Year End Giving Tips and the Influence on Your Donors-Part 3

We have been looking at year end giving tips--most of which usually cite the tips from Charity Navigator.   Their discussion is much more in depth than the summary here so make sure to review their listing.  Our focus has been on how you as the charity can put your best foot forward.   The last three...

8.  Look at the charity's financial health.  Review the last three years of the Form 990.  Generally you would expect to see 75% of the expenses spent on program and 25% on administration and fundraising.   I was pleased to note that Charity Navigator affirms that well run organizations need to spend money on raising funds and the administrative functions of running the organizations.  I am always wary of charities who proclaim that 100% of your donation goes directly towards the program.  A sustainable organization spends money to continue fundraising and has a solid administrative foundation.   You should also have money saved for the future. 

We sometimes find that smaller nonprofits only allocate direct program costs to the program category.  You should have a reasonable method for allocating occupancy costs, office costs, and other costs to program, administrative, and fund raising.

9.  Concentrate giving.  If you have spent time evaluating a charity, give more money to that charity instead of spreading smaller amounts among multiple charities.  Charities spend time and money processing your gift and following up with future requests, newsletters, etc.  The cost to process a $10 gift will be likely the same as to process a $100 gift.  Overall, concentrating your gifts saves charities money.   This is an interesting perspective.  As a charity, you may be thinking that you welcome that $10 gift because you can demonstrate success in increasing that first $10 gift to a larger gift in the coming years.  If that is not the case, what can you do to engage donors so that they want to invest more with your organizaiton in the coming years?

10.  Make a long term commitment. When a donor sees the value of their partnership with the charity they will want to be engaged for the long run.  Do your donors feel like partners?  Similar to the prior point--how can you further engage your donors?

These posts have been aimed at helping you see your charity through your donor's eyes.   In the end, you are the steward of your donors funds.   By working in partnership with you, they hope to see impact in the community.   The more clearly you demonstrate this, the more they will want to partner with you.

Year End Giving Tips and the Influence on Your Donors-Part 2

In the last post we started looking at advice given to donors on reviewing charities and how you as the charitable organization can put your best foot forward.   The articles typically site this listing from Charity Navigator.    Let's continue with the next few:

4.  Commitment to Accountability and Transparency-charities that follow good governance practices-such as an approval process for the CEO salary; conflict of interest policies; a whistleblower policy; etc.--are more likely to follow good practices in accomplishing their mission.  Your potential donor can find out information about your good practices by reviewing your IRS Form 990 either by obtaining a copy from you or the online site, Guidestar.   Look at your Form 990 and read page 5 and Schedule O.    An organization following good practice will have answered affirmatively to the questions on page 5 and it will be supplemented by clear explantions of how these practices work in Schedule O.   Make sure the explanations in Schedule O can be easily understood.

5. Review Executive Compensation-compare it with counterparts in organizations of similar size, mission, and location     Charity Navigator notes that the compensation for the Executive Director for the average organization that they review is about $150,000.  Their 2012 study covers this in more detail.  Your own compensation review process should verify that your Executive Director and key staff's compensation is in line with organizations of similar size, mission, and location.   Ocassionally our clients are asked by stakeholders to defend their Executive Director's pay package.  Make sure you have the written results of your annual compensation review so you can answer any questions.

6.  Be careful of sound alike names.  Watch out for organizations that adopt the name of a reputable organization to boost their fundraising.  If there is another organization with a name similar to yours, what can you do to  ensure donors aren't confused.   In some situations, our clients have trademarked names or logos and have legally enforced those trademarks.  The legal costs might be expensive but becuase they had a national brand it was important to protect their name.

7. Don't give via phone telemarketing.  Typically telemarketers keep 25 to 95 cents of every dollar they raise.  This is considered an inefficient way of fundraising.  If you use telemarketing, look at the cost.  It may not be worth it.  If you are the exception, and this practice is cost effective (for example, volunteer students raising money for an alumni association) recognize the negative impact that this practice may have on your donors.  How can you overcome the negative perception that might be turning potential donors away?

Just three more to go and we will cover them in the next post.