Nonprofit Information

Fundraising Tips and Resources

Funders Demand More Information About Outcomes. Time Management & Expense Reporting Answer the Call

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Nonprofit Funding

Nonprofits are under immense pressure as the prolonged pandemic significantly increased demand for their goods, services, and programs, while an uncertain economic environment has curtailed financial contributions in a major way.

This year, nearly 75 percent of nonprofits report declining contributions, and half of these organizations expect year-over-year donations to diminish by at least 20 percent. By the time the pandemic eventually subsides, The Washington Post estimates that one-third of nonprofits may permanently close, leaving vulnerable constituents without help and support when they need it most.

To meet the moment, nonprofits need to maximize their ability to retain existing funding and procure new opportunities, requiring a renewed emphasis on donor concerns. For leaders looking to develop more resilient, donor-friendly organizations, here are three questions potential funders are asking.

#1 Does the Organization Do Good Work?

Successful nonprofits have identified a problem, need, or challenge that their resources or expertise can address. Fundraising efforts tend to start there, engaging potential donors with messaging and advertising that conveys the problem and solicits their financial support.

However, donor trends indicate that potential funders require clear, comprehensive insights into organizational outcomes, not just mission, before committing to a financial contribution. For example, according to one report, 75 percent of potential donors are actively seeking information about a nonprofit’s impact. Meanwhile, an assessment conducted by Charity Navigator, a nonprofit assessment organization, and published by the Federal Trade Commission, found that only 2.5 percent of charities rated by the organization made outcomes-based results easily accessible on their websites.

Instead, nonprofits misconstrue activity, aspiration, and marketing with impact, creating a chasm between fundraising initiatives and donor demands. This presents a readily available opportunity for nonprofits to differentiate themselves, capturing and conveying outcomes for potential donors ready to support organizations that are doing good work and making a difference.

For example, the Nonprofit Leadership Center encourages nonprofits to identify and measure performance metrics that provide potential donors with clear insights into organizational outcomes, including:

  • How is your nonprofit changing lives?
  • How is your work creating positive change in the community?
  • What are the milestones that measure success?

Simply put, donors want to know that an organization is doing good work before committing financial resources to a nonprofit. Providing insights into outcomes will help answer that question.

#2 Is the Nonprofit Fiscally Responsible?

Many donors are using overhead expenses as a quantifier for impact and value in lieu of outcomes-related information. With so many potential charities and nonprofits to support, donors want to know that an organization will steward their financial resources responsibly.

Specifically, nearly 70 percent of potential donors seek information on fundraising and overhead expenses. In response, nonprofits should embrace unparalleled transparency, earning the supporters’ trust and confidence and relying on their continued financial support.

In this way, exceptional governance in the form of time and expense reporting can be a gateway to demonstrating fiscal responsibility, earning donors’ trust, and maintaining operational continuity. For instance, enhancing time and expense practices allows nonprofits to account for:

  • resource allocation. Let donors know how much financial and personnel resources are devoted to specific outcomes.
  • overhead projections. Demonstrate fiscal responsibility by transparently and comprehensively reporting overhead projections.
  • grant readiness. Many nonprofits don’t subsist on individual donations alone. Time and expense best practices position organizations to capitalize on other opportunities, like grants, that can support mission and outcomes.

High-performing, sustainable organizations are predicated on fiscal responsibility, which donors undoubtedly understand and assess when supporting nonprofits.

#3 Who is This Organization Helping?

To be sure, donor decisions aren’t purely data-driven. While anecdotes and individual testimonials can’t convey an organization’s big-picture impact, they are meaningful communication methodologies, allowing donors to connect with the cause in specific and interpersonal experience.

Nonprofits can enhance fundraising by connecting donor support with individual impact, combining outcomes and impact into a singular narrative. These efforts include:

  • Storytelling. Stories help donors understand the value of their investment, creating intimate connections between financial support and individual impact.
  • Data. Capturing and conveying the number of people served, outcomes reached, and lives changed can help donors appreciate the reach of their financial support.
  • Sustainability. Donors want to support sustainable causes, not bloated organizations. Combining incredible individual impact with a sustainable or scalable business model conveys value at every level.

Ultimately, nonprofits exist to help people, and potential donors want to know that their contributions are achieving this critical outcome.

Conclusion

As nonprofits are strained by surging demand and diminishing financial resources, some will reduce capacity, scale back initiatives, or close altogether. However, some will use this challenging moment as an opportunity to strengthen donor relations by refocusing their on-the-ground efforts and funder-facing efforts to respond to the latest trends.

