Fundraising Ideas

Retain New Donors With Easy Stewardship Emails

June 16, 2020 By Allison Weber

In times of crisis, many nonprofits gain a large number of new donors—but few retain them. According to The Fundraising Effectiveness Project, less than half of all donors are retained year over year.

While there are countless donor retention strategies, many can be expensive or time-consuming. Thankfully, there’s a quick way to keep your nonprofit top of mind with your new (and old!) high net worth donors: a donor stewardship email program. To start, you simply need to put yourself in your donors’ shoes and do a little planning.

Many people give to a nonprofit once and then move on. In many cases, this is because other organizations inspire them in new ways. As a result, for your nonprofit to retain its existing donors, you need to keep them motivated to continue supporting your mission.

You may not be able to inspire them to feel exactly how they did the first time they learned about your work. It’s tough to compete with the excitement of something new. But you can offer value in another way—by building meaningful relationships with them.

So imagine this: you’re a new donor who recently gave a large gift to your nonprofit. What’s the best way for the nonprofit to build a relationship with you? By showing that you matter. And saying it often.

A donor stewardship email program does just that—it keeps donors engaged in your work through consistent, thoughtful outreach. It creates an authentic connection between your mission and their interests. And prevents your longer term donors from feeling like they don’t hear from you much unless you’re making a fundraising ask.

To get started with a stewardship email program, map out a plan that addresses the basics: what to send, when to send, and how to send it.

What To Send

Just because a stewardship email is thoughtful doesn’t mean that it needs to be complicated. In fact, it shouldn’t be. Your high net worth donors are busy, so be brief to get your message across. Plan to send short emails that do two key things: express gratitude and offer something useful.

Let your donors know that you saw something and thought of them, so you wanted to pass it along. Depending on your donors’ interests, examples of useful items could include:

Evidence of the impact of their support (annual reports, progress updates)
Materials to help them learn more about your cause (white papers, press releases)
News articles relevant to your mission and their interests (new research, current events)
Assets that will help them share their passion for your work (suggested social posts, printables)
Messages of gratitude (thank you videos or quotes from your staff and the people you serve)
Sneak peeks into upcoming happenings (events, campaigns)

It’s crucial to put yourself in your donor’s place as you think about what to share. Think about what truly excites them about your work. After that’s clear in your mind, decide from there what resources to share.

How to Send

There’s no need to invest in the latest marketing technology for stewardship emails. Ask donor relationship managers to send stewardship emails from their normal email inbox. That way, their messages feel personal, not commercial and mass produced. Simplify the process by creating a quick written email template with areas where relationship managers can add in:

The donor’s name
Why they think the resource is relevant to the donor’s interests
Instructions on how to view or use the resource
An invitation for feedback on the resource
A sincere message of thanks for their support

When it’s time to send a message, the relationship manager can simply paste the template into a blank email, edit as needed, and send.

When to Send

Reach out to your donors often, but don’t overdo it. Perspectives vary on how often to communicate with donors, and you should experiment with what works best for your nonprofit.

As you test different rhythms, pay attention to how much time you are investing, changes in your donor retention rates, and what responses, if any, you receive from your donors. It may take several months for your experiments to bear fruit. Relationship-building takes time.

If you’re looking for a number to start at, send one stewardship email per month to each of your high net worth donor for one year. Create a donor communication calendar that outlines possible topics you can highlight each month during the year, depending on when you know that different organizational materials will be published or various holidays and events are happening. But always be ready to adjust your calendar as new topics take priority.

When asking for feedback on the resources you share, don’t hesitate to ask whether your donors would like you to continue sharing similar content with them in the future. That will help you understand whether you should change your strategy or stay the course.

A donor stewardship email program may sound complex, but it’s actually very straightforward. It will help you build relationships with top donors through quick, thoughtful gestures, provided via email. It’s an excellent solution for busy nonprofits looking to stay connected and supported by the generous people helping them realize their vision of a better world.

4 Modern Fundraising Approaches to Grab Donors’ Attention

May 20, 2020 By John Killoran

The vast majority of nonprofits have had to flip their fundraising plans upside down as a result of COVID-19 and social distancing guidelines. Large-scale fundraising events are being cancelled, employees are beginning to work from home, and donor wallets are tightening due to a looming recession. Many nonprofits are worried about securing the funding needed to sustain daily operations and philanthropic projects.

However, this unprecedented time has also been a unique opportunity for nonprofits to refresh their fundraising strategies and integrate modern approaches into their plans. If that’s where you and your organization land, it’s important to make the most out of this time by finding ways for your team to be productive (and innovative!) in the midst of a crisis.1

Let’s walk through four of our favorite modern fundraising approaches, what they can bring to your nonprofit, and how to get started with each:

Use text-to-give fundraising so that donors can give on-the-go.
Employ peer-to-peer fundraising strategies to gain traction.
Host virtual fundraising events to boost donor engagement.
Incorporate individual outreach to personalize relationships.

Finding new ways to engage with your donors and secure fundraising revenue are essential for keeping your organization afloat in a time like this. Ready to get started? Let’s jump in!

1. Use text-to-give fundraising so that donors can give on-the-go.

If you’re looking for new and exciting ways to engage with your donors,2 especially younger donors, text giving might just be the perfect method. Text-to-give is a relatively new fundraising strategy that allows donors to give in seconds from any mobile device.3

In the last year, mobile giving has increased by over 50%,4 meaning if your nonprofit has yet to establish text fundraising practices, now is the time to do so! To get started with text-to-give fundraising, all you have to do is:

Choose a text-to-give provider and receive a unique mobile giving number. Be sure to find the right service provider for your organization based on platform fees, features offered, and user-friendliness. Once you settle on a text-to-give service, they’ll provide you with your very own mobile giving number that you can start sharing with your donors.
Set a particular keyword (or multiple) for donors to text. This is going to be the body of the message that your donors send to your specified mobile giving number. Be sure to pick something unique, relevant, and memorable to make the process easier on your donors, like give, gala, or your organization’s name!
Promote your mobile giving number and keyword far and wide. Use social media, your website, emails, newsletters, and more to make sure every donor has access to your mobile giving campaign. The best part is you’re not limited by any geographic boundaries!

Text fundraising campaigns often grab donors’ attention because their phones are rarely out of reach, making donating very accessible. Plus, the donation process is incredibly simple, making it more likely donors will follow through to submission— while more complicated processes lead to donation form abandonment.

2. Employ peer-to-peer fundraising strategies to gain traction.

Organizing a peer-to-peer fundraiser is a great way to get the word out about your organization and raise money for a particular cause.5 After all, individuals are much more responsive to a request for donation from a friend or family member than that of a national organization.

