Rational Fundraising and Income

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Is This Task On Your To-do List? Miss It At Your Peril

One overlooked task of nonprofits is to make sure they are rational in their fundraising and income development work. Why is this overlooked? People don’t realize it is needed. Most people come to your nonprofit based on their emotions, that is, their passions.

Passions are an excellent starting point. It is how we select the causes we care about from the overstuffed cereal-aisle-full of nonprofit opportunities. What do we believe in? What made a difference to us? What will make a difference in our community? We choose based on emotions. We choose based on passions.

Passions get us in the door. While passions should not be forgotten, they do not make a good base for fundraising and income development work. Passions alone do not create income. Passions mixed with rational actions based on research, strategy, analysis and planning do create income.

How can you tell if your fundraising and income development work is rational?

Here are three keys to evaluate it:

Key One: Logical and Realistic Expectations. If you raised $100,000 last year from earned revenue, it is logical given similar efforts and a similar market, that you will raise the same amount give or take 10 percent next year. If you never raised $100,000 is unlikely you will receive a gift this size, even if you included it in your strategic plan. Your fundraising and income plan are rational when you can identify short sequential steps that get you from here to there.

Key 2: Effort. The strategic plan states that the fundraising committee will raise funds. The committee meets regularly, directs several initiatives and makes appointments to ask donors for donations and to build relationships. In this case, effort matches the sought outcomes. Contrast this with a fundraising committee who meets for several times and then quits because they have no idea how to fulfill the goals given to them.

Key 3: Proven Paths. Not only must you put forth effort, it must be the right effort. Susan, in the midst of her first capital campaign, attends a workshop to confirm that her work as campaign coordinator is on track and that she has correctly organized her next steps. From her research, Susan learns that she has a proven plan to meet her goal.

Passions often rule, even in fundraising and income development work, unless efforts are made to be rational. What keys that show you are being rational would you add to these three? How do you make sure your fundraising and income development work is rational?

Serving on a Nonprofit Board is Good Business

This summer several blog contributors are presenting a series of audio conferences entitled Serving on a Nonprofit Board is Good Business. The series prepares individuals to serve on boards of nonprofit associations. While aimed at board members, executive directors can also learn from them. A recent session, Engage! Provide Oversight, lead by Dr. Terrie Temkin provided these helpful tips:

1. Terrie suggested developing a checklist to help complete all board essentials quickly. She shared that most boards spend ALL their time on these essential but routine items, which leaves little time for thoughtful strategic conversations. Do you have a checklist for routine items? When can you develop one?

2. While you might already have one or more skeptics on your board, Terrie suggested you make this role available to everyone by creating a “skeptic of the day.” This person asks dig-deeper questions to stop automatic group consensus and encourages thoughtful questioning. By sharing the role you will hear a new voices and new questions.

3. You can’t be everywhere. Terrie recommended dedicating a few minutes at each meeting for a “By the Way Conversation.” During this time people share what they have heard about your organization and key community events that impact it. What can you discover if you regularly ask your board members what is new? What events did they attend since you last met? What did they learn? “By the Way Conversations” help you to learn all over the community.

In a few weeks the group presenting this series will meet for a planning session. Do you have any interest in a series like this for your board members? (The current series is for members of the Society for the Advancement of Consulting only.) Would you be interested in a similar series for executive directors? Let us know your thoughts so we can include them in our plans. Thanks!

Can You Make Money with Your Mission?

Questions for Board Members to Ask

Are you a board member looking for earned or mission income opportunities? Before you start new income activities study your organization’s other mission income experiences. Has your organization earned mission income in the past? Were the efforts successful? Can their success be traced to marketing, the products or timing? Are the circumstances repeatable? What percentage of the cost of providing the service did or does the income cover? In short, what strengths and skills has your organization gained with mission income?

For more see March’s Added Value newsletter. It presents a quick overview of this nonprofit funding source for board members.

