Learning Opportunity – This Friday

Anyone who’s going to be in the Western PA area this Friday, April 27, should seriously consider attending Grant Writing 201: Winning Grants in Southwestern PA with Eric Davis, Owner Procopio Fundraising and Managing Partner, Elliott & Davis, PC. 

Grant seeking in Southwestern Pennsylvania has never been more competitive than today. With information on grant opportunities so broadly available, most grant making foundations and agencies receive hundreds more worthy grant proposals for each funding cycle than they could ever fund. It is critically important that nonprofit organizations to learn how to set themselves apart by preparing winning grant applications.  Give your proposals the competitive edge of a serious grant seeker. If you’re ready to get serious about grant writing, invest a day honing your skills with proven techniques for generating support.

Here are the details on the event.

What Your Nonprofit Can Learn From the “Three Cups of Tea” Scandal

In the early 1920s, America’s faith in the presidency was rattled by something called the “Teapot Dome” scandal, in which President Warren Harding’s administration accepted bribes from the oil industry.

Flash forward to April 2011.  America’s faith in the nonprofit sector is currently in limbo—in something that’s been dubbed the “Three Cups of Tea” scandal.

Author and philanthropist, Greg Mortenson, made waves in the nonprofit sector and media by founding 170 schools in Pakistan and Afghanistan through his Central Asia Institute and documenting his travels and experiences in his popular book Three Cups of Tea.

A recent investigation by 60 Minutes and writer Jon Krakauer revealed that that Mortenson had fabricated parts of his story.  Even worse, 60 Minutes visited 30 of the schools supposedly built by his Central Asia Institute and found half empty or otherwise not receiving support from the Institute.  And according, to a May 5, 2011 article in Slate, additional stories of “ghost schools” have emerged after the program aired.

The scandal has already attracted the attention of Montana’s attorney general (Central Asia Institute is incorporated in Montana).  As Montana Attorney General Steve Bullock said in a statement:  “I’ve been in contact with attorneys for the Institute and they have pledged their full cooperation in addressing our concerns. While looking into this issue, my office will not jump to any conclusions – but we have a responsibility to make sure charitable assets are used for their intended purposes.”

So what are the lessons learned for nonprofits and for donors?

Charity Ratings Aren’t Perfect. 

The Central Asia Institute had garnered high ratings from some large charity websites.  According to the Wall Street Journal, CharityNavigator.org, a ratings website, had previously awarded the Institute four stars (the website’s top rating).  The Institute’s ratings have since dropped and a “donor advisory” has been issued since the scandal broke.

“Like financial markets, ratings are supposed to have a predictive value,” Perla Ni, founder of GreatNonprofits, told the Wall Street Journal. “But we’re still in our infancy. There are going to be scandals in nonprofits, just like any industry.”

The takeaway for donors is obvious—it’s important to look beneath the surface and make an informed decision, based on more than a rating.  Nonprofits should learn not to be content with a high rating but should work to cultivate good donor relations—and base their operations on strong governance, transparency, and accountability. 

Using IRS Filings as PR Tools.

As noted by Guide Star, the IRS’s 990 requirements present an opportunity for organizations to “capitalize on the opportunities created by the increased transparency. If unprepared, they may be unnecessarily subjected to potentially damaging external risks.”   The 990 is no longer merely a tax-exemption compliance measure, but can now be leveraged by organizations as a tool for reaching out to potential donors.  990 forms filed with the IRS are public record, and the recent changes to the 990 requirements gives potential donors greater access to important funding-related considerations such as the organization’s mission statement.  For example, many potential donors might not be aware of an organization’s mission statement, which was previously buried on page three of the 990.  Following the new changes, however, potential donors won’t be able to miss the mission statement, which now appears prominently on page one.

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit www.guidestar.org .  

Consider an Independent Audit.

Self-reported numbers by staff members are obviously not as trustworthy as numbers prepared by an independent audit.  According to an article in the Chronicle of Philanthropy,  “[t]he Central Asia Institute did not have an audit even in 2008 when its net assets exceeded $10 million, it spent more than $5-million, and it generated a surplus of more than $8-million.  The board’s decision to forgo an audit until fiscal 2009, combined with the problem of the small size of the board and the financial self-interest of the charity’s founder and executive director, raise suspicions that it failed to exercise appropriate oversight and might have misused charitable assets.”  While audits are often mandatory for larger organizations, smaller organizations may want to consider retaining an independent firm to conduct an audit, simply for transparency reasons.

It remains to be seen what will come out of this scandal and the investigation to follow.  But the lessons are clear.  Whether your organization is large or small, trust matters.   Although controversies like this one and the Bernie Madoff scandal before it erode the public’s trust in the nonprofit sector, the only way to address this is for organizations to proactively re-earn this trust.