By conveying their great work, fiscal responsibility, and individual impact, nonprofits can enhance their fundraising efforts, procuring the resources needed to serve their constituents at this critical time. 

2021 Fundraising Tips to Jumpstart the New Year

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2021 Fundraising Tips

The nonprofit fundraising landscape has changed, and nonprofits are now thinking outside of traditional signature, in-person-only events to stay relevant and widen their audience reach. Those that leveraged technology at the beginning of the pandemic quickly transitioned fundraising efforts online to connect with supporters, drive deeper engagement and maximize donations, while those that didn’t pivot online continue to struggle to move their missions forward.  

Technology investments and adoption of new and innovative trends in 2020 are enabling nonprofits to build greater resiliency in the new year. For those not-so-tech-savvy fundraisers, below are a few easy ways digital technology can be used to jumpstart fundraising efforts. 

Tap into Donor Data to Personalize Engagement

You don’t have to be tech-savvy to understand trends in donor giving. Start with your most loyal supporters and look into how much they gave over the last year, when and how. Tap into this insight to segment and target outreach based on donor engagement and giving habits. Personalized messaging makes donors feel recognized and appreciated, ensuring repeat and recurring giving.

To drive greater donor engagement in 2021, try creating more robust registration pages and post-giving surveys to capture additional donor data. Maybe the donor or someone they love is personally impacted by the cause, or perhaps the donor simply wants to help others. Understanding motivations to give will enable you to develop hyper-personalized messaging that resonates with each audience and creates life-long supporters.

Reduce Costs and Raise More with Donor Covers the Fee Opt-In

Most donors want 100% of their donation to go straight to the cause and data suggests that they would opt-in to cover any fees, such as credit card processing as an extra gift, if the option was available. Simply use your fundraising platform to give donors the option to cover the transaction fees and watch your fundraising dollars grow while inspiring and satisfying your donor base!

Enable Different Types of Giving Options, Including Hybrid Event Options

Technology enables a slew of fundraising options, so make 2021 the year your organization diversifies its efforts. In addition to enabling direct donations, recurring or monthly giving options, try adding a virtual event – such as an online auction, gala or peer-to-peer event – to your next campaign. Providing multiple giving options and hybrid event options enables donors to give the way they prefer as well as the opportunity to participate in multiple events, maximizing donations.

Industry surveys and data indicates that astute fundraisers will incorporate virtual elements to all in-person fundraising efforts in the future, leading to a rise in hybrid fundraising. One of the biggest benefits of hybrid events is that anyone can attend from anywhere. Expand your network of givers by reaching out to all donors, not just past event attendees. Expanding your addressable audience increases your overall network of supporters today and tomorrow.

Maximize Workplace Giving

A lot of companies provide matching giving programs as a benefit to employees. Utilize your fundraising platform and enable a corporate gift matching company search for organizations that participate in employee giving. Encouraging givers to look up their company in a donor matching database can help forge stronger emotional connections with donors and your mission by doubling their donation!

Think Outside Normal Business Hours

If you are targeting corporate donors, it makes sense to stick to traditional office hours for email sends, as you want to connect with those donors when they’re most active. However, if you’re targeting individuals and families, consider breaking out of the norm by sending emails, texts and social media posts during off-hours, including on the weekend. 

Use your fundraising platform to quickly schedule emails during off hours to maximize donations. Social media posts can also be scheduled ahead of time, making outreach a breeze.

The pandemic has severely impacted fundraising efforts for nonprofits around the world. As we settle into our “new normal,” the most successful nonprofits, regardless of size, will learn to adapt quickly and leverage tools to navigate an ever-changing fundraising landscape. From leveraging donor data and automating email outreach to tapping into social media and virtual events, the ability to meet revenue goals and enact positive change is far easier when backed by the right strategies. 

New Nonprofit Fundraising Guide -Top Tips for Raising More

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New nonprofits crop up all the time, yet there are still a lot of questions floating around surrounding fundraising from startup organizations. Can you solicit donations before receiving tax-exempt status from the government? What about grants? What exactly goes into incorporating and applying for 501c3 status? 

That’s why we’ve put together this quick guide for helping new nonprofits and the philanthropists behind their missions begin to explore fundraising in a new way. Specifically, we’ll cover the following:

  1. Fundraising before receiving 501c3 status
  2. Seeking grants as a new nonprofit
  3. Acquiring initial donor support
  4. Getting started with fundraising software

Are you ready to learn more about the beginning stages of fundraising as a startup nonprofit—and how to make your efforts as productive as possible? Let’s get started.