Our Boards Must Understand How They Operate

I just finished analyzing a governance assessment completed by 15 different organizations participating in a board building program sponsored by our local Community Foundation. It was fascinating. In many cases there would be one person from an organization that would answer the question in the affirmative about whether that organization had a Whistleblower Policy or a Records Retention policy – policies every organization must have. The rest of the respondents would answer “no” or “I don’t know.” In each of these cases, the executive director/CEO completed the survey along with board members. While I didn’t have the access required to manipulate the data, I’d bet my bottom dollar it was the executive director/CEO that was correctly answering the question because he or she was the one who ensured compliance. Even the answers to questions such as whether the organization employs term limits or a consent agenda revealed that oftentimes more than half the board members did not know if they did or didn’t.

While not surprised, I must admit I’m a bit disappointed. Clearly the majority of these organizations are operating according to proven practices, but the board is not aware of it. According to their answers to the question about the ease of getting a quorum, it doesn’t appear the problem lies with nonattendance. It seems as if the chief administrative officer is implementing the right policies and procedures but failing to share this with the board along the way.

What is the answer? First, maybe it’s time that the executive director/CEO turn over the implementation of board-related responsibilities to the board. Using the example above, this would mean that the development and dissemination of policies would be done by the board. And, if the board handles the job, the members would know the policies exist.

Second, perhaps the content of board education should be changed to focus more on proven practices and how the board complies with such practices. The bylaws committee might mention what section in the bylaws is guiding each action. The board development committee might create more or different talking points or initiate a short quiz at each board meeting designed to test whether the board knows how it is/should be operating. The orientation might be enhanced to ensure new board members understand what is expected and why.

Finally, there has to be a better communication. At meetings the board chair might make it a point to explain why certain actions are being taken. Committees might use a report form that spells out how recommendations relate to the organization’s strategic initiatives the budget, staffing and so on.

Hopefully, by working together more as a board each member of the board will know exactly how the board operates and why. Ultimately, that has to result in a more effective board.

Study on Women Donors Presents Lessons for Board Recruitment

A study released this week by the Women’s Philanthropy Institute at Indiana University’s Center on Philanthropy showed that women are the largest donors. They give more in actual dollars and they give more frequently than men. This is a reality that holds true regardless of the women’s own economic status; and, the disparity of giving increases with the individuals’ income. For instance, 35.2 percent of women who earn $23,509 or less annually make charitable contributions, opposed to 27.5 percent of men who earn at that same level. When income rises to at least $103,000, 96 percent of women give to charity, while only 75 percent of men of similar means give. The results, culled from a sample of 8,000 American households, also revealed that women typically give because they care about the work that is being done. Men tend to give because they are asked.

This study is already shaking up many who have traditionally turned to powerful men in the community for large financial commitments. However, it should also shake up those who are recruiting for boards of directors. According to the Urban Institute study, “Nonprofit Governance in the United States: Findings on performance and accountability from the first national representative study” by Francie Ostrower, while women make up almost half of all boards in the US (46 percent), they tend to be found on the boards of smaller organizations – typically organizations with budgets under $100,000. The percentage of women serving on the largest (budgets of $40 million plus), most prestigious boards is only 29 percent.

One reason for the above may be that, according to Ostrower’s findings, women often do not make the cut when organizations use financial skills and reputation in the community (“affluence and influence”) as recruiting criteria. If board members are expected to be among the biggest and most committed givers, the Women’s Philanthropy Institute’s study should cause us to question whether organizations are shooting themselves in the foot when they actively solicit more men than women.

Perhaps of even more import is the difference the study found in why people give. Will Brown’s work shows that belief in the mission is the most important factor related to board performance. Conversely, Candace Widmer, in a now classic study, found that joining a board because a friend asks is a temporary incentive and provides neither ongoing rewards nor participation. So, unless the organization is quickly able to provide these board members with other, more meaningful incentives, they will not stay involved. Does it not make more sense, therefore, to recruit those who are already motivated by what the organization is doing? We now know empirically, this means recruiting more women with a demonstrated interest in our organization’s mission.