The Billionaires’ Club: The Giving Pledge and What It Means for Your Nonprofit

Looking back at 2010, the biggest story in philanthropy this year was the Giving Pledge, a call to arms by Bill and Melinda Gates and Warren E. Buffett in which America’s wealthiest individuals were asked to give half of their fortunes to charity.

The response has actually been quite impressive—the Pledge has secured commitments from 40 of the wealthiest Americans, totaling some $600 billion.

The Pledge has also sparked a debate about giving from such incredibly wealth individuals and its place in the nonprofit sector.

The purpose of this eBulletin is to provide an overview of this debate and offer some advice as to what nonprofits can expect in the coming months from a fundraising perspective.

According to a November 12 article in the Foundation Center’s Philanthropy News Digest:

“Critics of the pledge include those who are concerned it will only serve as a reminder of the growing concentration of wealth in society, while others, like Pablo Eisenberg, a senior fellow at Georgetown University’s Center for Public and Nonprofit Leadership, question how any additional philanthropic dollars generated by the campaign will be spent. Although Eisenberg acknowledged that the pledge is likely to inspire more giving among the rich and super-rich, he also expressed concern that it would ‘increase the number of mega-foundations, and I worry that will hurt our democracy because of the influence these institutions will exert.’

Despite such criticism, Bill Gates himself is optimistic that the campaign will not only help increase philanthropic giving in the U.S., and around the world, it will also improve the practice of philanthropy and help address income inequality by serving as a tool for the redistribution of wealth in society. ‘We will never be able to measure how much the group gets people to do more giving or do it in a better way,’ Gates told the Times via e-mail. ‘However, I think the impact is likely to be quite positive.’”

OK, maybe your nonprofit is not first in line when Bill Gates opens up his wallet.   Don’t worry—you’re not alone.  If your organization is like many other small-mid-sized nonprofits, you rely on support from regional foundations, from government, and from individuals whose means are a bit more modest than Gates, Buffett, et al (and, really, whose aren’t?)

What should all of this mean to you?   What can your organization expect in the months to come?

First, the Pledge should be welcomed—not only for the money it will generate directly—but also for the ripple-effect it is likely to have.   For instance, as the New York Times reports, Marc Benioff, the billionaire founder of SalesForce.com, was not asked to sign the pledge, but he was inspired by the pledge and has made a $100 million gift to the Children’s Hospital at the University of California, San Francisco.

Second, there are a couple of reasons why you should be optimistic during the next few months, as well as in the year ahead.    Charitable contributions generally increase around this time of year.  This is because individual donors often feel more charitable during the holiday season and will often substitute a present under the tree for a donation to a favorite charity, and also because an end-of-year charitable contribution is an added bonus in terms of tax deductions.    In broader terms, if you look back at the Great Depression of the 1930s and other economic recessions, you will see that, when times are tough, the nonprofit sector has historically risen to the occasion and helped those in need.  According to a 2005 paper from the National Bureau of Economic Research, charitable giving by religious organizations appears to have risen during the Great Depression.

Please feel free to contact Elliott & Davis, PC with all of your questions about nonprofit law.

Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at: www.elliott-davis.com.

More Advice for Nonprofits Struggling in the Tough Economy

It’s no secret that the current economic recession is hitting nonprofit organizations particularly hard.  So what does this mean for your organization?  If you’re still plodding away with the same fundraising plan you’ve used for years, it’s time to stop and revisit your methods and expectations in light of the current financial reality.

Strategically allocate your resources. With so many cutbacks, it will be more difficult to find new sources of funding until market conditions improve.  Rather than directing resources towards a new campaign with a limited likelihood of success, consider dedicating some of your staff time towards the cultivation of existing relationships with funding sources and strategic planning within your organization to develop the strongest possible case for support.

Do your homework. Make sure you’ve fulfilled all the requirements for any grant funds you’ve already received, so you don’t inadvertently take your organization out of future funding streams.  Check websites and other publicly available information to make sure that a potential funder’s programs and priorities haven’t changed.  You don’t want to spend hours preparing an application only to find that the funder suspended giving for the year.  A more limited number of well-researched requests will likely bring in more returns than a form letter sent to every funding source you can find.

Check the accuracy of your information. Make any needed adjustments to your budgets and narratives as a result of changing market conditions, and make sure that the underlying basis for your requests is still relevant.  For example, if your narrative refers to the “skyrocketing cost of transportation” when gas prices have fallen significantly, funders may question the truth of your statements.  If changes in finances impact your use of grant funds, (for example, you received a $1,000 grant to purchase heating oil but only used $800, you received funds to offer 6 sessions of a program, but were only able to offer 4 sessions) you need to communicate the changes to the funder as soon as you are aware of the changes, and may need to return the surplus.  You cannot use leftover funds designated for a specific purpose for your other needs without the prior permission of the grantor.

