by Ted Grossnickle

A few weeks ago we shared a link to a survey conducted by the Nonprofit Research Collaborative.  This survey and the resulting report are produced as a cooperative effort of the Association of Fundraising Professionals, Blackbaud, the Center on Philanthropy at Indiana University, the Giving USA Foundation, Guidestar, and the National Center for Charitable Statistics.

I wanted to share with you the some interesting findings from the resulting “Late Fall 2011 Nonprofit Fundraising Study,” published this month. 

Slow Recovery, Leaves Some Behind

In general the survey appears to suggest that charitable giving is in the midst of a slow recovery, but that the rising tide may not be lifting all ships equally.  A plurality (41 percent) of organizations reported seeing increases in their charitable revenue through the first three quarters of 2011.  In contrast,  28 percent saw their revenues decline and 31 percent reported that charitable revenues had stayed flat compared to 2010.

New Donors are a Bright Spot

Another series of findings of particular interest related to the number of organizations reporting increasing success in acquiring new donors.  Half of organizations reported that they had more success attracting new individual donors in 2011 compared to 2010.

More See Increases in Gift Size, Than Decreases

In addition, many organizations reported increases in the size of average gifts.  Though 46 percent of organizations reported that the average size of gifts from new and renewing donors stayed flat, more organizations reported seeing increases in the average size of gifts. 

More organizations reported increases in gift size from new donors (30 percent) and renewing donors (29 percent), than those reporting decreases in gift size.  Only 24 percent saw decline in average renewal gifts, and only 25 percent reported decreased average gifts from new donors.

Though we are clearly not out of the woods, and continued global economic instability may jeopardize the gains made both economically and in terms of charitable giving in the last two years, we continue to see indications that donors may be starting to reengage and once again expand the circle of causes which they support.   

It is our job as fundraisers and consultants continue to create opportunities that draw donors back into the fold and maintain the connections with existing donors that have weathered the financial storm.

by Andy Canada 

Would you say you’re knowledgeable about basic financial principles and concepts? 

If you answered yes, you are not alone. 

In a recent financial literacy survey conducted by the Center on Philanthropy at Indiana University and sponsored by Moody’s Financial, 76 percent of nonprofit managers considered themselves financially “knowledgeable” and another 7 percent claimed to be “experts” in that regard.

Unfortunately, if you are like the average nonprofit manager, there is a decent chance you overestimate your level of financial understanding. 

In reality, only a third of respondents were able to correctly answer a series of three questions on basic financial concepts like inflation, investment risks, and diversification.  

While nonprofit managers are not expected to be Warren Buffett, when donors make a gift, they expect it to be competently managed, especially when that gift is meant to be held in an endowment. 

We don’t have to look too far back to see significant examples of financial naivety costing nonprofits and foundations dearly.  Whether falling victim to criminal schemes like the one perpetrated by Bernie Madoff, or leaving themselves overly exposed to volatile market fluctuations, a number of nonprofits have paid a high price for not arming themselves with the appropriate expertise and assistance in financial dealings.

The silver lining to this news is that nonprofit managers were more knowledgeable than the public at large.  But nonprofits don’t have to compete with the general public for donations. They compete with each other. 

In an environment where nonprofits are increasingly coming under scrutiny from donors and regulators, it is important for nonprofit managers and their boards to honestly assess their own knowledge and practices to avoid missteps that could have a long-term impact on donor confidence.

So, take some time to crack open that Finance 101 book and brush up on your financial knowledge.  It will pay dividends.

by Melanie Norton

This is the time of year when we stop – if even for a moment – and reflect on those things for which we are most thankful.  At JGA, that reflection leads to our clients and the dozens of charitable organizations we partner with each year.  For those charitable partners, thoughts of thankfulness likely lead to donors and those who selflessly give of their time and talent to help advance the mission.

A recent online article in the Chronicle of Philanthropy gives us yet another reason to be thankful.   In a poll conducted by the American Red Cross, nearly seven out of 10 Americans believe it is important to make giving to charity a holiday priority.  And, 72 percent of those who plan to give also plan to make a contribution that equals or exceeds their gift from last year.

At a time when the economy can still be categorized as challenging, this is encouraging news for charities.  In fact, the same poll indicates that givers plan to cut other expenses before scaling back on their charitable contributions.

Other key findings of the survey are as follows:

• 79% would rather have a charitable donation in their honor than a gift they won’t use
• Four in five Americans agree that helping someone less fortunate is an important part of their holiday tradition
• 68% of Americans believe that it’s important to give to charity because of the economy
• 45% of Americans will cut back their expenditures on travel, and the same percentage on decorations, but only 26% plan to spend less on charitable donations

Amidst the flurry of year-end mailings and appeals, it is especially important for donors and volunteers to feel like their contributions are appreciated.  The good news above lets us know that charitable giving is still a strong priority for Americans and we need to let donors know we don’t take that goodwill for granted. 