Summer Reading: Jumping Hurdles

The History of the Schoenbaum Human Service Center of Sarasota

In my hunt for books that tell nonprofit stories, I found this booklet. Dr. Kay Glasser, who died early this year, tells about her magnificent obsession to create a human service center. At the Center she created, nonprofits receive “free rent” and those in need receive multiple services.

The booklet’s biggest lesson is to remind nonprofit leaders of the importance of creating by-laws that serve your organization. The Center’s first by-laws called for a board of directors composed solely of representatives of the agencies housed in the Center. This resulted in two challenges. First, board members had the natural tendency to vote in their own agencies interests. Second, according to Dr. Glasser, she had to do the fundraising without board help because they were busy fundraising for their own organizations. Would the Center have been better served by creating a board of influential citizens with agency representatives serving an advisory role?

Dr. Glasser also shares the many other hurdles she overcame in the eight years or so it took to move from concept to grand opening and serving 15+ agencies. Here you can read stories of trying and trying again and finding people willing to help, especially in banks and in city government. Besides the by-laws lesson, the nonprofit leader, in this short read, will be reminded about the value of perseverance, asking for help and asking for money . . .from people who have it.

Who Should Facilitate the Exit Interview?

The other day a respected colleague and good friend, Carol Weisman, sent a copy of her latest blog post entitled, “Don’t Just Whack’em and Plaque’em: Exit Interviews for Retiring Board Members.” As all of Carol’s writings, it dealt with an important subject, was informative and had me in stitches – Carol is one of the smartest and funniest people I know. She spoke to the value of doing an exit interview and shared five excellent questions to use in such a situation. My only quarrel was that she put the responsibility for doing the exit interview on the executive director. I have always believed an exit interview should be conducted by the board, in the person of the chair or a member of the governance/board development committee.

She and I went back and forth with our arguments. She felt that the executive director is the constant – the one who will be there after the entire board turns over. I reasoned that there is no guarantee that the executive director will be there tomorrow, let alone years down the road. I know too many organizations that make that position a revolving door. But even in the most stable organizations, a lot of long-time executive directors are reaching the point where retirement is starting to look pretty good. We’re also starting to see a number of less fortunate dying with their boots on.

Carol asked me to honestly examine how many boards step up to the plate and take on this responsibility. While I concede that the job often defaults to the executive director, by accepting that role, the executive director makes it that much easier for the board to abdicate its responsibility in the future. It is the board that benefits most from learning what it could/should be doing differently to maximize, or at least improve, its directors’ experiences. The interviewer should be taking notes that can be kept in a board book for easy referral by future boards. Carol argued that future boards won’t bother to look back. I of the “you get what you expect school” retorted that debriefing should be an expected part of the job. After heating up cyber-space for a couple of days, we agreed to disagree.

However, I was like the store clerk who gets in an argument with a customer. Long after the customer leaves, the clerk is whining about that customer to everyone else she comes in contact with that day. I ran the arguments by another colleague, Jane Garthson. Jane said definitively that it was the board’s job to conduct exit interviews. However – sneaky devil! – she said she understood if an executive director wanted to conduct his or her own exit interview to learn what he or she might do differently in the future. So, this brings me to the question of the day. What, if any, are the arguments that we are all missing? If you even agree that exit interviews for departing board members are valuable, who do you want to see facilitating them? Why?

Should Board Members’ Contributions Be Designated To Pay For Their Education?

I was speaking with a couple of colleagues the other day and the subject of board contributions came up. Later in the conversation we transitioned into the importance of ongoing board education and organizations building a sufficiently-large line item into their budgets for this. And then the idea bubbled up: What if one of the expectations of board service was that a portion of each board member’s personal contribution to the organization went to pay specifically for board education?

