Effective Frontline Fundraising Part 1

Effective Frontline Fundraising.

A Guide for Non-Profits, Political Candidates, and Advocacy Groups.

by Jeffrey David Stauch.

About the Author.

Jeffrey David Stauch received his BA in political science at Middlebury College and his MA in social sciences at the University of Chicago. He started his career in fundraising in Boston with Gra.s.sroots Campaigns, Inc., and Telefund, Inc. Jeffrey is currently the a.s.sistant director of princ.i.p.al gifts at a small, elite liberal arts college. He is also the volunteer giving officer for Betasab (www.betasab.org), a home for orphaned children in Ethiopia. When not at work, he runs, coaches youth hockey, trains in the martial art of Aikido, and writes creative non-fiction. He has a pet rabbit.

Acknowledgments.

I would like to begin by acknowledging the team at Apress, specifically Jeff Olson and Adam Heath for their guidance and patience while this book came together. Chandra Clarke made us all look good with her expedient and thorough copyediting. Special thanks to Jeff for trusting that we could pull this off in the first place, and for giving me the opportunity to put my thoughts to paper.

I would also like to thank my mentors past and presenta"Lisa, AJ, Hyam, Mama Duck, Stephanie, Matt, Meghan, Mike, and Sue K (twice now!)a"for being generous with their time and wisdom over the years. Much of what is expressed in this book is owed to the lessons that I learned under these very talented fundraisers.

And, of course, thanks to all those donors who support the important work of the nonprofits out there.

Introduction.

There's No Such Thing as Luck.

My first job as a fundraiser was not glorious. I was working for a for-profit company that contracted with progressive nonprofits that had opted to outsource their fundraising operations. While the job was far from glamorous, it was a great training ground, and I was fortunate to meet many people dedicated to what we called internally the movement, or the left-wing conspiracy.

My first year, I was put in charge of directing the street canva.s.sing office in Boston, in the lead-up to the mid-term US elections. Our client at the time, not surprisingly, was the Democratic National Committee (DNC). I worked six to seven days a week, averaging more than 60 hours a week (and oftentimes pus.h.i.+ng 80). Three or four of those days, I was out with my crew, clipboard in hand in a bright blue DNC t-s.h.i.+rt, waving down pedestrians with a smile and a question along the lines of, aDo you have a minute for the Democrats?a or aHave a second to talk about the mid-terms?a The work was grueling, and there were certainly moments when I questioned what I was doing. Back at the office, the saying went: aThe hours are long, and the work is thankless, but at least the pay sucks.a One of the first lessons I learned, direct from the mouth of one of the vice presidents of the company, let's call him Stan, during our week of intense training in Newton, Ma.s.sachusetts, was there's no such thing as luck. It was an interesting thought, and just counterintuitive enough to make all the young, starry-eyed liberals in the room pause for a second to internalize what exactly that meant.

Stan's point was that becoming an effective fundraiser is about developing a skill set, just as in any other job. His conviction proved true first in my job canva.s.sing on the streets of Boston, then down the hall as I grew the call center of the canva.s.sing company's sister organization, and now, at a small college in New England, soliciting six- and seven-figure gifts and coordinating eight-figure solicitations in collaboration with the college administration.

We often get into fundraising by accident; that was certainly the case for me. I was fresh out of graduate school, and I took the first job I was offered. Despite the long hours and lackl.u.s.ter paycheck, I was fortunate to have a solid training program and great supervisors who were goal driven and checked in weekly on how my staff was doing (or more frequently if performance was down). In most of the nonprofit world, this type of diligence and attention to quant.i.tative data, at least with respect to the development shop, is rare.

Granted, this organization was a for-profit, whose sole duty was to raise money for nonprofits. The fact that nonprofits are outsourcing, however, is a sign that they aren't terribly good at doing the development work themselves. This can bring with it a number of problems, especially as an organization first turns toward making its fundraising department a professional ashop.a Many clients that this company brought on were quite large: the American Civil Liberties Union (ACLU), the Sierra Club, Save the Children, the Democratic National Committee. All of these organizations were able to make that investment to outsource significant components of their development operations to a third party.

Smaller, younger nonprofits do not have that luxury. First, you might not have the money to spend to pay the vendor. Second, and more important, it is unlikely that you would be taken on as a client. The company I worked for operates on a profit motive, so it wants to concentrate on clients that already have name recognition, nonprofits readily recognizable to the average pa.s.serby on the street as canva.s.sers like me tried day after day to flag someone down. Name recognition matters. In fact, the company I used to work for is now turning away business. So instead, young, protean nonprofits are left to their own devices when it comes to fundraising.

Even if it were financially viable for your organization to consider outsourcing, I would recommend against it. As you'll read later on, when I discuss messaging in Chapter 7, when you outsource your fundraising operations, you are also sacrificing a certain degree of quality control. You risk your message getting convoluted by a profit incentive as opposed to a sincere dedication to the mission that your nonprofit represents.