Take some time this holiday season to make certain your stakeholders know how thankful you are for their support.  Send a card, write a note, or pick up the phone and share your appreciation.  Despite the fast-paced nature of our society, changes in the economy and also personal priorities, Americans enjoy the opportunity to give to causes they care about.  And we appreciate the opportunity to say “thank you” to those who make a difference.

 by Angela White

This week, more than 125 communities and over 50,000 people will be celebrating National Philanthropy Day (November 15^th).

These celebrations honor the donors who generously give billions of dollars and volunteer hours each year to feed the hungry, clothe the needy, save the environment, cure the sick, and fund systemic and long-lasting change.

You know these donors in your community, and I encourage you to send them a special thank you on National Philanthropy Day to acknowledge the difference they are making in countless lives each day. 

JGA is pleased to be celebrating National Philanthropy Day in two cities on the same day  — on November 17^th JGA will host a table to celebrate the honorees in Cincinnati, OH at a luncheon and in Indianapolis at a dinner that evening.

Check out the Indianapolis recipients and the Cincinnati recipients.

And, for all of us who try to emulate these philanthropy leaders, check out Change the World with a Giving – and Wise – Heart! and watch the video for tips on giving wisely, including:

• Plan your giving – create a giving plan that details how much you want to give, when you would like to give and what type of charities you want to support.
• Decide when you will give – some charities struggle in Spring and Summer when giving drops significantly.
• So many charities – educate yourself about the many charities looking for support
• Knowledge is power – thoroughly research those charities you identify
• Financial data is important, but doesn’t tell the whole story – review financial data, but don’t use it as the only metric to whether a charity fulfills its mission.
• Know your rights as a donor – review the Donor Bill of Rights and make sure you are treated fairly.
• Give from the heart – give to support those charities you truly believe in.

Happy National Philanthropy Day!

 by Kris Kindelsperger

Several of our clients are in the midst of raising funds for large capital projects.  In all cases the ideal fundraising outcome is to raise 100% of necessary funds in cash.  Seems pretty straightforward.

In reality, the needs and preferences of donors must be factored into the equation. 

• Most donors lack the liquidity to write a check up front for the full amount of their gift. 
• Many donors make multiyear commitments stretching out five or more years. 
• Some gifts may be premised on the sale of a business, property, or other investment, the timing of which may be fluid. 
• Other donors may need to incorporate some form of gift planning that will cause the funds to come to the organization sometime in the future. 

It gets complicated.

One way to address these fundraising realities is to develop, in advance, a Funding Plan, or a road map that takes into account a series of assumptions and contingencies that fit the organization’s needs as well as its tolerances for risk.

Elements of a Funding Plan include:

• Realistic estimates of fundraising that include projected cash flow, the likelihood that major liquidity events (sale of property, for example) will occur in a specific time frame, and calculations on the present as well as future value of planned gifts.

• Determine the cost of building today versus in the future.  Are there significant savings to be had by building today when construction costs are relatively low?  What happens if costs rise, might they eclipse fundraising progress in three years?

• What is the cost of not completing the facility soon?  An academic building that will allow increased enrollment in revenue generating programs has a projected current revenue value as well as a lost opportunity cost.  If construction is delayed three years, how much revenue is lost?

• What is the organization’s ability finance debt? Whether short term construction financing or longer term debt, what is the cost to finance a project in interest and/or bonding costs?

Each of these points requires creating a set of assumptions and making judgments about what will likely happen in the future. Well conceived plans can allow organizations to create flexible funding strategies that can be adjusted as circumstances unfold, but may provide the opportunity to move ahead with construction while fundraising is still underway. 

In today’s economy waiting till all the cash is in the bank, may not be the most cost effective way to fund a new building.

by Dan Schipp

Last week I attended the Ohio Association of Nonprofit Organizations (OANO) and the Ohio Attorney General’s Joint Nonprofit Conference. 

A focus of the conference was the release of OANO’s Nonprofit Sector Report.  The report, based on 2009 data, draws on information compiled by the Urban Institute’s National Center for Charitable Statistics and the Center for Civil Society Studies at John Hopkins University. 

 The purpose of the OANO report is to provide nonprofit leaders with a tool to use to heighten awareness of the economic impact of the nonprofit sector.

According to the OANO report, 14,787 reporting charitable nonprofits in Ohio had $68.3 billion in expenditures in 2009 and contributed more than 13.8% of Ohio’s Gross National Product.  A hefty 9.8% of the total Ohio workforce was employed by nonprofit organizations.  This made the nonprofit sector the fourth largest industry in the state, behind only manufacturing, retail trade, and local government.

OANO urged the boards and staffs of nonprofits to use the report data to educate policymakers and business leaders about the economic impact that the nonprofit sector has at local, state and national levels. 