By using social proof as a fundraising tool, you can appeal to donors because their friends and family are getting involved with the campaign, so they should too. In fact, over 47% of donors giving through a peer-to-peer campaign are first-time donors for that organization.6 That means it’s a great way to expand your donor network and reach new people.

When you’re ready to launch a peer-to-peer fundraiser, you’ll want to:

Recruit supporters to become volunteer fundraisers. This can be a tough job, so it’s a good idea to focus on past donors who are already highly engaged with your organization and care deeply about your cause. Then pitch the idea to these supporters and see if they’re interested in taking the next step to become a fundraiser themselves.
Equip individuals with the right peer-to-peer fundraising tools.7 Even once you’ve gathered your volunteer fundraisers, they won’t be able to accomplish much without the right tools. Be sure to provide fundraisers with your donation page, sample social media posts, and scripts to share with family and friends who may be interested!
Encourage fundraisers to promote your campaign to friends and family. Now that you’ve set your fundraisers up for success, you watch and wait for the fundraising revenue to start coming in. During this time, it’s important to monitor each fundraiser’s progress and encourage those who may be struggling. Plus, you can employ some friendly competition between fundraisers to drive motivation.

Nonprofits everywhere are quickly moving their fundraisers to the virtual sphere, just like you are, which means there’s an increase in clutter you’ll have to break through to bring attention to your own fundraising campaigns. Luckily, unique peer-to-peer fundraising pages will stand out from the crowd!

3. Host virtual fundraising events to boost donor engagement.

In a time of social distancing, many donors will warmly welcome the opportunity to take part in an exciting virtual fundraiser. That’s why now is a great time to plan and host online events. After all, events are one of the most engaging types of fundraisers, making them a great way to boost virtual donor engagement and sustain relationships.8

To create a virtual fundraising event that your donors will really want to partake in, be sure to:

Plan activities your supporters will want to take part in. Whether you decide to host an online auction, talent show, or gala, make sure it’s something that your particular audience will be interested in.
Promote your event online and through social media. Get the word out through your online platforms so that donors everywhere know exactly how to get involved.
Personally invite donors to participate in your online event. A personal invitation can go a long way, especially for donors who have been major contributors in the past. Make sure your top donors are aware of and excited about your virtual event!
Encourage participants to register online.9 This way you’ll be able to plan for your audience more effectively, while also collecting participants’ contact information for future reference.

The possibilities for virtual events are essentially endless. You’re no longer limited by a choice of venue nor are attendees restricted by travel distance. You can even save money while hosting your event online and bringing in fundraising revenue at the same time.

4. Incorporate individual outreach to personalize relationships.

While social media and other digital marketing tools are great for nonprofits to raise awareness for their cause and even promote their own fundraisers, it’s important that you don’t forget the power of personal outreach. After all, a general request for donations is easier to ignore than an individual ask in your donor’s inbox.

There are many ways you can personally reach out to donors, including through a phone call, handwritten letter, or text message, but email is one of the easiest and most effective.

Here are four key steps to optimize your email outreach and personalize your relationships:

Start building an email network. Be sure to collect email addresses at every possible avenue, including donation forms, event sign-ins, and virtual registration forms. Then store this information, along with other detailed information you have about each donor, within your CRM, or constituent relationship manager.
Segment your audience. Using the information you collect about each of your donors, divide individuals into groups based on their similarities. For example, you might have different segments for first-time donors, repeat donors, those on a recurring schedule, and lapsed donors.
Craft intriguing email messages. Lead into your email with a compelling message demonstrating the impact of the work your organization does. Consider telling a true story of a constituent whose life was changed so that donors can feel emotionally involved with the philanthropic success. Be sure to include imagery as well to illustrate your emails.
Employ a clear call-to-action. End your message with a clear, compelling, and specific call-to-action so that donors know what the next step is. For example, you can send donors to your online donation page or include your text-to-give number.

Just because you can’t be physically close to your nonprofit supporters doesn’t mean your relationships should suffer. Instead, try implementing these strategies to strengthen donor engagement during this time.10

COVID-19 has resulted in an unpredictable year. But, as a nonprofit working to continuously support your community, it’s important to make note of the positives associated with the time as well. After all, it’s provided an opportunity for organizations to expand their virtual strategies and improve digital connectivity available to organizations.

Sometimes all you need to get started is the right fundraising software!11 During the move to largely-virtual fundraising practices, it’s important that your team is equipped with the necessary tools to ease the transition.

For more information on strategic fundraising practices within a pandemic and into the foreseeable future, check out the following resources:

After the Storm… Post-Crisis Fundraising

May 20, 2020 By Melissa Biggar

The COVID-19 global health pandemic hit the U.S. harder than originally anticipated. More than eight weeks into self-quarantine and physical distancing mandates, many non-essential businesses across the country still wonder when and if they might reopen. The crisis has bumped unemployment to record levels. Economic forecasts are not optimistic for the near future, and across the nation individuals and businesses are rethinking investment and operational strategies. Even nonprofits that work with those directly affected by the epidemic are operating on Plan B, and many more whose work is considered peripheral to the health emergency are concerned their donors will be more focused on crisis-management philanthropies…if they’re thinking about philanthropy at all. Other than emergency relief fundraising, many think now is not the time to look for donations.

However, some fundraising experts say those nonprofits might want to reconsider; in the midst of a crisis – and immediately after, when the dust has begun to settle – there are tactful yet effective ways to seek support.

“It’s important to remain in touch with donors in times of crisis. Keeping supporters informed of your organization’s response tactics, as well as checking on their well-being, goes a long way toward good stewardship,” says Peter Hathaway, senior vice president of the Andrews Foundation in Boston, a nonprofit that supports the arts. “In traumatic times, unless your charity works with populations directly impacted by a crisis and you’re seeking aid for emergency relief, fundraising isn’t likely to be very successful or welcome. But that doesn’t mean your work isn’t important, and as the storm subsides there are creative ways to re-engage interest in your mission.”

Keeping relevant

An animal rescue and shelter might not be foremost in people’s minds when considering how to support charities during and immediately after a global health crisis. But the website landing page for New Jersey-based St. Hubert’s Animal Welfare Center contains a prominent link to the organization’s COVID-19 updates, as well as practical tips for pet owners to prepare for continued pet care should they become ill. Among the list of ways to help the organization, they’ve included animal safety advice, applications for animal fostering and adoption, a supplies drive, and direct contributions.

Save the Redwoods League, a 102-year-old nonprofit that works to protect and restore California’s redwood forests, offers visitors to its website the opportunity to send a free e-card to a loved one. The organization emphasizes the importance of human connection during this time of isolation, even though their focus concerns environmental issues. Although their mission isn’t directly related to the economic and social crises created by COVID-19, they’ve managed to stay relevant and show their concern for the emergency at hand while keeping on their donors’ radar.

