Nonprofit University Blog

When things come together in a short period of time, I pay attention.  So, this blog is my paying attention to this series of events that happened last week, all related to year-end fundraising anxieties.

So, the first event:  a reporter called to ask me what was I hearing about people’s (meaning nonprofit staff and board) attitude towards philanthropic giving as we move into the frenzy of end of the year giving.  So I decided to ask around, and heard a lot.  I asked about 50 executive directors, development directors and some program directors from nonprofits of all different ages, sizes and missions.

And what I heard, while not unexpected, was not happy news.  (Though there were some folks who were rather quite optimistic, one claiming he had no choice but to be optimistic because who would fund a pessimist!)  By and large, folks are quite anxious about the return they will get in this end of the year push, fearing it will not nearly be enough; all admit to working harder than ever, not just now – with multiple letters, starting earlier than usual, more meetings, trying new tactics along with the tried and true – but doing so throughout the year.  All seem absolutely exhausted.  But the worst, according to many – and I’ve been saying this for a long time (despite frequently feeling like Chicken Little) is yet to come.  As bad as 2010 has been, people fear 2011 will be even worse—across the board from individuals to foundations and corporations to the government.

The second event:  Another question about year-end fundraising received within the space of four hours:  should we ask our volunteers to donate money?  The hesitancy – which always follows this question in rapid fire: they already give their time so we don’t want to ask them for money.  (This is an exceptionally common question; I just don’t normally get it twice within one day, let alone twice within four hours.)

The third event:  Bank of America Merrill Lynch last week released its 2010 Study of High Net Worth Philanthropy:  Issues Driving Charitable Giving among Affluent Households, researched and written by the Center on Philanthropy at Indiana University.

According to this research, high net worth households did not abandon nonprofits in 2009, though they did give less.  Giving levels in 2009 (98.2% gave) were on par with 2005 and 2007, though how much was given dropped by 34.9% between 2007 and 2009—and therein may lay the rub.  Add to this that more than 75% of high net worth people volunteered in 2009, an increase of almost 4% from 2007, and increased their volunteerism to an average of 307 hours.  And, particularly noteworthy: the more they volunteered, the more they gave.  Really more!  Those who volunteered between 101 and 200 hours gave, on average, just under $46,500, while those who volunteered 201 hours or more gave just under $75,700.

Where am I going with all of this?  I’m simply paying attention and seeing what unfolds.  I like pretzels; but you can only eat so many before your mouth gets dry and your taste buds bored.  Maybe being a pretzel – twisting yourself into knots – isn’t the best way to approach fundraising at any time of the year.

It starts right about now:  an increase in solicitations in your snail and email boxes, on your phone and via all forms of social media, asking for donations for what is hoped is your favorite charity.  It continues with the news articles and radio and television stories on assessing where and how to give.  It continues right up to the first note of Auld Lang Syne.

The tug of war has begun:  charities that need your money versus the highly sought (and in high demand) donors who want the last grab at a tax break.  (Truth is, and this seems something folks seem to forget, that the tax deduction is good no matter when in the calendar year you give; no need to wait until the last minute of the year.)    At nonprofits, the frenzy has already begun as folks everywhere struggle with the standard questions of who, for what and how much.  And you don’t have to listen hard to hear the weariness in nonprofit staffs’ and volunteers’ voices as they anticipate the approach of this season.

I’ve been giving a lot of thought of late to this relationship of donor and charity.

No matter how smooth, strong, friendly, etc. the relationship, it is, by its very nature, always fraught, made so if for no other reason than the fact that one is the beggar and the other the giver.  Being honest, no matter how good we think our organization, and no matter how nice the donor, when you have to go with hat in hand, it feels like begging.  As I said, I’ve been giving this a lot of thought, partly because of the season and partly because of Panera Bread Company.

In May of this year, Panera opened a store in downtown Clayton, Missouri.  No news there.  But this store was an experiment:  it is a pay what you want to pay.  There are suggested prices for every item and a “greeter” who welcomes patrons and explains the system, letting people know that this Panera is not a free store but a pay-what-you-feel-you-can-and-should-pay.  Five months after the start of this experiment, Panera has declared the store a success, and announced in October that the store was breaking even and should be turning a profit any moment now.  Turns out that when given a “suggested retail price, ”65% of patrons paid it; another 10%-15% gave more, leaving the remainder who gave less.  And the thinking is that the majority, though not all, of those who paid less were those who were truly in need.  The experiment was so successful that Panera has plans to open two more such stores—one in the mid-West and one on the West Coast, and is not making predictions about how common or not such stores may become.

