Archive for the ‘Foundation Hall of Shame/Stupid Foundation Tricks’ Category
April 5, 2012
Dear Nonprofiteer,
I was hoping you might be willing to follow up on your last post on your blog because I felt it was incredibly powerful. I hope it is being reblogged and reposted as much as it should.
What does a professional do when they see a job that sounds amazing but the salary is lowballed? Do you address it in a cover letter, if they gave an insultingly low number outright in the job description? What about when it sounds great and you get an interview and they make an offer and it is $15K less than what’s in line with the position? I know anyone can just simply decline, which I’ve done myself.
But I feel like leaders in the sector have a duty to say something, to help move towards realigning expectations of founders and staff who offer insultingly low pay, especially for organizations that offer critical services that honestly won’t select themselves out of the sector. What are your thoughts on this?
It doesn’t seem like we’re at a transparency point in the sector where we can say, “If you want the best candidate for the position you have to pay competitive wages, if you want the fourth or fifth best or most desperate candidate, you can get away with what you’re offering.”
Of course, I feel particularly stung after two painful lowball offers in the past four months that I’ve had to turn down, but that’s sort of beside the point. I never realized that this was such a pervasive problem. It seems especially bad in Chicago, for whatever reason, compared with my compatriots in DC, SF, and Seattle.
Sincerely, Looking at the Bigger Picture
Dear Looking,
The Nonprofiteer understands there to be two parts to your question. The first is, “What is a professional to do when faced with an unacceptably low salary offer?” The answer to this is that you have nothing to lose (but your chains) by responding—in person or in writing—”I realize you may not be as familiar with the nonprofit job market as I am, given that your agency only looks for an Executive Director once every many years; but the amount you’re offering isn’t suitable to the position you’ve described. The range is more like [and then cite the minimum you'd accept and the maximum you can really envision].” There are only two possible answers to this: “Well, we don’t have that kind of money and don’t intend to get it,” in which case you know you’re dealing with a Board of Directors you wouldn’t be able to manage anyway; or “Oh, really? Well, is there any way we can make this work?” in which case you’re suddenly negotiating.
There’s no need to say, or even think, that an offer is insulting: if you can’t assume good faith on the part of agencies, at least recall that they derive no benefit from insulting prospective employees. Though it feels otherwise, no one is commenting on your qualifications by offering you a low salary. They’re simply hoping they can get someone great for cheap, which if you think about it is the entire nonprofit model. So consider yourself someone whose first task is to educate your prospective employer about how things ought to work. Again, if the employer is uninterested in that education, good riddance to bad rubbish; whereas if it’s interested, you may actually be able to get to ‘yes.’
But your second question is of much broader application: What would it take for the sector to begin to offer wages that are appropriate to the skill level being sought? And the answer to that, as to most questions about how to fix nonprofits, is ‘more money and more understanding from big institutional funders.’ As long as foundations and social venture capitalists pound the drum for a strict ceiling on administrative expenses, nonprofits will continue to skimp on paying for talent. The people with money are the thought leaders in the sector (isn’t that always the way?), and they’ve made it acceptable to answer reasonable salary demands with the enraging, “Well, no one goes into nonprofit work to get rich.”
Take a look at Watkins Uiberall’s excellent comparative compensation survey from 2010. Though it’s from Tennessee and from two years ago, it will provide a basis for conversation about what’s appropriate for many jobs in the sector. As data like these are spread (including by prospective employees), employers will come to understand the way things really work, vs. their fantasy of hiring President Obama for a community organizer’s stipend.
Nonprofit Boards, meanwhile, should consider the non-trivial possibility that shorting their employees on salary and benefits will ultimately lead to a unionization drive. The Nonprofiteer is a union girl herself, but most Boards of Directors and nonprofit managers don’t agree. So somewhere in any conversation about salaries one might gently slide in the question, “If your pay scale is so low, how do you avoid the unions?” You won’t get an answer but you’ll be providing food for thought, and the longer employers chew on it the less chintzy they’ll be.