Where there’s a will, there’s a way

Financial advisers and attorneys note the COVID-19 health crisis has spurred people to think about their plans for the future. California estate attorney George Gordon says his firm has seen an uptick in individuals setting up wills and end-of-life directives.

“As this crisis has progressed, interest in estate planning has steadily increased,” he says. “It may sound morbid, but it’s actually very responsible. People of all ages and income levels have been eager to put their finances in order. That includes philanthropic planning.”

Advisers like Gordon are currently working with clients remotely, but reports indicate that since the onset of the epidemic, business on self-guided online estate planning platforms has risen nearly 150 percent. Husband and father David Matthews of New York says the realities of COVID-19 motivated him to stop procrastinating and create a will.

“I was hearing about perfectly healthy people contracting this potentially deadly virus and realized I needed to be prepared to protect my family,” he says.

He turned to a free online will preparation program to put his estate in order, including bequests to the family’s favorite charities. Having donated to several causes for many years, Matthews wanted to ensure their ongoing support well into the future.

Leaving a legacy

By including legacy giving in a list of donation options, a nonprofit can plant the seeds for estate gifts now and revisit the concept at greater length with donors later.

Hathaway says, “No one wants to have a conversation about their mortality, especially at a time like this, but by subtly including planned giving in a collection of giving vehicles you can address the issue from the sidelines. As long as you approach it as one of several options, it’s easier to talk about legacy giving.”

The benefit of planned giving is that it can be done without touching any money today, so legacy gifts are painless, even for donors who feel uncertain about their income and investments. With thoughts of the future topmost in people’s minds, now is the perfect time to gently remind donors of your charity.

“It’s perfectly acceptable to send out informational pieces explaining ways people can lend support,” says Cara Bradshaw, who leads the development and communications division of Family Promise, a national nonprofit that serves families battling homelessness. “Suggesting people volunteer, help raise awareness, or make in-kind gifts are all worthwhile. And of course, it makes sense to encourage donations of cash, stocks, donor-advised funds, and planned gifts like bequests.”

No time like the present

Kenneth Alexo, vice president for development and alumni relations and president of the foundation at the New Jersey Institute of Technology, believes fundraising, including planned giving, shouldn’t be put on hold in times of uncertainty. He cites how nonprofits responded to past crises, such as September 11 and the economic crash of 2007-2008.

“The nonprofits that came out of the crisis more financially intact were the ones that said their mission was too important to stop fundraising,” Alexo explains. “They simply modified their approach. Maybe they halved their major gift solicitations or exercised more discretion about whom they solicited, but they still stayed in touch with donors. Once the crisis was over, these nonprofits hit the ground running without missing a beat.”

By contrast, he notes, many organizations that thought they were “doing the right thing” by halting fundraising efforts altogether discovered later that this tactic didn’t work and were often less successful when they did resume fundraising.

That said, Alexo acknowledges most nonprofits will come up short against the fundraising goals they set at the beginning of this year. With unemployment soaring, an unstable stock market, and an uncertain future, people will be more thoughtful about their money.

Some economic experts are cautious about how donors will respond to the COVID-19 crisis, in large part because the true impact on the economy has yet to be seen. History has shown that most donors who give prior to a recession continue to donate at approximately the same capacity during and after a downturn, though it may be harder to attract new donors unless a nonprofit is working directly with those affected by the crisis. For COVID-19, that’s the health and human services sector. But economists also caution that high net worth donors whose investments are currently in flux might want to sit things out for the time being until they know where the stock market will land.

Naturally, health and safety are the number one concerns in any emergency, and every charity must decide what approach works best for its mission and donor base. But nonprofits whose operations rely on individual donations should stay attuned to fundraising trends, especially if their organization’s work is tangential to the crisis at hand and not receiving much attention. Once there’s a light at the end of the tunnel and a return to ordinary life post-disaster seems imminent, fundraisers shouldn’t feel uncomfortable connecting with donors to explore ways to support their charity.

Top 4 Ways to Boost Virtual Fundraising Event Participation

April 27, 2020 By Wayne Elsey

In the midst of the COVID-19 crisis, nonprofits everywhere are having to cancel their biggest revenue-generating events and take an entirely new approach to fundraise. As a nonprofit professional, you might be worried about the looming shortfalls in fundraising revenue and what that will mean for your organization.

While a lot is still up in the air when it comes to managing a nonprofit and getting things back on track, one thing is for sure—now is not the time to give up. In fact, there’s a lot that nonprofits can be doing at present to keep operations up and running amid the disruption.

One such idea is the implementation of virtual fundraising events. Nonprofit organizations have long understood the benefits of engaging supporters with fundraising events. Now, it’s just a matter of adjusting to the circumstances.

Whether you’re interested in transitioning an existing event into a virtual one, or starting from scratch planning an engaging online fundraiser, here are four of the best ways to capture your audience’s attention and boost registrations in no time:

Plan unique and intriguing events.
Connect with donors on an emotional level.
Keep the momentum going with strategic communication.
Raise the stakes with matching gifts.

Ready to get started? Let’s jump in.

1. Plan unique and intriguing events.

The best way to ensure a good turnout at your fundraising events, whether virtual or in-person, is to plan activities that your supporters will enjoy. Remember, not everyone likes the same types of events. To appeal to the highest possible number of participants, offer a diverse set of fundraising events.

Especially now, with the majority of the world’s population stuck inside for days on end, an appealing virtual event might be just what your supporters need!

Here are some of our favorite ideas to switch things up with virtual fundraising events:

Virtual 5k: Although you can’t host a traditional 5k fundraiser right now, an adapted version can be a unique way for participants to get out of the house while raising money for a good cause. Simply encourage supporters to walk or run a set distance on their own and record their stats with a smartwatch or tracking app!
Virtual auction: Both live and silent auctions are tried-and-true fundraising events for organizations everywhere. Now, you only have to take that auction to the virtual sphere! Collect items just like you usually would. Then, participants can bid online through a virtual auction catalog instead of at a physical location.
Virtual gala: Hosting a gala can be a great way to engage with supporters who are looking for a reason to get spruced up, even if it’s just for a live-streamed event. But of course, the great part about a virtual gala is that attendees are also able to participate without dressing up at all!

Consider integrating your virtual event with a peer-to-peer fundraising campaign for even better results. This way, you can easily expand your network of support and reach a wider audience with the help of your dedicated volunteer fundraisers.

2. Connect with donors on an emotional level.

Not only should you focus on the appeal of the event itself, but also that of your organization as a whole. A great way to maintain that appeal is through building emotional connections with supporters.

With a looming recession ahead of us, you might be expecting significant drops in fundraising revenue during this time. That’s why it’s so important to emphasize donor retention.

Here are four simple tips to follow to strengthen donor relationships and convey the importance of each and every gift:

Share success stories.
Use pictures to illustrate impact.
Emphasize the importance of donors’ continued support.
Show your appreciation.

