Saturday, April 11, 2015

Table of Contents

Table of Contents

Scroll down and click title in table of contents for articles of interest to nonprofit leaders and professionals:
For additional articles click "older posts" at bottom right of page at end of scroll

Tips on Establishing or Revising Gift Acceptance Policies

Response to AFP Fundraising Study

Why Do Planned Giving Marketing Efforts by Nonprofits Fail?

Donor Recognition Capital Campaigns

Tips on Establishing or Revising Your Gift Acceptance Policy

Tips on Gift Acceptance Policies for Your Nonprofit

Norman Olshansky: President
NFP Consulting Resources, Inc.

Decisions related to acceptance of out of the ordinary donations and pledges can be among the most challenging issues nonprofit professionals and leaders have to address, related to fundraising.

Have you experienced any of the following issues?

How do you deal with a donation from someone who is well known and of “ill repute” in the community who has made their fortune from being a slumlord and now is offering you a lead gift to your capital campaign with the proviso that the building be named after him?

How do you avoid accepting a gift of real property that may cost you more in the long run than it is worth due to zoning, structural concerns, carrying expenses, legal or tax issues?

What “strings” attached to gifts related to its use, recognition, investment, etc. are you willing to accept?

What type of assets are you willing to accept? (collectibles, art, autos, boats, jewelry, privately held stock, real estate, etc.)

Are you willing to accept life insurance policies which may require future premium payments?

Are you willing to accept “split interest” gifts?

Do you sell all stock donations immediately, hold them as investments or make decisions on a case by case basis? What guidance is given to those making day to day decisions?

Who in your organization can make a decision not to accept a gift?

How do you recognize testamentary gifts, especially those which may not materialize due to the terms of the gift? What about a testamentary gift where the donor or his/her family is able to change the beneficiary or amounts at a future date?

When there is a need to make an “exception” what process is used to authorize a decision which may not be covered clearly by established policy or practice?

These and similar issues occur more frequently than one might expect as part of the ongoing fundraising and development efforts of nonprofits. The type and frequency of these issues may vary from one nonprofit to another, but all nonprofits engaged in fundraising need to address gift acceptance.

If you do not have a policy in place to establish guidelines, practices and procedures for your staff and volunteers, you are leaving yourself vulnerable to problems, potential conflict with donors and liability to your organization.

There are many sample policies online, from basic to complex, which can be of assistance to you if you do not already have an established policy. If you do have one, it should be reviewed to make sure it covers conditions that could impact your organization. Review of your policies, with input from legal counsel, should be conducted periodically by nonprofits.

I have utilized a basic policy for my clients, who prefer more flexibility by their organization when considering acceptance of gifts.   Some nonprofits have a separate gift acceptance committee while others use their standing executive committee, finance, or fundraising committee to handle gift acceptance issues.
Sample Gift Acceptance Policy
NFP Consulting Resources, Inc.

_______________________, Inc.,  a not for profit 501C3 organization organized under the laws of the State of ____________, encourages the solicitation and acceptance of gifts, grants and donations  for purposes that will help ___________ to further and fulfill its mission. The following policies and guidelines govern acceptance of gifts made to ______or to any of its programs.

Acceptance of any contribution, gift or grant is at the discretion of __________Inc.

Donations will generally be accepted from individuals, partnerships, corporations, foundations, government agencies, or other entities, without limitations.

________ will refrain from providing advice about the tax or other treatment of gifts and will encourage donors to seek guidance from their own professional advisors to assist them in the process of making their donations.

__________ will accept donations of cash or publicly traded securities. Gifts of in-kind services will be accepted at the discretion of the ___________.

Certain other gifts, real property, personal property, in-kind gifts, non-liquid securities, and contributions whose sources are not transparent or whose use is restricted in some manner, must be reviewed by the __________CEO/Executive Director and/or finance committee (which shall serve as the gift acceptance committee), prior to acceptance due to the special circumstances, obligations raised or liabilities they may pose for _________.

__________ will provide acknowledgments to donors meeting IRS substantiation requirements for property received by the charity as a gift. However, except for gifts of cash and publicly traded securities, no value shall be ascribed by ____________to any receipt or other form of substantiation of a gift received.

__________ will respect the intent of the donor relating to gifts for restricted purposes and those relating to the desire to remain anonymous. With respect to anonymous gifts, information about the donor will be restricted to only those staff members with a need to know.

__________ will not compensate, whether through commissions, finders’ fees, or other means, any third party for directing a gift or a donor to _______________.

Revision History
On____________________ the Board of Directors of _______________s adopted this Gift Acceptance Policy.
Among the many online sources, I would recommend David Wheeler Newman’s article if you are interested in developing a more detailed policy.

The CEO/Executive Director should also seek input from fundraising staff and volunteers. The CEO/Executive Director should then engage the Board Chairman for input so that a policy, or revisions to the existing policy, can be taken to the Board of Directors for review and approval.

Do not wait until you have to deal with issues related to a specific gift before you develop gift acceptance policies! Make sure you have an established gift acceptance policy and committee to which staff and/or volunteers can bring unique concerns, which need to be addressed. By planning, thinking and acting smart, you can minimize, if not avoid, many of the problems other nonprofits have faced in the past.

