Foundation Giving Hit Hard by Economy (Q2 2009)

Foundation Giving Hit Hard by Economy (Q2 2009)

by Tom Wilson Major Gifts Guru

The Chronicle of Philanthropy reported (4/23/09) on a survey conducted of 1,243 of the largest foundations by the Foundation Center.

• 2/3 of large foundations will reduce the number and size of their grants this year
• 46% will reduce the number of new grantees
• In an unusual finding 39% expect to use their endowment principal to make grants

As noted in an earlier post, the impact on foundations has been highly variable. Check with your local foundations to see how they've adjusted.

And, as one foundation executive told be: "Be ready to tell our trustees how you have changed operations and programs to adjust to the new realities of the economy. If you come in acting like it's business as usual, you will be facing some very tough questioning."

Permanent Link: Foundation Giving Hit Hard by Economy (Q2 2009)

http://majorgiftsguru.com/2009/04/foundation-giving-hit-hard-by-economy.html

Good News in Higher Education Philanthropy

By Tom Wilson Major Gifts Guru

$70 million in 2 months to at least 12 colleges – an anonymous donor and all the colleges have women presidents. Lisa W. Foderaro reported this story in The New York Times noting this generosity to Binghamton University (NY), Montclair State University (NJ), University of Southern Mississippi, Michigan State University, Kalamazoo College (MI), Purdue University (IN), University of North Carolina Asheville, University of Maryland University College, and others in Iowa and Colorado.

Nobody knows who is being so generous: One note on a bank's stationary.

"It is hoped this will make a substantial difference to your students during these challenging times enabling a more confident, sharper focus on their studies with improved career and life prospects."

Permanent Link: Good News in Higher Education Philanthropy

http://majorgiftsguru.com/2009/04/good-news-in-higher-education.html

The 5 Most Important Questions for Nonprofit Organizations (part 1 of a series)

The 5 Most Important Questions for Nonprofit Organizations (part 1 of a series)

By Tom Wilson Major Gifts Guru

How can you get your organize to focus on its mission? To clarify it so it’s simple and understandable to major gift donors? So your board members can remember it in social settings?

How can you prove the impact of gifts to your organization? What’s the evidence your organization benefits the community? Society?

What’s your plan for the future? Where do you need funding to realize this vision?

These are some of the issues that Peter Drucker’s 5 Most Important Questions force you to deal with.

I had the pleasure of participating in a 5 Most Important Questions facilitator network training session in San Diego recently. It was presented by the Leader to Leader Institute and sponsored by the Bright China Social Fund. 36 of us from throughout the U.S., China, Korea, South Africa, Mexico, and the United Kingdom spent our weekend together sharing insights and facilitation tips.

The 5 Most Important Questions

• #1 What is your mission?


• #2 Who is our customer?


• #3 What our customer value?


• #4 What are our results?


• #5 What is our plan?

In this series of blog posts, we’ll review each of the questions and why it’s important for your organization to answer them in order to set up a Winning Gifts major gifts program where your donors really do feel like winners.

This article was the first of two. Click here to read the second: The 5 Most Important Questions (part 2 of a series)

Permanent Link: The 5 Most Important Questions for Nonprofit Organizations (part 1 of a series)

http://majorgiftsguru.com/2009/04/5-most-important-questions-for.html

Nonprofit Benchmarking Book Review

Nonprofit Benchmarking Book Review

By Tom Wilson Major Gifts Guru

I wrote a series of articles earlier this year about benchmarking for fundraising and included a review of Gary Hubbell's new book. In listening to Gary present at a CASE regional conference he mentioned the Keehley & Abercrombie book Benchmarking in the Public and Nonprofit Sectors: Best Practices for Achieving Performance Breakthroughs, 2nd edition.

My personal goal is to review one book a month for you. While vacationing in Hawaii over spring break I did some beach reading, so here's the review.

The first edition was focused on the public sector: governmental agencies. This edition goes into nonprofit practices and particularly notes a unique nonprofit style of quick "solution-driven benchmarking."

I recommend this book for those of us who want to understand benchmarking better. For the public sector (5 stars *****), for the nonprofit executive (4 stars ****), for the major gifts fundraiser (3 stars ***) only after reading Gary Hubbell's book.

The authors make the point that corporate benchmarking came out of the TQM (total quality management) movement created by Edward Deming (one of my heros). To help determine quality measures, Xerox created benchmarking measures to help detect and implement best practices from some of their manufacturing units to the entire company.