Remember, it’s more important to stay emotionally in-touch with donors during a pandemic than ever before. Many of your organization’s key supporters have likely been impacted by the COVID-19 crisis— whether medically or economically.

In other words, donors’ budgets are likely tight during this time. That means you’ll need to effectively demonstrate the purpose behind your mission and the emotional significance of each donation if you want to capture their attention and secure their support fully.

3. Keep the momentum going with strategic communication.

An essential aspect of planning and hosting a virtual fundraising event is the virtual outreach that precedes it. This effort is how supporters all over the world can hear about your upcoming event and decide to attend.

Thanks to effective digital marketing and communications tools, it’s easier than ever to get your message out into the world. However, this technology also introduces new issues having to do with breaking through the digital clutter and creating compelling messages that stand out.

Here are some of the best ways to boost your fundraising momentum and get your audience excited about your event:

Send out targeted email blasts.
Increase your social media presence.
Be sure to remind attendees ahead of time.
Keep your website up-to-date with event information.

Learn more about establishing a successful nonprofit digital strategy here, and then use your newfound knowledge to promote your upcoming virtual fundraising event!

4. Raise the stakes with matching gifts.

Did you know that many of your donors are eligible to have their gifts matched through corporate giving programs by their employers? And yet many eligible donors don’t know about these programs and how to take advantage of the opportunities!

Studies show that when donors know their gift gets matched, 84% report that they’d be much more likely to donate, and 1 in 3 donors suggests they’d make a larger donation. That’s because donors get the joy of knowing their gift is making twice the impact without having to reach back into their wallets.

Consider taking your fundraising event to the next level by leveraging the power of matching gifts. Encourage donors to quickly and easily search their employer in a matching gift database to find out whether they’re eligible!

For more information on how to leverage corporate philanthropy and matching gift programs with your organization’s events, see this comprehensive guide.

A critical characteristic of successful nonprofit organizations is the ability to adapt, and the current social and economic constraints are testing it. By bringing your best fundraising events to the virtual sphere, you can increase your reach and receive support from all over the world.

For more inspiration, check out our extensive guide of unique and exciting fundraising ideas to get started. Good luck!

Staying Socially Distant – but Emotionally Close – to Donors During a Pandemic

March 22, 2020 By Jennifer S. Aniskovich

In times of crisis, our first thoughts in the nonprofit sector are for the men, women and children we serve – our clients, patients, parishioners and friends. Perhaps our next thought is for the welfare of our employees and volunteers. Third in our list of priorities, but in no way less important, is the well being of our donors.

In a global pandemic, how do nonprofits stay socially distant, but emotionally close, to our supporters?

As we cancel galas, restructure capital campaigns and rush to rewrite traditional appeals, many are struggling to know how to engage key supporters in meaningful ways. Here are a few tips for navigating these rough waters.

Be in Touch – Now

Let your key supporters know that they are among your first thoughts during in this crisis. By top donors, I mean the top 10 or 20, those who are key to your annual fundraising efforts. Let them know they are family. Call them and email them – personally, not en masse – to fill them in on how you are serving your clients, what’s happening with your staff, what your board is thinking. Let them know you’re concerned for their welfare.

Your supporters are, after all, people. They appreciate knowing what’s going on and being part of your early outreach. They are your closest friends – so be a good friend and be in touch right away.

Keep Your Values Center-Stage

It’s absolutely right to put your clients first. Their needs are your organization’s raison d’etre, even more so during a crisis. Tell your donors what you are doing to help your clients. Share how you are adapting, being creative and using technology to help your clients and keep them safe.

Your supporters will be proud of your work, inspired by your commitment, energized by your vision. Remember that list of values your team worked on at the last retreat? This is where you dust them off and put them into visible action.

Invite Your Supporters In

They may not be able to visit your organization (or even leave their house), but your supporters still want to help. Invite them to do something tangible to help you serve your clients. Something that doesn’t involve making a donation.

If your clients need home supplies, set up an Amazon list and invite donors to make a purchase. If one of your clients is having a birthday party or life event, invite your supporters to flood the client with emails of congratulations. If your clients are feeling lonely and shut in, arrange a phone call effort to brighten their day. Donors want to help and, like you, are feeling helpless at home. Invite them to be an active part of your bucket brigade.

Wow them with Your Ingenuity

There is always a silver lining. For nonprofits, the cancellation of life-as-we-know-it brings the opportunity to define the new normal. We’ve always done more with less. Why not lead the way in serving clients in inventive, original ways?

Unable to operate a soup kitchen? How about boxed supplies to go? Can’t open the diaper bank? What about patrolmen delivering in key neighborhoods? Show your donors that you have the spirit and resourcefulness to reach those in need. It’ll make your donors proud and deepen their commitment to your cause. Arm them with stories of your against-all-odds successes to share with others.

Cultivate with Care

It’s an international crisis….proceed with care. And this goes for direct solicitations. Right now – and for the immediate future – your supporters are getting their bearings. Yes, they want to help, but read the room carefully.

If the gala has just been cancelled, and you have a full website of online auction items to share, by all means have a virtual fundraiser. But keep the long view in mind. For many top donors, now is the time to invite them to strategize before investing. Which leads to the last tip . . .

Do Donor Engagement Differently

Here’s where you imaginative development professionals can shine! This is going to be a multi-month event – reinvent your donor outreach to fit the pandemic. Don’t scrap all contact until the curve flattens out. Develop ways that you can meet your donors’ needs – for information, social engagement, positive news – while promoting your nonprofit.

What does that look like? How about “Tuesday Teas” where donors get real-time, conference call updates regarding client outreach? Or Facebook Live tours of your under-construction new facility? Or Survey Monkey polls asking for thoughtful feedback about strategic questions?

Recognize what’s different that may be in your favor: donors have more attention to give; they may welcome a relief from forced family time; they are eager for upbeat news; they can absorb a greater depth of information; they want to help be part of your solution.

Bonus: A Few Practical Tips

Be brief – a 2-hour in-person meeting translates to a 30-minute facetime meeting.
Brand it – whether it’s an activity for a client or a cultivation communication, give it a catchy name and look so it sticks in your donors’ minds.
Be the first – set yourself apart from your peers by being the first to do it that way.
Bring it back to mission – every conversation, every activity, every interaction should bring your donor back to your clients, your mission, the dent you want to make – with their help – on the world.

