Archive for the ‘Fundraising’ Category

Dear Nonprofit Board President…By Susan Detwiler

June 30, 2014

We’re pleased to bring you this guest blog post from Susan Detwiler of The Detwiler Group.  Susan is a Standards for Excellence Licensed Consultant.  Standards for Excellence Licensed Consultants are an elite group of independent consultants that have been selected by the Standards for Excellence Institute and have received extensive training in using the Standards for Excellence code and program materials for the advancement of their work and the nonprofits and other institutions with whom they work.  To find a Licensed Consultant in your area, check out the online listing of Licensed Consultants.  For more information on applying to become a Licensed Consultant, click here for application information (The deadline for the Class of 2014 is July 8, 2014). 

Dear Nonprofit Board President,

Your board members need to hear this. In person. From you.  

Thank you for all the time and wisdom you’ve been contributing to our organization.  We have a firm foundation now, with a great executive at the helm.  

Our clients rely on us to change their lives. You’ve heard their stories; and I’ve heard how passionate you are about what we do.  

Every time we’ve invested in making our dreams happen, we’ve had a great return on that investment. We invested time and energy into finding a path out of debt. We invested time and energy into finding our new executive.  

And in the last year, we’ve made great plans for the future.   Now we have to make those plans a reality. When you joined the board, you made a commitment to invest in our future.

It’s time to fulfill that commitment so we can start the new year knowing we can make those goals come true.  

Please join me in making this organization, that I know you passionately love, your top philanthropic priority.  

You have a vital responsibility to your agency (big or small!) to take your job to effectively lead your fellow board members seriously. As the President, you lead. Your words carry weight.   If your board members think the only reason for 100% participation is so other funders will give to you, then you need to rethink who’s on your board.   Donors give money. Volunteers give time. Board members do both.  

If you’d like to hear more about inspiring your board members  – please get in touch. I’d love to hear from you. Susan [link to sdetwiler@detwiler.com]   The post was originally published by the Detwiler Group.  Susan Detwiler is a Standards for Excellence® Licensed Consultant who specializes in strategic planning, governance, board excellence and facilitation. Located in the MidAtlantic, she works with agencies across the United States. Have some thoughts to share on this subject?  Get in touch with her at sdetwiler@detwiler.com.

Gifts with Strings and Friends in Low Places

April 11, 2012

Garth Brooks sings about his less-than-reputable buddies in his popular country song, “Friends in Low Places.” It is hard to determine whose reputation appeared more sullied in Mr. Brooks’ recent headlining activities – himself or the nonprofit hospital which he sued for apparently not following his wishes.

Recently, a jury in Oklahoma ordered the Integris Canadian Valley Hospital, to which Garth Brooks had made a $500,000 donation, to refund his contribution plus punitive damages because the medical center apparently did not comply with Mr. Brooks’ wishes to place his mother’s name on a new women’s center.

The medical center insisted that there were no conditions on the donation and that it was initially offered as an anonymous gift.

Ouch. Garth Brooks looks bad.  The medical center looks bad. How could this situation have been avoided?

The Standards for Excellence clearly states that “Nonprofits must honor the known intentions of a donor regarding the use of donated funds.”  In a situation like this, it would have been more than prudent for the recipient of the half million dollar gift to have a paper trail describing restrictions (if any) placed on the gift.  That way, any misunderstandings about restrictions or lack thereof could have been cleared up at the front end instead of in a court of law and on the front pages of the newspaper, tabloids, and television news programs.

For more information on donor relations, you may be interested in checking out the Standards for Excellence educational resource packet, Fundraising Practices, available free of charge to members of the Standards for Excellence Institute.

Fundraising Pressure

August 26, 2011

How much pressure is too much? I am aware of churches and other faith based organizations that include a list of those families who have made financial commitments to the congregation in each week’s bulletin or order of service.  This may or may not feel like too much pressure, but surely many of us would bristle over the idea of listing all the individuals or families that haven’t made pledges to the financial health of the organization—as a kind of charitable black listing. So how do we ensure that we are asking in ways that don’t feel like arm twisting?

The Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector® clearly states that:

“Solicitations should be free from undue influence
or excessive pressure, and should be respectful of
the needs and interests of the donor or potential
donor.”

What does that mean for your organization? Do you rely on high pressure tactics or extreme guilt to encourage individuals and families to donate to your organization?

How do we ensure that our own solicitations are free from undue influence or excessive pressure?  How does this play out in our own organizations? The Standards for Excellence Institute encourages nonprofits to enact a board-approved fundraising and solicitation policy as well as a gift acceptance policy.  Such policies often provide the guidance needed by nonprofit staff members and volunteers to help ensure appropriate solicitations.

For more information on the in depth collection of Standards for Excellence educational resource packets on fundraising topics (Fundraising Practices, Fundraising Costs, Employment of Fundraising Personnel, and Solicitation and Acceptance of Gifts) available to members of the Standards for Excellence Institute, please click here.  For access to the members only resources, click here.

For information on joining the Standards for Excellence Institute, please visit our website.

Can you really deduct that as a charitable contribution?

August 4, 2011

One of my friends once told me that she was never upset when she had to pay library fines because she supports and loves her local library.  Perhaps it is a very small price to pay for the ability to borrow such a variety of great books and not have to actually purchase these books and publications.  This is completely appropriate as long as my friend does not incorrectly assume that she can actually take a tax deduction for the library fines she’s paid.  Certainly, she can make tax deductible gifts to her local Friends of the Library organization, but she should not confuse this fee/fine for service as a ready-made tax deduction.

There are many instances where individuals assume that a tax deduction exists even in places where it does not.  Did you know that each year, the IRS publishes a list of Dirty Dozen Tax Scams?  In this year’s 2011 edition, Don’t Fall Prey to the 2011 Dirty Dozen Tax Scams, the IRS included “Abuse of Charitable Organizations and Deductions” as one of the dozen tax scams, what the IRS deems to be the “worst of the tax scams”.  Nonprofit organizations should take care to ensure that they do not serve as a willing participant by allowing or setting up scenarios that allow its donors to misuse tax-exempt organizations and shield income or assets as a result.  The IRS Dirty Dozen Tax Scams report specifically calls out inappropriate and illegal situations where donations are overvalued and donors are even able to buy back the items at a price set by the donor! These are the “scams” that put ethical tax deductions at risk for the rest of us.

The Standards for Excellence: An Ethics and Accountability Code® for the Nonprofit Sector specifically states that “an organization’s fundraising program should be maintained on a foundation of truthfulness and responsible stewardship.”  The Standards for Excellence code goes on to state that “nonprofits must be aware of and comply with all applicable Federal, state, and local laws. . . ” which includes “complying with laws and regulations related to fundraising.. . .

Members of the Standards for Excellence Institute have access to more information on how you can ensure that your organization is in the best position to comply with fundraising laws and regulations, you may be interested in the Standards for Excellence educational resource packet on Fundraising Practices, which includes the helpful Standards for Excellence publication, “Disclose It: A Charitable Nonprofits’ Guide to Disclosure Requirements”

For information on how you can join the Standards for Excellence Institute, please visit our website.

Three Cups May Be Too Much

May 2, 2011

With the airing of 60 Minutes investigative report on Greg Mortenson, author of Three Cups of Tea and CEO of Central Asia Institute, a recognized 501(c)3, we are once again confronted with controversy in the nonprofit sector. Here is an organization with a very compelling and important mission – building schools and educating girls in impoverished central Asian communities – and charitable contributions that would be the envy of the vast majority of the nonprofit sector. It is unfortunate that the ensuing debate over the situation seems to be focused more on the personal actions of one individual rather than the vitally important issue that nonprofits must committed to be well run and responsibly governed in all aspects of their work in order to ensure the efficacy of their work and the trust of the public.