Traditional benchmarking takes 11 steps and significant resources. Nonprofit solution-driven fundraising cuts this back to 5 steps and can be done by 1 brave leader.

The authors capture the trend of corporate benchmarking (20 to 30 years old) transferring to public benchmarking around the re-engineering government movement of the mid 1990s. The next frontier will be nonprofit organizations (hospitals are starting to see this big time as evidenced by the major benchmarking initiative launched by AHP a few years ago).

If the mantra for real estate is location, location, location . . . and the mantra for major gift fundraising is cultivation, cultivation, cultivation . . . then the mantra for benchmarking is measure measure, measure.

The other themes are discovering best practices and finding a partnering organization to learn in depth what they are doing well and why.

The 5 steps for nonprofit solution-driven benchmarking are:

• 1) Discover the problem


• 2) Establish criteria for solutions


• 3) Search for promising practices


• 4) Implement promising practices


• 5) Monitor progress

Stay ahead of the curve and get this book.

Permanent Link: Nonprofit Benchmarking Book Review

http://majorgiftsguru.com/2009/04/nonprofit-benchmarking-book-review.html

Big Picture Financial Planning for Nonprofits (part 4 of a series)

Big Picture Financial Planning for Nonprofits (part 4 of a series)

by Tom Wilson Major Gifts Guru

In the previous posts we discussed the keys to financial success for nonprofit organizations – a balanced budget, a 5% contingency, no debt, and 3 to 6 months of cash reserves. I noted that some donors find these factors reassuring and are very willing to give. If we’re asking donors to make investments in our organizations, we need to be a safe and vibrant place in which to invest.

But, is this enough of a case statement for a major gifts officer?

Not yet.

In helping organizations to get these financial elements in place, FAS would offer technical assistance to management. And, most importantly, they provided a major challenge grant to help motivate donors to help. Ideally they wanted to put up 1/3 of the capital needed, help the organization find a lead gift donor to put up another 1/3, and then go to the community for the balance of stabilization funds.

This challenge component is a key.

Those of you that have heard me speak about endowment fundraising have heard my great diversionary tactic – if all else fails, have a challenge gift to motivate donors.

The lead donor loves to make the challenge and other donors like to earn the money so they step forward. The purposes of what the funds will be spent on are not hidden, but secondary to the thermometer effect of reaching the challenge goal.

So is this all there is about financial stabilization fundraising?

To read the rest of the series, please see below:

• Big Picture Financial Planning for Nonprofits (part 1 of a series)
• Big Picture Financial Planning for Nonprofits (part 2 of a series)
• Big Picture Financial Planning for Nonprofits (part 3 of a series)
• Big Picture Financial Planning for Nonprofits (part 6 of a series)
• Big Picture Financial Planning for Nonprofits (part 5 of a series)
• Big Picture Financial Planning for Nonprofits (part 7 of a series)
• Big Picture Financial Planning for Nonprofits (part 8 of a series)

Permanent Link: Big Picture Financial Planning for Nonprofits (part 4 of a series)

http://majorgiftsguru.com/2009/04/big-picture-financial-planning-for_22.html

Fundraising Volunteers

Fundraising Volunteers

by Tom Wilson Major Gifts Guru

In good times there was never enough major gift officer staffing to raise all the money we needed. Now in tough times, we need more money and have to do it with the same staff, or in many cases with less staff.

For years there has been a debate on staff driven fundraising or volunteer driven fundraising. And, too often the staff viewpoint was prevailing.

Those of you that know me are aware of my arts fundraising start to my career. In the arts budgets are always tight and fundraising goals aggressive. For the arts, the only way to achieve major gift fundraising success is through finding, recruiting, and training effective volunteer fundraisers.

A recent article in of the March / April edition of AFP's Advancing Philanthropy highlighted one great volunteer, Bill Greehey, chair of Nustar Energy LP of San Antonio, Texas who won AFP's 2009 Outstanding Volunteer Fundraiser award. Greehey notes:

"Nonprofits need to be more aggressive in getting leadership. There's no point in having board members who aren't committed to giving time and money. That's why I always want to be on the nominating committee . . . . Too many nonprofits just look for a big name, and that's not important if they don't get involved."

That's also why as a great major gifts fundraising you need to be involved in your board's nominating committee. Offer to provide staff support and names of people you'd like to see on your board. Help write a "rules of engagement" job description for board members that includes their role model giving and communicating with passion why your organization needs funds.