Tags:501c3, Board of Directors, charity, Executive Director, governance, human resources, IRS, labor, nonprofit, not for profit, personnel, unions
Posted in Executive Directors, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Nonprofit management, Nonprofits--General, Personnel Issues, Poverty, Succession planning | Leave a Comment »
March 28, 2012
An op-ed piece a few weeks ago in the Wall Street Journal (behind a paywall) argued that donors should construct their foundations to spend down assets as rapidly as possible, lest the foundations end up supporting causes their donors would revile. This familiar argument comes with a familiar whipping-boy: the Ford Foundation, whose enthusiasm for assisting the poor and marginalized was certainly not shared by its eponymous founder Henry. The op-ed piece, like many of its kind, focuses on the question of donor intent, arguing that only a brief payout period can assure that the donor’s intent is served.
The Nonprofiteer has never cared particularly about the intent of dead donors. First of all, they’re dead, and while death may not extinguish intent as a matter of law it certainly does as a matter of common sense. Second, how much better off do we really think the world would be if Ford’s foundation had spent all its money on Ford’s enthusiasms, such as promoting publication of the scurrilous anti-Semitic tract The Learned Protocols of the Elders of Zion? Third and most important, the tax-free status of foundations is supposed to encourage philanthropy, not the accumulation of permanently idle tax-free money.
The Nonprofiteer has long argued that the minimum expenditure required of foundations is way too minimum, and that setting up a structure to give away 5% of income shouldn’t entitle a donor to a 100% tax shelter–whatever his/her intent. Most likely that intent was to escape from taxation, without too much more thought than that.
So let’s think about the issue not from the standpoint of donor intent but from the standpoint of social good. Which is more useful for a philanthropy: remaining around in perpetuity, to grapple with issues that may arise a generation or three from now, or spending down in the present and relatively short-term future on issues the donor understands and cares about and which in any case are currently urgent? From the phrasing you can tell the Nonprofiteer’s position: spend it down.
Julius Rosenwald saw the wisdom of this approach when he created a program of fellowships for African-American artists for their professional development. Rather than keep the fellowships around in perpetuity, he ordered that the principal be awarded completely within 5 years of his death. As a result, virtually every mid-20th-Century African-American artist you’ve ever heard of received a Rosenwald Fellowship: Ralph Ellison and Romare Beardon and Katherine Dunham and Gordon Parks and many others. The value of what Rosenwald did, giving artists enough money so they could work without fear or distraction, is literally incalculable.
But also as a result, virtually no one remembers Julius Rosenwald, or at least not his fellowship program. So that presents the question: are we in the business of fostering greatness, or memorializing it? Is remembering a donor as important as creating work through a donor’s generosity? Again, to the Nonprofiteer the answer is self-evident. She’d rather be grateful for Ralph Ellison than to Julius Rosenwald.
Look, here’s the deal: people will make money in every generation, and in every generation some people will make a lot of money. If we tax them properly they’ll look for the opportunity to shelter their money in philanthropy. Why shouldn’t we tax them so that they’re motivated to spend it philanthropically, too? Like the proverbial Fifth Avenue bus, another chunk of money will be along any minute.
Sure, there’s a risk of spending too rapidly and with insufficient research (or “due diligence,” as people are fond of saying when they want to pretend that the nonprofit sector is really just like a business). But the greater risk is the situation in which we find ourselves now, where philanthropies give out amounts insufficient to make any significant change. No, philanthropy isn’t supposed to be society’s primary source of support, but while people are busy starving government so they can drown it in the bathtub, private wealth can and should step into the breach.
Consider the contributions of the Gates Foundations to the Global Fund to Fight AIDS, TB and Malaria. Can anyone really argue it would be better to hold back on eradicating those diseases, in case there’s some bigger plague later on? If there is, as AIDS itself demonstrates, we’ll mobilize and raise money for it. Meanwhile, in case of every ailment, time is our enemy: the later we provide resources, the harder it will be for those resources to have impact. Thus wasting money is a less significant risk than failing to spend enough to make a difference.
Two things need to happen: philanthropists themselves need to organize their giving so that it ends within a reasonable time after their death, and Congress needs to modify the tax code to require philanthropies to pay out more each year to retain their tax-favored status. A 10% annual payout–double the current rate–may end up causing philanthropies to dip into principal, maybe even until they’re empty. But remember the words of Citizen Kane as he contemplated the financial difficulties of his newspaper empire: ” I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars *next* year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… 60 years. “ Let’s take a Kane-like risk of running out of money.
