Mega Donor Values Warren Buffett (Part 2 of a series)

Mega Donor Values Warren Buffett (Part 2 of a series)

By Tom Wilson Major Gifts Guru

This article is part of an ongoing series of excerpts and insights from the recent biography The Snowball: Warren Buffett and the Business Life by Alice Schroeder.

One of the other business and philanthropic legends of Omaha, Nebraska, U.S.A. is Peter Kiewit. His construction firm, Kiewit Construction is still highly respected throughout the world.

Warren Buffett noted that Peter Kiewit: “. . . it may well be the most profitable business of its type on the country, an achievement possible only because Kiewit was able to transmit, throughout an organization of thousands of employees, an unremitting insistence on excellence and efficiency. Kiewit was overwhelming a producer, not a consumer. Profits went to build the capacity of the organization, not to provide opulence to the owner.”

With assets of over $400 million, the Kiewit Foundation is the second largest charitable foundation in the state of Nebraska.

Mr. Buffett’s view that owners should reinvest in their companies not their salaries or offices should make some nonprofit CEOs pause. Too often, high salaries, fancy large offices, and free-spending contradict a nonprofit organization’s need for contributions from donors.

If Mr. Buffet were to tour your offices next week, what would he find?

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Mega Gift Donors -- Trying to Understand Their Values

Mega Gift Donors -- Trying to Understand Their Values

by Tom Wilson Major Gifts Guru

I've never met a billionaire or asked one for a major gift. So, every time I read an article about one of them in a philanthropy context I'm eager to read on.

As some of you know, KT the youngest of our 4 children, is a dancer in New York City with the Rockettes. She's getting ready to start her third season. We get to NYC a couple of times a year and I read The New York Times every day to keep up on The City.

Mayor Michael Bloomberg is a very interesting character. He's getting ready to run for a third term as major of New York City. For someone of his wealth, his political work is highly commendable.

I new he was wealthy and I knew he was generous, but I had no idea.

In a recent article in The New York Times, it noted that Mayor Bloomberg had just reported an estimate of his last year's taxes with income and expenses in rough categories. It noted that his networth was $16 billion and that he had lost about $10 million last year in the stock market. That is an amazingly low number compared to most investors last year.

The story went on to say he gave $235 million to 1,221 organizations in 2008. This topped his giving in 2007 of $205 million. Wow. In running for office, he doesn't even mention this generosity.

To provide context. The 2008 amount is 1.5% of his networth. Not huge giving, but remember that networth and liquidity are two different issues. He owns a lot of stock in his company which he cannot spend. So of his liquid assets, this may be pretty spectacular giving. I wish I knew more about his motives and values.

On behalf of my adopted second city, New York. Thanks Mayor.

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Critical Role of Physicians in Fundraising (part of the healthcare series)

Critical Role of Physicians in Fundraising (part of the healthcare series)

By Tom Wilson Major Gifts Guru

One of the most highly respected fundraisers in healthcare is Claudia Looney, senior vice president for development at Childrens Hospital Los Angeles. She recently co-authored an article, “The Critical Role of Physicians in Fund Development” in AHP Journal (Spring 2009), with Walter W. Noce, Jr., retired vice chairman, president & CEO of Childrens Hospital LA. They will be co-presenting this topic at the AHP International Conference in San Francisco, September 2009.

Children’s Hospital Los Angeles has raised more than $750 million since 2000. “Campaign leaders need to create an environment where employees and physicians realize, and actively support, the notion that philanthropy is the lifeblood of the institution.”

Looney and Noce restate an item I stress in healthcare fundraising – for physicians it’s not so much asking for money as being open to working with the fundraising staff to cultivate donors through formal presentations, facility tours, and informal discussions. They also tackle an important fundraising planning issue.

“At Childrens Los Angeles, we used multiple concurrent campaigns built around strong medical programs. Before we committed to a campaign, each of these programs had to develop a business plan. This effort was physician led. We asked each medical area what their needs would be over the next 5 years; how they would spend the money, if raised; and what the benefits would be to patients and the community. If the physician leaders couldn’t develop a credible case statement, we would not commit to support a mini-campaign.”

“Open ended, undocumented requests for money are simply not acceptable. But if physician leaders can clearly articulate goals, and the resources required to achieve them, the organization can confidently commit resources to try to raise philanthropic dollars.”

“All the mini-campaigns we ran concurrently at Childrens Los Angeles had physician co-chairs. These campaigns needed a physician spokesperson for the community, as well as a peer leader who would ask colleagues to get involved.”

“Physicians have the credibility to explain how patients will benefit from a new building, a new piece of diagnostic equipment, or a new specialist being recruited.”

“It is important to continually point out to all physicians that their engagement is the driver. Physicians who are active in fundraising activities generate more donor prospects.”

“If a physician’s program receives significant donations, they need to participate in developing the stewardship report.”