1. Fundraising before receiving 501c3 status

As a new nonprofit, you’re likely eager to get started fundraising as soon as possible. You don’t want to sit around waiting for some government official to approve your application. Luckily, you might not have to wait.

Nonprofit experts share that while it is possible to begin raising funds prior to receiving official 501c3 status, there are a few critical components to keep in mind:

  • You must disclose your uncertain tax status to donors before accepting gifts.
  • If your organization is denied tax exemption by the IRS, donors’ contributions will not be tax-deductible.
  • The rules and regulations can vary from state to state.

Make sure you look into the specific state and local laws where you’ll be fundraising to make sure you—and your donors—don’t end up in a difficult situation. Still, other organizations choose not to begin their fundraising until they’ve become an officially certified 501c3 nonprofit just to be certain.

2. Seeking grants as a new nonprofit

Grant funding is a fantastic way to supplement individual contributions and bankroll your organization’s mission—especially for startup organizations. This Grants Plus guide to nonprofit grant-writing stresses that a grant proposal should be clear, tailored, compelling, and persuasive. After all, it’s critical that you make a compelling case that your organization is the best recipient for the funding, as grant funding is limited and very competitive in nature.

If you’re seeing relevant grant funding for your organization, these are the most common sources to look into:

  • Corporations: Building partnerships with businesses and getting corporate sponsors is one of the best ways to raise support for your nonprofit. Corporate philanthropy is a win-win for all involved. The nonprofit receives critical funding while the business builds a charitable reputation among consumers and employees.
  • Government: Government funding is another great way to support your nonprofit as it’s beginning to grow. Specifically, there are federal, state, and municipal-funded grant programs in place to help charitable organizations pursue their missions. A great place to get started with federal grants is with the comprehensive database at grants.gov.
  • Foundations: Finally, there are also private grant-giving foundations that exist solely to financially support nonprofits looking to better the world, usually within the same community as the funder. These grants are typically more targeted, so it’s a good idea to search for foundations in the area that align with your own organization’s mission.

One thing to keep in mind when soliciting grant funding for your nonprofit is that while individual supporters might be willing to contribute to your fundraisers before you’ve received 501c3 status, most grant-giving institutions will not. Instead, you’ll likely want to wait to pursue grant funding until you’re an officially incorporated nonprofit organization. And in the meantime, you can begin building relationships with individual donors.

3. Acquiring initial donor support

Acquiring initial donor support for your new nonprofit can be an overwhelming task. After all, if you’re newly incorporated, it’s likely that you don’t have a lot of existing brand awareness in the community. When getting started seeking donor support, here are a few best practices to consider:

  • Explain the need. Why are you starting a new nonprofit in the first place? What need exists in the world that you plan to fulfill by creating this new organization? Before you can expect donor support, you need to make your community aware of the problem you attend to address—and how they can help.
  • Share where donations go. Be specific about where individuals’ donations will go and how they will be used. For example, can a donation of $X feed a family of four for a month? When you explain where funding is directed upfront, donors can see not only what their money is being used for (food), but who it is going to help (a family of four). 
  • Leverage your own network. More than likely, you have your own existing network of individuals who want to see you succeed. This might include family members, friends, colleagues, neighbors, and more. Try getting their support first, and encouraging them to share your campaign to their social media pages to garner even more traction for your fundraisers.

Then, be sure to begin the donor stewardship process to work toward building long-term relationships with your supporters. Although acquiring new donors will be critical at the beginning, it will be most cost-effective for your organization to begin retaining existing support rather than continually seeking new, one-time donors.

4. Getting started with fundraising software

Selecting your fundraising software is a critical aspect of getting your fundraising efforts up and running as a new nonprofit. Luckily, there are a ton of existing software providers to choose from.

Top donation software will prioritize aspects that enhance the donor experience and provide benefits to your organization, such as:

  • User-friendliness: Make sure your fundraising software is easy to use for both your nonprofit team on the backend setting up campaigns and your donors and supporters on the frontend contributing to your cause. Otherwise, you risk losing out on critical support due to a lengthy or otherwise complicated giving process.
  • Functionality: The features included will vary from provider to provider, but it’s a good idea to look for a solution that offers online giving pages, text-to-give, event and ticketing tools, and even mobile bidding software for fundraising auctions. The more functions your donation software encompasses, the more you’ll be able to raise for your mission using a single tool.
  • Affordability: Robust fundraising solutions can be great investments, but sometimes you just don’t have the money to shell out for new technology as a startup organization. Luckily, there are a ton of free and low-cost solutions available to help new and small nonprofits raise money without straining their wallets. Plus, if you invest in an easily scalable solution, you can add on new features and functionality as you need it. This way, your fundraising software is able to grow alongside your organization!