Volunteers can be tough to manage because many are bright, strong willed, and want to charge off in many directions. Remember the Law of the Few from The Tipping Point; some will be champions, many will be connectors, and a few will be salespeople.

Take the time to train volunteers, nurture them, go on calls and you'll develop some wonderful talent for the ideal major gifts fundraising method – volunteer led, staff driven fundraising.

Permanent Link: Fundraising Volunteers

http://majorgiftsguru.com/2009/04/fundraising-volunteers.html

Foundation Fundraising During the Economic Crisis (Q2 2009)

Foundation Fundraising During the Economic Crisis (Q2 2009)

By Tom Wilson Major Gifts Guru

As I've been out interviewing foundation trustees and staff of foundations, I've heard astounding information for a major gifts fundraiser.

Some foundations are literally trapped in a slow moving glacier – multi-year pledges combined with 40% drops in assets have virtually shut them down.

Others are fully committed for 2009 but will get back in action in 2010.

Some were conservative, did no future pledging, lost some assets in the market, and will move forward but with smaller grants and tougher scrutiny.

One trustee recently told me that some foundations are considering taking out a line of credit so they don't have to cash in underperforming assets and realize their lower valuations.

The Foundation Center is tracking many of these issues on their website www.FoundationCenter.org. Check out their status reports and ongoing monitoring of how foundations are focusing on housing, emergency assistance, and providing shelter and services for the homeless by clicking here.

Permanent Link: Foundation Fundraising During the Economic Crisis (Q2 2009)

http://majorgiftsguru.com/2009/04/foundation-fundraising-during-economic.html

Big Picture Financial Planning for Nonprofits (part 3 of a series)

Big Picture Financial Planning for Nonprofits (part 3 of a series)

By Tom Wilson Major Gifts Guru

So far in parts 1 and 2, we covered the basic keys for financial stabilization for a nonprofit organization – a balanced budget, a 5% contingency fund, and no debt.

What’s next?

The magic bullet for financial stabilization . . . (drum roll and cymbal crash) . . . reserve funds.

Your organization should be holding 3 to 6 months of reserve cash in the bank. If you need to borrow money for an operating problem, or a building repair, borrow from yourself not from a financial institution.

And, have a strict payback policy (no interest is fine, but pay back the reserve fund over the next 1 to 3 years to get back to the 6-month reserve target).

A corollary issue – if you have unrestricted gifts (usually bequests) that the board has designated as endowment (quasi-endowment or temporarily restricted funds), please move enough of these funds from “endowment” to reserve fund status. I was involved with one endowment capital campaign and came to find out from irate donors that the Endowment fund had been “raided” a few years earlier. Funds were needed to complete overruns for a construction project, but they were taken from endowment (with a small “e”) that was board designated. So yes, they could be used. Endowment (with a big “E”) that is donor restricted cannot be touched. Endowment fundraising is hard enough without confusing people with donor restricted funds (true endowment or permanently restricted funds) and board designated funds (quasi endowment or temporarily restricted funds).

Set up reserves right now and avoid future problems.

For a major gifts fundraiser, all of this may seem dull and hard to market to donors –money for an operating contingency, to pay off debt, and to build cash reserves. But, you’d be surprised. For people who made their money in the business world all of these issues make sense. Their company would never operate without reserves and working capital.

In fact, when they realize all of the factors that have been hampering your organization because of the lack of capital they are eager to help.

But, there’s also a few more elements to stabilization fundraising that can make it more exciting to donors.

To read the rest of the series, please see below:

• Big Picture Financial Planning for Nonprofits (part 1 of a series)
• Big Picture Financial Planning for Nonprofits (part 2 of a series)
• Big Picture Financial Planning for Nonprofits (part 4 of a series)
• Big Picture Financial Planning for Nonprofits (part 6 of a series)
• Big Picture Financial Planning for Nonprofits (part 5 of a series)
• Big Picture Financial Planning for Nonprofits (part 7 of a series)
• Big Picture Financial Planning for Nonprofits (part 8 of a series)

Permanent Link: Big Picture Financial Planning for Nonprofits (part 3 of a series)

http://majorgiftsguru.com/2009/04/big-picture-financial-planning-for_20.html

Updated Link for April 17 Educational Session

Updated Link for April 17 Education Session

The link is the original post has been repaired. Here is the link for the Effective Fundraising for Nonprofit Organization session.

http://www.lorman.com/teleconference/teleconference.php?pid=202107

Permanent Link: Updated Link for April 17 Educational Session

http://majorgiftsguru.com/2009/04/updated-link-for-april-17-educational.html

Fundraising Training: Effective Fundraising for Nonprofit Organizations

Fundraising Training: Effective Fundraising for Nonprofit Organizations

by Tom Wilson Major Gifts Guru

Please join me on Friday, April 17th for my teleconference through on Lorman Educational Services on Effective Fundraising for Nonprofit Organizations.