Sunday, February 9, 2014

Response to Association of Fundraising Professionals' Study: Fundraising Effectiveness

Response: Fundraising Effectiveness Study
AFP Fundraising Survey Response
By Norman Olshansky: President
      NFP Consulting Resources

In response to a request from my local Association of Fundraising Professional’s Chapter, to comment on the new National Fundraising Effectiveness survey, I have prepared this article .
For the first time in five years, results from the annual AFP Fundraising Effectiveness Survey reveal that charity respondents experienced positive gains in giving, but continued to lose donors faster than they gained them.  The 2013  report summarizes data from 2,840 respondents throughout the United States, covering year-to-year fundraising results for 2011-2012.  
   Gains in gifts from new, upgraded and previously lapsed donors were offset by losses through reduced gifts and lapsed donors.  So, while there was a positive net growth-in-giving, every $100 gained in 2012 was offset by $96 in losses through gift attrition.
   Gains of new and previously lapsed donors were offset by losses in lapsed donors.  This means that there was a negative growth-in-donors and every 100 new donors gained was offset by 105 in lost donors.
   Performance varied significantly according to organization size with larger organizations performing much better than smaller ones. 
It should come as no surprise that over the past several years nonprofits have had their share of fundraising challenges, especially among mid and small size organizations.
A snapshot of the national trend for all nonprofits shows that, while overall giving had modest gains, the number of donors has decreased. Bottom line – fewer people are giving and nonprofits have become more dependent on their major donors.
I was asked to comment on the trends noted in the recent study based upon my experience as a fundraising consultant:
1.     While not realistic, nor appropriate, more and more boards and executives are looking for their development staff to bring in the “bucks” without adequate leadership involvement and support. Staff alone cannot be expected to provide magic bullets, especially in mid to small nonprofits.
2.     During the recession, many nonprofits cut staff to save on expenses and the remaining staff, especially those devoted to fundraising, were overwhelmed, and burnt out, causing high turnover and a multitude of other problems.
3.     Many nonprofits have continued to focus their fundraising efforts primarily on events, which have a low return on investment. Events have their place but need to be part of a broader fundraising strategy and plan that uses a variety of fundraising activities targeting multiple segments of one’s donor and prospect base.
4.     Development departments have ignored many of the basics when it comes to fundraising:
A. Keep in touch with existing donors and provide good communications and recognition. They are your most important donor segment. This does not mean sending out quarterly fundraising mass appeals, or only communicating when there is an “ask”. Nonprofits need to spend more
time on stewardship and recognition of existing donors. You can never thank a donor too often.
2.     Do not neglect the pipeline. Keep in mind (especially in Florida), we lose many donors to death, health issues, relocation and from feeling that their gift is not appreciated. In order to simply maintain your existing number of donors you need to add a lot of first time donors. Do not neglect to include new donor acquisition activities within your campaign plan.
3.     While there is a science as well as an art to fundraising, nonprofits are also corporations (businesses) that need to analyze, evaluate and conduct their affairs with an understanding of return on investment of human as well as financial resources. Have a plan that is prioritized to maximize resources and maintain metrics that can be evaluated.
4.     Leaders and staff within nonprofits tend to be crisis oriented and not strategically focused. Too often inadequate time is spent on vision, impact, outcomes and staying true to mission.
There are many axioms related to fundraising. One is that “it all starts with leadership”, (volunteers AND professionals). Analyze, ask questions and do not ignore the basics of professional fundraising. Only then will you be able to say that, “we not only reversed the trend” but also raised more money, retained more of our existing donors, added more donors overall, increased our average and median gift size, and engaged more fundraising leadership and volunteers with a lower fundraising cost per donor”. For more axioms related to fundraising go to: Fundraising Effectiveness Survey ResponseResponse to AFP Fundraising Effectiveness Study

Monday, May 6, 2013

Why Do Many Planned Giving Marketing Efforts By Nonprofits Fail?

Why Do Many Planned Giving Marketing Efforts By Nonprofits Fail?
By Norman Olshansky: President
NFP Consulting Resources, Inc.

Nonprofit fundraising, whether for annual, capital or endowment campaigns, is all about relationships.  This is one of the main axioms of fundraising.  (See Ten Basic Fundraising Axioms

Planned gifts are major gifts.  Like with other major gifts, they require proper prospect research by nonprofits related to the passions, interests and philanthropic goals of the potential donor, followed by a thoughtful cultivation process.

Since many planned gifts utilize giving techniques that can be technical or somewhat complicated, such as trusts, annuities, transfers of real property, insurance, etc., nonprofits have depended heavily upon the advice and input of financial services professionals (accountants, tax attorneys, investment advisors) for the development of their planned giving programs.  While financial advisors are a very important component within a nonprofit’s planned giving leadership, too often development professionals have focused too much on how to structure planned gifts rather than on how to engage qualified prospects to the point of willingness to consider making a planned gift.  As a result, marketing efforts have typically focused on charitable annuity tables, and a plea to “leave us in your will” rather than a focus on the interests and values of the donor.