With the right fundraising software provider, you’ll be able to accept online donations and bring in online fundraising revenue for your new nonprofit. Then, additional fundraising software solutions (such as your donor database or CRM) can help you collect, organize, and leverage information about your supporters to build relationships and craft future campaigns.

As you surely know, starting a nonprofit organization is difficult—but it doesn’t have to be impossible. 

By launching your fundraising efforts as quickly as possible, exploring available grants, acquiring critical donor support, and setting up a foundation of high-quality fundraising software, you’ll be well on your way to fundraising success. And with that, you’ll be better equipped to pursue the mission that inspired you in the first place. Good luck!

Nonprofits and COVID-19: How to Strategize Beyond the Crisis

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Nonprofit Funding

When the pandemic first emerged, nonprofit professionals everywhere were caught off guard. At that point, the focus was on emergency funding, pivoting operations and simply responding to the crisis.

We’re now long past that point, and nonprofits everywhere are back to work with fundraising and other initiatives—after all, your organization’s mission is more essential than ever! But this period of uncertainty underscored the importance of a flexible, adaptable and informed strategy.

As we continue to work through unusual circumstances, it will be important to create a strategy that’s cognizant of the uncertain landscape while positioning your organization for success over the next 6 to 12 months.

When it comes to strategizing beyond the crisis, make sure to:

  • Fortify your internal foundation.
  • Revisit your planned fundraising goals and timelines.
  • Adjust your communications strategy.
  • Solicit gifts with care.
  • Turn to alternative methods of funding.

Are you ready to establish a strong foundation for success beyond the crisis? Let’s get started.

Fortify your internal foundation.

When the COVID-19 pandemic first hit the U.S., a flurry of stay-at-home orders and CDC social distancing recommendations sent citizens into their homes. Even many months later, many organizations are opting to extend these solutions to ensure staffers and volunteers are as safe as possible for the duration of the crisis. 

This is the perfect opportunity to revisit your impromptu work-from-home processes and internal structures to ensure everything is working efficiently.

As you begin refining your strategy, consider the following:

  • How can you improve your work from home policies? Consider which aspects of your organization’s productivity were impacted negatively in the transition to working from home. Can you create new policies around meetings, communications, scheduling, working hours, etc. to regain any lost productivity, or even to level up from your efficiency at the start of the year?
  • How can you improve any in-office/in-the-field procedures? Ensure your in-office/in-field staffers and volunteers are equipped with all needed equipment (and more!) to feel as safe as possible during this time. While the initial transition was quick, you should have more time and perspective now to address any issues. 
  • Would third-party consulting benefit your organization? Consider hiring a fundraising consultant to help navigate major strategy changes and challenges associated with COVID-19 operations. These advisors provide an unbiased view and nonprofit expertise to guide your organization to success despite the uncertain landscape.

Any of these improvements will continue to generate benefits for your nonprofit for years to come.

Revisit your planned fundraising goals and timeline.

While we wouldn’t advise taking on a large-scale capital campaign right now, avoiding fundraising completely is not an option. Your mission and the needs of your constituents still exist, and may even be more urgent due to the pandemic’s effects!

Instead of pausing, revisit your existing goals and timeline and make adjustments where needed to accommodate the current circumstances. Let’s break this down a bit further.

Timeline

Whether you’re in the middle of a campaign or you’re operating off a general 2020 fundraising calendar, you’ve probably set an overarching timeline for your organization’s upcoming efforts.

Revisit this timeline, paying close attention to benchmarks, campaign start/end dates and event dates. Then, consider the following questions:

  • Are there any deadlines that you’re not on track to meet?
  • Are there any upcoming events that must be moved?
  • Are there any benchmarks that you’ll have a better chance of meeting if they’re moved?

Making any needed adjustments ahead of time gives your organization the best chance possible to adjust and get back on course.

Goals

The challenges presented by the COVID-19 pandemic couldn’t have been predicted, even by the most observant, worldly nonprofit leaders. Because of that, it’s time to let go of any guilt associated with the inability to reach every fundraising goal you set at the outset of the year.