One more story: Some time in the ’90s Joan Kroc stood up at a Ronald McDonald House benefit to announce her annual gift. Rumor had it she was actually going to make a five-year pledge, and the Nonprofiteer’s table indulged in the parlor game of trying to figure out just how much that would be. We figured the previous year’s gift ($5M) plus a little bump (so $6M) for each of 5 years, and settled on $30 million. And then she rose to speak, a little woman holding a torn-off piece of yellow legal paper in her hand. And she said, “I was going to make a 5-year gift, but then I thought: ‘The need is now.’ So tonight I’m giving $50 million to Ronald McDonald Children’s Charities.” Everyone at the table fell back in her seat, literally knocked over by her generosity, and also by her insight: The need is now.
Aside from Ronald McDonald, Mrs. Kroc mostly supported causes her late husband disapproved of. If only he’d given more in the present, he wouldn’t have had to contemplate a future in which his money went to places he despised. So the donor’s intention and the sector’s need are in sync:
Spend it now.
Tags:501c3, charity, donors, foundations, Fundraising, grants, IRS, nonprofit, not for profit, philanthropy, Relations with funders, women
Posted in Benefit events, Endowment, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Health care, Mission, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders, Women's Issues | Leave a Comment »
February 2, 2012
as they seem to have lost their own. Komen’s decision to de-fund Planned Parenthood at the behest of an anti-choice Board member reminds us how ready the right wing is to sacrifice women’s health for political gain.
There’s a petition to sign if you want to want to make your voice heard. If you’ve been a Komen supporter and you now de-fund the organization, your voice will be heard even louder.
Tags:501c3, charity, foundations, Fundraising, nonprofit, not for profit, politics, Poverty, Relations with funders, social services, women, Women's Issues
Posted in Advocacy, Advocacy groups, Boards of Directors, Charity scandals, Current Affairs, Disease charities, Foundation Hall of Shame/Stupid Foundation Tricks, Health care, Nonprofit management, Nonprofits--General, Poverty, Private Philanthropy, Social Service Agencies, Women's Issues | 6 Comments »
February 1, 2012
but she’d really have preferred not to have this as an inspiration. There is no excuse for the decision of Susan G. Komen for the Cure, until now a respected source of information and funding in the fight against breast cancer, to defund Planned Parenthood‘s program of providing breast exams to poor women.
In fact, the decision doesn’t even make sense–unless you consider that a recent addition to the Board of Komen is an anti-choice ex-politician from Georgia. As another commentator has wisely noted, Planned Parenthood will survive this latest injury–the Nonprofiteer’s determination to support the agency has just been redoubled, and probably her gift will be, too–but Komen may not.
Please join the Nonprofiteer in notifying Komen of your distress at its decision to let irrelevant politics endanger the lives and health of poor women, and of your decision to redirect to Planned Parenthood any support you may have been giving to Komen.
Tags:501c3, Advocacy, Board of Directors, charity, foundations, Fundraising, Komen, nonprofit, not for profit, philanthropy, Planned Parenthood, politics, Poverty, Relations with funders, social services, women, women's health, Women's Issues
Posted in Advocacy, Advocacy groups, Boards of Directors, Current Affairs, Disease charities, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Health care, Mission, Nonprofits--General, Poverty, Private Philanthropy, Social Service Agencies, Women's Issues | 4 Comments »
November 29, 2011
Look, there are numerous “good cases” where one can see that infusion of capital that doesn’t really have to be repaid at market rates makes good sense. (Actually, government loan guarantees of, say, solar power start-ups falls into this category.) The problem with allowing 501(c)(3)’s to make these sorts of investments is that the process is subject to abuse.
Say that I want to create “Stuart Levine’s Good Works Foundation.” The Foundation attracts $10M in tax deductible contributions. The Foundation uses the cash to “invest” in projects operated either by me or my Aunt Minnie. While Minnie and I invest our own funds in these businesses, our capital position is ahead of the Foundation’s and gets a higher return, so that the first profit out goes to pay us and, if the deal craters, the biggest part of the hit will fall on the foundation. (Did I mention the $250K a year consulting fee paid to me by the investment entity?)
I don’t for a minute believe that the Bill and Melinda Gates Foundation is engaged in double-dealing of the sort that I described. I have less faith in the “Stuart Levine’s Good Works Foundation.” Has everyone forgotten the Pallottine Fathers? See here:
http://tvnews.vanderbilt.edu/program.pl?ID=254962
Or, as one might say, everything old is new again.
