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Posted By Lindsay Nichols on May 15th, 2012, in these categories: From Our AdvisorsThe following is a guest post by Joe Garecht, founder of The Fundraising Authority.
 Joe Garecht Non-profit fundraising can be a grueling business. When everything is clicking, there’s no better job to have…but when your organization is stuck in a rut and can’t seem to break free, every hour can seem like torture.
As non-profit managers and fundraising professionals, we like to think that fundraising plateaus are out of our control – and sometimes they are. Yet, far too often, it is within our power to break free of the rut and reach a new level for our organization and the people we serve. They key to doing so is to recognize the mistakes we are making and understand how to correct them. Here, in my experience, are the top 3 fundraising mistakes made by non-profit organizations:
#1 Not Thinking Big Enough
Thinking big is scary. Setting lofty program goals requires setting ambitious fundraising goals. And setting ambitious fundraising goals means stretching our resources and our staff to hit our targets. It’s far easier to set incremental goals: raise 5% more at our event this year, increase our donor file by 100 really solid names.
Don’t fall into this trap! Thinking big and setting audacious goals is motivating to your staff and attractive to your donors. Your supporters and prospects want to get caught up in a huge vision, one much bigger than themselves, that allows them to make a major difference in the world. It’s up to you to think big enough that they can’t help but get involved and fund your mission.
#2 Not Being Organized Enough
I can’t begin to tell you how many non-profits I have worked with that set new goals or launch new fundraising programs without a clear, written strategy. There are thousands of organizations that run events without an event plan, keep donor contact information on file but have no idea where there prospects are in the prospect funnel, and ask board members to call a list of names without ever following up and tracking the responses that are received.
No matter how small or large your organization, you will never maximize your fundraising potential without getting your development program organized. You don’t need a 78 page plan for every fundraising event that you hold or every mailing that you take to the post office. What you do need, though, is a clear list of what needs to be done, who is responsible for doing it, and what the deadlines for completion are.
#3 Not Spending Enough Time and Effort Cultivating Donors
While many development consultants would say that too many non-profits spend all of their time cultivating donors and never get to the ask, I would argue that the vast majority of non-profits are doing just the opposite: they’re not spending enough time and effort cultivating their prospects and donors. Sure, they may wait six months from the initial meeting before they make their ask, but how much time and effort are they spending on that donor in the meantime? Usually the outlay is very minimal.
Fundraising is all about building relationships. Just as you can’t build a friendship without seeing, talking to, and socializing with another person, you can’t build a fundraising relationship without calling, meeting with, and communicating with your prospect. Invest more time and effort into your prospects, and they will reward you with larger and more frequent gifts.
Joe Garecht is a fundraising consultant, author, and speaker based in Philadelphia. He is the founder of The Fundraising Authority, which offers hundreds of articles and tips on how to raise more money at non-profit organizations.
Posted By Lindsay Nichols on May 11th, 2012, in these categories: From GuideStar I recently spoke to the NonProfit Times’ Zach Halper about our adventure with Pinterest, the “virtual pinboard.” In a nutshell, I talked about using this visual platform to better engage with our supporters. You can read the full article here: http://www.thenonprofittimes.com/article/detail/nonprofits-make-sure-friends-find-them-pinteresting-4584.
Since GuideStar collects and disseminates information about every single tax-exempt organization in the country, I’m often lacking the “heartbeat” at the center of the story, which as the director of our communications, I am constantly seeking. I know we help nonprofits and those that work with and support nonprofits every single day, but I just don’t have a lot of real-life examples – of how we helped a real human, animal, piece of land, etc. – at my fingertips.
That’s where Pinterest comes in. It’s given me a way to visually express our mission, our sense of humor, and ultimately the people and organizations that we’re trying to connect with every single day.
I’d love to learn from you. What methods do you use to share real-life examples and stories with your supporters? How are you using Pinterest?
Posted By Lindsay Nichols on May 9th, 2012, in these categories: From Our Advisors The following is a cross-post by Amy Eisenstein, author, speaker, trainer, and owner of Tri Point Fundraising, a full-service consulting firm.
 Amy Eisenstein You’ve prepared.
You’ve practiced.
You’ve overcome your fear of asking for a donation.
So you ask for a gift, and they say “no.”
But how do you know when “no” really means “no”?