Choose your requests wisely. The program most in need of funds in your organization may not be the one most likely to attract funding.  When prioritizing grant requests, ask yourself if securing funds for the “fundable” program would free up funds in your budget for the “not-so-fundable” program, giving you the same bottom-line effect.  Targeted program requests, as a rule, are generally more successful than requests for general operating funds.  However, as mentioned above, you cannot request funds for one program and then use those funds for another program.

Give the most bang for the buck. Provide specific examples of what your funding source would get for their money, and if you can, show how their funds will allow you to achieve greater returns.  For example, if you can say that for each dollar spent on administrative costs, you are able to distribute $50 in donated food to the homeless, $30 in free medical services, to reach 40 children through educational programs, etc., you’re demonstrating value to your funder.  Avoid making requests for recurring expenses if you could focus instead on a specific, one-time investment in capacity for your organization that would produce long term savings, such as purchasing a color printer to save on printer’s fees for producing your monthly newsletter, or obtaining a specific certification for your staff that would allow you to expand a program.

Cut costs-legally. You may find that it is more cost efficient to outsource certain aspects of your fundraising efforts such as grantwriting.  Remember that charitable fundraising is highly regulated in Pennsylvania (and most other states), and that any actions you take must comply with all applicable laws.  Also keep in mind that employment laws relating to independent contractors can be tricky and may have long term consequences for your organization.  Craigslist and other job sites are full of ads for grantwriters and fundraising staff that raise significant legal and ethical questions.  A consultation with an attorney experienced in these matters will ensure that your organization’s money-saving efforts are legal.

Innovation in a Tough Economy: Hope for the Nonprofit Sector

There’s been a lot of talk over the last year about the impacts of the current recession on the nonprofit sector, and I’ll be the first to admit that I’ve chimed in from time to time with my two cents through this eBulletin.  A great deal of this conversation has taken a “how to do more with less” approach to the current situation.  And although this conversation offers a lot of valuable lessons that nonprofits can use to help stay afloat in the current economy, it only tells part of the story.

As many nonprofits know, the picture is much more dynamic.  At the same time private foundations and governments are being forced to tighten their belts, the rough economy has, quite noticeably, created an increase in demand for certain services offered by nonprofits.  This increase in demand opens up new channels of charitable giving that may not have been open prior to the recession.  Whether it’s an individual donor who feels inspired to help neighbors who are forced to get by on less, or a corporate charitable giving program that steps up its philanthropic efforts in response to a tragedy, someone is making sure that these newfound needs do not go unmet.

The “how to do more with less” story also overlooks the fact that there is light at the end of the tunnel.  The current recession will not last forever, and it’s important to focus on the broader picture of how we are going to transition out of this recession and what the new landscape will look like for you and your organization.   The purpose of this Nonprofit Law eBulletin is to highlight some examples of opportunities and strategies that will help your organization thrive in both the short run and the long run.

Recession Rule Number One: Adaptation is Everything

It may seem as though grant money—whether through private foundations or through government support—is simply becoming increasingly scarce.   This is not entirely true.  Although some sources of funding are shrinking overall, many others are just reevaluating their grant making strategies in light of society’s changing needs.   We have recently seen many foundations emphasize funding to meet basic needs in light of the recession.

But let’s say your organization does not run a soup kitchen or a homeless shelter.  How do you compete for grants when foundations are shifting their attention to providing basic needs to those struggling in the current economy?

One solution might be to re-frame your organization mission in light of recent social and economic changes.  Take the field of animal advocacy, for instance.  With more grant money going to meet basic human needs—food, shelter, health care, etc.—it may seem increasingly difficult for an animal advocacy group to secure much needed funding.  But organizations such as Foreclosurepets.org have found a way to bridge the gap between helping animals find homes and helping people faced with economic uncertainty.  The website serves as an online forum where people facing foreclosure can find a home for their pet.

Even if your organization’s programming doesn’t have a direct link to the effects of the recession and its economic effects, there are still opportunities for you to tap into other pressing social needs such as the access to health care and environmental sustainability.  The bottom line is to find a way to meet society’s most urgent needs through your organization’s activities—a strategy that not only help you do more good for the communities you serve but will also open you up to more funding opportunities.

A Lesson in History

If you look back at the Great Depression of the 1930s and other economic recessions, you will see two very promising patterns that should offer encouragement not only for the nonprofit sector, but for the economy as a whole.