Of course, that doesn’t mean changing course with wild abandon! Instead, as the year draws to a close, consider each goal you set for 2020. Are there any that are simply impossible to reach, even if your nonprofit operates as optimally as possible from here on out? Brainstorm new challenging yet feasible goals— referred to as stretch goals in the world of capital campaign consulting— for your team to aspire toward.

Adjust your communications strategy.

Before you dive back into nonprofit fundraising, revisit and revitalize your current communications strategy. This is because the pandemic has created a few unique communications challenges, such as:

  • The society-wide stress that’s affecting many, whether due to economic challenges, health concerns or both.
  • The risk of sounding insensitive in the wake of such a societal downturn.
  • The physical distance separating nonprofits, supporters and the cause uniting both.

How do you greet all of these challenges when revitalizing your communications? We recommend starting with:

  • Training staff and volunteers to respond. Your staff members may be greeted with a new gamut of supporter responses, including eager support, ambivalence and even sad stories. Ensure they’re ready to respond in an empathetic manner regardless of how the conversations turn.
  • Recreating key communications materials. While you may have already prepared your fortified communications materials, including fundraising letters and your case for support, you should revisit these materials. It’s important that any physical materials you’re sharing with supporters acknowledge the state of current events.
  • Use technology to the fullest extent. To replicate the benefits of in-person communications, implement technology to further your cause. Consider using video conferencing software and social networks to stay connected despite social distancing measures.

With these tips, your staff will be better prepared to communicate with supporters during what is still a trying time for many.

Solicit gifts with care.

Many nonprofits opted against fundraising for their causes during the outset of the crisis to fundraise for the pandemic response instead. This isn’t exactly feasible, as your organization’s cause is too important to abandon for months at a time!

So, how do you begin soliciting gifts again as the pandemic wages on? Very carefully.

Consider the following tips for soliciting gifts during a crisis:

  • Check in with supporters before making an ask. Even though we’re well into a new phase of the pandemic, remember that the crisis is still in full swing for many! Begin any gift conversations with an acknowledgment of this, asking supporters first and foremost how they’re faring through it all. Further, only continue with the gift solicitation if the donor indicates they’re open to such an ask.
  • Offer creative giving options. For example, offer the opportunity to make a pledged gift now with the actual donation occurring later in the year. Or, offer a recurring giving program in which donors can give a smaller amount biweekly or monthly, rather than one large gift upfront.
  • Ask donors how you can best engage them. If a supporter is unable to give during this time, ask them how they’d like to be involved today and in the future. Would they be open to another gift ask a month down the line?

With these tips, you’ll be prepared to successfully secure donations to fuel your cause and continue stewarding those supporters that are unable to give at the moment. An empathetic and flexible fundraising approach will serve you well in the future, too. If fundraising during a crisis is unfamiliar for your staff, remember that you can bring in a consultant to help.

Turn to alternative methods of funding.

Donations to your organization may be less readily available than this time last year. COVID-19 kickstarted an ongoing economic downfall, with record unemployment rates that may be impacting your donors. You may encounter:

  • Previously secured major gifts being canceled.
  • A decrease in mid-tier and small gifts.
  • A pause of recurring gifts.

As we’ve covered, you should greet these situations with empathy and understanding. However, that doesn’t mean you should stop trying to fundraise for the cause! These recent circumstances have highlighted the importance of diversifying revenue streams.

Consider alternative methods of funding you may not have used in the past. For example, this is a great time to ramp up your efforts to seek donations from donor-advised funds (DAFs), grant funding and corporate sponsorships. 

Donor-Advised Funds

Donor-advised funds are specialized holding accounts in which major donors contribute funding, receive associated tax benefits and choose beneficiaries at a later date. These accounts are very popular with major donors, and there is a decent chance that some of your major donors have contributed already! 

Seek out these funds within your organization’s existing support base and externally from DAF sponsors, which include community foundations and wealth-management firms. Making allocations from a DAF is one way that supporters can give without actually donating any more during the crisis. Learn more through this DonorSearch guide.

Corporate Giving

In recent years, corporate giving has been steadily on the rise. While many industries have been negatively affected by the pandemic, others are still experiencing stability and even growth. 

While you should keep the sector of the company in mind (for example, now isn’t the best time to approach a travel-focused business), look to businesses as a potential source of revenue for your mission. You can solicit corporate sponsorships or look for opportunities to secure matching gift revenue or volunteer grants through the employers of your supporters.