Fundraising Tips to Re-Engage Lapsed Donors: Punt the Bunt

March 3, 2020 By Melissa Biggar

If you’ve worked in fundraising and development for more than five minutes you’ve probably come across the terms LYBUNT and SYBUNT. To those outside the field these fundraising acronyms may sound like Klingon, but for development officers they’re part of everyday conversation. Pretty self-explanatory – a LYBUNT (Last Year But Unfortunately Not This) donated last calendar/fiscal year but not this year, a SYBUNT (Some Years But Unfortunately Not This) made a gift in some previous year(s) but – wait for it! – not this year. Many fundraisers target these audiences on automatic pilot, but successfully re-engaging lapsed donors should involve a little more thought.

Here’s some advice to get you thinking outside the BUNT box.

Define “Lapsed”

A supporter who donated last year but hasn’t yet given a gift this year (LYBUNT) doesn’t automatically fall into lapsed donor territory or even the at-risk-of-lapsing zone. Until a full year has passed, and even for a short while longer, consider these folks current donors.

Think about it. Last August you made your first gift to an organization. They added you to their mailing list, maybe even invited you to an event or two. (This is assuming they’ve been properly stewarding you since you made your donation. More on that in another article!) Fast forward 13 or 14 months. You still feel passionate about the organization and its mission but for whatever reason haven’t gotten around to making another gift, or you simply haven’t been in a position to do so. You’d be surprised – and probably disappointed – to discover the organization already considers you a has-been.

Some nonprofits set specific parameters, say 13 months without a gift, after which they consider a donor lapsed. That works, but it’s also very limiting. It’s still early enough in the game to think of them as current donors whom you want to steward toward their second gift. No one wants to alienate supporters with language like “What happened?! We want you back!” when they still consider themselves engaged.

For a lapsed donor campaign I’ve been developing, I’m looking at donor giving history for the past five years. In my experience I’ve found that when it comes to lapsed donors, reaching beyond that point offers little to no reward, but every nonprofit’s donor base is different. I’ve identified a target audience that looks like this:

Donor Criteria for 2020 Lapsed Donor Campaign

Last gift between January 1, 2015 and December 31, 2018
Lifetime giving history includes at least two gifts
Lifetime giving totals at least $500

Onions Have Layers

To paraphrase Shrek, fundraising is like an onion – it has layers. “Some” years of giving (SYBUNT) is a pretty broad definition, and the last gift of a SYBUNT donor can range from two years ago to 10 or more. It takes a little work, but roll up your sleeves, pour yourself a strong cup of coffee, and settle in for some serious donor data review.

Once you’ve defined what “lapsed” means to your organization, you can begin reconnecting with these donors through targeted communications that clearly show the impact of their gift, followed by an appeal that expresses how much you value their support and your hope they will renew it, again emphasizing impact.

BUNDle, don’t BUNT

Implementing a unique campaign like this for every donor is impossible – donor lapse is an ever-moving target. Now that you’ve defined “lapsed,” you’ll see you have lapsed donors every month, maybe even every day!

For simplicity’s sake, you can use the calendar year to schedule an all-encompassing lapsed donor campaign, keeping in mind that you’ll want to exclude donors whose latest gift is less than one year old (remember that thing about alienating donors?).

You can reconnect with these folks through targeted communications during the first two quarters of the calendar year. For example, if their last gift was in December 2018 and it’s now March 2020, use the next few months to send a few donor touches that emphasize the importance and impact of their gifts and keep your organization on their radar.

Later in the year, perhaps even in Q4 as part of your year-end appeal, you can follow up with a customized fundraising campaign. As you prepare your campaign, reexamine your donor list in case your initial touches were so successful that you re-engaged donors earlier in the year. You don’t want to ask those people to “come back” yet again!

As always, once your campaign is complete, study the results to gauge its success and identify strengths and weaknesses. Fundraising campaign results can inform future donor communications and appeals, so a little number crunching now can go a long way.

Prevention is the Best Medicine

As all good fundraisers know, at the end of the day it’s about relationships and letting donors know how much you value their support. Retaining current donors and recovering lapsed ones is more cost-effective than acquiring new donors. And re-engaged donors can become your organization’s most ardent supporters, so taking the time to treat them well is in everyone’s best interest. It’s said an ounce of prevention is worth a pound of cure – in terms of fundraising, that means serving your current donors well to improve your donor retention rate and minimize donor attrition. With good planning and thoughtful communication, you can turn “We miss you!” into “Welcome back!”

Tips for Fundraising Momentum Through the Summer

March 3, 2020 By Heather Schlesinger

Despite the keen anticipation of three straight months of warm weather and freedom from the classroom, summertime is often the time of year that nonprofit activity slows down. With kids out of school, families take summer vacations to make the most of fun in the sun. That usually means donors, volunteers and staff organizers aren’t handling the same volume of fundraising tasks that keep them so busy throughout the rest of the year.

Nonprofits provide necessary social programs, particularly for school-age children and their families, so the absence of assistance in the summer season marks the start of an increased need. Over the Summer months, The Atlanta Community Food Bank observes two critical occurrences: kids aren’t in school to access daily meal programs, and nonprofits that could typically step in can be in short supply of volunteers and donors who are away for the summer. In 2018 alone, America’s summer food service programs provided 2.7 million meals to kids every day of the peak month of July.

Particularly for the Food Bank, which services a 29-county area through 700 partner agencies, summer hunger presents many challenges and difficulties in the vein of food insecurity for children and their families. In the 2019 school year, the Georgia Department of Education reported that over half of all school-age children statewide were enrolled to receive reduced-price or free meals. With numbers like these, it becomes clear that if organizations haven’t planned ahead, summer hunger can create a scenario in which funds and manpower for imperative assistance programs over these months are severely lacking. Fortunately, with a bit of forethought and insight on your part, you can take a page from the Food Bank and put the fun back in fundraising while watching your nonprofit’s summer participation and engagement increase.

Summer Fundraising Ideas

Take advantage of sunnier weather and longer days

With outdoor events, you can use the warm days and extra daylight to give you the edge you need to attract potential contributors looking for fun things to do with the family. Outdoor events serve as the perfect background for getting people excited and getting them involved, as well as increasing the likelihood that they’ll recruit family and friends to participate. The more the merrier, as they say. Bonus tip: make your events kid-friendly to engage the whole family while promoting the idea that helping a worthy cause can be fun.
Ideas for fun outdoor activities include movies in the park, a summer concert series, a community yard sale, or neighborhood cookouts. Everyone will appreciate the opportunity to have fun outside, and these are the types of events where you can expect multiple streams of incoming revenue from ticket/entry donations, corporate sponsors and food sales. Additionally, with the knowledge that many nonprofits will be experiencing the summer slowdown, your nonprofit efforts will stand out thanks to decreased competition for donor attention.