This book is intended to guide you through the steps of setting up a professional development shop, to help you come up with ambitious but achievable annual goals, to make you aware of the important behind-the-scenes aspects of the shop that are essential to moving your operations forward, and, of course, to provide you with the necessary tools to solicit gifts ranging from a one-time donation of $25 to a five-year commitment of $1 milliona"or more.

You should walk away from reading this book with the confidence to approach your nonprofit's top decision makers with a strong case for why you need to develop and staff a fundraising shop, and why it is a wise (and necessary) investment in the organization you represent. You should also be able to recruit, train, and manage a top-notch development team; come up with a strong annual plan; craft effective messaging; and follow it up with solid stewards.h.i.+p, which in turn prepares you to resolicit your donor base all over again.

Another lesson, which I learned in my second fundraising post working with a college's aYoung Alumnia program was this: You are not responsible for the outcome of the conversation, but you are responsible for the preparation going into that conversation.

To that end, this book will also teach you how to plan a great fundraising trip, how to provide your prospects with meaningful follow-up, and how to s.h.i.+ne in your face-to-face meetings with prospects small and large. This book will also provide you with lessons on how to solicit by phone and e-mail, which will in turn help you to train volunteers to do so. In short, you will learn how to ensure your organization has an impact on society for decades to come.

Before we get into the details, however, let's first look at philanthropy within the context of the nonprofit world.

Nonprofits, Cash Flow, and Philanthropy.

Fitting the Puzzle Pieces Together.

The aim of this book is to provide you with the tools necessary to expand and improve your nonprofitas fundraising operations. There are many reasons that make the effort worthwhile. Most importantly, more money empowers your organization to do more of what itas designed to do.

What youall learn is that thereas a lot of work that goes into an individual solicitation, whether for $100 or $1,000,000. Preparation and follow-up is a big part of what we do as fundraisers. The actual execution (i.e., the solicitation) is a small, small part of a much larger process.

The Road A head.

This chapter will ease us into the wide, wide world of philanthropy. Iall begin with a broad sketch of nonprofits in the United States and where cash flow and philanthropy intersect. Iall then talk briefly about philanthropy, both in the United States and abroad. Weall end the chapter with a road map and preview of the path that your fundraising shop might follow.

Nonprofits in the US.

The best way to explain how philanthropy fits into the nonprofit world is with an example. One with which Iam most familiar involves my current employer, a small liberal arts college in the heart of New England.

Like almost every college and university in the United States, it has three main sources of revenue. The first and most visible source of revenue is tuition. Every parent of a college-aged child knows about this one, as does every student graduating with thousands of dollars of college debt.

For many small, liberal arts colleges, a full-paying family will spend over $40,000 to send a son or daughter to college for one year. While a hefty price tag, to be sure, this amount does not even cover the entire cost of educating, housing, and feeding a student while at college, plus the costs of extracurricular activities, such as sports, speaking engagements, social events, etc. In many cases, the total cost is closer to $80,000 per year.

So, in the abesta of circ.u.mstances (i.e., when you have a full-paying student), there is still a gap of tens of thousands of dollars between tuition and the actual cost of obtaining an education. Also, since upwards of 40 percent of students receive some sort of financial aid (the average grant at many colleges is about $30,000), the gap between a studentas familyas financial contribution and the cost of educating that student is even greater. Financial aid can represent 15a"20 percent of a top collegeas expenditures, usually second only to what it spends on instruction.

How do such colleges make up the difference between the true cost of education and the tuition charged? Many colleges and universities have endowments that help to alleviate some of the cost. The endowment is invested (in global equities, private equity, alternative a.s.sets, etc.) and grows over time. Small colleges and universities have endowments ranging from hundreds of millions to a few billion dollars (larger universities have endowments in the multi-billion dollar range). An average aspend-ratea for a collegeas endowment is 5 percent,1 and the hope is that the endowment grows at a rate faster than 5 percent. In 2008a"2009, the desired rate of growth was not achieved, which got a lot of inst.i.tutions of higher education into some pretty troubled waters.

__________.

1Inst.i.tutions of higher education are not taxed on these endowments, so long as theyare actually spending the money. Some inst.i.tutions have actually gotten into trouble, or almost gotten into trouble, because their endowments had grown to such proportions that they were only spending 2 percent.

Even with expensive tuitions and large endowments pus.h.i.+ng $1 billion, these elite colleges still rely on philanthropic support in the millions, each year, from alumni, parents, and friends.

Many schools in this category will, for example, raise $15a"20 million each year in expendable support (i.e., money that is spent immediately) and upwards of $20 million in endowed funds each year (i.e., money that is reinvested into the endowment and spent at the 5 percent spend rate).