This is a basic overview course that will cover:

• Champion a culture of philanthropy
• Develop a successful annual giving program
• Work on capital giving

Click here to get information on how to join this session.

Permanent Link: Fundraising Training: Effective Fundraising for Nonprofit Organizations

http://majorgiftsguru.com/2009/04/fundraising-training-effective.html

Convert Planned Estate Donors to Major Gift Donors

Convert Planned Estate Donors to Major Gift Donors

by Tom Wilson Major Gifts Guru

For years, I've been an advocate for every fundraising office doing basic planned estate gift fundraising. Knowing that 87% of all planned gifts come by way of a simple estate gift, then all of us can start a wills and bequests program.

The usual path is creating a legacy society or heritage club to honor people who have made a planned estate gift to your organization.

If you're in campaign mode, or as time goes on you want to have each legacy society member estimate what the size of their commitment to your organization will be. This enables you to check on how they made their gift and to determine what opportunities there are for revaluing the estate.

For example, one lady I talked with said she didn't have a big estate. As I looked around her dated, but wonderful home in the hills overlooking the city, I asked her what about her house. She said it wasn't worth much, just $16,000. I asked again and she said yes, she and her late husband had paid $16,000 65 years ago. To her, the house wasn't a big asset. To us, in her estate plan, the house was worth well over a million dollars.

So how do you convert planned estate gift donors to major gift donors now?

Keep building your relationship and when the time is right ask if some of the estate gift could be advanced now.

There was a great article in The New York Times recently that captured this concept perfectly. Sandy Weill had already given Cornell University more than $200 million to name the medical school. He had also indicated a sizable bequest of $250 million would be coming as well. With Cornell's endowment hard hit by the market crash, University president David J. Skorton asked 76-year old Weill if he could advance some his estate gift now. Mr. Weill agreed and donated $170 million in cash

According to the Cornell University website: "In completing their gift in December and January, the Weills created the Weill Challenge, which will raise up to $203 million in additional gifts that exclusively support construction of the medical college's new research building."

So, every major gift officer should devote some time to simple planned estate gift fundraising and in converting long-term legacy society donors to major gift donors now.

Permanent Link: Convert Planned Estate Donors to Major Gift Donors

http://majorgiftsguru.com/2009/04/convert-planned-estate-donors-to-major.html

Big Picture Financial Planning for Nonprofits (part 2 of a series)

Big Picture Financial Planning for Nonprofits (part 2 of a series)

By Tom Wilson Major Gifts Guru

See part 1 for more background on why endowments are not the magic answer to financial health for most nonprofit organizations. To continue on the solution path . . . .

While started as an arts initiative, after many years the Financial Arts Stabilization Fund, shortened its name to NAS Fund when it became apparent this financial model fit all nonprofit organizations, not just the arts.

Why is this financial stabilization discussion important to major gift fundraisers?

In these unsettling times, many nonprofits are financially unstable and major donors know it. Why should they invest in an unstable organization? How can you reassure them you will be okay and have a plan for the future?

Read on.

A balanced budget each year was the first key to financial discipline. Remember this was the arts (and is the arts where I started my fundraising career). Balancing the budget year was not a given and still isn’t.

To help ensure a balanced budget and to plan for uncertainty, FAS recommended a 5% contingency fund be established in the operating budget. If these contingency funds are not used during this budget cycle, they can be carried for use next year. This contingency fund insulator enables organizations to weather ups and downs in their operations without breaking (or going) to the bank. For an organization just barely balancing its budget each year, the 5% guideline can seem like a huge budget number. Start small if you need to. Shoot for 1% next year, then 2% the following year until you hit the 5% benchmark.