I tell my kids “no” all the time. Yet, it doesn’t stop them from asking again, and again, and again. They do this for a variety of reasons, but mostly because they’ve learned that sometimes “no” turns into “yes” if they ask frequently and persistently enough.
So how come as adults, we’re much more likely to take an initial no as a final no?
Turning “No” into “Yes”
 In fundraising, some of the best development directors are those who can take a “no” and turn it into a “yes.” When you get a “no” for whatever reason, your job is to ask why? That’s the most important question you can ask. Get to the core reason, and explore if there’s a way to turn the “no” into “yes.”
Before asking a prospective donor for a contribution, you’ll want to consider all of their possible responses, so you’re prepared to respond appropriately.
In general, there are three types of response:
1. yes
2. no
3. maybe
In fundraising, “yes” and “maybe” are great answers, but “no” can be good too. “No” is an opportunity to explore, build the relationship, ask more questions, and encourage engagement.
It’s up to you to find out why the person is saying no, and how you can turn their no into a yes.
4 Reasons Why Prospective Donors Say “No”
There are many reasons why people say no. Four of the most common include:
1. Wrong time.
Money is tight at the moment for whatever reason. Six months or a year from now might be better. Or, they could need more information before making a decision.
2. Wrong project.
They love your organization. They’re really interested in the after school program — but you asked for the preschool program.
3. Wrong amount.
You asked for too much or too little. Once you ask some good follow-up questions, you may be delighted to receive a gift of another amount.
4. Wrong asker.
This is often the most difficult issue to identify, but it’s possible that your donor just doesn’t click with the board member you brought along. Keep your intuition tuned for issues like this, because they will often go unspoken.
Going Further
There are some great posts around the web pertaining to this topic. Here are two of my favorites:
Have you ever turned a “no” into a “yes”? I’d love to know about in the comments.
Fundraising expert Amy Eisenstein is a respected author, speaker, and trainer, as well as the owner of Tri Point Fundraising, a full-service consulting firm. She specializes in fundraising consulting for local and national nonprofits. Her “no-nonsense” approach to fundraising yields big results for her clients and readers. You can read her original blog post here.
Follow Amy on Twitter @amyeisenstein or connect on Facebook.
Posted By Lindsay Nichols on May 2nd, 2012, in these categories: From GuideStarThe following is a cross-post of the CTK Blog, written by Bunkie Righter, a business development director at GuideStar. You can find the original post here.
Kony 2012 hits the airwaves, and millions are drawn to it. To do what, I wonder? Share it,talk about it, love it – or hate it, to be sure – but to change the situation? And what is it they would do? Is it clear? Is it right? Is Invisible Children the vehicle to do it? How do we know? I have been fascinated watching the saga, and keep wondering: what will be the outcome? And will it be the outcome intended by the nonprofit Invisible Children? How will we know?
 Bunkie Righter Within the nonprofit world, adopting and employing innovation is crucial, and yet we can be slower to do that than the commercial sector. But adopt them we must, and employ them we are. Today we are embracing new techniques, new methodologies. Today, we are embracing technology to tell the story and as Invisible Children can now attest – it’s a jungle out there when we do. We of limited resources and so much passion must go forth and know that we might be seen and we might be critiqued. And yet, it’s a journey we must take in order to do the job we need to do for our causes. Nonprofits must be willing to take action, and willing to be transparent, and courageous enough to stand in their revolution with conviction and information .
GuideStar’s mission is to revolutionize philanthropy with information. I speak all over the country for GuideStar about the “new normal” in the philanthropic sector. As the need and the method for receiving information evolves, so too does our need to shape that information in meaningful ways that are understood by the masses as well as by our funders. Example: my son told me the other day that Invisible Children spent too much on overhead and not enough on their programs – so even though their film was great, don’t give to them! My son is 17, tuned in, and being educated on how to think about giving at a level that I never dreamed of!
For years, transparency was a primary objective of nonprofits nationwide. Today, a new conversation is emerging – one that goes beyond the limited, and sometimes misleading, focus on overhead and talks about nonprofit effectiveness and impact. Nonprofits need to collect and communicate information that drives confident decisions. They need to present the information in a way to get the most people to use it to think, and use it to give, and use it to drive the action intended – or something greater.
