by Meg Gammage – Tucker

Managing to Repay Debt with Capital Funds

“How can we move ahead and buy or build something and then have our clients repay the debt?”  We have historically, and still regularly do, advise strongly against this strategy. 

We have advised against this strategy for two very important reasons—

1.)     Donors often do not want to fund something that has already been built thus reducing both their financial and personal influence over its development.  This is also why we test the “preliminary” case for support.  And,

2.)    Given the recent recession and its fallout, funding activities through debt is considered by some to be a precarious strategy, at best.

Today, however, it is a reality and one that more and more clients are asking us to address.  It may not be the best way to do our work, but it is a reality with which we must deal and strategies must be devised.

Debt repayment through philanthropy is not easy, and it requires organizations to be extra thoughtful and strategic to make it possible.  It requires the following:

Mission and Program Impact

How has this investment made the world a better place? 

How has it helped achieve our mission? 

What programs have we developed or improved? 

Financial Justification

Clear and sound reasoning as to why the investment was necessary.

Why did you invest first and ask later?  Or, in other words, what did you save and how did the organization benefit financially by buying or building before the dollars were available?

Potential Donors

Knowledgeable and entrepreneurial donors –who are both already committed to your cause and who appreciate and understand that your organization can be entrepreneurial as well.

It is not an easy path—nor one we readily recommend.  But it is one that is part of our philanthropic world and one which requires both thoughtful consideration and action.

“Let Meg know how helpful  Managing to Repay Debt with Capital Funds is for your organization and share your results by posting in the JGA comments section below.

by Angela White

Philanthropy  =  The Love of Humankind

We know the general definition of philanthropy as the love of humankind.  I recently read a story that brought this definition to life for me.  ESPN’s award-winning reporter, Rick Reilly, featured this story in his column For the Love of the Game on May 25, 2010.  And, amazingly enough, this story is about a high school that is located just 3 short blocks from my house. The story is about the junior varsity softball team of Roncalli High School in a game vs. inner city Marshall Community High School.  What happened during this game was truly philanthropy in action – a group of young women who made the decision to be philanthropic leaders on the softball field.   To quote Rick Reilly, “Yes, a team that hadn’t lost a game in 2½ years, a team that was going to win in a landslide purposely offered to declare defeat. Why?  Because Roncalli wanted to spend the two hours teaching the Marshall girls how to get better, not how to get humiliated.”  I encourage you to read the entire article at  http://sports.espn.go.com/espn/news/story?id=5218228 and to think about the powerful lessons learned on this softball field and how they can apply to our work in philanthropy.

“Let Angela know how helpful  Philanthropy = the Love of Humankind  is for your organization and share your results by posting in the JGA comments section below.

by Ted Grossnickle

The “generosity pulse” in America – How is the patient in 2010?

Giving USA has released its Report for philanthropy in 2009. As always, this work which is compiled by the Center on Philanthropy, provides terrific information about the “generosity pulse” of America. In the spirit of full disclosure, I am Chair-elect of the Board of Visitors for the Center. But the work done by the Center on so many fronts – the Giving USA Report just one of them- is outstanding and so helpful  to so many in our field.

There is some debate about the perspective of this report and what some other scholars say. Some ask if Giving USA paints an overly rosy picture of giving with a decrease of only 3.2% in 2009. Gifts in some categories dropped by much more – nearly 18% to higher education and gifts to the organizations that raise the most money dropped by 10%- are two examples.

But there are other factors to consider. What some would call mega gifts – those in the $100 million range- often go to private foundations which do not typically distribute funds immediately. And most high net worth donors continued their support. Most tellingly – at least to me- is the fact that much of what we may be seeing in an over-all drop relates to gifting at the highest end. Gifts of more than $1.0 totaled $4.4 billion- which was a drop of nearly 64% from 2008. Donations of less than $5000 fell by a median of 4.8% (according to an analysis by Target Analytics.)

This suggests to me something very healthy. The broad and deep impulse to help – across a nationwide population seems strong. Is that impulse impacted by this very tough economy? Yes. Is it likely to continue to be impacted for awhile? Yes. But gifting at that level is posting a lower decrease than the gifts at higher end levels.

