Fundraising Building Blocks for Board Members and Volunteers

1. Fundraising Building Blocks for Board Members and Volunteers Nonprofit and Public Management Center Shelley Strickland January 13, 2010

2. Overview • Fundraising as a Profession • The Trustee Role in Fundraising • Fundraising is Communication—Overview of Key Conversations • Changing Philanthropic Landscape • Summary of Key Ideas • Q&A

3. Fundraising as a Profession

4. Development / Fundraising • “Development” first used in 1924 by U. of Chicago President DeWitt Burton to explain fundraising as: “the planned promotion of understanding, participation and support” (Cutlip, 1965) • “Fundraising is the management of the relationship between a charitable organization and its donor publics” (Kelly, 1998) • “In the first place, I advise you to apply to all those whom you know will give something; next, to those whom you are uncertain whether they will give anything or not, and show them the list of those who have given; and lastly, do not neglect those whom you are sure will give nothing, for in some of them you may be mistaken” – Benjamin Franklin

5. History of FR / Dev • 1641-1700s: appeals to England end as colonists raise funds to promote education, church • See signs of generosity and community Tocqueville would recognize in democracy • 1800s: church plate, suppers & bazaars, “begging letters” & volunteer committees of charity balls, auctions, benefits • Civil War brought first high-pressure, organized fund drive • 1900s: Carnegie & Rockefeller shift from charity to philanthropy • campaign originated in YMCA • concept of strategy & methodology to fundraising • only after WWII were there staff fundraisers, not just consultants or firms hired for that role

6. FR / Dev in the 21st Century • Increased professionalization and professionalism • Training and education • Growth and demand in field • Specialization • Ethics • Philanthropic partners • “When the fundraising process is undergirded by an examination of the organization’s mission and case, it is a task that can be carried out with dignity. The person seeking the gift should never demean the request by clothing it in apology.” (Payton, 1991)

7. With staff devoted to development, why does the board need to fundraise? Fundraising is still a legal, ethical and moral obligation of board members!

8. The Trustee Role in Fundraising

9. Board Members & Fundraising “The board cannot divorce itself from its fiduciary responsibility; thereby it always remains responsible for funding both policy and program decisions” (Herman & Block, 1990) “One of the most inappropriate things a board can do is to call for increased income and leave it to the staff to produce….The board is accountable—and the board leads” (O’Connell, 1993) “Trustees are the primary stewards of philanthropy. They hold the nonprofit organization in trust in the public interest to ensure that it functions according to its statement of mission. Governing boards must then accept responsibility for developing the organization’s resources, both of talent and money, and directing them toward its goals and objectives.” (Burlingame & Hulse, 1991)

10. Roles of Board Members in Fundraising • Steward: planning & goal setting, mission relevance, accountability for donor intent, gift management & investment, budgeting for an adequate and capable staff and support system • Donor • Solicitor • Prospector • Advocate • Visible Attendee • Team Builder (Henderson, 2003) Never think you need to apologize for asking that someone give to a worthy object. – John Rockefeller

11. Successful Fundraising Board Members • Give generously themselves • Have strong personal and professional connections to wealthy individuals • Enthusiasm borders on competitiveness regarding fundraising • Most importantly, devotion to the cause (Hall, 2008)

12. Roles of Board Members in Fundraising Civic service at the board level is not a natural right. It is a privilege. And those who can afford to donate at far higher levels should be asked to do so. In the harshest of terms, this point of view is sometimes known as “Give. Get. Or get off.” A board that is clear about its financial and service expectations, but flexible in how it applies a new standard, recognizing that there are many ways to contribute, is a leadership group properly discharging its fiduciary and governance responsibilities. (Levy, 2008)

13. Being an Educated Board Member • Where does the money come from? • Philanthropy in US is 2% GDP • MONEY COMES FROM INDIVIDUALS! (82%) Individuals (75%) Corporations (5%) Giving USA Bequests (7%) Foundations (13%) • People give to people! • Fundraisers do not make people give. • The #1 reason why people don’t give? They weren’t asked. • You are not asking for something; you are providing an opportunity when you invite people to invest.

14. Traditional Donor Life Cycle Identification Interest and Involvement Cultivation Solicitation (interest, ability, linkage)Stewardship “It is proverbial wisdom that the success of fundraising is 90% in prospect identification, research, cultivation and preparation, and 10% in the asking.” (Howe, 1991)

15. Stewardship • Reciprocity: Acts of appreciation and recognition • It is sometimes appropriate to include naming rights and plans in the proposal. • In discussing recognition, emphasize how this will have: • an immediate impact (motivating other gifts) • a lasting legacy (permanent naming) • Responsible Gift Use: Donation used for purpose intended • Reporting: Donors are informed of gift usage • Relationship Nurturing: In conjunction with the first three, donors are encouraged to renew their giving (Kelly, 1998)

16. Stewardship • Extensive study of donors found that nearly all would be impressed if a board member thanked them promptly and personally for a gift (but few think it will happen!) • Donor relations is too staff intensive; needs to be better balanced with volunteers • Involving board members only with top donors limits their fundraising performance • Board members can effectively be involved in communicating with donors of lower levels (Burk, 2003)

17. Fundraising Elements • Special Events: Resource intensive, often low ROI • Corporate, Foundation and Government Grants: Remember where the most money is—individuals! • Annual Giving • Types gifts: cash, pledges, securities, real property, personal property • Policies & Procedures • Vehicles: direct mail, telephone, email/website, personal visit, event

18. Fundraising Elements • Major Gifts • Planned Gifts • Is your organization ready for the impending intergenerational transfer of wealth? • Between 1998 and 2052 an estimated $41-$136 trillion will change hands (Schervish & Havens, BC) • Much more than a bequest! Today’s laws and plans provide for living income and survivors • Capital Campaigns: feasibility study, silent/nucleus phase, five year average, endowment

19. Fundraising is Fun! Fundraising is the gentle art of teaching the joy of giving (there’s equal joy in getting!) (Rosso, 2003) It’s all about relationships and communication is the key!