“At Childrens Los Angeles, like most institutions, we never asked physicians to directly request a gift from one of their patients, although some did so voluntarily. We did ask them to be alert for grateful patients expressing an interest in helping.”

Congratulations Claudia for your great fundraising work on behalf of the children of the LA Basin. You’re a real pro.

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Structural Foundation Proposals: Why they are important to major gift fundraising

Structural Foundation Proposals: Why they are important to major gift fundraising

by Tom Wilson Major Gifts Guru

A reader asked what I meant by a structural foundation proposal. It's a great question.

Many foundation proposals go to family foundations and therefore need to be very brief. Other philanthropic foundations (defined as highly staffed foundations with a rigorous, formal review process) require an in-depth proposal, a structural proposal, that covers all aspects of the project and your fundraising for it.

A U.S. national foundation that puts you through this process is the Kresge Foundation of Michigan. In the American Pacific Northwest, the M.J. Murdock Charitable Trust, is one of the toughest and most thorough. Serving Washington, Oregon, Alaska, Idaho, and Montana the Murdock Trust has a long and storied history of kind, but tough-minded trustees and program officers.

After a letter of inquiry (LOI) to Murdock, a full proposal can take up to 20 pages to complete. Staff reviews your proposal over 6 to 9 months and will come for a site visit of several hours to interview team members involved with the project. Follow up questions and clarifications are all part of their due diligence.

I've had another foundation give a client a million dollars for a project then go to the Murdock Trust with an updated proposal only to find we had to do 15 drafts to get all of the details in place. After two sets of written questions with 10 pages responses each, we finally had our act together and eventually got funding.

While the Murdock Trust asks for 40% of the project to be funded before approaching them (and the Kresge Foundation 65%, although this may be changing now with new leadership), I always encourage my client to start drafting these "structural" proposals early in the campaign as they force the organization to be thorough. These proposals can be used for donors who want the whole story and as a template for shorter, less rigorous foundation proposals.

Let me know if this answers the question.

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Philanthropic Fundraising from Investor Types

Philanthropic Fundraising from Investor Types

By Tom Wilson Major Gifts Guru

Having worked on the West Coast of the United States for more than 20 years now, I’ve had the opportunity to work with many venture capital investors, angel investors, and mid-cap investors. In presenting a major gifts proposition to them there are unique challenges.

What I’ve found that works well is:

• 12 to 20 slide PowerPoint outline presentation with pictures, charts, graphs to be able to engage the potential investor (major gift donor) in our organization, its impact, its challenges, and its return on investment for society.
• An everything you might want to know set of documents that enable a serious investor “to go deep.” Structural proposals to your toughest area foundation work well as a basis for this document.
• A comprehensive internal team of both management and all employees and staff so when the investor does their due diligence by wandering around (either on person or on the phone) they are getting a consistent, unified response from all parties within your organization no matter what the job level.
• Be respectful but be ready to push back if unreasonable questions are asked. This means you have to have done your homework. A strong institutional and project plan are critical to knowing what you know and what you don’t know. It’s okay to say “we haven’t thought about that yet.” Or, “I don’t know, that’s a great question.” Sometimes these investors want to see how tough you are.

A recent article in The New York Times “In Pitching to Angel Investors, Preparation Outweighs Zeal” by Brent Bowers brought back some of these concepts. Mr. Bowers noted:

“Don’t get carried away when you pitch your product as your investors may lose interest.”

“One misstep – like stammering a vague reply instead of saying you do not know the answer, can also kill the deal.”

There are an estimated 260,500 active angel investors in the United States according to Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire. In 2008 $19 billion was invested in 55,000 ventures; in 2007 $26 billion. Mr. Sohl noted:

“With time at a premium, it is imperative for entrepreneurs to come to both meetings (an informal session to see if an idea has promise and then a PowerPoint presentation followed by a Q&A) with solid arguments.”

At a Babson College conference Richard Sudek, an angel investor and assistant professor of entrepreneurship at Chapman University in Orange, California stated: “We like you to show excitement but don’t force it. Being authentic is much more important. There is such a thing as quiet passion. Anything that comes across as slickness is a negative. Angels put a high value on trustworthiness. If you don’t know the answer to a question, say so, and promise to get back to them. Don’t fake it. In fact, acknowledging gaps in your knowledge and other weakness, and letting angels know you need their help, can add to your credibility.”

Advice from three research studies presented at the Babson College entrepreneurship conference include.

• Memorize an “elevator pitch” of 90 seconds or less
• Consider hiring a speech coach
• Attend pitching contests
• Be upbeat but realistic in your revenue projections showing optimistic, middle-ground, and pessimistic projections
• Don’t ask people for money unless you have invested your own
• The business plan should be precise (look at the software on Angelsoft.net)
• If you get a “no,” ask for suggestions on where else to make a presentation, get referrals of other investors to see

I love these articles that have nothing to do with major gift fundraising . . . and everything to do with it.

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