Why Reduced Government Funding is a Good Thing

You, like many nonprofits, are facing a cut or one of many cuts in your funding from government agencies. To many this is unwelcome news. While I see much handwringing by nonprofits about reductions, cuts can also be a blessing in disguise. Why? For many reasons, here are four:

1. Re-Invent Yourself. Reductions are an opportunity to decide how you wish to be funded. Government funding is only one of seven major nonprofit funding streams. Often, nonprofits chose it by default or because the money arrives in large attractive chucks. Is this the ideal way for you to be funded? This is a chance to examine the options and choose your ideal path.

2. Farewell to Restrictions. If you are tired of being unable to serve people who need it, because they fail to meet funding restrictions, more flexible funding with fewer restrictions is a “yes!”

3. Less Unnecessary Work. Perhaps your nonprofit is unique, but almost all nonprofits find that government funding requires extra work that you wouldn’t do (it doesn’t improve your outcomes) except to comply with the rules and retain the government money. If you can shift this effort into productive outcomes, it’s worthwhile.

4. Closer to Your Community. Getting your income from large chunks of government money, especially from state, province or federal sources, often isolates nonprofits from local market influences and needs. Growing diverse income sources will bring you in touch with these needs, demand new partnerships, innovative thinking and create greater income stability.

Why is reducing government funding is a good thing? In short, it opens up new possibilities. With creative effort and hard work, you can overcome the reductions you face. Before your current government funding shrinks further (it will!), take steps to grow your future using the resources you have now. If you wait, you risk having to start from dead stop. The sooner you begin the sooner you will be to say, “Reducing government funding was one of the best things that ever happened to our nonprofit.” Contact Karen for help.

Painless Giving

Last month I blogged about three graduate students at Rutgers University that made a life-long pledge to give a significant portion of their incomes to those less fortunate. A common response I got to the post was similar to what the three themselves have heard: “How admirable. But I wonder how long they’ll maintain that pledge once they start having families and facing the everyday responsibilities of a mortgage and car payments? But must these commitments be mutually exclusive? Can’t one still give generously without negatively impacting one’s lifestyle? There are those that would answer a resounding “no” to the first question and “yes” to the second.

After posting that last blog, I heard back almost immediately from a colleague, Dr. Donna Goldstein. She wanted to share what she does to make a difference in others’ lives that take little more from her than her time. One idea she presented is that when she goes to the grocery store she takes liberal advantage of the frequent two for one offers, even though she rarely needs the second item. She keeps the one she needs and donates the second to her local food bank. She also haunts the second-hand stores, often finding just the perfect item for her wardrobe or home. She takes the money she saves by not buying new and donates it. On top of the good feeling she gets from that, she enjoys the pleasure of the hunt.

My brother, Dr. Larry Temkin, is a Professor II in the Philosophy Department at Rutgers. A moral philosopher internationally recognized for his work on inequality, he lectures on this topic regularly. He tells his students that while some, like Donna, may actually prefer finding something unique at the second-hand store, they can still buy new and make philanthropic contributions, all without necessarily affecting their desired lifestyle. As an example he might suggest that perhaps they have been lusting over a special pair of jeans that cost $150. They are going to buy the jeans, but they just haven’t gotten around to it. Then one day, the jeans go on sale. They pick them up for half off. They were perfectly willing to buy the jeans at $150, but only had to spend $75. They could take the $75 they saved and donate that to charity without taking a dime from the pocket they know they should be designating for charitable giving.

On a smaller scale – that does add up – they can become coupon shoppers. Fifty cents here, two dollars there… If they put aside their savings, in short order they will have a full piggy-bank to share with someone less fortunate. Again, it’s all out of money they have mentally already spent, so it seems less onerous than having to come up with “extra” money that they can donate. And, of course, if they are among those that empties the change from their pockets each night and throws it into a can to sit for years and years, they have a ready source of cash that will never be missed.

I’d love to hear your suggestions for painless giving.

Touch Goals

Q: “Many boards like to set monthly goals for “touches” with new prospects. In your experience, what is a reasonable amount of “touches per month” for new corporate and individual prospects? My boss wants something like this and I don’t want to be way off base.”

A: The quick answer is that it varies organization-to-organization and situation-to -situation. No magic one-size-fits-all number exists. To establish your customized touch goals for new donors, consider several factors. The most important ones are results, flexibility and common sense. If you establish touch goals and find that your results are inadequate, revise numbers or your definition of what constitutes a touch. Also, any new touch goals (i.e., ten individuals and five corporations) should be comfortably placed on the backburner when other more beneficial opportunities arise. That is, if you have opportunities to work with seven known donors this month to bring in $25,000 each and it takes all your time, your touch goals become secondary—with no penalty. A donor-in-hand is worth more than twenty in the bush. Jerry Panas states that it can take 4.5 times the resources, staff, and energy to acquire a new donor as its does to keep a current one.

To establish the discipline necessary to meet your touch and other development office goals, see http://www.kedconsult.com/articles-resources/tracking-worksheet-for-donor-development/ . I developed this for donor development. I use something similar every day. On unstructured days, it will help you to remember to keep “the main thing” the main thing. After you adapt and use one like it for your work, evaluate it at the end of every month for results. Jiggle what you do until you find a stretch that motivates you, pleases your boss and creates the long-term results you seek.