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.

by Ted Grossnickle

Since 2008 we have all noted quantitative answers to what the impact of the economy has been on gifting.

What is talked about less is what individuals tell us. We know there is more uncertainty and we know that uncertainty, not bad news, is not good for philanthropy.

But what else do we hear from donors and prospective donors? What trends are emerging? Are there lessons to be learned as we navigate these new waters?

Our clients tell us — and we hear for ourselves during feasibility study interviews- the following key themes:

“I’m going to think about a gift more carefully – especially one from assets rather than cash flow.” Donors seem to be taking a longer time to decide and are definitely seeking advice from advisors more frequently.

“I used to support 6 or 8 organizations; I’m cutting that down.” Again, this is anecdotal but it seems donors have decided they wish to continue to be generous but they are giving to fewer organizations. Is this because they have less to give? Perhaps. Is it because some organizations have not done as good a job of staying in touch with donors? Perhaps. Is it because some organizations have not responded well during these times and donors don’t think they are as meritorious a cause? Perhaps. It may be a combination of these factors – or others.

“I’d like to see a clearer, more precise picture of what the organization will be like as a result of my gift. Is there a sound and strategic fiscal model?” We hear this more and more. And believe it ties closely to some of the points mentioned just above.

If one result of the current era is for donors and prospective donors to be savvier and more thoughtful about their philanthropy, then that is good. Everyone wins. Not only those that receive the gifts, but even the organizations that learn the lesson that they must change how they articulate what they do — and be very sure they are effective and efficient in their missions.

As some have called it, this period is the “new normal.” Things will not go back to the way they were and all nonprofits must work harder to help donors see the value they can create with their gifts.

by Andy Canada

There are many steps an organization must take to build and maintain a loyal and sustainable donor base, and perhaps the most important and often overlooked is retaining your existing donors.

Not only is putting a stop to donor attrition important, it also pays dividends, according to a recent report from the Fundraising Effectiveness Project (FEP), a joint effort by AFP and the Center for Nonprofits and Philanthropy at the Urban Institute. The 2011 Fundraising Effectiveness Survey Report shows that for every $5.35 gained in new gifts by an organization in 2010, $5.54 was lost from the organizations current donors not renewing, resulting in an average net loss of 1.9%. Though the study did show improvement from 2009 to 2010, donor attrition is still a challenge that nonprofits need to address.

As we have all heard many times, it is more cost effective to retain and motivate your current donors than it is to attract new first time donors to your organization. However, often current donors are taken for granted as organizations go out searching for a new group of potential donors. Attracting new donors to your organization should never overshadow stewardship to your current donors.

Turnover of donors increases your overall fundraising costs and inhibits growth. With increased turnover, organizations struggle to build long term and sustainable relationships with donors, move donors to higher giving levels, or build a major gift pipeline for the future.

Here are some steps to assist in donor retention:

1. Focus on thanking your donors within 48-72 hours after they make their gift. Let them know the gift has arrived safely and that you appreciate their support.
2. Personalize your communications. Utilize your database system send personalized letters and notes.
3. Periodically touch base with your donors. A personal call is great but an email providing an update on the organization is also effective. Allow them to feel engaged with the organization.
4. Personally visit to say thank you whenever possible.
5. Explain how their gift has made an impact.

These are basic steps but they do require an investment of time and coordination from your organization. But, current donor relationships are an asset well worth the investment.

by Kris Kindelsperger

Unemployment is hovering at more than 9%. Significant layoffs have been seen in recent years in the nonprofit sector.  Many organizations are fighting for their financial lives.  So, how is it possible that some organizations claim that they cannot find qualified candidates for development positions?

The overall turbulence in the economy is causing many good candidates to hold tight and not make any moves at all.  Professional search firms will tell you that two-career couples are reluctant to move for fear that a spouse will be unable to find a job in today’s market.  Candidates who own homes may be underwater in their mortgage or concerned that they will be unable to sell their existing home.  The recession has put downward pressure on salaries making some moves less financially attractive.