First, and most directly, there is the simple fact that when times are tough, the nonprofit sector has historically risen to the occasion and helped those in need.  According to a 2005 paper from the National Bureau of Economic Research, charitable giving by religious organizations appears to have risen during the Great Depression.

Second, research suggests that there is generally more innovation during recessions, which can be seen in an increase in startup companies.   According to a 2009 paper from Ewing Marion Kauffman Foundation, about half of future Fortune 500 companies were founded during a recession.  This historical fact not only suggests a brighter future for the economy in general ; it’s also a sign that we are likely to see increased innovation in the nonprofit sector as well.

The Way Forward?  It’s Innovation

When Bill Gates talks, people listen.  And for good reason: he has run one of the most successful technology companies and currently serves as co-chair at one of one of the largest private foundations.  The Microsoft founder and Co-Chair of the Bill & Melinda Gates Foundation recently issued his second annual letter.   In the letter, Gates argues that innovation argues that investments in science and technology are essential to achieving a wide variety of charitable ends ranging from global health to public education.  Gates argues that, in order to make private donations and government aid (both of which are often limited) more effective, we need to encourage new innovations and technologies that will facilitate the daily operations of nonprofit organizations.

How to Cope with the Struggling Economy by Embracing Trends within the Nonprofit Sector

Despite some recent positive signs, it’s no secret that the economy is still in bad shape.  It’s also no secret that the current economic recession has taken its toll on charitable foundations and nonprofit organizations.  The purpose of this post is to share with you some recent trends in the nonprofit sector that may represent valuable opportunities which could help your organization avoid feeling the effects of the recession.

Social Networking

Everyone is talking about it—but how can nonprofits make use of social networking in carrying out their charitable purpose?  Here’s one example.  A new video sharing site launched this month, called World Flix, is using the power of online video to bring personal messages from places like Uganda and Haiti directly to the laptops of prospective donors.   Donors can browse video messages, viewing messages and making donations in just a few clicks.  World Flix’s founder, Laika Grant Mann , is excited about the prospect of using online video sharing as a fundraising tool.  As Mann told the San Jose Mercury News, “[…]by bringing together video clips, grassroots organizations and online donor pools, World Flix can be the means to changing the world through micro grants one video clip at a time.”

So which social networking tools should you use?   The answer depends largely on your organization’s mission.  If your message contains strong visual components, online video sharing sites such as YouTube would make be a good fit.  If you are concerned with expanding your range of contacts, consider using Facebook or LinkedIn.  If your organization wants to provide regular updates to others, a blog or a Twitter account would help you achieve this.

Which tools are members of the nonprofit community currently using?  The nonprofit resource group, idealist.org, recently published results from its survey of idealist.org users’ social media habits.  The survey found that 27% of respondents were on Twitter, and 21% were on MySpace.  55% of respondents actively post to these networks, compared with 44% who were passive observers.  Between 51% and 48% of respondents indicated that they read blogs.

Cause Related Marketing

Chances are, if you don’t own a Livestrong® bracelet or a (RED)™ branded product, you know someone who does.  Cause related marketing continues to grow in popularity and is showing no signs of slowing down.  According to a report from IEG, a company specializing in sponsorships, North American companies are expected to spend a total of $1.55 billion on cause-related partnerships in 2009.  This amount represents a 2.2 percent increase from 2008.

In the current recession, cause related marketing could be especially beneficial to basic need charities.  According to a recent article in the Philanthropy Journal, basic need charities such as Share our Strength, an anti-hunger group, have had particular success with cause marketing.  Share our Strength has seen its cause-related revenue jump 15 percent through partnerships with companies such as AT&T and Hickory Farms.

Cause related marketing is a great way to boost your organization’s revenue by reaching out to charitable consumers in a way that resonates with them.  How can your organization take advantage of cause related marketing?  You can start by taking a look at the Foundation Center’s introduction to cause related marketing, which is full of valuable information and resources.

Micro Giving

When it comes to fundraising, many nonprofits tend to “think big,” pursuing large grants from private foundations and governments.  Recently, however, there’s been a trend toward “thinking small.”  This small-scale “micro giving” takes a couple of forms.

First, many nonprofits are forging strategic partnerships with retailers that allow the retailer’s customers to make very small donations to the nonprofit in a convenient manner.  For example, Petco, the large pet supply chain, created a program that encouraged customers are able to “round up” their purchase to the nearest whole dollar.   All proceeds from the program went to local spay/neuter focused animal welfare organizations.

Other nonprofits are partnering with social networks such as Facebook that enable users of the social networks to make small donations online to a charity of their choice.  Facebook allows users to give online “gifts” to one another, with the majority of the nominal fee, often around $1.00, going to the selected charity.

