2007 GuideStar Nonprofit Economic Survey Kickoff

On October 8, we will send an e-mail inviting Newsletter subscribers associated with 501(c)(3) organizations to participate in our sixth annual nonprofit economic survey. The survey is designed for U.S. public charities and private foundations. It will run October 8-22, 2007.

From the President's Office, October 2007

Dear Friend:

Legislative and IRS Updates, October 2007

Student Loan Forgiveness for Public Charity Employees

Note: The following discussion is provided for informational purposes only and is not intended to serve as legal advice. For specific information about the College Cost Reduction and Access Act, consult your attorney.
Signed into law September 27, the College Cost Reduction and Access Act includes a provision allowing the secretary of Education to forgive the balance of federal student loans held by public service employees who (a) have not defaulted on their loans, (b) have made monthly payments on their loans for 120 consecutive months after October 1, 2007, and (c) were employed full-time in a public service job during the entire 120 months during which they made the payments. The law includes employment "at an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code" (i.e., a public charity) in the definition of "public service job."

Law [H.R.2669.ENR] (Click on the sixth link to read the text of the law)

Form 990-N FAQs

The IRS has posted Frequently Asked Questions (FAQs) related to Form 990-N. Also known as the "e-Postcard," Form 990-N is a new information return that many smaller exempt organizations will be required to begin filing in 2008.

The FAQs are available on the IRS Web site. The questions include "Is there a new filing requirement for small tax-exempt organizations?" "Why do I need to provide this information?" and "What happens if I fail to file the e-Postcard or Form 990 or 990-EZ?" There is also a link to a printable version of all 14 questions and answers.

Background information on Form 990-N

2007 Workshops for Small and Mid-Sized 501(c)(3) Organizations

In November and December 2007, the IRS will be offering one-day workshops for small and mid-sized section 501(c)(3) exempt organizations. These introductory workshops are designed for administrators or volunteers who are responsible for an organization's tax compliance. Each workshop will be presented by experienced Exempt Organizations staff members and will cover the following topics:
  • Tax-Exempt Status–Benefits and responsibilities of tax-exempt status under
    section 501(c)(3) and actions that may jeopardize an organization's tax-exempt status.
  • Unrelated Business Income–The definition of unrelated business income, common examples, common exceptions, and filing requirements; includes a discussion of charitable gaming.
  • Employment Issues–Classification of workers and filing requirements for employees and independent contractors.
  • Form 990–An explanation of the Form 990, tips on record-keeping, and advice for completing the return; includes a discussion on the new "e-Postcard" filing requirement.
  • Required Disclosures–Overview of disclosures tax-exempt organizations are required to make, including new requirements imposed by the Pension Protection Act of 2006.

Dates and Locations

  • November 13, 14, 15–Salt Lake City, Utah
  • December 4, 5, 6–Columbia, S.C.
  • December 18, 19, 20–Sacramento, Calif.
See more information >

Suzanne E. Coffman, October 2007
© 2007, Philanthropic Research, Inc. (GuideStar)

Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.

The 20 Biggest Fundraising Mistakes, Part I

Excerpt from The Relentlessly Practical Guide to Raising Serious Money

Call them what you will—gaffes, blunders, oversights, or errors—mistakes creep into everyone's professional life. But in fundraising—unlike other fields—where thousands if not millions of dollars are often at stake, mistakes can be especially hazardous.

Who hasn't forfeited a significant gift, or received but a token one, due to some serious miscalculation?

While there may be hundreds of them, 20 potentially costly fundraising mistakes stand out. They can't really be ranked, since circumstances alter their impact. But here they are in an effort to ward you away from them.

1. Thinking Your Organization Will Attract Support Simply Because It's a
Good Cause

Just because you have a good cause—one of thousands, really—doesn't mean money will wend its way to you.

Organizations must attract support the old-fashioned way—earn it.

Giving away money is something we all do reluctantly, and it's hardly an instinctive act. Nonetheless, people will support you if you present them with a challenging project that is consistent with their interests.

To succeed, you must explain exactly why you seek the funding, why your project is compelling, who will benefit, and why the money is needed now.

In other words, your needs—presented as opportunities—must be specific, people-oriented, and have a sense of urgency.

Keep in mind, always, that people give in order to get. They don't simply want to give away their money; they want to feel they're investing it and getting something in return.

2. Thinking That Others Can Raise the Money

Successful fundraising abides by the "rock in the pond" principle. That is, you can't expect others to contribute until those closest to the center of your organization do so. The farther from the center, the weaker the interest.

In short, solicitation starts with your inner "family"—most notably the board. Only when these individuals have made proportionately generous contributions do you reach out to your external constituency.

Why this principle? Because it only makes sense that if a board approves a program involving significant outlays, with the understanding that money has to be raised, then these same trustees must commit themselves to giving and getting.

If your governing body won't do so, who will?