As we have worked to help clients fill open development positions, we have seen several visible trends at work in the advancement job market:

A bird in the hand – Many of the best qualified professionals are not “in the market” for positions.  They have a good situation and are sticking with it.

Home Sweet Home – Some qualified candidates are not willing to relocate, especially to smaller communities, even for a significant career advancement.

Great Expectations – The expectations of some presidents/CEOs/boards for quick fundraising results are scaring away the best candidates.

What can you do about this?

• Many organizations are working harder to home-grow their staff.  Forward looking managers are doing more hiring and promoting from within to build future leadership.
• Good major gift officers are hard to find, so some organizations are more willing to experiment with individuals with sales and marketing backgrounds, as long as they embrace the mission of the organization.
• Lots of organizations are finding that their candidate pools are shallow so they have to exercise patience and be prepared to look longer and harder to find the right person.

One benefit of the recession is that new candidates are looking at the nonprofit industry who may not have in the past.  They look to the nonprofit world today as a safe haven from the perils of the economic storm ravishing many for-profit companies.  If they really care and believe in what you do, they may be the right person for the job at the right time.

Whatever your situation, remember three things:

1. Don’t settle for second best hoping that the person will somehow work out, they seldom do.
   
2. Do hire for the personality and work ethic characteristics necessary to do the job.  The resume can’t tell you this part of the human equation.
   
3. Do pay attention to your instincts about fit and dedication to your culture and mission. 

by Dan Schipp

When you work in development there are always a few gifts that stand out in your memory.  Often they are the large gifts that involved years of cultivation. 

Not in this case. 

One of the most memorable gifts that Saint Meinrad Archabbey received during my tenure as vice president for development came from a junior high school student. 

The gift of cash — $45 – was accompanied by a handwritten note from John, the young donor.  He explained that he had decided to contribute a tithe of his annual allowance to our $40 million campaign. 

John said his parents encouraged him and his siblings to give a portion of their allowance to charities of their choice.  Thanks to his parents, John was learning to be a philanthropist.

I was reminded of this experience earlier this summer when I read an article in the Wall Street Journal entitled “How to Raise a Philanthropist” (June 20, 2011). 

In the article, Veronica Dagher notes that the great generational transfer of wealth has more and more affluent families taking an active approach to teaching their heirs about philanthropy. 

In addition to leading by example and demonstrating an attitude of gratitude, here are some other practices that she says parents are using to encourage their children to become volunteers and philanthropists:

• Talking with their children about giving and volunteering
• Matching gifts to their children’s charities
• Volunteering with their children (at an animal shelter or soup kitchen, for example)
• Conducting family meetings, often facilitated by an advisor, on individual and collective philanthropic goals
• Asking children to research causes and to “pitch” them at meetings of the family’s foundation board.

Research is showing that the younger generations are philanthropically inclined.  JGA’s and Achieve’s 2011 Millennial Donors research revealed that 93% of the nearly 3000 millennials (ages 20 – 35) who participated in the survey made a gift in 2010.  Nearly eight out of ten volunteered. A nudge from a family member prompted 42% of the millennials to give.

It is encouraging to see that we as a society are becoming more intentional about teaching philanthropy and volunteerism to younger generations.  Families and churches still lead the way in teaching and encouraging giving, but there are more formal efforts underway. 

One remarkable example is the Learning to Give organization, which is working with generationOn to provide high quality K-12 lessons, units, and materials on philanthropy to schools throughout the world. 

With efforts like this, more and more organizations will be counting young philanthropists like John among their donors.

by Angela White

 Our JGA team of professionals has grown by one with the addition of Melanie Norton, our newest consultant.

Melanie is a talented planned giving director and fundraising professional well known to the JGA family. Over the years, she has served both at Franklin College and most recently at Depauw University.

Her keen understanding of the legal, financial and emotional dimensions of charitable giving will be immensely valuable for our clients. She provides real world insight into best practices, proven processes and procedures that can help clients generate success in their donor management programs.