GuideStar today uses a SQL platform and the FAST technology engine to help us get our information to you as quickly as possible. We are currently working in two datamarts to display our information in order to be able, to be agile, and to respond fast to changing stories, and to be able to contain more data. Via our website, subscription tools, and many partner sites, we are accessed by grantmakers, public charities, the media, and professionals in order to research and analyze charities and make sound decisions. What we collect on charities, in addition to information they are reporting to the IRS, is frequently surveyed, interviewed, and scrutinized to make sure that it makes sense for the audiences needing to use it. How we collect it – online and 24/7 – is a process that (though still time consuming) has been developed to be as simple as possible for the nonprofits to use. Today, as in the beginning, we still look at all of that information before it goes live, to check for mistakes and potential cases of libel. We still verify via phone and email that the person claiming the profile of any given nonprofit is who they say they are and has the authority to give us information about their organization. And we are constantly innovating to do more.
Money for Good II Research, which we conducted in partnership with Hope Consulting, details specific information donors, foundation grantmakers and advisors are looking for, and discusses resources such as Charting Impact, a standardized tool for nonprofits to tell their full impact story. GuideStar, BBB Wise Giving Alliance, and Independent Sector developed Charting Impact in response to this research. In today’s age of shrinking budgets, donor fatigue, difficult government budgets, consolidation and contraction (rather than growth and expansion) across the sector, and the explosion of how we receive our information and who is listening – we need to tell our story. Not just the story of our cause – but the story of our organization. The “era of assumed virtue” is over, and we as nonprofits must provide an accessible way for people to get what they need more of: transparency and accountability, greater personal engagement in philanthropy, and quality information on which to base decisions.
Convincing people to do something is also convincing people (my son and yours) that we are credible sources and credible vehicles for the change they want to see in the world. And if we don’t provide the answers – who will?
Bunkie Righter has 20 years of experience in both nonprofit management and fundraising. During the last nine years with GuideStar, Bunkie has worked in a variety of roles, and for the last eight years in her current role, where she focuses on developing partner relationships and delivering comprehensive data solutions from the GuideStar database for partners and clients. Beyond the distribution of GuideStar’s extensive database through licensing partnerships, she travels throughout the country talking with nonprofit professionals about GuideStar’s role in the nonprofit sector.
Posted By Lindsay Nichols on April 26th, 2012, in these categories: From GuideStarCheck out our new infographic below depicting the six steps nonprofits can take to more effectively fundraise. These tips are anchored by research, called Money for Good II, that we partnered on with Hope Consulting – check it out: www.guidestar.org/moneyforgood.
What’s the crux of the infographic’s message, you ask? I’ll tell you: it’s about effective communication. Transparency and accountability used to be hot button issues for the philanthropic sector – now they are old hat as donors and funders come to expect both from nonprofits across the board. The focus now is on engaging with donors and funders on all levels. Our infographic gives you concrete examples on how to go about it. Enjoy! You can also check it out on our Money for Good Pinterest board: http://pinterest.com/guidestar/money-for-good-ii/.
We want to hear from you: which tips do you think will be the easiest to implement? Which do you think will be challenging?
Posted By Lindsay Nichols on April 25th, 2012, in these categories: From Our AdvisorsThe following is a guest blog by Andrea Kihlstedt, co-founder of Asking Matters.
 Andrea Kihlstedt No one has ever accused me of being a math whiz. In fact, numbers seem to roam around my brain, sometimes reconfiguring themselves in strange ways that have little to do with reality.
In fact, in all the years of my capital campaign work, one of my most challenging feats was keeping campaign goals straight. Was it $1,500,000 or $2,250,000? $500,000 or $120,000,000? And I must confess to forgetting or confusing campaign goals more than once in my lengthy consulting career.
So when this morning, a client from years past sent me an e-mail telling me how he still appreciated and relied on the formula I had come up with for an organization’s endowment, it made me chuckle.
But chuckle or not, when I look at that formula again, it makes perfect sense as a place to start thinking about developing an endowment goal. And if these particular numbers make perfect sense to me, I guarantee they’ll make perfect sense to you.
How big should your organization’s endowment be?
It’s simple. It should be two times the amount of your annual budget.
If your annual budget is $2 million dollars, your endowment should be $4 million.