Peer to peer fundraising

Peer to peer fundraising can help circumvent the absence of volunteer and donor aid that impacts the increased community needs in the summer. Current supporters can tap their network and bring a significant increase in new donors to your organization, raising more funds with less tax on your already-reduced summer resources. Peer to peer events often include charity runs or walk-a-thons that are participant-friendly but can also apply to online fundraising campaigns, which are easily shared on social media for further exposure. Supporters can use their personal experiences with the nonprofit to tell a story that engages potential supporters, or asks that friends and family donate to their favorite nonprofit for their birthday or in lieu of holiday gift exchanges.

Summer service projects

Summer is an entire season of the year it’s assumed that all kids enjoy while feeling carefree with their family and friends. However, for many school-age children facing food insecurity, this is not the case. Recent statistics suggest as many as 37 million Americans struggle with hunger, and reliance on school meal programs that provide essential nutrition and nourishment means that when school is out of session, there’s a major food gap to fill. Parents are faced with the task of feeding their families without this support, and families don’t need to struggle in the summer to provide essential meals. Summer service projects can be a very effective way to tackle summer hunger head on.

Consider the efforts of the Food Bank, which hosts an annual Great Summer Dish volunteer initiative to ensure that children don’t go hungry during the summer months. Through a partnership with The Soulfull Project, the Food Bank dishes out much needed resources and support for local children. The Great Summer Dish day of service takes place each June and gathers members of the media to accomplish a goal of filling 500+ backpacks with nutritious food products for children in need. A summer service project like the Great Summer Dish engages a wide range of participants, generates action and brings attention to your cause. Families don’t have to fight summer hunger alone.

While in the summer months nonprofits often face an increased need in conjunction with reduced resources, with a little thoughtfulness and creativity, it doesn’t have to stop the stream of contributions. Using these tips and examples from the Atlanta Community Food Bank as a jumping off point as well as thinking outside the box will keep momentum flowing through the summer season and pay dividends towards your nonprofit’s summer success.

4 Ways to Make the Most of Your Nonprofit Advocacy Campaign

March 1, 2020 By Gerard Tonti

Let’s say you’re a nonprofit professional looking to establish an advocacy campaign for your cause. The mission behind your organization is important to you, and you want to raise awareness so that others can get involved as well. In the end, your ultimate goal is to enact positive change in your community or on a grander scale.

How can you launch this type of campaign, create an effective marketing plan, and maximize its potential?

First things first: What is an advocacy campaign? An advocacy campaign is a unique campaign strategy used by many nonprofits to draw in new supporters, increase exposure for the cause, and create change on a local, state, or national level.

An advocacy campaign differs from other nonprofit campaigns in that the main goal is generally not to collect donations. Although some advocacy campaigns will indeed call for donations to directly solve a problem, other key objectives include boosting awareness and gathering supporters to complete a certain action, like signing a petition or making a phone call.

The overall goal for an advocacy campaign is to create a change. Regardless of the mission you support or the path you choose to follow, there are a few tactics you can use to bring your campaign to the next level.

Consider these 4 strategies to make the most out of your advocacy campaign:

Establish good storytelling practices.
Use the right tools.
Foster relationships with representatives.
Boost your campaign with social media.

Ready to get started? Let’s jump in.

1. Establish good storytelling practices.

Your advocacy campaign is essentially a platform for telling your story— what your nonprofit does, why and how you were founded, why your mission is so important, etc. This is how you draw in new supporters and develop a team willing to fight for a needed change.

Consider these three storytelling tips:

Use emotion. Targeting your audience’s emotions is a great way to foster a connection with your nonprofit. When your audience has strong feelings towards an issue at hand, they are more likely to take action. Tell a true story of a particular group your organization is trying to assist, and encourage your audience to picture themselves in the story. By doing so, you can evoke feelings like a desire for an improved world, compassion for others, or even rage at injustice.
Explain the proposed solution. Unraveling your audience’s emotions won’t do you any good if you don’t have an outlet to direct that support toward. This is the perfect opportunity to bring in your nonprofit and the work you are doing. Whether you are advocating for a change in policy, awareness of a relevant issue, or signatures on a petition, you can once again bring your audience into the story by placing an emphasis on how they can help solve the problem.
Include pictures. You’ve heard the saying, “A picture is worth a thousand words.” Well, it’s cliche, but true. By using intriguing, eye-catching images in your marketing materials, you can grab the attention of potential new supporters and lead them into your campaign. Photos easily illustrate the issue, why it matters, who it matters to, and how your audience can help.

The key is to leave the story open-ended and conclude with a specific call-to-action. Encourage your audience to be part of the solution by completing a particular action. By the end of your story, the supporter should know exactly what they are being asked and how to follow up.

2. Use the right tools.

Before undertaking any new project, it is crucial to have all the tools you might need. Luckily for you, there are thousands of software options available to help you do pretty much anything. What used to be a fairly drawn out, manually intensive set of processes can now be streamlined with digital tools and automated resources.

Find a set of tools with comprehensive features including:

Online petitions: When you gather thousands of individuals as a collective voice, you increase the likelihood of your representatives taking you seriously and actually doing something about the issue at hand. Online advocacy software knows this, and has made it increasingly easy to start a petition, send it out to the world, and encourage supporters to sign and share.
Click-to-call: Click-to-call functionality creates a quick and easy way for supporters to connect with their representatives by automating the process. This decreases the research and effort from the user, and as a result increases the volume of calls going through— once again, amplifying your voice! You may also choose to provide a script or outline to further simplify the conversation.
Legislator lookup: When a user does have to search for the appropriate representative to contact, a legislator lookup tool makes this as simple as possible. A supporter enters their zip code or address, and is provided with their legislators and available contact information.
Alerts and updates: Your supporters likely want to keep informed on your mission and find out if there is anything they can do to help. Using tools with the ability to send out alerts and updates is an excellent way to send out mass communications to those who have already gotten involved.

No matter the technological route you choose, the right tools can cover a wide range of tasks vital to your organization. One recent trend uses optimized mobile apps to empower the supporters of your advocacy campaign.

The best resources can easily integrate with other tools so that the information collected can quickly stream from one program to another. For example, with your tools integrated, your advocacy app would be in communication with your CRM and your advocacy software! In fact, Salsa refers to this as an advocacy software ecosystem.

3. Foster relationships with representatives.

Because of the vital role that legislators play in enacting change to your community, it is a good idea to try to get them on your team. Having an elected official backing your cause increases the likelihood of real action being taken.

Follow these 5 key tips to leverage your organization’s relationship with local legislators:

Ask your supporters what their main concerns are. Consider taking a poll on social media or asking your followers to rank their top grievances. This will give you a better understanding of what your supporters want to see changing around them.
Decide on no more than three asks. Compile your list of concerns and decide on three that have been repeated the most among your supporters. These three will become your asks— the specific requests you plan to bring to your representatives in hopes of change.
Request a meeting with your local representative. Find your legislator’s contact information (using a legislator lookup tool!) and call their district office to set up an appointment. Plan for your meeting to last about 20 minutes; 10 of which should cover your nonprofit’s mission, with the final 10 minutes devoted to your asks.
Follow-up afterwards. Send a thank-you email a week or two after your initial meeting, and then continue to follow up once a month to check up on the status of your asks. You don’t want to be a nuisance, but you also don’t want to let them forget about you and your cause.
Encourage others to do the same. Gather other supporters of your nonprofit and set up meetings in other districts with other officials. Provide your list of asks to other advocates that meet with representatives so as to keep everyone on the same page.