The first step in obtaining charitable planned gifts is to identify prospects who care about your mission and have charitable intent.
The quality of a gift is directly related to the quality of the relationship between the nonprofit and prospect. Major prospects deserve personal attention. Your nonprofit’s relationship to the prospect has a direct impact on their gift. The more they know and trust the nonprofit and their representatives (volunteers and staff), the more comfortable they will be making a major gift. They need to know that they are getting accurate, current and reliable information about the organization and the impact of their giving. They also will be more comfortable knowing that the nonprofit, with whom they have a relationship, is  familiar with their background, interests and abilities than would a stranger. 

Planned giving is an opportunity for the donor to leave a legacy gift. 

The dictionary has two definitions for legacy.
1.  a gift by will especially of money or other personal property :
2.  something transmitted by or received from an ancestor or predecessor or from the past

As related to marketing of planned gifts, these definitions of “legacy” offer great input.  Why would a donor want to leave a legacy through a planned gift?  Is it the motivation for the gift to serve as appreciation for the work of the organization, or a memorial to a diseased relative, to honor someone, to set an example for others, to pass on their values of philanthropy to children and/or grandchildren, to sustain the organization about which the donor cares, to endow their annual gift, to fund a program or service or scholarship long term, to be recognized as a major donor while they are still alive, to thank the organization for its past service to the donor or a family member, to be able to make a more meaningful gift than they have in the past…. ?  The reasons may be different for each prospective donor.

Research has shown that the best prospects for planned gifts are:
1.    Long term donors and volunteers who have demonstrated a commitment to the organization (not gift size but more focused on length of giving)
2.    Those who are over 60 years old

Many of these prospects are living off of unearned income, have concerns about their ability to provide for themselves or other family members, long term. Their net worth may primarily be in property or other assets, which do not produce income or, at best, minimal interest. They are usually individuals who have been small or moderate long-term contributors to the organization.

While many charities have received bequests from individuals who had previously never made a gift to the charity, most donors of planned gifts fit the characteristics above when they made the decision to “plan” a gift.

Developing a “relationship” with the prospect so that conversations can take place that help the individual articulate what they care about, is the critical first step once they have been identified as a prospect.

Once the “solicitor” has acknowledged and demonstrated appreciation for their long term support, and has determined some of the potential interests and philanthropic motivations of the prospect related to your nonprofit, ask:  “If you were in a position to make a legacy gift to accomplish some of what you just mentioned, and you had the resources, would you want to make a legacy gift or gift in perpetuity to our nonprofit”?

Typically, they will respond that they are not wealthy or in a position to do so and don’t have the ability to make such a gift. 

Ask what they would want to accomplish with a major legacy gift to the nonprofit, if indeed they WERE in a position to do so.  Get them to talk about their passion for your nonprofit and their interests.

At the right time during that conversation, the solicitor can respond as follows:

“If we could show you a way that could enable you to make a legacy gift, without any cash out of your pocket and the possibility to receive income for the rest of your life greater than you are earning from some of your investments, would you be interested in learning more?

In most cases, long term supporters will be curious as to what you are suggesting and will be willing to learn more.

If the solicitor is a planned giving professional they can continue the
conversation.  If it’s a volunteer or a staff member without significant financial services knowledge, they should ask if it’s ok to have one of the
organization’s advisors set up a time to discuss with the prospect some of the ways they can make a legacy gift and also receive income and significant tax advantages.

The next step or meeting, once their interest has been established, would be to determine what are the primary assets of the prospect (residence, collectibles, life insurance, other appreciated assets, etc). Use of appreciated assets for gift planning offers the donor additional advantages.  In addition, a determination should be made regarding investments in low performing instruments. (money market funds, CD’s, bonds, etc.) With that information, the professional/advisor can suggest some of the techniques that might best fit that individual. (Gift annuities, trusts, life insurance, bequests, stock transfers, bequest, etc.)

It is important to encourage the prospect to engage their own financial advisors to make sure what is being discussed is appropriate based on more detailed knowledge of their unique financial situation and needs.

The nonprofit’s representative should offer to contact the prospect’s financial advisor once the prospect has had a chance to initiate the discussion with their advisor.

Marketing for planned gifts is primarily a one-on-one engagement of the prospect, their financial advisor and in many cases, their family. 

Establishing legacy societies and ways to recognize those who sign letters of intent to leave a bequest by will, or have committed to a planned gift, are critical components of a planned giving program.  The more planned gifts are recognized for the reasons the gift was made without emphasis on the amount of the gift, the more such recognition will encourage others to consider planned gifts.  

However, emphasis on marketing should primarily be on ways to identify and engage those who fit the legacy gift profile.  Brochures, emails, gift tables seminars and engagement of financial advisors, while helpful, are not sufficient for the development of a successful planned giving program for your nonprofit.  The key to marketing your planned giving initiative is to get good conversations with appropriate prospects started, which is all about “relationships”.

How would you rate the marketing for your nonprofit’s planned giving program?