What we have is a mismatch of expectations and a lack of transparency. Clearly what people thought the Central Asia Institute was doing with its money is not what it was doing with it. Sure, it was delivering on its mission, but clearly not to a level that was proportionate to the level of philanthropic support it received. Sure, Mr. Mortenson’s charisma and books were significant assets that the organization leveraged to get that support, but comingling his personal endeavors with the finances of the nonprofit make it look as though these “assets” were actually significantly costing the organization at the expense of fulfilling the mission.

I work with nonprofits daily, and I can attest that their structure and regulation can be confusing. It’s not always clear what’s allowable to do under the tax exempt designation nor are the passionate people who start these endeavors, like Mr. Mortenson, always aware of the unique complexities of running a charitable organization and managing its finances.  Not understanding how a nonprofit should operate and not having the full scope of skills to run a complex organization can lead to unfortunate events like those illustrated in this case.

It is important that those working to improve our world through nonprofit charitable organizations have access to the knowledge needed to be successful, have impact, and remain accountable. Here at the Standards for Excellence Institute®, we work diligently to provide such resources and guidelines so that organizations can build sustainable governance and operations to maximize the social impact of their work, reassure donors that their contributions are used as expected, and keep themselves out of potentially compromising situations by adhering to the highest levels of accountability and ethics. We also provide organizations the opportunity to demonstrate this commitment to the public by earning the Seal of Excellence, an honor held by 250 nonprofit charities in the US.

One thing is clear. Donors, the government, and the public at large expect charities to exist for the benefit of communities and environments, not for the benefit of the people that found or run them. Following proven practices of good nonprofit governance and management reminds us that the best interest of the nonprofit and the community it serves is to take the time to learn about what the community needs and from what it can benefit; understand what it takes to effectively operate; and, when it comes to accepting items of personal benefit it may be better to only accept one cup of tea rather than three when doing so.

Raising the All Mighty Dollar: Board Involvement

March 31, 2011

The Standards for Excellence Institute has always encouraged nonprofits to have a clearly written list of expectations for board members.  One of the most important responsibilities for every nonprofit board is the responsibility “to assure that adequate . . . financial resources (earned income, government contracts and grants, and charitable contributions) are available. . .”  (Source: Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector).

But don’t take our word for it!

Fisher Howe’s leading publication, The Board Member’s Guide to Fundraising (Jossey Bass Publishers)  starts with this statement:

“Start with the first principle: The board of a nonprofit organization is responsible for governing the organization and ensuring that it succeeds in its mission. That responsibility-no matter what the size of the organization or the nature of its mission includes seeing that that organization has the resources required to carry out that mission . . . . If an institute is having trouble raising money, don’t look to the development office; don’t look to the chief executive; first check out the board of trustees.”

BoardSource’s 10 Responsibilities of the Nonprofit Board clearly states that the board should:

“Ensure adequate resources.”

We know that in some organizations, board members feel as though fundraising is not really a responsibility that they want to take on.  In many situations, this stems back to their first encounters with the board:   often board members are not adequately apprised of their fundraising responsibilities during their recruitment and orientation.  Setting high expectations at the outset can go a long way toward ensuring high performance.

According to the BoardSource’s Governance Index 2010 report, year after year, nonprofit leaders identify fundraising as their board’s greatest weakness and most important priority for board improvement.

Also according to BoardSource’s Governance Index 2010 report, board members are more comfortable with fundraising the farther they are from the donor.   Eighty-seven percent of board members are comfortable writing letters, compared to 57% with directly asking for money. Comfort with fundraising is declining. Board members express greater discomfort with various common fundraising activities such as soliciting funds, identifying donors, attending fundraising events and making personal contributions in 2010 than they did in 2007.

For more information, see the Standards for Excellence Educational Resource Packet, Conduct of the Board, which includes sample position descriptions for board members. This and other packets are free to Standards for Excellence Institute members through the members’ only section of our website. Hard copies are also available upon request.  We also offer one-on-one technical assistance for members only.  Not a member? Join now!

If your board is among the ranks of nonprofits without a strong commitment to fundraising and raising the resources for the organization, we hope this posting will provide some much needed ammunition for your journey to an excellent board.