Point?  Do we do what is “right” because we know it is right or because we are “told” it is right by heart wrenching stories and smiling, yet hurting, faces?  Do we take responsibility for ourselves and others because we are given a tax break or because we know it is the right thing to do?  With no promise of a thank you note, a tax deduction, a name on a recognition list in an annual report, 75%-80% of the patrons of the Panera in Clayton did the right thing.  That’s a much better response rate than most direct mail campaigns get.  Maybe there is more here that deserves our attention.

Contrast this with a story a friend, an executive director of a nonprofit, recently told me.  She was at a fundraising dinner (not for her own organization) and struck up a conversation with an older woman.  As the evening drew to a close, the older woman mentioned that she needed to call her husband to arrange for a ride home.  My friend offered to take the woman home.  As the woman went to get out of the car at her home with a very, very posh address, she turned to my friend and said, “Well, I guess I’ll be hearing from you.”  Was this a kind offer of support for my friend’s nonprofit?  Was this a gesture to make things easier or the weariness of a donor who “knows the drill?”

As we move into this season of asking, how are we as nonprofits encouraging the freedom to give as opposed to creating the burden of giving?

I hate current hot phrases and this one is no exception:    the new normal.  If the current economic conditions—by which I don’t mean the level of unemployment, the number of home foreclosures on the books, the lack of agreement as to how we got where we are and hot to get out, but rather the reduction in credit availability, people’s fear of unemployment and their hesitancy to spend money on anything other than essentials, and more—are, in deed, the new normal, why haven’t nonprofits moved on?

It seems as if the nonprofit sector has adopted this phrase, but not the suggested outlook that should accompany taking that phrase into one’s lexicon.    Rather, I am still seeing nonprofits reacting to the now as if it were a passing something.  They are not paying attention to the well being of their staff, instead choosing to freeze salaries (many for the third year in a row), cut benefits, expand workload, and more.  They are grabbing at any money that seems remotely related to the mission (to wit nonprofits scurry to apply for stimulus dollars despite the short term “respite” that stimulus dollars were supposed to bring, that have in fact created other problems) just to get through the next fiscal year without a deficit (or as small a one as possible).  They are abandoning strategic plans and being reactive instead of following the thoughtful course charted in that planning process.

If, however, organizations truly believed that these leaner, more cautious economic times are in fact here to say—what the phrase the new normal suggests—then I should be seeing very different behavior.  Instead of abandoning strategic plans that were developed through a thoughtful, reflective, data-driven process, I should see nonprofits sticking to that plan after a careful review of the “new reality” in which the plan will be implemented.  If the priorities identified in the original process were good two or three years ago, most of them are still good now for the organization and the fulfillment of its mission, though the time frame may need to be adjusted, or the scale ramped down a bit.  A few may, in this “new normal” seem incredibly naïve, but I’d argue that’s not the case; it may simply be a matter of adjusting the scope of the prize while still eying that prize.

Instead of chasing dollars that you know from the outset:   a) have a have a short shelf-life with little to no chance for re-application or funding from new sources and b) stretch you (I’m being kind) from your mission, nonprofits who have accepted the new landscape should be having heartfelt and mission- and data-driven conversations on key questions.  Key question:  What is it that we are currently doing that are truly our core competencies and we should keep and what programs should we jettisoned as they are draining focus, energy, resources, etc., from that which makes our organization sing?  Key question:  What are the resources, from human to financial to material, that we really need to execute those programs that we are keeping at a level that makes us excel well above our competition?  What is it we will need going forward, as opposed to what is it that we need to do to keep what we have?  Key question:  what changes do we need to make in how we assess and protect the financial health of our organization so that when the “new normal” gets hit by a small or large quake, which we know it will at some point in our future, and threatens us with a “new, new normal” we will be in a stronger, better place than we were this time around?

Unfortunately, I am not seeing the indicators that nonprofits are accepting current times as our new state of being.  Instead, I see organizations continuing to act as if this were a passing phase, one that must be survived in order to reach the bright times on the other side. (Did your children ever watch the video series?  It is fiction and the dinosaurs don’t roam the land anymore.)  Survival mode is a short-term strategy adopted for a temporary situation.  We don’t go into survival mode for a long-term state of affairs.  For that, we need a sustainable, long-term mode of being.

It is time nonprofits started charting that course.