If your annual budget is $500,000, you should build an endowment of $1,000,000, and so forth.
Why?
Because if your endowment is twice your operating budget and if you take 5% of it out each year to spend on operations, you’ll be able to count on income from your endowment to the tune of 10% of your operating budget each year.
More than that amount, and organizations run the risk of becoming fat and lazy. Less than that, and it’s a hand-to-mouth existence every year.
Let’s run the numbers:
Say your operating budget is $1,000,000.
Two times $1,000,000 is $2,000,000
5% of $2,000,000 is $100,000.
Bingo! $100,000 is 10% of your operating budget.
And the same will be true no matter what your operating budget. Try it.
Why is this ideal? Three reasons:
- A lovely simple formula like this gives you and your board something clear to shoot for, and endowment seldom seems clear.
- Because it’s based on your annual budget, it gives you a clear reason to grow your endowment as your organization grows.
- Having an endowment goal to shoot for gives you good reason to work on getting planned gifts. Without a goal, they often fall by the wayside.
I tried out this formula with my friend, Tony Martignetti, a planned giving specialist, and he tells me in no uncertain terms that it’s too simplistic. The stock market ebbs and flows, and organizations that are serious about their endowments should evaluate and adjust their spending rate each year. Alas, like most things in life, endowments are not really so simple.
But, as a way to start thinking about an endowment, my simple formula will give your board members something to grab onto that makes sense.
Believe me, if I can make sense of it, anyone can!
And when thinking about endowment, never forget the sage words of one of the wonderful old whales of fundraising, “Where’s there’s death, there’s hope…”
Andrea Kihlstedt is a writer, coach, speaker and trainer in major gift fundraising. She is cofounder of Asking Matters, an innovative website that has developed the concept of personal Asking Styles.
Posted By Lindsay Nichols on April 23rd, 2012, in these categories: From GuideStarThe following is a post by Lee Glenn, GuideStar’s senior vice president.
 Lee Glenn At GuideStar, we have long believed that armed with the best information about nonprofit organizations, givers and advisors to giving can support the organizations making the most impact for their cause. We came together with NFF to create a new standard for analyzing financial health in the nonprofit sector: Financial SCAN (Situation & Comparables ANalysis). As you’ve seen on this blog earlier, Financial SCAN is an exciting new product brought to market through collaboration with Nonprofit Finance Fund (NFF). This product has been in development for over a year and was launched April 9th.
When we came together to develop Financial SCAN, there were a couple of problems we set out to address. The first is that the sector lacks a common language and understanding of what it takes to keep a nonprofit in business and in balance. The use of existing rating platforms that focus on metrics like “overhead” does not provide an accurate accounting of an organization’s efficiency or effectiveness. Many funders and donors have expertise in various mission-related areas but may lack the financial expertise to determine financial health. There is little agreement on what to measure, why it matters, and how it links to mission success. Second, financial data collection, reporting, and analysis are time- and skill-intensive activities. Our everyday demands of running our nonprofit organizations compete with funder and donor demands for a wide variety of reports and information. Data is important in making decisions but we want to avoid the trap of data-crunching superseding data-driven decision-making in grant management and due diligence.
Financial SCAN, powered by up to five years of financials from Forms 990 filed with the IRS, addresses these issues. This easy use tool provides a comprehensive analysis of a nonprofit’s financial condition utilizing dashboards and metrics, detailed charts, educational narrative with questions to consider, and sophisticated peer analysis which allows you to look at financial health across a number of organizations. This tool establishes an analytical standard for nonprofit financial analysis. It will help you think about the full costs of running a nonprofit and the relationship between mission and margin. This tool is not designed to tell you once and for all whether to fund, or not to fund, a nonprofit, but rather a means to engage in a meaningful, metrics-driven dialogue. We believe Financial SCAN will help to create more clarity and transparency fostering greater collaboration and leading to more effective allocation of limited funds. We hope, eventually, this tool is something nonprofits, funders and advisors will consult before undertaking key projects or making big decisions.
Check out more on how the tool works by viewing a demo at www.guidestar.org/financialscan.
Posted By Lindsay Nichols on April 19th, 2012, in these categories: From Our AdvisorsThe following is a guest post by Dennis McCarthy, VP of Strategy and Business Practice at Convio.