3. Believing That Because People Are Wealthy They Will Contribute to You

Simply because someone is wealthy, or thought to be wealthy, is no reason to assume that he or she will want to give to your project. This is the thinking of neophytes.

People make gifts, substantial gifts, that is, only after you've reached out, informed them of your work, and meaningfully involved them in your organization.

It is then that the prospective donor understands your goals, recognizes their importance, and welcomes the opportunity to have an impact.

Solicitation rightfully becomes the final step in the fundraising process, not the first one.

4. Thinking You Can Whisk Wealthy Prospects In at the Last Minute

Individuals, if they are to be committed to your organization, must have the opportunity to be involved in your work—and not at the 11th hour.

Intensively courting prospects just prior to your fundraising drive is an insulting ploy, and most are smart enough to know what you're up to.

Much more advisable is to continuously involve prospects, for just as the best trustees are those who are meaningfully involved, the best contributors—and best solicitors, too—are involved in your drive from conception to victory.

Dollars, as Jerold Panas notes, follow commitment. And commitment follows involvement.

5. Failing to Research and Evaluate Prospects

Rarely do meaningful gifts come from strangers. Most major donors are either associated with an organization or have logical reasons to give.

It is the role of prospect research to reveal these logical reasons by focusing on three elements, namely, linkage, ability, and interest.

Is there any link between the prospective donor and your organization? If so, then this link—and it must be legitimate—makes an appointment with the prospect possible.

Next is the person's ability to give. Does the prospect have enough discretionary income to justify your soliciting him or her for a major gift? Research will tell you the answer.

Finally, what is the prospect's interest in your organization? If he or she has little interest or limited knowledge about you, then you will likely receive a small gift if any at all.

6. Failing to Ask

Very often, when campaigns fail, it's not because people didn't give, it's because they weren't asked. In fundraising, asking is the name of the game.

The problem is, only for the rarest person is asking for a gift easy. For most of us, the discomfort is so strong we'll invent 100 excuses to procrastinate.

Despite any training, despite any inspirational send-off, asking will always be the biggest challenge.

What can temper the fear to some degree is keeping in mind that prospects, who are usually more sensitive than we expect, respond favorably to solicitors who are dedicated and genuinely enthusiastic about the causes they represent.

7. Thinking That Publicity Will Raise Money

Publicity, despite our best wishes, doesn't raise money.

If you have solicitors and prospects, a strong case, and a campaign plan, you won't need any publicity.

Those who do insist on a big splash are, more often than not, people who don't want to face the rigors of a campaign. When the publicity push fails to create a stir, they use it as an excuse for not working.

As for campaign materials, most serious donors see them as nonessential. They much prefer a persuasive verbal presentation, underscored by simple documentation.

So long as you treat your press releases, brochures, drawings, or photographs as aids and not as solicitation devices, they will be useful, but they will never take the place of direct asking.

8. Failing to Recruit the Right Trustees

Of all the groups important to an organization, none is more vital than the board of directors.

There are exceptions, to be sure, but in 99 out of 100 cases, an organization that consistently attracts the funding it needs has a board that accepts fundraising as a major responsibility, despite any other governing duties.

Put another way, an organization's ability to raise money is almost always in direct proportion to the quality and dedication of its leadership.

As Hank Rosso, founder of the Fund Raising School puts it, "People who have the fire of leadership burning within their souls, and who have that deep commitment to the organization's mission, will drive any program through to success."

9. Believing You Can Raise Money by the Multiplication Table

People new to fundraising often get it in their heads that all you have to do is divide your goal by the number of likely donors, then ask everyone to give an equal amount.

But you can't raise money adequately by the multiplication table—trying, for instance, to get 1,000 persons to give $1,000.

There are several inherent problems here. First, not everyone will give (which throws a wrench into the whole approach). Second, we all tend to give in relation to others. If someone, five times wealthier than you, pledges $1,000, are you likely to feel a $1,000 pledge from you is fair? Third, seeking $1,000 from each donor in effect sets a ceiling on what an unusually generous person might wish to pledge.

10. Failing to Have Deadlines

By nature most of us are procrastinators, and whatever we have plenty of time to do, well, we seldom get it done.

For many if not most volunteers, the thought of asking someone for a contribution leads to procrastination.

To counter this, you must press for specific accomplishments within prescribed deadlines. In other words, to force action you need a campaign schedule with target dates understood by all.

Everyone will then know the rules of the game and, despite the pressure, will be grateful for the deadline.

Next month: "The 20 Biggest Fundraising Mistakes, Part II""

David Lansdowne
© 2007. Excerpted from The Relentlessly Practical Guide to Raising Serious Money. Emerson & Church, Publishers. All rights reserved.

David Lansdowne has spent much of his professional life in the nonprofit sector, serving in development and administrative positions for educational, cultural, and health organizations throughout America. The book from which this excerpt is taken, The Relentlessly Practical Guide to Raising Serious Money, was chosen by AmeriCorps Vista as the premier work on the subject. He is also the author of Fund Raising Realities Every Board Member Must Face.