In this time of increasing pressure on nonprofits to do more with less and amid a growing discussion of reducing tax advantages for those who contribute to nonprofits, it is important to call attention not only to the role of nonprofits in changing, enriching and saving lives through arts and culture, education, healthcare, and social services, but the significant contribution they make to our nation’s economy.

As one conference speaker noted, years ago our governmental leaders wisely acknowledged the importance of the nonprofit sector by establishing the tax deduction for charitable gifts.  Today some are calling for capping the charitable deduction.  The speaker warned that capping the tax deduction would lead to continued chopping away of the deduction and its eventual elimination.

The Joint Nonprofit Conference presentations on the OANO Nonprofit Sector Report reminded me of the “best practice” that some nonprofits have of regularly assessing their economic impact and sharing this information with their boards, civic leaders, and local business community. 

When was the last time your organization looked at the contribution it makes to the local and state economy?  When was the last time you had a discussion with your board about the economic significance of the nonprofit sector?

by Ted Grossnickle

The Center on Philanthropy atIndiana University released their analysis yesterday of the impact the Obama Administration’s proposed tax changes may have on nonprofits.

 In their view, impact of the proposed 7% reduction of the value of charitable deductions allowed for taxpayers with an AGI of more than $250,000 would be relatively small.  More concerning are the estimated impact of proposed higher tax rates for this income bracket.  Though they represent only 3% of all tax returns in 2008, these taxpayers claimed 43.5% of all itemized charitable giving deductions.

 “Our estimates indicate that if the Administration’s proposals had taken effect in 2009 and 2010, total itemized giving would have declined by 0.4 percent in the first year and by 1.3 percent in the second year,” said Patrick M. Rooney, executive director of the Center on Philanthropy. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term.”

As Rooney points out, with the many other stressors weighing on the nonprofit community currently, the impact could likely be magnified and comes at a time when few nonprofits are at the pinnacle of stability.  What nonprofits need and what donors need, is more stability in the overall economy.

Thank you to the Center on Philanthropy and our respected colleagues at Campbell & Company for supporting this research.

by Angela White

A colleague recently shared with me a blog post on the Harvard Business Review of an article by Paul Leinwand and Cesare Mainardi entitled The Cure for the Not-for-Profit Crisis.

This is a must read for any of us working with and for not-for-profits in today’s economic times.  Although the issues raised in the article stand the test of time, they are even more important today.

The authors define the crisis before attempting to cure it.  The crisis is not a lack of funding, shrinking donor rolls, or dipping endowments but rather a crisis of coherence.

This is defined as a lack of strategy to connect mission with the ability to deliver/achieve the mission. 

Incoherent organizations lack:  

• distinctiveness,
• reliability in service delivery, and
• focused and cohesive activities that relate to the strategic direction.  

As JGA works with our clients in strategic planning, we focus on these concepts and assist our clients in maintaining their coherence in good and bad economic times. 

Incoherent organizations focus on short-term demands (often proposed by well-meaning donors) and follow growth opportunities that are not linked to strategy and mission. 

Where are you on the coherence/incoherence continuum?

by Melanie Norton

I was fortunate to attend the National Conference on Philanthropic Planning last week inSan Antonio,Texas.  The Partnership for Philanthropic Planning (PPP), formed in 1988 as the National Committee on Planned Giving, hosts this annual conference for the variety of professionals whose work involves charitable gift planning. 

The annual conference is always an energizing opportunity to learn from and network with others who devote their time and energy to making charitable giving more meaningful.  I’m always impressed with the variety of gift planners, major gifts officers, financial planners, attorneys, accountants, consultants and other professionals who attend and make this such a rewarding experience.

There were many common themes among the participants this year, but there remains an overriding desire among professionals to provide solutions that are in the best interests of both the donor and charitable entity, to do so in the highest ethical manner, and to seek closer relationships among all of the parties in the charitable process.  

As uncertainty prospers, planning and staying ahead of the educational curve is becoming increasingly important.  But, in this era of tighter budgets and fewer staff, breaking away to indulge in professional development is difficult at best.  Staying on top of the latest information takes real dedication. 

The PPP website offers helpful tips for those who might need extra support convincing his or her boss that a conference or other educational opportunity is a good investment.  Consider sharing the following benefits:

• The opportunity to learn about new approaches or tactics developing in response to donor demographics, economic conditions and legislative/regulatory developments
• Contact with the nation’s leading experts in the field
• The ability to converse with quality service providers and vendors, as well as solicit feedback on their services from other attendees
• The occasion to dialog with fellow professionals – sometimes before and after the event – who do similar work
• Access to materials, both online and in person, for future reference and sharing with internal staff

Perhaps one or more of the above arguments will help you make the case for your next development opportunity.  Take the time to refresh, learn from the best minds in the business, and form meaningful relationships with your professional colleagues.  These investments of time and resources will serve both you and your constituents well in the future.