Although a July 14 info graphic in the Economist observed the good news that charitable giving among wealthy individuals has not been hurt by the recession, if your organization is like most organizations, not all of your donors are wealthy.  Micro giving provides an extraordinary tool for reaching out to these donors where giving is convenient and affordable to them.

Conclusion

Despite the tough economic times, it is clear that there are still a variety of opportunities for your organization to generate more revenue and expand your capacity.  Which of these trends holds the most opportunity for your organization?  The answer depends on many factors, including your organization’s needs, goals, and expertise.  As always, we are happy to consult with you about any questions you might have.

How to Locate Opportunities for Your Nonprofit During the Holiday Season and in the New Year

With the holiday season just weeks away and 2009 drawing to a close, now is a perfect time for your organization to look back on the past year and to focus on opportunities during the upcoming holiday season as well as those in the year ahead.

A Tough Year

There’s no hiding the fact that 2009 was a hard year for nonprofits.  The Chronicle of Philanthropy is reporting that the nation’s 400 largest charities predict a 9% decline in total donations given this year.  The Foundation Center is estimating that the decline in charitable giving will be closer to 10%, based a recent survey with 600 respondents.

Hope for the Holidays?

Many nonprofits have come to count on increased giving during the holiday season.  After a year as tough as this one was for the nonprofit community, the need for increased giving this holiday season couldn’t be greater.

There are two basic reasons why charitable contributions generally increase around this time of year.  First, individual donors often feel more charitable during the holiday season and will often substitute a present under the tree for a donation to a favorite charity.  Second, for many people, an end-of-year charitable contribution is an added bonus in terms of tax deductions.   Regardless of their reasons, donors have generally stepped up during the holiday season.  So what can we expect this year?

When you say the words “holiday giving” perhaps the first thing that comes to mind is Santa Claus standing alongside one of the Salvation Army’s red kettle.  According to a recent article in USA Today, recent news of falling consumer spending has Salvation Army worried, as the organization’s holiday donations efforts depend heavily on foot traffic at shopping malls.

So if potential donors aren’t coming out to the malls, where can you find them?   One answer might be to look online.  For example, the Network for Good, a nonprofit organization that provide online fundraising services, is expecting to process a total of $32.5 million in donations this December, a number that would mark a 30% increase from last year.

Although giving might be down in some areas this holiday season, the good news for your organization is that there are positive indicators in other areas.  The most important thing for your organization is to focus on your mission and—if possible—relate your funding needs to the current state of the economy.

What to Expect in 2010 (and beyond)

It might take a while for charitable giving to return to previous levels, but, rather than focusing on the negative, we think that it is worthwhile to look ahead and map out some possible trends in charitable giving.

In a recent article for the Wall Street Journal, Pablo Eisenberg of the Center for Public and Nonprofit Leadership at Georgetown examines the state of charitable giving and offers some suggestions for how to solve the problems we are currently facing.  Eisenberg’s suggestions are interesting and highlight some possible trends that are worth noting.  Some of Eisenberg’ suggestions include:

• More general operating support. Eisenberg estimates that only 20% of foundation grant money is allocated to general operating support.  Eisenberg argues that an increase in general operating support would allow nonprofits to “hire and maintain quality staff, conduct advocacy activities, build organizational capacity, participate in coalitions and retain the flexibility to pursue targets of opportunity.”   Although many foundations still prefer to make project-specific grants, a move toward more general operating support would be welcome news to many nonprofits.

• More multiyear funding. Eisenberg notes that most foundations are comfortable with shorter grants of one or two years.  He argues that lengthier grants of five, 10, or even 20 years would be beneficial—especially to policy and advocacy groups.

• More rolling grant making. Many foundation boards meet only twice a year and limit their giving to times when the board is meeting.  Eisenberg argues that foundations should be more flexible, making grant money available throughout the year.  The good news for your organization is that there are a number of foundations in Pennsylvania with rolling grant cycles.

• More funding to the truly needy and underserved populations. In a tough economy, demand is at an all-time high for health and human services, education, disaster relief, and various other programming that reaches out to at-risk and underserved populations.  If foundations recognize the increasing demand for these services in the coming year, it presents an excellent funding opportunity for nonprofits engaged in these sorts of services.

Conclusion:  Be Patient and Keep Thinking Outside of the Box

Many nonprofits are familiar with the common grant writing wisdom that says that user fees are a good way to show donors that the nonprofit is doing its part to offset operating costs.   The idea behind this is that it shows donors that the nonprofit is not relying too heavily on foundation grants.