Elected representatives know that part of their job includes keeping their constituents happy and taking their wants and needs into consideration. Take advantage of this by reaching out and making your voice heard.

4. Boost your campaign with social media.

Social media platforms are an excellent way to reach thousands of supporters at once, while also increasing your reach and exposure to new audiences. Social media can be an invaluable tool for your advocacy campaign— as long as you know how to use it.

Check out our 4 top tips to boost your campaign with social media:

Gather input. Social media gives individual supporters a voice and an opportunity to impact the greater organization. Encouraging supporters to share their ideas and concerns reiterates the fact that your nonprofit is fighting for the people. For example, you can request input when determining your asks for your legislative meeting!
Encourage supporters to share your posts. One of the greatest benefits of social media is the shareability. When you post engaging updates to your social media and encourage your current followers to interact with and share your posts, you increase your network to include their families and friends as well.
Try different angles. Mix up your current social strategy. Try different calls-to-action and varying approaches to see what works best. Maybe you are seeing high conversion rates with online petitions, and lower rates with click-to-calls. If you notice that one of your posts is doing particularly well, try to determine what makes it stand out and emulate that with other posts.
Explore various platforms. According to Double the Donation, Facebook, Instagram, and Twitter are currently the top three platforms for digital advocacy. Each offers unique benefits to your advocacy campaign (such as real-time updates, photo sharing, metric reports, etc.), so consider a combination of a few to maximize your campaign’s impact.

When your social media campaign successfully reaches new supporters, you continue to grow your voice. It is also a great way to keep your current followers up-to-date with the status of your mission. Celebrate reaching goals such as gathering your target petition signatures or convincing a representative to take action, so that your supporters see the difference they are making.

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By taking advantage of a few crucial tools, you are on your way to maximizing your nonprofit’s impact on the cause. If you’re ready to take your nonprofit advocacy to the next level, click here to discover other key strategies and techniques for running a world-changing campaign.

Keep fighting to make the world a better place. Best of luck!

Utilizing Financial Transparency as the Foundation to Fuel an Art Culture that Moves People

February 12, 2020 By Chris Safford, CMA, MBA

In today’s landscape, managing the increased cost of operating a nonprofit can be a challenge to any organization, even the arts. Still, research and experiences continue to prove that they make profound impacts on communities and an individual’s overall well-being and identity.

California Arts Council made one the largest investments in arts and culture in nearly two decades, reinforcing the state’s commitment to organizations trying to address societal challenges and shaping the future of our next generations with arts.

Relative to this, Yerba Buena Center for the Arts (YBCA), one of the nation’s most innovative contemporary arts centers, strives to reinvent the role an arts institution can play in the community it serves through local programs within local San Francisco schools and communities. Since its founding in 1993, YBCA has been on a mission to generate culture that moves people through year-round performing arts, civic engagement programming and visual arts.

Today, the center’s initiatives range from fighting for food justice with art and cooking alongside the Healthy Corner Store Coalition of San Francisco to developing a curriculum focused on community memory, using art and gardening as tools for local youth with Bessie Carmichael Elementary School. The center also spotlights artists and activists across the community, hosting a multitude of performances, programs and exhibitions.

Evolving the Arts Through Technology

It’s critical for nonprofit organizations to effectively manage grants and donations, as well as continue their initiatives to secure the necessary funds to expand their services and offerings. As a premier performing arts center, it was essential for the YBCA to remain extremely organized and establish strong financial visibility and accountability in order to continue supporting current activities and scale their operations. Doing so required an approach to adopting technologies that allow them to derive deep insights into operational expenses and use the data to inform business actions that align with the company’s future goals.

Looking to grow their organization, streamline its systems, move to the cloud, and modernize its financial management, the YBCA needed to implement new technology that both fit where they were at, as well as support the organization’s goals for the future.

Honing in on Culture by Eliminating Siloed Finances

The YBCA team decided to turn to Sage Intacct to implement radical changes the growing organization needed to track against its goal to generate a culture that spurs and supports societal movement. With Sage Intacct, YBCA was able to analyze the operational context for every transaction, introduce automated processes, develop meaningful key performance indicators (KPI) and bring together datasets that were thought to be unimaginable before. By doing so, the team was able to dedicate more time to strategic activities, sped up its lengthy financial processes while increasing budget accuracy by 30% and improving finance productivity by 25%.

For nonprofits, having a granular view into whether funds are being used effectively and efficiently is vital. The ability to generate insights into the fluidity of key operational tasks and functions, including the center’s grants, projects, programs, departments, revenue types, and donor activities all within one platform, enables organizations like the YBCA to inject efficient processes across its operations. For example, with this streamlined process, the center’s finance team can quickly deliver any information the city requires before releasing grant funding each year, which prevents the interruption of funding that could ultimately result in the delay of vital programs. The elimination of duplicate data entry led to a 60% faster close, saving $30,000 on extra employee costs to help execute their financial processes and instead get to the core of the mission they strive to accomplish on a daily basis.

These tools also offer a window into important trends and provide valuable data for future campaigns and assisting when establishing realistic goals. YBCA is now able to better target their audiences by importing individual donor demographics and event attendance data into Sage Intacct. This enables the organization to progress while keeping its mission in clear view, ensuring that important movements have the opportunity to be showcased for years to come.

Ways to Implement ESG & Expand a Nonprofit’s Reach

January 30, 2020 By Stuart Blair, CAIA

Most nonprofits have probably considered environmental, social, and governance (ESG) investing, or soon will. Interest has escalated, and as a result, advice abounds. Reading it, only one thing seems clear: ESG investing is complex. It seems every answer leads to two questions, and it’s no surprise that many turn away after an initial look.

The good news is that while it is true that ESG investing is complex, it doesn’t have to be complicated, and contrary to old beliefs, it doesn’t necessarily damage returns. With a solid understanding of what an organization wishes to accomplish, investment committees can implement ESG in a way that doesn’t necessarily sacrifice returns—but does bring investments into alignment with a foundation’s greater goals.

ESG’s Origins

First things first: ESG is not a new way of investing. It’s simply a set of criteria layered onto an organization’s existing investment guidelines. Environmental, social, and governance investing has been called by other names, and has been around for at least 30 years (some might say since the genesis of investing). It started with avoiding entire business categories for religious, moral, or ethical reasons, such as a Catholic foundation avoiding military, firearms, or adult entertainment. It expanded into environmental concerns, such as avoiding fossil fuels, or companies known to pollute.