The burden of proof rests on those who believe L3Cs are essential. They must demonstrate that the entities’ potential for abuse is outweighed by their capacity to meet needs that are otherwise unmet. But all that’s unmet so far is that burden of proof.
Tags:501c3, charity, Conflict of Interest, donors, foundations, nonprofit, not for profit, philanthrocapitalism, philanthropy, Relations with funders, social entrepreneurship
Posted in Conflict of Interest, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Investment, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Relations with funders, Social enterprise | 3 Comments »
November 2, 2011
Ellen Alberding’s interview with the Chicago Tribune in advance of the Independent Sector‘s meeting in Chicago earlier this week pressed nearly every one of the Nonprofiteer’s buttons. Ms. Alberding, head of the Joyce Foundation, described the Foundation’s approach to what even she characterizes as a perfect storm of increased need and reduced resources in the nonprofit sector:
We do what any good business person would do when faced with reduced resources. We have become very focused on first maintaining support of our core grantees. Foundations are required to spend a minimum amount — 5 percent of our assets. On occasion, we will overspend that in order to keep our grantees whole.
In other words, business as usual. Most likely the Joyce Foundation’s governing documents prevent its Board from spending its assets down to zero, but there’s no reason why the Foundation shouldn’t use more than the statutory minimum 5% of its $800 million in assets to sustain the work it exists to support. Foundations are NOT businesses; they exist to give their money away, and only in some vague theoretical sense is an institution with $800 million facing constraints preventing it from giving away more than $40 million.
If Joyce gave only 6% instead, that would be another $8 million available to nonprofits in its areas of concern—a not-insubstantial 20% increase. What is stopping the Foundation from doing this, other than a misguided sense that preserving its capital is more important than doing its job?
And then the cherry on the sundae:
It’s the position of the Independent Sector that a cap [on charitable deductions] will reduce charitable contributions across the board and diminish support for nonprofit organizations. I believe it’s the administration’s view that the 28 percent cap might have some impact, but it wouldn’t have a dire impact. (But) I think we have to listen to the organizations themselves, who feel otherwise.
In other words, notwithstanding reality, the prejudices of self-interested parties will dictate the organization’s behavior. Their minds are made up—don’t confuse them with the facts. But as President of the organization, doesn’t it behoove Ms. Alberding to make sure her members don’t make their decisions based on fantasy?
Grrrr.
Tags:501c3, Board of Directors, charity, Conflict of Interest, donors, Endowment, foundations, Fundraising, grantmaking, grants, IRS, nonprofit, not for profit, philanthropy, politics, recession, Relations with funders
Posted in Boards of Directors, Conflict of Interest, Coverage of nonprofits, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Investment, Mission, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders | Leave a Comment »
March 29, 2011
In fundraising there’s an old saw that if you want someone’s money, you ask for his advice. Leave it to the ever-innovative Rahm Emanuel to turn this observation into an ultimatum, telling people equipped with useful advice that it won’t be heard unless it comes wrapped in money.
That, in effect, is the meaning of Mayor-elect Emanuel’s request to a group of Chicago foundations that they pay the costs of his transition, costs traditionally covered by leftover campaign funds, of which Emanuel has plenty. In a city whose political culture has long consisted of being punished for disagreeing with or disobeying the mayor, the foundations faced an unattractive choice: call the mayor-elect on his inappropriate pick-pocketing and look forward to 40 years in the desert, or pay the man the $2 (or $2 million, as the case may be) in order to be heard.
The Nonprofiteer doesn’t blame the foundations for ponying up, though she wishes they hadn’t: their job is to influence public policy and make change, and the mayor’s office is an important route (sometimes the only route) to doing so. But the Emanuel administration-in-waiting should never have asked for this sort of tribute. Whether intended or not, the request makes it appear that access to city government is restricted to those who tithe. There’s nothing new about that—the title “City That Works” has always ended in a silent “For Pay”—but Chicagoans might be excused for having hoped for something new post-Daley.
Many in the nonprofit sector are dismayed at having to compete with city government for the foundations’ largesse, and that’s a legitimate concern, though a belated one: the Daley administration never hesitated to ask private and foundation donors to subsidize city expenses with money that would otherwise have gone to independent community groups. (Can you say “Millennium Park”? “Olympic bid”?) But the Nonprofiteer is more concerned about a new mayor’s implying, and establishing a precedent for the idea, that even being heard on the 5th floor requires big bucks.
