Pursue Individual Donors

We’ve been looking at individual donations and Haiti. What about what we see in our local area? We work with over 100 nonprofit agencies and prepare over 700 tax returns for individuals. While it is a small population, observations can still be made:

• You don’t have to write a grant application to ask individual donors for money
• Individual donations are not normally restricted for specific purposes so you can use individual donations (in most cases) for general operating monies
• Individuals will typically give to the same charities year after year and most tend to be life long donors
• A nonprofit with about a $1 million budget with a good planned giving program in place for 10 or more years receives on average $50,000 annually. This has been our experience. However, I do not know the national statistics on this.
• As a percentage of their income, lower income individuals give more than higher income individuals. While we note this at our CPA firm, it actually mirrors the same documented national statistics
• Charities that are less dependent on government money and foundation money are more stable, survive the rough times better, and have more people resources to devote to their mission because they don’t have to file mountains of government paperwork or find new foundations to support them every few years.
• A surprising number of very nice, caring people don’t give--at all.
• When individuals talk about charities that they have had some relationship with, they say “If they asked me to give money, I would”
  

Haiti and Individual Giving – and how it relates to you

I still continue to be amazed and moved by the generosity of so many in reaching out to Haiti and to reflect on the value of individual donors. We as nonprofits work so hard applying for grants when we should be putting that effort towards reaching individuals. In my last post I listed some important truths about giving illustrated by the outpouring for Haiti. What do these mean to your nonprofit?

• Communicate the need
• Communicate why you are effective at meeting that need—build your donor’s trust
• Pursue individual donors
• Make it easy. Make sure donors can give securely and easily through your website
• Look into a text campaign—a good fit for certain events or causes
• Invite people to participate at various levels of giving
• Repeat---Pursue individual donors. Put more energy into this than pursuing corporate donors, foundations, and government grantors.
  

A client recently had their first annual appeal. They raised $12,000 increasing their total contributions by 5%. Not a bad start for their first year. Most of their contributions had historically come from foundations and corporate funders. Tomorrow the nonprofit I serve with is going to look into getting the “donate now” button on our website and we are working on a grant application. I’ll keep you posted on the outcome of each.

Haiti and the Message about Individual Donors

As of January 21, over $305 million had been raised just eight days after the earthquake struck Haiti. This CNNMoney article goes on to discuss where the money came from and how it was raised.

The outpouring of donations for Haiti, and before Haiti, for the victims of Hurricane Katrina and the tsunami illustrate a number of important truths about giving.

• People will give and give generously to a demonstrated need-they will give to hurting people in the US and they will give to people in need around the world.
• People give to organizations they trust
• The potential for individual giving is greatly untapped-for such a large amount to come in, in such a short period of time shows that people have money to give. Some people may have given sacrificially (another lesson for another time) but most probably will not miss the donated funds.
• People give when they process is easy. It is estimated that over half of the donations have been online contributions. The American Red Cross reports over 60% has been received online and 15-20% through its text campaign. That means that only 20-25% of the funds have come through the mail.
• A little goes a long way-by January 16, 700,000 people responded to the American Red Cross text campaign with donations of $10 each
• Although the giving includes corporate gifts the American Red Cross noted that about 15% of the donations are from corporate gifts—meaning 85% are from individuals. Individuals have historically represented the largest percentage of givers.
  

Yes, the circumstances noted are catastrophic, and have received a tremendous amount of media coverage, and the need is immediate. But then again, you aren’t trying to raise $305 million in eight days.

More Than Great Cookies (in honor of Girl Scout Cookie Month)

What are we best in the world at? This was the key question that the Girl Scouts of the USA asked as they began their transformation several years ago. www.girlscouts.org. It’s a great question that Organizations should ask periodically to refocus on their core mission.