This financial model is the industry standard for independent, private liberal arts colleges and universities, insofar as there is an industry standard. Some colleges rely more heavily on tuition than others, but philanthropy always plays a role in keeping educational inst.i.tutions afloat.

The college that I represent now, and the nonprofits on whose behalf I canva.s.sed in Boston, are relatively affluent. When I was working as a canva.s.ser in Ma.s.sachusetts, I was under contract with nonprofits that were large enough to outsource their fundraisinga"large in the sense that they had the money to spend on outsourcing and also in the sense that they had name recognition. Some of the nonprofits that my organization represented were ACLU, the Sierra Club, Save the Children, the Democratic National Committee, Amnesty International, Human Rights Campaign, People for the American Way, and even political candidates. There was a time, in the heat of the 2008 presidential elections, that my organization had to turn away business because it did not have enough staff to meet the demand for services.

Some of these very well-recognized nonprofits that outsource certain aspects their fundraising also have in-house operations. Arguably, this ability to invest in fundraising gives these nonprofits a distinct advantage over smaller nonprofits. One of the ways for smaller nonprofits to compete (and survive) is to invest in their own development shops. Outsourcing fundraising operations raises standards concerns and quality-control issues that can be avoided if the fundraising staff is on a nonprofitas payroll.

My own experience observing and managing canva.s.sers that were fundraising for multiple clients at a time revealed several problems. Some of those were tied to pay structure, while other problems arose due to the fact that the canva.s.sers were only indirectly working for the client. A good number of canva.s.sers were there solely for the paycheck, and they lacked devotion to the cause of the nonprofit that they were representing. This problem can be avoided by making the investment to pay professional fundraisers to represent the nonprofits directly.

Whether protecting womenas rights, saving the rainforest, eradicating poverty, or sustaining the local soccer organization, many nonprofits find themselves in similar situations: they are fiscally solvent, but are held back from expanding programming because they are just making ends meet every year. These nonprofits need someone to manage their fundraising programs, so that they can worry about advancing their main goals.

You can bring your nonprofit to new heights if you make the leap of faith that investing in a fundraising shop is a good idea.

Nonprofits Need Cash.

Letas face it: asking for money can make people uncomfortable. Often, when I explain to friends or new acquaintances what I do for a living, the immediate response is aOh, I could never do that!a My initial reaction is aYes, fundraising is not for everyone,a but I think that this mindset is little more than a mental barrier that must be overcome if you want to succeed in the nonprofit world.

Think about it: You asked your parents for an allowance. You negotiated a raise. You negotiated the price of a new car. While not exactly the same thing as asking someone for money to support a nonprofit, the skill set, I would argue, is quite similar. You just have to begin to see it that way.

Sometimes, asking for money makes people feel somewhat ashamed, much like asking for help with something that they should be able to take care of by themselves. This mindset must be abandoned if you are to be an effective fundraiser. This book will help you do just that.

It is also easy to start perceiving money, or those with money, as dirty, impure, and compromising to your mission. This outlook is perilous. Money, like it or not, is critical to your mission. The more quickly you can accept this truth, the more quickly you can set your sights on doing a good job soliciting people for money.

One of the most disarming questions a new fundraiser can face is, ironically, the most basic one. The question can come in many different forms, but usually is something along the lines of the following: Are you asking me for money?

What do you need from me?

Whatas the bottom line?

Weall get to how to respond to questions like these later on, but for now, know that your prospects, particularly the savvy ones, are going to be asking you these kinds of question every day, so you better have good answers at the ready. While that inquiry can sometimes come off as combative or confrontational, it is, in all actuality, an invitation for you to make your pitch.

The overarching point here is that all nonprofitsa"hospitals, womenas shelters, soup kitchens, private (not-for-profit) schools, food shelves, local environmental groups, etc.a"need cash. So do political candidates and advocacy groups. The bad news is that fundraising takes you away from your nonprofitas missiona"unless you devote staffers to the task. The good news is that professional fundraising is a growing industry, meaning that there are more qualified people to hire. The better news is that there are plenty of people out there looking to give their money to your cause.

Wealth: Where Is It?

With an unbecoming frequency, when we think about where thereas money to be had, expendable income to be given away, we turn our sights towards the financial sector, toward Wall Street. There is certainly plenty of money there, make no mistake; however, to stop your search there is to be fatally myopic.

You may not immediately become an expert on wealth and where the money is, but you should at least begin to think creatively about where to look for money. You can start with conventional wisdom, but then be sure to push past it. For example, major gift officers often have working knowledge of the wealthier zip codes in the regions and neighborhoods that they cover. To fail to search beyond those wealth zones, however, can be a costly mistake.