But sometimes common wisdom needs to be challenged.  The Chrysler Museum of Art in Norfolk, Va. did exactly that.  According to another recent Wall Street Journal article, the museum recently decided to ask four of its largest donors to help the eliminate its $7 general-admission fee.   The museum suggested that it needed to eliminate the admission fee because many families could no longer afford it in the current recession. The donors responded favorably, contributing roughly $150,000, and the museum was able to eliminate the fee.   And it has paid off.  According to the article, “[w]hen free admission became effective in September, attendance was three times greater during the first week than during the same period in 2008.”

Creative thinking such as this is a great way for your organization to distinguish itself in the current recession.

Always Say “Please” and “Thank You”: How Your Organization Can Use Donor Recognition Strategies to Maximize Fundraising Opportunities

With so much to focus on during a fundraising campaign, donor recognition can easily be overlooked.   However, a sound donor recognition strategy can create valuable fundraising opportunities in both the short-term and the long-term.

Recognition Pays Off

Everyone likes to be recognized.  Some recent anecdotes and research from the nonprofit sector help underscore just how valuable donor recognition can be.   Here are just a few examples.

A September 15 article in the Nonprofit Times highlights how personalized donor recognition can provide a much-needed boost a fundraising campaign.  The article cites the example of KCSM, a community jazz radio station in the San Francisco Bay Area.  As part of a fundraising campaign, KCSM targeted lapsed members, offering them a chance to renew their membership in exchange for a personalized gift.  For their donation of $80 (twice the amount of an ordinary donation), donors were given a KCSM T-shirt with their name on the back, along with the names of jazz legends like Miles Davis, Charlie Parker and Duke Ellington.

According to the Nonprofit Times article, “[t]he Legends of Jazz campaign raised $42,400 from 577 donors, with 200 donors giving at least $80, for a response rate of almost 6.5 percent. The average gift was more than $100 and the campaign’s overall Return On Investment (ROI) was 204 percent.”

The article also cites a study by M+R Strategic Services in Washington, D.C., which tested the effects of gifts or premiums to prospective donors.  The survey focused on donors to the following organizations: Easter Seals, Human Rights Campaign, Save Darfur Coalition and The Wilderness Society.  The premiums that were given out included scarves, calendars, T-shirts and blankets.

The M+R study found that donor recognition in the form of gifts and premiums had a strong correlation with overall giving.  When a premium was offered, response rates increased by 95 percent and the average gift increased by 37 percent.  Even when the cost of the gift or premium was taken into account, the nonprofit was still better off.  Three of the four nonprofits in the survey netted more when premiums were offered, and overall net dollars per recipient were 51 percent greater when a premium was offered.

Possible Recognition Strategies

So what are some donor recognition strategies your organization can use?  Other than the sort of gift and premium ideas discussed earlier, the following are some good, general strategies that will help you ensure that your donors get the recognition they deserve:

1.       Tell your story. Your donors want to know exactly where their money is going.  Put yourself in a donor’s shoes for a minute.  Whether you’re a public radio supporter giving $50 in a telethon or a large foundation offering a sizable grant, you want to make sure that your contribution is being used for its intended purpose.  When it comes to donor recognition, job number one is to tell your donors about all of the good things you are doing thanks to them.   In addition to the traditional thank you letter, you might want to consider phone calls, email updates, sending pictures of your projects and programs, and even using social media such as a blog to reach out to donors in a relevant, timely manner.

2.       Keep track of the details and be transparent. In today’s post-Enron, post-Bernard Madoff business culture, trust and credibility are more important than ever.  The best way to build trust with donors is to be meticulous about budgets, statistics, and other details and then to share this information with your donors and, where relevant, with the public.  It’s a great way not only to quantify and highlight the impact you are making but also to set yourself apart as an efficient and trustworthy organization.

3.       Recognize loyalty. If your organization conducts ongoing fundraising campaigns, take a look at the number of years each donor has been making contributions.  You should consider developing a recognition program based on the number of years a donor has contributed to your organization.  A loyal donor who makes small contributions now may one day be in position where they can make a much larger donation.  The only way to ensure that their largesse benefits your organization is to recognize their loyalty at the present moment.

4.       Stay in touch. It should go without saying that regular contact is one of the most important aspects of donor recognition.  You shouldn’t wait until the next fundraising cycle to contact your donors.  Invite past donors and potential donors alike to tour your facilities or attend your programs and events.  Your board members and staff should recognize the importance of networking, and that it’s just as important in the nonprofit sector as it is in the for-profit sector.

Your Contribution –Satisfaction Guaranteed?