I am very excited to welcome Melanie to our team and look forward to having the opportunity to introduce her to you personally over the next few months. Please find more information on Melanie’s background and experience in the announcement below.

JGA Welcomes Higher Ed Development Professional

(Indianapolis) September 8, 2011 – Johnson, Grossnickle and Associates announced today that Melanie J. Norton has joined the firm as Consultant. Norton will provide philanthropic counsel to JGA’s nonprofit clients to help them maximize their fundraising potential and position themselves for long-term success.

Prior to joining JGA, Norton was the Director of Gift Planning for DePauw University in Greencastle, Indiana. She brings more than 12 years of experience with Planned Gift Giving committees and boards for higher education institutions.

During her work at DePauw, Norton was responsible for the oversight and administration of the $180 million gift planning program. She helped donors navigate the complex legal and financial mechanisms while matching donor giving interests with the institution’s needs to create a mutually positive and effective legacy between donors and the university.

“We are very excited to incorporate Melanie’s skill set into the JGA team,” said Angela White, Senior Consultant and CEO of JGA. “We have been familiar with her work over the years and her notable track record of success. Her proven leadership on volunteer boards and her expertise with prospect strategy and development will provide great insight and counsel for our clients.”

In addition to her four year tenure at DePauw University, she worked for seven years as the Director of Major and Planned Gifts at Franklin College, where she also began her career as Assistant Director of Admissions.

During her career, Norton also spent seven years in the banking industry serving as an Assistant Vice President at Fifth Third Bank in the divisions of Trust and Investment Advisors and Retail Banking.

Norton holds a B.A in Business with a concentration in management from Franklin College. She also holds an M.B.A from the Kelley School of Business. She was recently elected to serve on the national board for the Partnership for Philanthropic Planning (PPP). She is past President and board member of the Planned Giving Group of Indiana and also served on the board of Independent College Advancement Associates.

About JGA

Founded in 1994, Johnson, Grossnickle and Associates provides authentic and strategic philanthropic consulting services to private colleges, seminaries, independent schools and large cultural and community organizations in the central United States. 

by Angela White

I recently recorded a short video interview on why we advocate feasibility studies at JGA. A feasibility study provides vital answers to help an organization create and run a successful fundraising campaign. By conducting a feasibility study, an organization can receive a third party perspective on the organizations upcoming campaign or project.

Here are some questions a good feasibility study should help you answer.

1. How much money can you expect to raise in a capital campaign?
• What are donors willing to do to aid your organization in achieving its goal?
2. Who are your potential volunteer leaders?
• Who might be able to partner with staff to make the campaign a success?
3. What are the perceptions of your organization among your constituents?
• How do donors connect to the leadership of your organization?
4. Are there underlying issues impacting your organization’s potential for success in a campaign?
• What might be out there that could maximize your giving?
• Are there challenges that could cut back on the amount of gifting you are likely to receive?
• Are there issues impacting your constituency of which you need to be aware?
5. What are the broader questions that need to be asked specific to our organization?
• How can we position this campaign to be successful today and set the stage for long term growth?

A feasibility study can be a valuable tool to help develop a thorough understanding of how successful your campaign may be and where you may encounter problems.

But from my perspective, to get at the broader answers about the campaign you need to tailor the approach specifically to the organization.

Through the years, we have recognized that the feasibility studies that yield the most useful information include the following:

• Detailed, custom plan development specifically to meet your organization’s needs, not a cookie cutter approach
• A tailored selection of questions that allows a feasibility study to take into account your organizations history and current situation
• Face to face interviews with clients which yield more insights and build closer relationship to volunteers and donors
• Enough time for a thorough study of the aspects that could impact your campaign, sometimes up to 90 – 120 days
• Go beyond donors and involve committees, staff, volunteers and other constituents important to your success

Taking this extra step to tailor the questions and the approach to your organizations unique needs allows the feasibility study to answer the bigger question of what do you need to be successful not just today in this campaign but to set the stage for long term philanthropic growth.