Such an expectation would do several things. It would communicate to the world that the organization believes an educated board is important. It would provide necessary dollars for such board education, without cutting into dollars dedicated to programming. And, it would help board members value the education the organization provides, because research affirms that people ascribe more value to something for which they pay rather than get for free.

There are some issues to consider. When my colleagues and I were talking, someone arbitrarily threw out $500 as the portion of each board member’s contribution that would go into this board education fund. While a substantial amount, with an average-sized board of 16, that only puts $8000 into the education coffer. True, $8000 is more than most boards currently devote to board education. But, $8000 won’t go far if the money is to be used for a true retreat, conference expenses or coaching, for instance. Asking for a number larger than $500 might be a non-starter for most boards – at least at this stage in the game. And, what happens in those organizations that ask for a personally meaningful gift from each board member instead of a contribution of a specific dollar amount? Yes, the leadership could opt to allot the entire board member contribution to its education fund, or designate a percentage, but how can any organization create an education budget if the ultimate total is an unknown? Perhaps the answer is that the board would still have to assign to the board education line a dollar amount from its general operating funds and use the contributions just to enhance its educational opportunities.

The biggest issue may be that some people will resent this set-aside, either out of principle or the belief that they do not need education – perhaps they’ve sat on many boards over the years and believe they have the job down pat. My guess is, though, this reality may be off-set by those that clamor to join a board that devotes so much attention to its board members and provides leadership training that they can then take back to their jobs or on to other organizations.

As someone who firmly believes in ongoing board education at every meeting, I love what this concept could “buy.” But I recognize it would require a major culture shift in most organizations. What do you see as the pros and cons? Is this an idea with sufficient value to push?

Do You Need Board Members?

At a community training session, a development director shared her organization’s challenges finding board members. They had tried to the nonprofit board bank. They had interviewed several people. The mission of the organization was difficult...helping children who had been sex offenders. I asked about her mailing list--about their list of people who had a passion for their cause with whom they communicated regularly. None existed.

At this point, our conversation was interrupted. What I wanted to tell her, I share here: Great Board members are an end product not a starting one.

To find board members for a difficult cause or even popular causes:

1. Figure out who in the community cares about your mission.

2. Find and connect with as many of these people as possible.

3. Nurture them and ask them for their help--as donors, task force and committee members.

4. In this crowd of supporters, you will find your board members.

Enhancing Board Trust

You cannot guarantee others will be trustworthy, but you can create a climate that improves trust on your board of directors. That climate, no surprise, is built on healthy relationships.

Your board trusts you because they know you and see your work. However, it is likely they do not know or may not trust other board members whom they meet one time per month in a formal setting around your large conference table.

You can create a climate of trust among these strangers. Naturally, you will help select and support the election of board members whom you believe will be trustworthy. Once they begin serving, provide opportunities for them to understand, know and learn to trust other members. One way is to help each board member to articulate why your cause is important to them and share their commitment to it by sharing their personal story—perhaps once per year for everyone or one member per month. To further create a climate of trust, include regular opportunities for one-on-one conversations during your meetings. Also, take 20 minutes to get board members into small group work during a board meeting and report back to the group as a whole. You will also want to work with your chair to enforce the consequences the board sets for itself, especially in terms of attendance and donations. Also, let all the board members know how others fulfill their commitments and be willing to help less organized members remember their promises with minutes, email reminders and check-in telephone calls.

For more about building trust in and around your nonprofit, email us at Karen@kedconsult.com for a copy of our May 2010 Added Value newsletter, “Frankly My Dear I Don’t Trust You.“

Creating Clairvoyant Board Members

Do you wish your board members could read your mind? If so, you may wish to read and share an article that appears on Charity Channel’s website this month. It lists a dozen thoughts nonprofit leaders often think during board meetings that they wish their board members knew. It also suggests board members actions.

Here’s one more additional “thought.”
“Listen to the community for us.” Sometimes, as a board member, you learn things no one else knows. Action: Share this information and your insights to help our nonprofit understand the community’s response to our work and take actions to use this knowledge to our advantage.