Grant Funding

Many grantmaking organizations have vowed to make funding more readily available to organizations in response to COVID-19. This could mean simplifying application requirements or providing more unrestricted funds. Research existing and crisis-specific grant opportunities, and prepare your proposals.

Learn more about nonprofit grant writing through this guide, and don’t be discouraged if you need to seek fundraising consultant assistance with the process. After all, proposal writing takes a village!

While many organizations paused fundraising and forward-movement at the outset of the pandemic, it’s past time to hit “resume” on your nonprofit’s operations. Your essential cause depends on it. 

Incorporate these tips into your approach, and consider hiring a nonprofit consultant for a fresh perspective and seasoned experience. By following this guide, you’ll strengthen your nonprofit’s fundamental strategies in order to handle the challenges of the current landscape and thrive in the future.

Three Steps to Address Endowment Spending in the Time of the Great Pandemic

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Much has been written of high market returns over the past few years, and the COVID-19 pandemic will certainly lead to higher volatility going forward. What hasn’t been written is that these data points have created a precarious situation for endowments and the organizations they support: Spend rates are up or at unsustainable levels, often beyond realistic expectations for real returns.

If real returns for most portfolios are unlikely to meet these increased spending goals, what should endowments do to adjust to this new market reality?

The resolution is not simply an exercise in math, in providing guidance for expected returns from a given portfolio, then backing out a realistic spend rate. Such an approach may avoid disaster, but it does not resolve a common issue connected to spend rates and to portfolio construction: a communication disconnect between the investment and operational sides of an organization.

Endowment Spending

This is not to say that the investment committee and operational management are necessarily at odds, but that they are often both working toward the best interests of their organization—using differing definitions for “best interests.” Operational management is fulfilling the daily work of an organization now and planning for the immediate future. This requires growth and thus increased expenditures, which stresses all sources of funding and may lead to a request for more endowment dollars. Meanwhile, the investment committee is ensuring perpetuity, funding part of the organization’s mission today, but not at the expense of its future. Those viewpoints are always going to be at least somewhat at odds.

To further complicate the situation, we are all human. Increasing spend rates have many complex justifications, but in the end, increased endowment spending is a direct result of human decisions made with human expectations: Returns have been strong for years; we can afford to spend more.

Optimism is a part of human nature, as is the desire for independence, which leads to the second reason for increasing spend rates: a desire to minimize reliance on increasingly uncertain sources of public funding given the fiscal pressures that states and local governments are facing during the pandemic.

That second reason is a valid desire. The market pressures that create lower expected returns long term can also depress public funding and philanthropy, putting even greater pressure on the endowment. How should a nonprofit’s investment committee manage this perfect storm?

Start with getting both sides together.

Investment consultants should do this at the start of a client relationship; in-house teams would be wise to put such a meeting on their next agenda. Have both sides bring short- and long-term goals and be prepared to talk about how they define the best interests of the organization. The goal is as great an understanding as possible about all aspects of the business that affect funding requirements: risks, needs, long-range plans, regulatory, donor community’s appetite to give, and non-financial market pressures; everything.

Have a candid conversation.

Identify consistencies and inconsistencies. Don’t stop there: Discuss how those goals and plans affect budgetary needs and all sources of income, not just the endowment. There are four primary sources of non-endowment funding for most nonprofits: philanthropic donors, public funding and grants, operational revenue for entities like colleges and hospitals, and current and future debt financing. A well-designed portfolio shouldn’t operate in a vacuum, as though it were unaffected by the business end of the organization.

It is part of an interrelated funding system that includes both operational and investment levers. The manipulation of those levers can affect how much pressure is put on an endowment, regardless of whether the manipulation takes place on the investment or operations side of the house. Too often, portfolio decisions and spend rates are set without a full understanding of the business pressures that the organization faces operationally. Businesses experience operational volatility; it’s an accepted part of the for-profit world and is no doubt a main concern of the operational management team at a nonprofit.

Market volatility is something that investment committees talk about often; almost daily in an uncertain financial market. But operational volatility is often absent in investment discussions. It should not be absent. A regular open communication session helps ensure that changing operational needs are part of investment decisions.

Revisit this collaborative planning session regularly.

It doesn’t need to happen annually; probably somewhere between one and five years is right for most nonprofits. Let your nonprofit’s unique situation determine the timing. Higher volatility than expected—for either markets or operations—may indicate that it’s time.