If you buy a blender and it doesn’t work, you expect to be able to take it to the store where you bought it and get your money back.  But what if you’re a donor and are unhappy with a contribution you made?

Donor recognition and satisfaction are so important that one organization, Global Giving, has taken their donor satisfaction strategy  a step further and is actually offering a “money back” guarantee similar to one you would find at a retail store.  According to the “Global Giving Guaranteed” page on the organization’s website:

“Any donor who makes an online contribution at GlobalGiving.com and is not satisfied with their giving experience may invoke the guarantee by phone or email. Subsequently GlobalGiving will refund the donation in the form of a gift certificate equal to the value of the original donation, which the donor can contribute to a different project on the site. The Guarantee can be activated at any time within a year after the original donation has been made, up to $10,000 per year, per donor.”

(Interestingly, Global Giving cannot return gifts in cash but must instead use gift certificates because IRS Rules prevent 501(c)(3)organizations from giving charitable donations back in cash.)

We recognize that Global Giving’s strategy is a radical one and probably doesn’t make sense for most nonprofit organizations.  We only mention it because we think it’s a great example of just how important donor recognition and satisfaction really are—especially in today’s economy.

Conclusion

In a highly-competitive fundraising environment, you need to do everything to make sure your donors are satisfied with their contributions and feel that they have been adequately honored and recognized.  If you take the time and apply some of the basic principles discussed in this post, you will hopefully start to see the positive impact that successful donor recognition strategies can have on a fundraising campaign.

What Pennsylvania’s New Budget Means for Your Nonprofit

Welcome to Pennsylvania Nonprofit Law Blog!  We hope that this blog will serve as a resource that nonprofit organizations can use to become informed about the legal and financial issues that affect their daily operations.

We’re glad you found us, and we hope you will keep checking back for more updates!

The purpose of this, our first post, is to highlight some of the impacts the recent state budget might have for your organization and to offer some suggestions and strategies that you can use to weather this time of reduced government support.

Government support is drying up

After a grueling 101-day impasse during which a dieting Governor Ed Rendell was able to lose 50 pounds, the Pennsylvania Legislature has finally approved its budget for the 2009-10 fiscal year.  The new budget, which contains extensive cuts in a number of areas, was signed into law by Gov. Rendell on October 9.

Although the new budget was certainly a relief for many organizations who had long been waiting for much-needed funding, there is no hiding the fact that there is a lot less money to go around.   Given the $3 billion shortfall state lawmakers were facing, it’s no surprise that the recently-approved budget contains numerous cuts.  Unfortunately, many of these cuts hit close to home for the nonprofit community.

According to a statement on the Pennsylvania Association of Nonprofit Organizations (PANO) website: “Thousands of nonprofits servicing state and county contracts and grants laid-off staff, cut services or closed their doors.  Children, the elderly and people with special needs lost vital services, and precious time.  Nonprofits must still receive payment from the state or counties, restore their infrastructure, pay back their loans – with interest, and rebuild shattered lives.”

Here are a few specific examples of cuts that may have an impact on the nonprofit community:

The Arts: The Pennsylvania Council on the Arts, which saw its funding decrease by 20.32%     under the new budget, has recently announced that the 2009 Governor’s Awards for the Arts is being postponed until the spring of 2010.

Economic Development: The new budget cuts all funding to Community Revitalization and Urban Development, meaning that these two budget items that received appropriations of $39,550,000 and $18,750,000, respectively during the last fiscal year, are now receiving $0.

Health Care: Under the new budget, funding to Health items decreased from $273 million to roughly $240 million, a decrease of 12.10%.  Some specific areas among the hardest hit were: Organ Donation Awareness (51.46% decrease), Cancer Control Programs (56.72% decrease), and Burn Foundation (52.06% decrease).

How to make less equal more

With this ominous cloud of reduced government support hanging overhead, it may be hard to believe that there is a silver lining anywhere in sight.  By now, we have all heard enough bad news about—or, even worse, experienced firsthand—the fact that many foundations and other private sources of funding also have less money to give as a result of the recession.

It is our goal, however, to share with you some strategies you can use to maximize fundraising opportunities for your organization—regardless of what’s happening in Harrisburg.

Diversify your sources of funding. Chances are, if your organization is among those hit hard by the current lack of state funding, you are faced with an incredible opportunity to discover new sources of support.  Nonprofits that are accustomed to substantial levels of government support may not have a great deal of experience locating and requesting support from private foundations.   If your organization fits this description, the good news for you is that the funding you need is out there, but it may just take some work to find it.

Accelerate your fundraising campaign. With the recent budget cuts on everyone’s minds, there is no better time than now to reach out to private foundations.  If your organization faces a loss of government support, private foundations and institutions with the power to help your organization are likely to be more sensitive to your situation—especially if you make it clear to them exactly how the climate of reduced government support has affected your organization.