20. Fundraising is Communication

21. Questions to Ask Donors (current & potential) • Why have you supported our organization in the past? • What prompted your gift? • Where is our organization in your philanthropic priorities? • Ask about mailings they receive / preferred methods of communication

22. “Seven Faces of Philanthropy” 1. The Communitarian: Doing Good Makes Sense (26%) 2. The Devout: Doing Good is God’s Will (21%) 3. The Investor: Doing Good is Good Business (15%) 4. The Socialite: Doing Good is Fun (11%) 5. The Altruist: Doing Good Feels Right (9%) 6. The Repayer: Doing Good in Return (10%) 7. The Dynast: Doing Good is a Family Tradition (8%) (Prince & File, 1994)

23. Making the Case • The donor should understand what makes your organization unique. “The case for the gift must be stronger and bigger than the institution itself” (Panas, 2005) • What’s in it for the donor? What does it mean to make an investment here? • How will a program or building affect society? • Make the needs about opportunities! People give to successful organizations.

24. “The Ask” is a small part of FR • Solicitation should not come as a surprise to the person being asked if the process is being done effectively. • Remember the donor life cycle and that fundraising is a process • This economy has helped focus fundraising efforts on thanking and retaining current donors

25. Changing Philanthropic Landscape

26. Pivotal Time in American Philanthropy • Today’s donors are “transformational” (Grace & Wendroff, 2001) • research an organization (Allen, 2007) • create rather than simply support philanthropic projects (Schervish, 2005) • give in ways that are often creative, experimental and designed to improve society or to be an experiment in societal development (Tobin, Solomon, & Karp, 2003) • spend out resources during their lifetimes, applying vast sums of money and talent to troubling societal issues (Conlin, 2003)

27. Nonprofit Best Practices for a Changing Philanthropic Landscape • Today’s donors emphasize collaboration. They want to know why your organization is unique, but they also might suggest working together with a related nonprofit or even merging. (Frumkin, 2006) • To provide for adequate infrastructure, boards might consider growing or merging to a scale where it’s affordable, outsource, or even restructure to be more volunteer rather than staff driven. (Nonprofit Overhead Cost Project, 2004)

28. Nonprofit Best Practices for a Changing Philanthropic Landscape • Board recruitment is key to engagement. Assess the criteria. Look for an array of backgrounds. • Promote a culture and structure that encourages board focus and influence beyond Exec Dir and/or Board Chair. • The board must regularly assess its performance! Train and implement changes. (Urban Institute, 2008)

29. Nonprofit Best Practices for a Changing Philanthropic Landscape • Shift from institutional focus to an issues, constituency, and donor-investor focus. • Donor life cycle (circle) changes to an “infinity loop” of transformational giving • Effectively position through marketing/PR and consistent messages the way the organization is addressing issues • Major gifts should be outcome rather than goal-focused: too often donors not asked again and not involved (Grace & Wendroff, 2001) High Impact Philanthropy: How Donors, Boards, and Nonprofit Organizations Can Transform Communities

30. The Board and “Forces for Good” • What makes nonprofits great? “Greatness is about working with and through others, as counterintuitive as that might seem. It’s about leveraging every sector of society to become a force for good” • Sectors converging / Lines blurring • Importance of “evangelists” • Fundraising strategy should be integrated with overall vision for change. • View government, business, and the public as funding sources that can leverage social impact. • Interesting finding that larger boards most successful (Levy agrees) (Crutchfield & McLeod Grant, 2008)

31. Nonprofit Best Practices for a Changing Philanthropic Landscape • Use technology strategically • Importance of networks • Know when to collaborate and when to compete • Successful nonprofits will remain centered in mission-driven activity, articulating a clear purpose and compelling theory of change (see Frumkin’s Strategic Giving, 2006) (NonprofitNext, 2009)

32. Summary of Key Ideas

33. If you remember nothing else… • Of all giving in this country, the vast majority (82%!) comes from individuals, not organizations • As such, encourage your nonprofit to move beyond dependence on grants and events for funding • By asking, you are giving an opportunity to the donor

34. You can fundraise beyond solicitation • Contribute to stewardship efforts: thank donors! • Facilitate introductions and visits • Help find new philanthropic partners that will stay beyond you • Accompany others on calls, even if you won’t make the ask • Write and/or sign materials

35. Promote the fundraising effort • Hire effective fundraisers in the executive director and development director roles • Have realistic expectations • Provide for ongoing support and training • Invest in necessary fundraising elements: materials, technology • Approve policies & procedures: gift acceptance, gift agreements, endowment spending, etc.

36. Promote the fundraising effort • Staff and board members are partners in the process (and it’s a process!) • Make fundraising an ongoing priority, not just in campaigns, not just for emergency needs • Proactively plan for future needs—have a compelling vision

37. Promote the fundraising effort • Make and support tough decisions (e.g., end beloved events with no ROI) • Persevere in difficult times—now more than ever communicate with your donors! • Emphasize ongoing stewardship of all donors at all levels

38. Research v. Reality? Q&A Rob Oliver Jim Reische

39. Thank you! srstric@umich.edu