This approach may seem outside the scope of investment consultants to some. After all, we are not management consultants, paid to improve business operations. But this approach is critical to helping nonprofits make smart decisions. Our bias, always, is to ensure that investment committees and organizations make decisions grounded in reality, not grounded in hope. Excess optimism and excess pessimism both are not good for long-term investing, but reality is.

Client history #1 – a too optimistic spend rate

The value of this approach becomes apparent quickly for many clients, even when their situations seem to be strong. One community hospital engaged us just after the Affordable Care Act (ACA) took effect. They had a high spending goal for their portfolio at 5.5%, well above the national average of 4.4%, but attainable based on the previous three years’ returns. Going forward, however, 5.5% would be difficult for a hospital endowment—to achieve the long-term returns necessary to sustain it, they’d need to take on disproportionate risk for a hospital. Such risk may not have been unreasonable in the right circumstances, if, perhaps, other funding sources been solid.

But at that time, they—like all hospitals—were uncertain of how the ACA would affect reimbursements and revenues. Few hospital CFOs then held any confidence in revenue projections. Worse, the same market factors that weaken returns often cause donors to decrease giving. At the exact moment that they needed to throttle back endowment risk and spending, they were uncertain how or if they’d be able to meet future budgetary needs. It was a triple threat.

We had to have an uncomfortable conversation once we got both teams in the same room.

The hospital was still fiscally strong at that time, and was a valuable asset to its community. By bringing the finance team in and showing them the reality of the risk to the endowment—which was not on their radar because they were by necessity mired in day-to-day operations—we were able spur a review of overall budgeting, fundraising, and financing. We were the bearer of bad news—they couldn’t rely on higher endowment spending—but the result was a donor drive that used all the information we’d provided on future market returns and the long-term health of the endowment. That drive succeeded. It raised funds to bridge the gap and ensure that they could weather the expected and potential revenue changes. The negative became a positive.

Client history #2 – a too conservative approach

On the opposite end of the spectrum, another client faced an enviable nonprofit situation: Their operational revenue and donations were both excellent. They were a valued part of their community. Their spending rate was realistic.

Despite no apparent problems facing the endowment, we brought both teams together for a collaborative discussion. The investment committee still faced a dilemma: The operational side was conservative and had been building up cash reserves far beyond common standards for days cash on hand for health-care entities. They had about a year and a half of cash on hand, millions of dollars earning little interest or contributing to the long-term success of the organization. The investment committee was stunned.

We had to engage in a tough series of discussions about the point at which conservatism is no longer in the organization’s best interests but is actually detrimental to long-term independence. Those reserves were so strong that including them in the portfolio decisions allowed them to take more risks and provide more long-term returns and stability.

Had we not engaged those conversations, the portfolio would have been structured differently and the investment committee would still be unaware of significant cash reserves.

Communication is the key

While this holistic analysis is not a panacea, in our experience, there is tremendous value in connecting these two parties. In practice, the focus of each can be very different and in direct conflict with the other, leading to a divide in communication and collaboration. This is not a fault of either team; it is simply a result of the typical structure of nonprofits and their endowments. There is no one-size-fits-all investment strategy, but communication is a one-size-fits-all solution that can strengthen not just the investment portfolio, but the organization overall.

This eyes-wide-open approach leads to stronger decisions and a stronger organization over the long haul, able to manage both market and operational volatility. The focus of this communication and of portfolio structure should not be on predicting, but on preparing. A prepared endowment makes for a powerful future.

After the Storm… Post-Crisis Fundraising

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Fundraising During and After CrisisThe 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.

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

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Connecting with Nonprofit Donors 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

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Fundraising Re-Engage Lapse DonorsIf 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

  1. Last gift between January 1, 2015 and December 31, 2018
  2. Lifetime giving history includes at least two gifts
  3. 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!”

How to Write a Letter of Thanks for Donations

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letter of thanks for donationsFunding can be one of the biggest single challenges of running a nonprofit. Without funding, programming becomes increasingly difficult. So what is the key to funding a nonprofit? Gratitude, of course! Writing an effective and heartfelt letter of thanks for donations lets donors know that you value them. And hopefully, this letter helps keep your nonprofit top of mind for future donations.

I started my own nonprofit to support transgender youth called Meta Center Inc in 2016. I had a big goal of creating an inclusive space for transgender youth to feel safe and supported. My goal was large but my funding definitely on the small scale. I dug as deep as I could into my own pockets. I also relied heavily on the kindness and generosity of family, friends and community members. A letter of thanks for donations helped ensure that my nonprofit started off on the right foot.