Given a balanced budget and a 5% contingency, the next key to financial stabilization is eliminating all debt. For some nonprofits, particularly colleges and hospitals, long-term debt around a building may be okay, but short term debt is an albatross around the neck of a nonprofit. A good metaphor is your personal finances. A home mortgage is okay but credit card debt isn’t. And of course, no debt at all is ideal.

So, to summarize so far – a balanced budget each year, a 5% contingency fund in the operating budget, and no debt.

But that’s wasn’t the total solution.

To read the rest of the series, please see below:

• Big Picture Financial Planning for Nonprofits (part 1 of a series)
• Big Picture Financial Planning for Nonprofits (part 3 of a series)
• Big Picture Financial Planning for Nonprofits (part 4 of a series)
• Big Picture Financial Planning for Nonprofits (part 6 of a series)
• Big Picture Financial Planning for Nonprofits (part 5 of a series)
• Big Picture Financial Planning for Nonprofits (part 7 of a series)
• Big Picture Financial Planning for Nonprofits (part 8 of a series)

Permanent Link: Big Picture Financial Planning for Nonprofits (part 2 of a series)

http://majorgiftsguru.com/2009/04/big-picture-financial-planning-for_07.html

Paying for Donor Recognition

Paying for Donor Recognition

By Tom Wilson Major Gifts Guru

A private investor, founder of U.S. Home Corporation, and AFP Outstanding Philanthropist Frederick E. Fisher (Florida) was recently quoted in Advancing Philanthropy on several donor recognition issues – “I’ve told organizations I work with that I have enough stuff. Save the money. Just send me a tax letter for my files. And if you’re going to have a party charge everybody. I think people appreciate it more. I do. I’d rather they use their money better.”

I’ve been advocating for many years that we should never give rich people free food. It hurts the tax deductibility of their gift, and like Mr. Fisher, most donors are very willing to pay their own way. As one of my million-dollar donors told me, I want my entire contribution to go to your university not feeding us. She encouraged us to charge the “real” cost of the meal.

We were careful never to make the pricing look like a special event fundraiser, and always included a note that we were charging to enable their full gift to be used for our students and faculty.

If people wanted to bring a prospect as a guest, we encouraged them to buy the meal for their guest or agreed the fundraising office would pay for a “newbee.”

Permanent Link: Paying for Donor Recognition

http://majorgiftsguru.com/2009/04/paying-for-donor-recognition.html

Big Picture Financial Planning for Nonprofits (part 1 of a series)

Big Picture Financial Planning for Nonprofits (part 1 of a series)

By Tom Wilson Major Gifts Guru

As the stock market and other investments have hammered nonprofit endowment funds, the FAS financial planning model for nonprofits is more relevant than ever.

FAS, initially called financial arts stabilization, developed in the 1970s as a response to a failed endowment challenge initiative by the Ford Foundation. In hopes of shoring up the finances of symphony orchestras throughout America, Ford Foundation issues a series of matching challenge grants in the late ‘60s for symphony endowments throughout the country. The challenge campaigns were successful and endowment funds boosted.

Nevertheless, 5 years after the initiative was over the orchestras were in financial trouble yet again. What happened? Why weren’t the new endowments working?

One of Ford Foundation staff members dug into the issue and discovered that budget surprises over the years had caused recurring deficits. In simple terms – endowment funds were pledged to loans to secure this new debt. The interest on the loans and the endowment distribution nearly cancelled each other out basically negated the presence of the endowment.

So what was the solution?

A financial arts stabilization model was developed and three major foundations including the Ford Foundation, Kellogg Foundation, and Charles Stewart Mott Foundation provided seed funding.

The keys to financial health were not just a big endowment fund, although part of the model includes endowment enhancement.

The keys were – a balanced budget, an operating contingency, and reserve funds.

To read the rest of the series, please see below:

• Big Picture Financial Planning for Nonprofits (part 2 of a series)
• Big Picture Financial Planning for Nonprofits (part 3 of a series)
• Big Picture Financial Planning for Nonprofits (part 4 of a series)
• Big Picture Financial Planning for Nonprofits (part 6 of a series)
• Big Picture Financial Planning for Nonprofits (part 5 of a series)
• Big Picture Financial Planning for Nonprofits (part 7 of a series)
• Big Picture Financial Planning for Nonprofits (part 8 of a series)

Permanent Link: Big Picture Financial Planning for Nonprofits (part 1 of a series)

http://majorgiftsguru.com/2009/04/big-picture-financial-planning-for.html