Think, for example, about the recession of 2008a"2009. Almost every sector of the economy got hit. We know that Wall Street got slammed, that real estate wealth plummeted, etc., but not every industry got hit evenly. The artisa.n.a.l chocolate business, for example, continued to thrive throughout the recession. I tell you this fact in an effort to drive home the point that there is always money somewhere, at all times, despite what headlines tell you. It is up to you to put negative messages aside and go bravely in search of the money. Turn over enough stones, and you will find buried treasure.

If you become your own detective, youall soon learn where and how to look for wealth. Sometimes itas obvious; for example, the CEO of a large clothing company that distributes its product internationally. Sometimes, itas more of a surprise: someone inherits the family fortune of a meat-packing dynasty. If you look hard enough and think hard enough, youall be able to find traces of wealth anywhere.

Our consumer-based economy provides you with ample clues. Anytime you go to the supermarket and buy chicken, or soda, or peanut b.u.t.ter, you are building the wealth of a company that put those products on the shelf. Not just the poultry company or the soda company or the peanut b.u.t.ter company, but also the trucking company that transports the goods, the bottling companies that packaged the soda and the peanut b.u.t.ter, and the supermarket itself. There is someone at the top of each of those companies, each one of them with lots of money which they, thanks to our tax code, are incentivized to give away.

When on your search for expendable wealth, one tip that seems simple, but is easy to overlook is never, under any circ.u.mstances, judge a book by its cover. Someone who looks wealthy may not be. It also means that someone who doesnat look wealthy may in fact be sitting on top of a fortune. One of my favorite prospects (as well as one of my most generous) drives a pickup truck and shows up to meetings unshaven in blue jeans and sandals. During those meetings, however, weare having discussions about six- and seven-figure gifts.

Get curious, and engage people on your search. Youall be surprised by how quickly networks begin to overlap and how soon youave stumbled upon someone with a huge family foundation, or at least someone who can write you a check for $2,000. Weall learn later on about the power of having events and engaging volunteers and donors to do your reconnaissance work; but, for now, just understand that there is wealth hidden everywhere and part of your job will be to uncover it.

Philanthropy in the US.

The United States is uncharacteristically philanthropic. American citizens, as a population, simply give away more money than most other nations. There are plenty of historical and political reasons that this is the case. The historical reasons have largely to do with a relatively decentralized system of governance and a populace that was reticent to have the government involved with certain aspects of society. Out of this system rose voluntary a.s.sociations. Alexis de Tocqueville noted as early as the eighteenth century that this phenomenon of voluntary a.s.sociations, of citizens grouping together to change something in society, was distinct from European culture. At the time of Tocquevilleas writing, in France one usually looked to the government to solve certain societal problems. In the United States, however, voluntary a.s.sociations were formed.

Voluntary a.s.sociations were the precursor to what we today call nonprofits. Each one focused on a mission and carried it out with help from volunteers, paid staff members, and, yes, patrons or philanthropists. Much like today, these a.s.sociations had costs, and those costs were offset by dues, sales, and charitable donations.

Not only is there a history of philanthropic behavior in the United States, but charity is also encouraged by the tax code. Charitable giving is rewarded in this country by a generous tax-deduction policy. To give you an idea of just how incentivized charitable giving is, consider the following regulations: in 2011 and 2012, individuals have the ability to give away up to $5 million to recognized nonprofits without paying any gift taxes. In 2013, the amount will revert back to $1 million, unless Congress extends this window, but $1 million is still a pretty significant amount.

Granted, not all gifts are tax-deductible. Gifts to political parties, candidates and Political Action Committees (PACs), or groups that lobby are not. However, the exemptions still leave a good number of organizations that accept tax-deductible donations. Tax deduction is often a big selling point for prospective donors who are on the fence. Many Americans donat enjoy paying taxes, and if they are able instead to give what would be taxed to a cause in which they believe, they will.

A quick word on tax deduction: A nonprofit must apply for tax exempt status with the IRS. If an organization is not registered as a 501(c)(3) organization in the Internal Revenue Code, contributions made to it will not be tax-deductible. You can learn more by visiting the IRSas website: http://www.irs.gov/pub/irs-pdf/p4220.pdf.

To give you an idea of how much Americans give away in a year, letas look at some data from the Giving USA Foundation (www.aafrc.org). In 2010, approximately $291 billion in philanthropic contributions from private sources were made to this organization. All from big foundations, right? Wrong; 73 percent of that was from individuals. Fourteen percent came from foundations, and only 5 percent from corporations (another 8 percent came from bequests). To put $291 billion in perspective, consider that the amount is equal to 2 percent of the United Statesa entire GDP.

The numbers are a bit fuzzier when we get into how many Americans give money each year. Estimates range from 65 percent to 85 percent.2 Either way, thatas a lot of individuals giving money away. At the low range of that estimate, thatas about 195 million people making some type of charitable donationa"thatas the populations of the United Kingdom, Portugal, France, and Spain combined giving something away each yeara"and thatas at the low range of that estimate!