Philanthropy is by and for everyone –at all levels of capacity to give. This is an “and” not an “or.” But it seems to me we ought to keep our eye on the base from which so much is expected and which – year in and year out- shows that generosity of spirit – the pulse – remains strong and vibrant.

“Let Ted know how helpful  The “generosity pulse” in America – How is the patient in 2010?  is for your organization and share your results by posting in the JGA comments section below.

by Dan Schipp

“Measure twice, cut once.”  That phrase seemed to be Ted Grossnickle’s mantra during the years he served as counsel for a $40 million campaign at Saint Meinrad Archabbey and Seminary when I was vice president for development there.  In fact, if I had collected a dollar from him every time I heard that admonition, I would have accumulated the lead gift for our campaign!

Ted was (and still is) a stickler for good, solid planning.  Under his and Angela White’s guidance, Saint Meinrad spent more than a year putting together a detailed plan for our campaign, including a case for support, five-year financial model, timetable, campaign structure, volunteer role descriptions, communications plan, budget, financing policy, gift table, gift acceptance  and recognition policies, and criteria for judging the success of the campaign.  We involved volunteers, Saint Meinrad leadership, and development staff in this extensive planning process.

At the end of our successful campaign, we conducted a formal evaluation of it.  We sought to learn what we did well and what we could have done better. 

Our volunteers told us that our in-depth planning was key to building their confidence in Saint Meinrad and in their ability to succeed in the campaign.  They said it was an aid to them when we encountered some rough spots in the campaign – 9/11 (just two months after launching the campaign), the drastic downturn in the economy, the sex scandals in the Roman Catholic Church, and the suicide of one of the Seminary’s top administrators.  The volunteers said our planning gave them something to fall back on during these tough times.  It steadied them.  It reassured them.

Although our pre-campaign planning involved a considerable investment of time and resources, it certainly paid dividends for us.  Planning well and executing the plan enabled us to achieve a level of philanthropic investment that more than a few people considered unlikely prior to the campaign.

As you go about preparations for your campaign, are you “measuring twice and cutting once”?

by Kris Kindelsperger

by Angela E. White

Millennial donors say that when it comes to requests for their time or money, they put high value on face-to-face communication. Read more on  AFP’s eWire:  Face Time: How to Reach Young Donors…

Check out Peter Panepento’s recent blog “Sleeping With the Cellphone: The 20-Something Donor” online at The Chronicle of Philanthropy.  Panepento’s blog, informed partly by JGA’s Millennial Donor Study, gives a quick snapshot of Generation Y donors and shares some tips to keep in mind when trying to engage them.

by Dan Schipp

The board member’s frustration was palpable. 

“I want to do my fair share,” he told me, “but I have no idea how I stack up with other board members in my giving and I really don’t know what [the organization’s] expectations are of board members when it comes to giving.  If [they] shared some facts and figures on the financial support they receive from the board, it sure would help me to see what I need to do.”

This board member understands that he has a responsibility to assist his organization financially, but he wants (and deserves) some clarity and guidance on what is expected of him.  I suspect he also wants some reassurance that other board members are stepping up to the plate, and his requests are not unreasonable.  His organization and all other not-for-profits would do well to be more clear and upfront about board giving. 

So, what should not-for-profits communicate to board members about giving?  First and foremost, it needs to be said that each and every board member is expected to make a generous, annual gift.   If the board has a tradition of board members giving at a defined level, that practice should be reported to the prospective board member at the time they are being recruited for the board.  The board member’s expected role in identifying, cultivating and soliciting prospective donors must also be discussed.

In reporting on board giving, organizations certainly need to note the percentage of board members making an annual gift and the total amount contributed by them.  In addition, not-for-profits might consider reporting the range of gifts received from board members as well as the medium and median gifts.  Another valuable statistic to share with the board is the percentage of board members who have included the organization in their estate plans.

So, is your organization clear about what it expects from board members when it comes to giving?  Are any of your board members frustrated because they don’t have the “facts and figures” they need to help guide their giving?

If you’ve encountered this challenge or have more tips on keeping your board informed, let us know by posting your thoughts in the JGA comments section below.