Fundraising Freedom

February 7, 2011

In a recent column, the Baltimore Sun’s Jay Hancock slammed the relationship between nonprofit organizations and for-profit fundraisers.   He had received a telephone call on behalf of an organization to which he had previously donated, and after some digging, discovered that the nonprofit had only received 51% of the funds collected the last year from this same for-profit telemarketing company.  Outraged by this discrepancy, Hancock wrote, “Your reaction, however, ought to be the same. Ignore them. Yes, even if it’s your favorite nonprofit and you always give money, just say no. Politely decline and hang up.”   These are very strong words.  The Standards for Excellence Institute has not chosen a side in this debate, however we do stand by our written code and expect our members to do the same.

The Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector provide clear guidance in the area of fundraising revenue and expenses and honoring donor intent.  Section 7A of the code states, “A nonprofit’s fundraising costs should be reasonable over time.   On average, over a five year period, a nonprofit should realize revenue from fundraising and other development activities that are at least three times the amount spent on conducting them.”  This 3:1 ratio is the minimum standard required to maintain the Seal of Excellence from the Institute.

However, the true power of the 3:1 principle lies in the freedom it gives to nonprofit managers.  It allows them to deliberate and  determine the most effective way to allocate scarce resources to raise essential support while still maintaining reasonable expense to revenue ratios.  Imagine if a reporter called you at work and said he knew your organization contracted a for-profit company to solicit your donors for end-of-year contributions or that you had spent large amounts of money on advertising campaigns to encourage donations. ,How great is it that you would be able to respond by clearly stating that over the past five years your organization has meet the high standard of a 3:1 revenue to expenses ratio across all of your fundraising efforts.  You can tell the reporter that even if you lose a large part of the cut for this specific fundraising campaign, your organization’s overall operations meet their goals and stand up to the highest public scrutiny. 

A nonprofit organization adhering to the Standards for Excellence may engage in any egal and ethical fundraising strategy as long as it meets the demands of the 3:1 fundraising ratio and honors the intent of donors.  Ethics, accountability, and best practices don’t mean your nonprofit must become a cookie cutter organization that operates according to some formula.  Quite the opposite- the Standards for Excellence guidelines give your organization the capacity and freedom from worry to creatively engage your donors and constituents.

For more information, see the Financial Cost and Fundraising Practices educational resource packets. This and other packets are free to Standards for Excellence Institute members through the members’ only section of our website. Hard copies are also available upon request.  We also offer one-on-one technical assistance for members only.  Not a member? Join now!

Beware of Fundraisers Who Seek a Commission

May 27, 2010

If you are in the market for a professional fundraiser or solicitor, you’re not alone.  Most nonprofit organizations have employees or contracts with professional fundraisers or solicitors.  When deciding on the appropriate compensation for these services, always keep in mind that the Standards for Excellence® code prohibits percentage-based fundraising.  The code states, that “fundraising personnel, including both employees and independent consultants, should not be compensated based on a percentage of the amount raised or other commission formula.”  The Association of Fundraising Professionals Code of Ethics also advises against the practice. 

Although not illegal, there are more than a few good reasons to pay fundraisers based on the job and not on the amount raised. 

Paying by the job can save you money.  According to Association of Fundraising Professionals, there is a correlation between charities that have extremely high fundraising costs and those who pay their fundraising firms on a percentage basis.  Also, donors might also become disillusioned to learn that 30%, of their donation, for example, will be given to a professional solicitor.

Commissions can lead to a “money over mission” attitude.  The practice is also considered unethical because mission tends to takes a back seat to personal gain in these situations, as it creates an incentive for self-dealing. 

Fundraising should be a team effort.  In the article, Why Good Fundraisers Are Never Paid on Commission , fundraising expert, Kim Klein tells us that the most important reason that commission-based fundraising is a bad idea is that successful fundraising requires coordination between the board, staff, and other volunteers rather than having one person in charge of an entire campaign.

The bottom line is that we encourage all nonprofit organizations to refrain from paying professional solicitors based on the percentage raised or other commission formulas.  It is just the ethical thing to do.