 Dennis McCarthy Integrated marketing, that is, the coordination of communication and solicitation efforts across multiple channels and programs, has been a frequently discussed topic within nonprofit circles for decades now. Indeed most nonprofits have been operating in several marketing channels for quite some time. However, there remains limited clarity on how to optimize integrated marketing channels in order to maximize the constituent’s relationship with a charity.
Furthermore, there has been very limited quantification surrounding the relative financial value of different engagement approaches e.g. dual channel vs. single channel communications. Convio, along with CARE USA, recently completed Insights into Integrated Marketing Constituent Behavior to further the thinking and dialog around integrated marketing
The study takes a deep dive into the metrics associated with a multi-channel marketing program at one large nonprofit, CARE – particularly the relationship between traditional direct mail and digital channels (also referred to in the study as offline and online).
While we’ve known for some time that an integrated multi-channel approach to constituent engagement is key for nonprofits to be successful, the study’s findings provide more concrete and statistical confirmation. We can now more confidently say that nonprofits need to adapt to in the way they both engage externally with their supporters as well as organize their efforts internally. Integration on both fronts is imperative.
Key Findings
- Dual channel donors give the most. On average, dual channel donors give $123.29 annually, this is 46 percent more value to a nonprofit than direct mail only donors.
- Adding digital channels does not materially cannibalize revenue from direct mail. Multi-channel donors gave almost as much through traditional sources as offline only donors.
- Online engagement improves the retention of traditional offline direct response donors. This illustrates that the ROI of online engagement should not solely be measured by giving online.
- There is no discernable downside to cultivating direct mail donors via email. Maximizing email collection for that audience and giving the option to give and engage through both channels is important.
Key Recommendations
Combining insights from this study as well as our 2011 study Integrated Multi-Channel Marketing – Where Nonprofit Organizations Are Today and Key Success Factors Moving Forward and work with clients, we have arrived at the following key recommendations
- Ensure your organization is committed and aligned. Realize that integrated marketing success is a large commitment and requires new thinking inside the organization. It probably requires discussion and some level of organizational realignment, and at minimum goal resetting and sharing. It likely requires system adaptation, and certainly requires new business process implementation.
- Aggregate data and build analytics. The premise of integrated marketing is to discern through feedback from and interaction with constituents how best to engage them to maximize their lifetime value. To understand cross-channel and program insights, and to effectively enact integrated campaigns, it is important to aggregate all key constituent data in a single place.
- Architect new segmentation and treatment strategies different cohorts of supporters. This study shows that donors can be described by their channel preferences in addition to others characteristics. The macro recommendation is that nonprofits need to move away from a mostly one-size fits all approach to multi-channel communications and to architect treatment paths that align to donor preferences.
To download the full study, including details on each of our key recommendations, visit http://resources.convio.com/ConvioCareReport.html.
Dennis McCarthy is Convio’s VP of Strategy and Business Practice. A frequent speaker in the nonprofit sector, he has more than 25 years of integrated direct marketing, fundraising and consulting experience.
Posted By Lindsay Nichols on April 17th, 2012, in these categories: From GuideStar Lindsay Nichols For too long, the nonprofit sector has been ill-equipped to determine which nonprofits are achieving success, and which are truly able to stick it out for the long haul. The public focuses on “overhead,” which is really how much an organization spends on administrative costs – such as keeping the lights on and paying their people, etc. – in relation to its total expenses. Popular opinion is that if the overhead ratio is too high, then the nonprofit can’t be doing enough to accomplish its mission.
GuideStar has been preaching for a long time about how arbitrary this ratio is, and how it just doesn’t get to the heart of the question – is the nonprofit doing what it should, doing it well, and will it be able to keep doing it? For example, if a nonprofit’s board of directors say that the organization needs to focus its energies on, say, upgrading its technology and expanding its IT staff next year, the organization’s overhead ratio might be high due to the cost of recruiting and retaining the best in the business, but that’s not necessarily a bad thing. Once in place, the technology could improve communications with staff in the field, automate processes so that the nonprofit can shift more resources to programs, or accomplish any number of things that will enhance the organization’s ability to achieve its mission. So who cares if the nonprofit has a high overhead ratio that one year?