Multi-Channel Fundraising: Tips of the Trade

Multi-channel fundraising has received a lot of attention lately, but is it really worth all the hype? Yes! With today's ever-expanding communication choices and ever-changing technology, multi-channel fundraising deserves consideration from the nonprofit community.

In order to understand fully multi-channel fundraising, one must first get a conceptual and visual definition. Conceptually, multi-channel fundraising is the idea of using various communication mediums to convey key messages to an audience or audiences. Multi-channel fundraising moves beyond a simple one- or two-tactic campaign to embrace the unique preferences of individuals while effectively using popular communication channels.

To get a better understanding of multi-channel fundraising, let's look at the most commonly used channels:

  1. Direct mail: This channel includes everything from postcards to newsletters that are mailed via the Post Office.

  2. Internet: This category includes a broad range of sub-categories that each use the Internet in some way. Nonprofits can use the Internet to communicate with constituents via e-mail, e-newsletters, blogs, RSS feeds, and social networking sites, to name a few. It is also important to remember that an organization's Web site is itself a communication channel.

  3. Phone: This used to be a pretty simple communication tool. With advances in technology, however, the phone can include more than an audio conversation. With today's cell phones and the increasing use of text messaging, the phone has become a multi-channel device.

  4. Face-to-face: Just because technology has created more choices doesn't mean that the good, old-fashioned face-to-face conversation has gone away. These conversations can occur one-on-one or in group settings at events. Many nonprofits know and understand the impact and power of these interactions, and they should not be forgotten in any multi-channel discussion.
With so many communication channel choices, one of the greatest challenges of effective multi-channel fundraising is determining which would be most appropriate to convey a particular message, while taking into account constituent preferences. As the number of communication choices continues to climb, the ability to decipher effectively the most appropriate message/medium/preference combination will prove vital in fundraising strategy.

Makes sense, right? But how can nonprofits determine the appropriate message/medium/preference combination? What can nonprofits do to help establish an effective multi-channel fundraising initiative? Below are seven tips for accomplishing this goal:

  1. Ask constituents their preferences: Most constituents appreciate it when an organization asks them how they would like to be contacted and what they would like to be contacted about. Some constituents might prefer to receive appeals via direct mail, whereas others may prefer a phone call. Taking note of these preferences can be done in most donor management systems and will provide a way to categorize constituents based on communication preferences.

  2. Use Web analytics: Web analytics provide a way to help an organization learn about its constituents. The information gathered by Web analytics can help an organization determine which causes or appeals are the most compelling and which channels are most utilized. Web analytics serves as an extra ear for organizations. It gathers information about constituent behavior that can be used to make better decisions.

  3. Segment the database: Most nonprofits already segment their databases. A different set of criteria exists when using multiple channels, however. Traditionally, nonprofits have used segmentation as a way to communicate targeted information to particular groups or to establish appropriate ask amounts. When using multiple communication channels, nonprofits should also consider a constituent's preferences as part of the segmentation criteria. This approach may lead to more mini-campaigns, but the results and impact are typically greater.

  4. Set up a social networking page: Setting up a social networking page is an easy and cost-effective way to build a micro-community for your constituents, who can then help spread the word about your organization's mission and goals.

  5. Create cross-functional campaign integration teams: By developing cross-functional teams that include representatives from all types of fundraising, IT, program, and administration, nonprofits can help ensure the most effective and executable multi-channel strategy.

  6. Enable incoming multiple-channel communications: Nonprofits should enable constituents to communicate however they wish. Organizations should give constituents the option to call, e-mail, visit a Web site, or send a postcard in a single communication piece. For example, a postcard appeal can provide a simple mail-in reply but can also give a Web site address and phone number where a constituent can learn more or even donate. The idea is to be always available and give constituents a convenient way to engage with the organization.

  7. Maintain consistent messaging: One of the potential drawbacks and most common mistakes when employing a multi-channel fundraising strategy is the failure to provide consistent messaging. Consistent messaging doesn't mean that every communication must have an appeal or the same content. It means that the overall message and image the organization would like to convey should remain consistent across channels.
These seven tips provide a basic guideline for nonprofits considering a multi-channel approach to fundraising. Because today's donors have so many choices when it comes to communications and each has his or her own unique interests and preferences, multi-channel fundraising is quickly becoming a necessary fundraising strategy. Nonprofits should use the seven tips mentioned above to create an effective multi-channel fundraising endeavor that empowers constituents to communicate on their terms while enabling the organization to meets its goals.

David Lawson, October 2007
© 2007, Kintera®, Inc.

David Lawson is vice president for market strategy for Kintera®, Inc. Kintera provides software as a service to help organizations quickly and easily reach more people, raise more money, and run more efficiently. The Kintera technology platform features a social constituent relationship management (CRM) system, enabling donor management, e-mail and communications, Web sites, events, advocacy programs, wealth screening, and accounting.