Focus on your mission. We are all well aware of the fact that not every private foundation is brimming with cash, ready to hand it out to anyone who asks.  So how can your organization ensure that it locates the foundations that are likely to be funding partners?  The answer is simple:  keep doing what you’re doing.  In the current recession, there is an increased demand for many services provided by nonprofit organizations.   This fact is clear to everyone—especially those in the foundation community.   The bottom line is that grant makers want to know that their money is making a difference in people’s lives.  If you bring your attention back to your organization’s mission and use it to re-focus your fundraising efforts, you will likely receive more attention from potential grant makers.

They finally did it.  After a grueling 101-day impasse during which a dieting Governor Ed Rendell was able to lose 50 pounds, the Pennsylvania Legislature has finally approved its budget for the 2009-10 fiscal year.  The new budget, which contains extensive cuts in a number of areas, was signed into law by Gov. Rendell on October 9.

The purpose of this Nonprofit Law eBulletin is to highlight some of the impacts the recent state budget might have for your organization and to offer some suggestions and strategies that you can use to weather this time of reduced government support.

Government support is drying up

According to an October 13 article in The Pittsburgh Post-Gazette, State Treasurer Rob McCord’s office began sending out long-overdue checks early this week, with at least 100 Treasury employees working through the holiday weekend in order get payments out on time.

Although the new budget and the issuance of checks is certainly a relief for many organizations who have long been waiting for much-needed funding, there is no hiding the fact that there is a lot less money to go around.   Given the $3 billion shortfall state lawmakers were facing, it’s no surprise that the recently-approved budget contains numerous cuts.  Unfortunately, many of these cuts hit close to home for the nonprofit community.

According to a statement on the Pennsylvania Association of Nonprofit Organizations (PANO) website: “Thousands of nonprofits servicing state and county contracts and grants laid-off staff, cut services or closed their doors.  Children, the elderly and people with special needs lost vital services, and precious time.  Nonprofits must still receive payment from the state or counties, restore their infrastructure, pay back their loans – with interest, and rebuild shattered lives.”

Here are a few specific examples of cuts that may have an impact on the nonprofit community:

The Arts: The Pennsylvania Council on the Arts, which saw its funding decrease by 20.32%           under the new budget, has recently announced that the 2009 Governor’s Awards for the Arts is              being postponed until the spring of 2010.

Economic Development: The new budget cuts all funding to Community Revitalization and         Urban                 Development, meaning that these two budget items that received appropriations of     $39,550,000 and $18,750,000, respectively during the last fiscal year, are now receiving $0.

Health Care: Under the new budget, funding to Health items decreased from $273 million to    roughly $240 million, a decrease of 12.10%.  Some specific areas among the hardest hit were:               Organ Donation Awareness (51.46% decrease), Cancer Control Programs (56.72% decrease), and       Burn Foundation (52.06% decrease).

How to make less equal more..

With this ominous cloud of reduced government support hanging overhead, it may be hard to believe that there is a silver lining anywhere in sight.  By now, we have all heard enough bad news about—or, even worse, experienced firsthand—the fact that many foundations and other private sources of funding also have less money to give as a result of the recession.

It is our goal, however, to share with you some strategies you can use to maximize fundraising opportunities for your organization—regardless of what’s happening in Harrisburg.

Diversify your sources of funding. Chances are, if your organization is among those hit hard by the current lack of state funding, you are faced with an incredible opportunity to discover new sources of support.  Nonprofits that are accustomed to substantial levels of government support may not have a great deal of experience locating and requesting support from private foundations.   If your organization fits this description, the good news for you is that the funding you need is out there, but it may just take some work to find it.

Accelerate your fundraising campaign. With the recent budget cuts on everyone’s minds, there is no better time than now to reach out to private foundations.  If your organization faces a loss of government support, private foundations and institutions with the power to help your organization are likely to be more sensitive to your situation—especially if you make it clear to them exactly how the climate of reduced government support has affected your organization.

Focus on your mission. We are all well aware of the fact that not every private foundation is brimming with cash, ready to hand it out to anyone who asks.  So how can your organization ensure that it locates the foundations that are likely to be funding partners?  The answer is simple:  keep doing what you’re doing.  In the current recession, there is an increased demand for many services provided by nonprofit organizations.   This fact is clear to everyone—especially those in the foundation community.   The bottom line is that grant makers want to know that their money is making a difference in people’s lives.  If you bring your attention back to your organization’s mission and use it to re-focus your fundraising efforts, you will likely receive more attention from potential grant makers.