The problem was that we haven’t had many tools in our arsenal to help us turn the page on the subject of overhead. That’s not to say that there aren’t any tools: our GuideStar Exchange program gives nonprofits the ability to tell their full story on GuideStar, through additional documentation, photos, videos, etc.; Charting Impact gives nonprofits a standard for defining and describing effectiveness; and the findings of our Money for Good II research show us that there are 6 steps nonprofits can take to help demonstrate their progress.
Financial SCAN, however, which we created in partnership with Nonprofit Finance Fund, gives us another tool for our arsenal – and what a robust tool it is. With Financial SCAN, we finally have the ability to analyze years and years of complex financial data to determine an organization’s true financial condition. And the financial condition is a big piece in determining the true state of an organization’s ability to meet its mission in the future.
Check out our short YouTube video by Pam Jowdy, GuideStar’s senior product manager, about all Financial SCAN has to offer here. If you’re interested in hearing more from the brains behind this new platform about how it can help you in your daily professional lives, join us for a free webinar on May 3.
For those of you that have taken a look at Financial SCAN, what do you think? Do you see it changing the way we value overhead when assessing nonprofits? Please leave your comment below or Tweet about it using the hashtag #FinancialSCAN.
Posted By Lindsay Nichols on April 12th, 2012, in these categories: From Our AdvisorsThe following is a cross-post from NFF’s Social Currency blog, written by Rebecca Thomas, vice president of Strategy & Innovation. You can find the original post here.
 Rebecca Thomas Nonprofit Finance Fund (NFF) has long held that nonprofit organizations are more than just the sum of their programs, and more than their overhead ratios. Existing nonprofit ratings platforms are simply inadequate to the complex task of analyzing and deriving insights from nonprofit financial data. They do not help nonprofit organizations communicate their financial story and goals to staff, board members and funders. They fail to provide a holistic picture of an organization’s business model and balance sheet.
Currently available tools can lead to premature or misinformed fund-no fund decisions, rather than a more enlightened grantmaker-grantee dialogue about what organizations need to survive and thrive. They risk turning nonprofit financial analysis into an exercise in compliance rather than a tool to advance organizational effectiveness.
If we’re honest with ourselves and really care about long-term effectiveness, we need to conduct the kind of comprehensive financial analysis that looks at the entire nonprofit enterprise. We need a more nuanced understanding not only of costs but also of revenue reliability, profitability, balance sheet health and liquidity. We need to look beyond numbers and ask probing questions about what kinds and amounts of resources are required in the context of an organization’s strategy, marketplace and lifecycle. These questions might include:
- Which key revenue streams are relatively reliable and which are at risk?
- Is the organization covering its full costs and generating regular surpluses?
- If not, are expenses adjusted in line with changes in revenue?
- Does the organization have adequate access to cash to manage its cash flow cycles?
- Are facilities and other fixed assets maintained as they depreciate?
- Is the organization’s board prioritizing saving for the long term and setting aside surplus cash into reserve?
Answering these questions takes time and requires sophisticated analysis skills. Fortunately, help is at hand. NFF has been working with GuideStar for more than a year to create a new data platform for nonprofit financial analysis and education. Financial SCAN (Situation & Comparables ANalysis) provides instant financial information on 280,000 nonprofits across the country.
Derived from Form 990 data filed with the IRS, Financial SCAN shows up to five years of financials for a nonprofit. Dashboards and graphs reveal ratios that are much more relevant to organizational health and stability, such as: profitability margins, estimated full costs, depreciation of fixed assets and months of liquidity. The platform allows you to compare the financials of multiple peer organizations to better understand trends across a sector. We’ve also incorporated an educational guide to help users make sense of the data and understand its implications.
By bringing transparency and comparability to financial information in the sector, Financial SCAN can provoke more informed, less judgmental and increasingly honest dialogue among nonprofits, their funders and advisors about what organizations really need to be stable and effective. We encourage you to learn more about Financial SCAN and how it can be helpful to you.
Rebecca Thomas has overall strategic responsibility for national initiatives, funder partnerships and new online and next-generation services that advance NFF’s profitability, visibility and impact. Ms. Thomas has extensive experience advising nonprofits in areas of financial planning and management and consulting for foundations seeking to incorporate finance into grantmaking practice. Ms. Thomas received an MBA from Columbia University’s Graduate School of Business and graduated from Yale University with a BA in French and International Studies.
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