Some wag once said that New York was about culture and Washington about power, but Chicago was all about money. Plus ca change . . .
Tags:Advocacy, Chicago, donors, foundations, Fundraising, governance, mayor, nonprofit, nonprofits, not for profit, philanthropy, politics, Rahm Emanuel, Relations with funders, strategic planning
Posted in Advocacy, Campaign finance, Current Affairs, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Government grants, Nonprofits--General, Private Philanthropy, Public private partnerships, Relations with funders, Strategic Planning (and the tactical kind, too) | 7 Comments »
March 17, 2011
Here’s something strange: a concept thrown around routinely and casually in conversations among nonprofits and philanthropies is simultaneously the subject of fierce debate and sometime disapproval by the Internal Revenue Service, a committee of the American Bar Association, and other experts. What is going on?
The notion of Low Profit Limited Liability Corporations (L3Cs, for short) is that they’re a vehicle for doing well by doing good and therefore an improvement over the typical nonprofit structure. L3Cs are permitted to earn profits but proponents claim that their praiseworthy intentions—to end hunger or provide clean water or whatever—make those who lend to them eligible for the special tax benefits attached to program-related investments. In other words, this is a legal structure presented as a technique for gaining access to capital (always a struggle for nonprofits) by providing a tax benefit to lenders.
Of course, foundations already get a tax benefit for program-related investments in regular nonprofits, so what, exactly, is the appeal? In theory, foundations might be more interested in program-related investments that generate a reliable flow of capital (in the form of profit) than in program-related investments that generate nothing but additional nonprofit programs and services. Likewise in theory, regular venture capitalists outside of foundations will be more interested in making investments in profit-making entities than in pure nonprofits. This—the notion goes—will increase the amount of capital available to support general good-guy behavior.
However, a number of scholars and lawyers (Daniel Kleinberger of William Mitchell College of Law prominent among them) see the L3C as, at best, redundant and, at worst, an invitation to fraud. They point out that regular limited liability corporations can be organized for any purpose, including public-spirited and low-profit ones. They point out that the IRS has not yet issued (and does not seemed inclined to create) a rule awarding automatic program-related investment status to any investment in an L3C. So anyone who invests in an L3C on the basis that it provides a higher return than a regular nonprofit with the same tax benefits will find out to his/her sorrow that this is not the case.
What strikes the Nonprofiteer as peculiar, though, is that in the many discussions she’s heard and read about L3Cs, only one mention (specifically, Professor Kleinberger’s Nonprofit Quarterly article) has ever surfaced of this opposition from the bar and Federal regulators. Not until her tax lawyer Stuart Levine asked about the [successful] efforts in Illinois to create L3Cs did she realize there was anything controversial about the phenomenon. After bringing her up to speed Levine wisely said,
L3C’s don’t work unless there is a change in federal tax law. In other words, L3C’s are a little like Oreo-Tycin-Myacin—the wonder drug for which there is no known disease.
L3C’s raise difficult issues of fiduciary duty and the inherent conflict between “charitable” purposes and “business” purposes. At the least, these conflicts cannot be dealt with via a quick-fix state statute.
Doubtless the Nonprofiteer spaces out on frequent occasions and misses aspects of what’s said or done in the sector. But she suspects there’s also a disconnect between what nonprofit executives and L3C promoters expect and describe and what lawyers and regulators understand.
So if you’re considering investment in an L3C, be the aware buyer of whom you’ve heard.
Tags:501c3, charity, Executive Director, foundations, Fundraising, IRS, L3C, low profit limited liability corporation, nonprofit, nonprofits, not for profit, philanthrocapitalism, philanthropy, program related investments, Relations with funders, social capital, social entrepreneurship
Posted in Coverage of nonprofits, Current Affairs, Earned income, Executive Directors, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Investment, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders, Social enterprise | 8 Comments »
November 1, 2010
As all budding journalists know, every story can be told through judicious use of the 5 Ws: Who? What? When? Where? Why? Here the Nonprofiteer employs this efficient system to tell the story of how reluctant volunteers can become enthusiastic and successful individual-gifts fundraisers.
For most small- and medium-sized organizations, everything about this story is a blank. So here’s a primer on how to fill in that blank.