Social Media and the Standards for Excellence®

February 19, 2010

With the advent of social media in nonprofits, the Standards for Excellence Institute® has received several requests for resources and assistance in handling the benefits and challenges of social media.

At this time, we are in the midst of convening a taskforce of industry experts to explore issues related to technology.  As part of that effort, we are exploring the idea that we should consider a new technology performance indicator for the Standards for Excellence® code and a potentially a new educational resource packet as well.  If you have ideas on how the Standards can be improved in this focus area, please forward suggestions to me at acmadsen@standardsforexcellenceinstitute.org.

As organizations consider their own guidelines and policies around social media, they will want to be sure to keep the best practices outlined in the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector® in mind. 

  •  In providing its programs or services, a nonprofit should act with the utmost professionalism and treat persons served with respect. Where appropriate, a nonprofit should have policies in place that protect the confidentiality of personal information and should provide a grievance procedure to address complaints.   Nonprofits should regularly monitor the satisfaction of program participants.  (From Section I of the Standards for Excellence® code, Mission and Program).
  • A nonprofit should have written personnel policies and procedures, approved by the board of directors, governing the work and actions of all employees and volunteers of the organization.   In addition to covering basic elements of the employment relationship (e.g. working conditions, employee benefits, vacation and sick leave), the policies should address employee evaluation, supervision, hiring and firing, grievance procedures, employee growth and development, confidentiality of employee, and client and organization records and information. (From Section IV of the Standards for Excellence® code, Human Resources)
  • An organization should provide employees a confidential means to report suspected financial impropriety or misuse of organization resources and should have in place a policy prohibiting retaliation against persons reporting improprieties. (From Section V of the Standards for Excellence® code, Finance and Legal)
  • Nonprofits should provide members of the public who express an interest in the affairs of the organization with a meaningful opportunity to communicate with an appropriate representative of the organization. (From Section VI of the Standards for Excellence® code, Openness)
  • Nonprofits should have at least one staff member who is responsible to assure that the organization is complying with both the letter and the spirit of Federal and state laws that require disclosure of information to members of the public. (From Section VI of the Standards for Excellence® code, Openness) 
  • Nonprofits should respect the privacy of donors and safeguard the confidentiality of information that a donor reasonably would expect to be private. (From Section VII of the Standards for Excellence® code, Fundraising)

For copies of the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector®, please click here.  http://www.standardsforexcellenceinstitute.org/public/html/explore_c.html  Discounts available for bulk orders.

Lots of Annual Activities for Nonprofits to Keep Track of…

December 21, 2009

A few weeks ago, in this 52 Tips in 52 Weeks column, I noted that marking birthdays reminded me of the annual activities nonprofits need to take care to address in the course of regular business. That article focused primarily on some of the annual responsibilities and roles that need to be carried out by each nonprofit’s board of directors. 

Of course, it is not solely the board that needs to keep an eye on its annual responsibilities.  Indeed, the Standards for Excellence:  An Ethics and Accountability Code for the Nonprofit Sector® cites annual tasks ranging from mission and program all the way to public policy and lobbying. 

Take a few moments to get out your organization’s annual work plan and ensure that the following activities are featured prominently:

  • Employee performance evaluations are completed annually
  • The Form 990 is sent to the IRS annually
  • An audit is performed by a certified public accountant (for organizations with revenue over $500,000) annually
  • Release an annual report that includes a mission statement, information about the organization’s programs, a list of the board and management staff, and financial information (specifically, a summary statement of financial position and statement of activities)
  • Follow the IRS and any state level charitable solicitations and disclosure requirements on all funding solicitations and receipts
  • Maintain at least a 3:1 ratio of dollars raised vs. the amount spent on fundraising
  • Ensure that all professional solicitors and fundraising consultants employed by the organization are properly registered with the appropriate authorities
  • Register with the appropriate authorities if employing/engaging a lobbyist.

For more information on the best practices in nonprofit management and governance described in the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector® or to order copies of the Code, click here.   Discounts are available for members and those who order in bulk.


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