Over the years, I’ve worked on perfecting the art of gratitude. Here are my tips on how to write a standout donor-centered letter of thanks for donations:

Be Swift

You should send out your thank you letter within 48 hours. This means that you need to be prepared for a donation that could come at any time. Follow the steps below to ensure that your letter is ready to customize and send quickly.

Make it Personal

Avoid a pre-printed card you keep on hand. Personalization is the key to a memorable letter of thanks. Skip “Dear Donor” or “Hello Friend” and include your donor’s name. They took the time to donate to your nonprofit. You need to take the time to write a real personalized letter. If this is not their first donation, make sure you include: “Thank you for another contribution..” Return donors are so important to your nonprofit’s livelihood. This simple touch acknowledges in a personal way that you appreciate them thinking of you again.

Tell A Story

I start all of letter of thanks for donations the same way: I tell a personal story. This is the best way to grab the reader’s attention.  Detail how the nonprofit directly impacted an individual’s life for the better. With permission, share that individual’s name  and include a direct quote. Make it clear right from the beginning who directly benefited from their donation. For Meta Center Inc, a story might details an individual who was able to start their medical transition, find a gender-affirming doctor, buy their first binder and live as their true authentic self.

Include Statistics

Numbers, figures and statistics take the personal story and extrapolate that one individual’s experience to demonstrate the full reach of your nonprofit’s work. Did your nonprofit organization increase individuals served this year? Were you able to step up your programming efforts? You added an extra weekly support group? Share that with your donor! As a donor, they are champions of your nonprofit’s success. Brag a little!

What’s Next for Your Nonprofit

Once you’ve let your donor know how their funding has impacted your organization already, let them know what you plan to do next. If you haven’t completed a project, let them know where you stand. No one expects you to have everything together, but an update goes a long way! Stay transparent and tell your donor how their funds will be used.

Don’t Ask for Another Donation

This is a letter of thanks for a donation. This is not the time to ask for another donation. Asking for another donation 48 hours after you received the first one simply comes off as ungrateful. An effective letter of thanks for donations will ensure that when your donor is ready to give again, your organization will be top of mind!

Keep the Door Open

If your donor is local, let them know about your next event or invite them over to the office for a tour. Take them to coffee. Think of your donors as relationships. You nurture relationships, right? Donors are the same! Make sure the letter is written and hand-signed directly by someone on your leadership team.

Feel confident you can nail the letter of thanks for donations yet? Remember to keep it personal, tell a story and show that gratitude!

 

Charitable Giving – 3 Ways Donating to Nonprofits Can Help You Save

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Charitable Giving Tips, How you can Give and SaveWhen considering the option of charitable giving, emphasis is often placed on the direct gains from tax deductible contributions. There are other, more indirect benefits of giving to charity that are important to observe.

Consider your financial goals and learn to plan wisely.

Donating to a charity can help you learn how to manage your finances more effectively, and actually increase the amount you save. By establishing a set of goals or priorities, philanthropic giving affords valuable skills and develops better financial habits. Understanding yourself and what you believe in will help you plan more wisely for the future. Identify what is most important to you, and assign a realistic number to what you could give over a period of time.

Charter change and make the world a better place.

Every little bit helps. Just a few U.S. dollars can go a long way in other parts of the world.

Studies show that charitable donations in the form of prosocial spending, e.g. money spent on others or the act of charitable giving fosters social connection and compensates the donor in many ways.

More specifically, generous behavior precipitates a more positive outlook, sweetens success, and promotes higher levels of happiness.

Claim Donations & Collect Tax Benefits

Charitable donations are tax deductible when made to qualified nonprofit organizations.

On the list of top 5 tax deductions, the benefits of donating to charity are well documented and should not be overlooked. When you make a cash donation to a registered nonprofit 501(c)(3) organization, the amount of the donation can be listed and deducted from your taxable income. This will reduce your overall tax liability.

Another way to save on your taxes is to donate old items to charity. Less common than cash, donating goods is a way to make use of items you no longer want or need, and receive a sizeable tax deduction. The Salvation Army provides a valuable guide for determining the value of your donated items. Always get a proper, itemized receipt to keep on record for the IRS.

With the balanced approach characterized above, engaging in charitable work in your community, or giving money to a nonprofit cause is a way to invest in a more profitable future. In return for your investment in a better world, you will gain personal knowledge about yourself, your values, and how to save for a better financial future.

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