WHO to ask?: Only two types of people should be asked individually for gifts: people who’ve given to your group before, and friends of your Board members. With anyone else, it’s sheer impertinence: “Hi, nice to meet you, open your wallet.” Ask friends (of the agency and the Board), and ye shall receive.
What to do when your Board members say, “I don’t want to ask my friends for money”? Reply: “You don’t have to ask your friends. Just ask each other’s friends!” So Angela asks John’s friend, and John asks Angela’s. All they ask of their own friends is to come to a meeting, and all they have to do at that meeting is wax enthusiastic about the group and listen while the other one solicits the gift.
WHAT to ask for?: If they’ve given to the agency before, you’re asking for more. You have to make the leap of imagination (from $250 last year to $1000 this year) before the prospective donor can think about making it.
Don’t worry about being too ambitious in your monetary goal. Very few prospective donors are offended by being mistaken for rich people. (Women, though, are more likely to be taken aback than men, so ask for slightly less from women. They’re more likely to say ‘yes,’ so it all evens out.)
If you’re asking a Board member’s friend, ask for slightly less than the Board member gives him/herself, because the first thing the prospect will do is turn to his Board friend and say, “What do you give?” If the Board member doesn’t think the agency’s worth $500, the friend is unlikely to think it’s worth anything.
What if your Board member’s friend is a gazillionaire? (We should all have this problem.) Then prime the Board member to say, “I give $200, because that’s what I can afford. We’re hoping you’ll likewise consider a gift based on your capacity.” Again, few people mind being suspected of success, so if your Board member is prepared to say, “Listen, I know you made a killing last year when you sold your Google stock . . .” his friend is unlikely to want to correct him!
WHEN to ask: The Nonprofiteer is a prompt—some might say premature—fundraiser. As a cautionary tale, she offers the story of how her alma mater took her out for coffee repeatedly to soften her up for an ask, despite her saying, “Guys, I’m a fundraiser. I know what we’re doing here. Just ask me for the money!” By the time they were ready to ask her, she’d been reminded that the school’s investment philosophy would have permitted owning shares in slave-ships, and did permit investing in companies propping up genocidal regimes; and therefore she declined to give, though she wouldn’t have reneged on a preexisting pledge. So don’t delay; get the yes!
“What about cultivation?” you ask. The Nonprofiteer believes that lots of what passes for “cultivation” in individual-gifts fundraising is nothing more than stalling. Don’t hold “cultivation” events and plan to ask for money later; if you hold an event, either get contributions through the ticket price or ask forcefully that night.
All you need to do to “cultivate” people is to demonstrate that you’re thinking about them on a regular basis, and you can do that by forwarding something you think they’d like to read. Better yet, send them invitations to your activities, whether performances or client graduations or river cleanups. People give where they feel they belong, so be on the lookout for “belonging” opportunities. For this purpose, the less special the event, the better. If you do something special for a donor, make it an ask.
One word of caution about WHEN: don’t ask too soon after the last gift. May and June may be two separate fiscal years to you, but your donors probably think (and give) on a calendar-year basis. So they’ll think you bizarre and ungrateful if you respond to their May gift with a June ask.
WHERE?: Over breakfast, lunch or dinner (or possibly bedtime snack). The Nonprofiteer is a firm believer in the power of food to facilitate fundraising. In any case, the advantage of a meal is that it requires the prospective donor to sit still for about an hour, during which time you can a) learn about her; b) educate her; and c) ask her.
WHY?: Why bother with individual gifts? Why not just write some more grants? (asks your Board.) Three reasons:
- Because grants come and go. Institutional funders have the attention span of fruit-flies: this year they’re interested in AIDS but next year it will be architecture. If you’re not the fad, you’re out of luck.
- Because even if they continue to embrace your work, very few foundations or corporate giving offices will give money to support your operations. They want to support programs, the newer the better, often leading agencies to elaborate their programming beyond what their infrastructure can sustain. If you need to pay your light bill—or your employees—you need individual gifts.
- And finally, even if they love you to pieces, most institutional funders want to sustain you while you find broader support. They’re not interested in being your permanent sugar daddy.
By contrast, most individuals give because they’re asked, and what they’re asked for is support for a cause or an agency (not a single program), and once they’ve agreed they keep giving out of habit. So you have to actively offend them before they stop.