Over time, nonprofits can find that they have drifted from their mission. Whether it’s following the greatest need or chasing the greatest dollars, an Organization can realize that they aren’t exactly doing what they initially set out to do. This is not necessarily a negative. If the needs of the community have changed and the Organization has changed to meet those needs, the nonprofit is relevant to its community. However if the mission changed in the process of pursuing funding, the nonprofit may be off track. Depending on the cause of the mission drift the Organization may need to restate its mission to better communicate what they do or get back on track.

The luncheon speakers at the BoardSource Leadership Forum were Kathy Cloninger, the CEO of Girl Scouts of the USA and Connie Lindsey, the National President of the Girl Scouts of the USA. In their own words they shared the process of “taking a deep look at the brutal truths facing the movement”. It was a challenging process but they were committed to complete transparency and steadfast in making the changes happen. Their goals were twofold: 1-to have a relevant purpose; and 2-to create a simple, faster business system. The process is described on their site.

The answer to the question? Girl Scouts creates leaders. 75% of women in leadership positions were once Girl Scouts. In the end the Girl Scouts emerged with some significant structural changes and a new definition of Girl Scouting—“Girl Scouting builds girls of courage, confidence, and character, who make the world a better place.”

What are you best in the world at?

The Auditors are Coming! The Auditors are Coming!

We audit a number of organizations-nonprofits and municipalities and a few corporate entities. Every year our clients express relief when the audit is over, especially if there aren’t any major findings. We reassure the clients that we as auditors aren’t “out to get them” and they should not worry about the audit. Any findings or comments will only help to make their internal controls stronger and their organization better. However we do understand their apprehension. No one wants to have their errors written and memorialized for others to see.

Every three years we find ourselves in our clients’ shoes when we have our peer review. We are audited by another CPA firm who reviews our system and a selection of our accounting and auditing work to make sure we are following standards properly. A month ago, I was confident in the philosophy that any comments will only enhance our client service. But with the peer review starting tomorrow I completely empathize with our clients. Which reminds me of another philosophy—walking in another’s shoes is a good thing.

Year End Tax Tips for Donors

The IRS published Year End Tips for Donors this week on their site.

• IRA owners age 70-1/2 or older can directly transfer tax free up to $100,000 per year to an eligible charity. This provision is scheduled to expire at the end of 2009.
• Clothing and household items donated to charity must be in good used condition or better.
• All donations of money regardless of amount must have a bank record (typically a canceled check) or written communication from the charity. Payroll deductions can be documented by maintaining the last pay stub for the year.
• Contributions need to be made by December 31 in order to take the deduction
• As of this posting, just 19 more donating days!

Strategic Planning vs. Strategic Thinking?

In the BoardSource session “Financial Leadership in this Emerging Economy”, the presenter, John Griswold noted that the strategic plan used to be for 5 to 7 years, now it is for 2 to 3 years. To which a Board trustee from a grant giving foundation replied—“forget the strategic plan—I want to see strategic thinking”.

We pay attention to what the grant makers are saying is important to them. After all, they are a significant source of funds for nonprofits. So is this a trend that nonprofits should be aware of—should they abandon their strategic plans—those nearly year long processes that result in a large binder with fancy charts and graphs and goals, objectives, and action items?

While I did not get to follow up with the Trustee who made the comment, I think she was expressing a common frustration—the strategic plan in the nice binder that sits on the shelf for 5 years until it is time for the next strategic plan. And in between, the plan is not looked to for guidance or updated annually or considered until then.

The common sentiment—“you don’t plan to fail, you fail to plan” embodies the reasons behind a strategic plan. But Boards and management, who spend countless hours and dollars on a plan and then don’t continually use it, cannot say that “the plan on the shelf” is truly planning. True strategic planning does include strategic thinking. It is not a “one and done” event. It is a continual process of incorporating your plan into every Board meeting and updating and modifying your action steps as you strategically look at what is happening in the world around you.

So it is not an issue of a strategic plan OR strategic thinking, it is strategic planning AND strategic thinking.