Interestingly, the governance portion of ESG investing is often considered the newest, yet good managers have always used governance criteria. Corporate governance is one of the best predictors of long-term success; transparency and good governance leads to fewer losses, missteps, and regulatory problems over time. This has been a consideration of excellent managers for far longer than ESG terminology has existed.

The Power of ESG

The attraction is simple: It’s a way to do more good with more money, expanding an organization’s positive effects from just the proceeds of a portfolio to the entire portfolio. With ESG criteria, the organization is able to use its capital to support the same goals as its grants and spending, without sacrificing returns.

Often, we see interest from large family foundations seeking to increase their overall effects in their communities. Also seeking ESG guidance are large funds who recognize the conflict inherent in investments that public scrutiny might deem hypocritical or in opposition to the fund’s goals or beneficiaries. What once might have been ignored is now fodder for public outcry, such as with a recent New Jersey pension fund invested in payday loan companies, which are both illegal in the state and seen by many as predatory.

Adding ESG criteria to investment guidelines both enhances a foundation’s long-term effects upon society and helps shield against criticism. It can also improve long-term returns due to its focus on governance, according to many researchers.

Where to Begin

When clients ask for ESG guidance, we start with a basic, fundamental question: Why do you want to do this and what do you hope to achieve? Clients often don’t have an answer. Commonly, they’ve heard of ESG and know that they want their capital investments furthering the same goals their grants address, but they’re unsure of next steps.

It can seem daunting, enough so that many will abandon the idea before finding an advisor who can show them how to accomplish those goals without increasing risk or lowering expected long-range returns. Before becoming mired in details that may not pertain to their organizations, clients should determine exactly what they hope to accomplish with ESG criteria. That answer drives the implementation strategy and nuances within that strategy.

Six Implementation Strategies

There are essentially only six implementation strategies. Two will best suit most organizations—exclusionary screening or best-in-class selection—though we are seeing more interest in impact investing. The remaining strategies require more effort and often more capital, and are not as common. Regardless, it’s good to be familiar with each.

Exclusionary screening is the oldest and simplest. This strategy excludes companies based on core or significant business activities; entire sectors may be excluded (e.g., alcohol, tobacco, or gambling). Note that it is rare and not recommended to draw a hard line against entire industries. Overly broad proscriptions create too much risk and can generate returns quite different from the initial strategy.

There’s often disconnect between an idealist view and market reality, such as absolutists who pressure an endowment to eliminate any company profiting from the coal industry. Doing so leads to unacceptable risk and underperformance that could jeopardize the endowment, because such an overreaching mandate would include trucking and transport companies, manufacturing suppliers, power companies, even construction industries or banks and accounting firms that do business with coal companies.

Exclusionary screening has a greater effect on a portfolio’s risks and returns when compared with the next two strategies.

Best-in-class selection is often called positive selection or positive alignment. This strategy focuses investing on companies with better ESG track records compared with peers, but does not exclude entire categories of securities. Many indices are available for help measuring ESG parameters, such as the MSCI ESG Index, though this is not to say that this strategy requires investing in an index.

The index rankings are helpful for comparing a company against its sector and industry peers. A portfolio composition can remain the same, but be weighted more toward companies with better ESG rankings across the parameters important to the foundation’s board. Because no sector is excluded, it avoids adding unnecessary risk, as can occur with exclusionary screening.

ESG integration, unlike best-in-class selection, does not require ranking or comparing companies based on ESG scores, but rather takes ESG issues into consideration when evaluating specific investments. This is a hands-on approach that requires resources beyond indices. Many active managers implement this to varying degrees.

Thematic investing refers to investing only in companies that address specific ESG criteria, such as health care for underserved populations, green building, or alternative energy. The risk with thematic investing is that its focus necessarily chooses companies serving two goals: profits and social good, such as a health care company that serves poor or rural populations. Often, one must subordinate to the other.

Impact investing generates interest because investments are selected with specific outcomes in mind with respect to selected ESG issues, while achieving a stated return. In this implementation, the investor actively measures and reports the impacts on ESG issues, which requires resources. Impact investing also suffers the same risk as thematic investing, in that it is difficult for a company to achieve high returns while also serving a social good.

Active ownership is the most time consuming, and refers to engaging with companies on ESG issues as a vocal shareholder or investor. This strategy is resource- and capital-intensive and lies in sharp contrast with exclusionary screening, in which investors “vote” solely by divesting ownership.

Balancing ESG with Returns

There is no indisputable evidence that incorporating ESG criteria has a positive or negative effect on portfolio returns. It can help avoid losses from badly managed companies whose labor practices, environmental policies, or governance lead to fines, shut-downs, or catastrophic losses. But it can also forfeit gains from those same companies.

Even exclusionary investing doesn’t have to expose a fund to extreme risk. Exclusionary strategies can set percentages to measure a business’s acceptability, such as excluding only companies that earn more than 20% of revenues from the targeted industry. This avoids eliminating large sectors that generate solid returns, and often also serve businesses or charities aligned with the foundation’s goals.

In general, if you approach ESG criteria with clear goals in mind and implement those goals in a balanced and thoughtful way, you will end with a portfolio that looks different from previous incarnations, but should generate nearly identical returns, or at least ones that do not significantly differ from the original mandate. It may also have lower long-term risks due to selecting stronger companies with better management.

There will undoubtedly be costs for restructuring the portfolio, though it’s possible to limit or manage those costs. But aligning a foundation’s investments with its goals can broaden its impact on society and avoid the risk of unseemly investment in businesses at odds with a foundation’s stated goals.

In the long term, incorporating ESG criteria into a portfolio means that all of the organization’s money, not just the earnings earmarked for charities doing great things, can accomplish good in the world.

Ultimately, that is every foundation’s—and every business’s—goal: To be the most effective and efficient operation possible, generating the most possible return or impact with the least possible risk. ESG investing isn’t a fad; it’s a smart way to stretch a foundation’s impact.

About Canterbury Consulting
Canterbury Consulting is an independent investment advisory firm based in Newport Beach, Calif, overseeing more than $23 billion in assets as of December 31, 2019. Canterbury provides consulting services to tax-exempt organizations — including community foundations, educational endowments, religious organizations, arts and cultural foundations, health care organizations as well as individuals and family offices. Founded in 1988, the firm designs and manages custom investment programs aligned with each client’s specific goals. Canterbury acts as the investment office for its diverse clientele and provides objective investment advice, asset allocation, manager selection, risk management, implementation, and performance measurement. Canterbury strives to deliver performance and service that exceeds client needs and expectations. Learn more about Canterbury at www.canterburyconsulting.com.