So that’s the story of successful individual giving. And if who-what-when-where-why merely piques your interest, you can learn how right here.
Tags:501c3, Board of Directors, charity, corporate giving, donating, donations, donors, foundations, Fundraising, generosity, giving, grantmaking, grants, individual gifts, nonprofit, nonprofits, not for profit, philanthropy, Relations with funders, volunteer, volunteering, volunteers, women
Posted in corporate giving, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders, Volunteers/Volunteerism, Women's Issues | Leave a Comment »
July 21, 2010
Dear Nonprofiteer:
We are a small non-profit music school. We have been running into a problem with grants strategy–as in, we aren’t getting any.
I am consistently getting feedback:
1. “Lovely program but we are only funding projects that can promise to reach 500-1000.” We are small with 350 students and while I can conceive of a program that would reach a larger audience, I don’t feel I can creditably offer that in a proposal.
OR
2. “Great ideas but we only fund people who we funded before.”
Previous executive directors in more generous times had decided that grant seeking was not worth the effort. I think we need to make a big push but I am starting to wonder if they were right.
We have a subsistence existence with only earned income and I feel we are desperately in need of a more diverse income stream if we are ever going to grow or prosper. Operating at less than break-even is not an option with my board.
What’s the small non-profit to do?
Signed, Stymied at Every Turn
Dear Stymied,
The Nonprofiteer suspects, as you’re starting to, that your predecessors were right when they gave up seeking foundation support. At the best of times, foundations have the attention span of fruit-flies, which means even agencies receiving support spend the whole grant term sweating blood over whether they can get it next time–nonsensical program-officer-speak to the contrary notwithstanding. (What kind of response is, “We only fund those we’ve funded before,” anyway? It’s barely lucid, let alone reasonable–unless it’s just a bald-faced lie.)
And these aren’t the best of times. (Like you hadn’t noticed.) Some foundations are stepping up and spending a larger percentage of their income on grant-making to make up for a loss in their portfolios; others can’t, or won’t. And as aggravating as it is to have a foundation ask you to provide services on a scale beyond your capacity, the Nonprofiteer will defend that point of view: foundations are in the business of trying to have broad impact with narrow means, and your program simply doesn’t meet their needs.
So you have to seek funds from another source. Earned income is all very well, but of course you’re required to raise one-third of your budget in contributions simply to maintain your 501(c)(3) status. How?
Well, as the Reverend Mother did not say, “When a foundation closes a door, somewhere an individual donor opens a window.” Stop pounding your head against the foundations’ doors and get thee to an individual gifts program. This may be your only option; it’s certainly your best one. Seek small gifts through an annual campaign, and big ones through individual appeals made by you and members of your no-deficit Board. (They made the rules, now they have to play the game.)
The annual campaign: Ask your students and their families, as well as any alumni you may have, to help you make up the difference between what it costs to provide this first-rate music education and what you charge in tuition. (If you don’t know that number, figure it out: it’s magic. Not only does it encourage contributions, it makes future tuition increases easier to swallow. Why do you think colleges keep repeating, “Tuition covers only a fraction of the cost of educating a student”? Though at $40,000-plus a year, one might begin to wonder what fraction, exactly.)
Ask at “Back to School” time, and again around Christmas, and again before or during recital/graduation season. Also, ask at performances. Don’t be shy: remember that most people say they give because “Someone asked me.” Your school is just as deserving as any other charity, and with 350 people in the program someone connected to you should be willing to cough up some dough.
Major gifts: Identify anyone who’s already been giving you money and take him/her out to lunch and ask for more. If your Board members aren’t already giving, conspire with your Board president to get them to do so–and once they’ve given, ask each of them for the name of one person who could be asked. Remember the Nonprofiteer’s rule: Board members don’t ask their friends for money–they ask each other’s friends for money!
Individual gifts come in smaller chunks than foundation gifts (though not in your case, actually). Moreover, they’re infinitely renewable and will sustain your school for years to come. Good luck, and let us know how you do.
Tags:arts groups, Board of Directors, charity, charity promotion, donors, foundations, Fundraising, grantmaking, grants, IRS, nonprofit, nonprofits, not for profit, philanthropy, recession, Relations with funders
Posted in Arts Organizations, Boards of Directors, Current Affairs, Earned income, Education, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders | 2 Comments »
