wealthy people or through the influence of powerful people like politicians. Since these people utilize UT Southwestern's healthcare sevices, the organization has made the good business decision to pay special attention to the services delivered to those people.

Delivering inferior service to anyone would be a bad thing. But delivering bad service to someone on UT Southwestern's "A-List" would have the double impact of both hurting that individual as well as their potential to help UT Southwestern serve others.

That being said, the aforementioned articles all contain quotes from UT Southwestern's staff about how these "A List" donors are not receiving disproportionately better medical care, and they also contain some quotes from the donors themselves to back this up.

Of course, this is the problem with Major Gift fundraising:
you can't talk about it.
Imagine if your "non-major" donors were told that they were second tier in terms of your concern about them or their relationship to your organization. Some could be greatly hurt -- particularly those who consider your organization to be one of their "major charities."

If a middle- or low-income donor is stretching to make a three- or four-figure gift to you, but you only consider donors who annually give $10,000 or more to be major donors, you could irreversibly hurt your relationship with those "minor donors" if you somehow make them aware of the fact that they are not on your "A-List."

We all want to be special. Particuarly as donors, we want to feel that we are important. We intuitively know that we are not all equally important, but we don't like to acknowledge that fact.

This is why I have never understood the use of titles such as "Major Gifts Officer." It acknowledges a tiering system that cannot help but make major donors feel like they are seen as nothing more than a bank account. And what about minor donors?

"Oh, hello there Mr. Ben E. Factor. What's that? You're here to see our Major Gift Officer? I am sorry. According to your gift record, you're only in the portfolio of our Annual Fund Director. Let me give them a ring and see if they can squeeze you in. Did you bring your credit card today?"

I realize that a title such as "Relationship Manager" or "Friendship Builder" would likely raise too many questioning eyebrows, but I think that fundraisers need to consider themselves to be much more in the business of building sustainable relationships with donors than simply in the business of securing gifts.

I applaud UT Southwestern for developing and implementing this advanced system of donor cultivation. I can guarantee you that the majority of the staff interviewed from UT Southwestern's peer organizations are going to consider implementing such a practice soon, even though they expressed such outrage at the idea.

I regret that this series of articles has forced UT Southwestern to take the blame for what is in reality the nature of their business.

But more importantly, I regret that we have all created a system in which these kinds of practices are necessary for a healthcare institution to do its basic work of healing the sick.

Moves your donors should make before tax season

Here's an interesting piece from a recent Dallas Morning News article... the kind of information that your donors will find helpful.

Moves to make before tax season | Dallas Morning News | News for Dallas, Texas | Personal Finance

Give to charity

The IRS is clamping down on what it sees as abuses in the realm of charitable contributions.

New for this year is a requirement that all monetary donations must be documented with a receipt, a bank record such as a canceled check, or written acknowledgement.

Also new this year is a requirement that donated clothing and household items be in good used condition or better to qualify for a deduction.

If you're planning to clean out your closet and donate old clothes to a charity, you may deduct only the fair market value for the donated goods. That's the amount that someone would pay for such items in a thrift shop.

You also can get a deduction for donating property such as stock, mutual funds, artwork and antiques.

As long as you've owned the property for more than a year, you can deduct the full fair market value of the gift, even if you paid less than that for the property, and avoid capital gains tax on the property's appreciation.

You also can time your contributions to accelerate or delay deductions.

"As long as you date and mail your check by Dec. 31, you can deduct your contribution for 2007, even if the charity doesn't receive it until January 2008," said Jim Smith, chairman of the Texas Society of Certified Public Accountants.

Charitable deductions made by a credit card are deductible if the charges are made this year, even if you don't pay the bill until 2008.

You must fill out the long tax form and itemize in order to deduct your charitable contributions.

Make it Easy for Donors to Give

Last year, I included a brief paragraph in some newsletter about how "Central Dallas Ministries accepts donations of appreciated assets such as stock and real estate."

Someone who had never donated called me up to ask for more information. I set up a meeting, and next thing I know... we start getting quarterly transfers of around $20,000 from him.

If you are not setting up a system for accepting such gifts (which admittedly take some time and can be a bit difficult to track down once the transfer is made), you are missing out on major opportunities.

This article states it well:

Most Stockholders Don't Understand Tax Breaks for Donating Securities, Study Finds - Philanthropy.com

Sixty-eight percent of the investors were unaware of the tax benefits of giving appreciated stock rather than selling it — namely, that they could save 15 percent of the amount by which their stock had appreciated in capital-gains tax, on top of the deduction they would receive by donating either stock or cash.

One of your primary goals as a fundraiser should be to remove as many barriers as possible that your prospect might face to making a donation. This includes:

• Use business reply (i.e. postage paid) envelopes for your newsletters/appeals; if they cannot find a stamp and don't want to make an online gift, you may lose the gift;
  
• Develop a plan for accepting non-cash gifts: cars, trucks, boats, real estate, clothes, food, and more. Definitely consider developing a policy in which you can turn down gifts, and also develop a policy for pick-ups. It's OK to tell people "no." If they stop donating or get mad at you because of it, they are probably the sort of high maintenance donor you don't want anyway.
  
• Develop a plan for accepting stocks and mutual funds (see above).
  
• Your Web site's primary purpose should be to cultivate a gift out of a prospective donor. Don't make them click through page after page to find your "donate now" button. Put it on the front page. Better yet, build a common header/sidebar that is on every page and that includes this button.
  
• Be sure your receptionist knows what to do when a donor calls to make a gift and no development staff are in the office.
  
• Be sure that your voicemail tells people to go to your Web site for more information.
  
• If you have automatic answering service on your phone system, be sure to have an option, "For more information about making a donation, press ___."

The easier you make it for donors to make a gift, the more donors -- and donations -- you will have.