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Electrifying Results: Fundraising Insights to Move the Needle for Your Nonprofit

JJ Watt Provides Another Fundraising Lesson

If JJ Watt is looking for a career once he retires from the NFL, he may want to consider fundraising. About a year ago he raised just over $40 million (with an original goal of $200,000) for Hurricane Harvey relief. And even if the cynic in you discounts that figure as being a wealthy and influential individual with a lot of wealthy friends that your organization could never duplicate, JJ’s efforts provide another lesson, this time in the area of stewardship.

At the end of August, the JJ Watt Foundation released this report detailing the work they have done with the funds they raised. Short and simple, the report does an outstanding job of giving specifics into the impact of the foundation’s work. Also notable is the recognition of other nonprofit partners who received the majority of the funds. Here, JJ is showing how efficiently the funds were used—not to start completely new programs (that may be duplicative), but to utilize the programmatic expertise of other organizations in the area.

Overall, this report demonstrates elements of a great stewardship piece: 1) A thank you; 2) Examples of the impact donated funds have had, providing as much specificity as possible; and 3) Another thank you. JJ and his team earn bonus for alluding to future plans, which says we’re thinking strategically and are still a smart place for you to invest (without a direct ask). Other nice features include a number of pictures of beneficiaries of the Watt Foundation work, a timeline and a well-written, personal note from JJ. If your donor retention rate isn’t where you want it to be, review your stewardship materials to see where you could bolster your thank you, impact reporting and future funding needs.

Shocking Statistic: The work of the JJ Watt Foundation facilitated distribution of 26 million meals to those affected by Hurricane Harvey.

Ten Reasons to Conduct a Feasibility Study

Feasibility Study

A feasibility study provides invaluable feedback for launching a fundraising campaign, yet many organizations still hesitate to invest in this key early step. So if you happen to be wondering whether your organization should just jump into a campaign without a feasibility study, consider the benefits a study can provide.

  1. Flags areas of concern for key donors or influencers. This allows you to address these concerns prior to the campaign and strengthens support from key individuals or groups. Are there pieces of the campaign that key stakeholders view as nonessential to your mission?
  2. Measure board support. While every board has different financial capacities, it’s important that everyone is supportive of the project and campaign. A study allows board members to share concerns they might not otherwise share in a group setting.
  3. Identify leadership gift prospects. Leadership donors can make or break your campaign. A study should verify whether or not those you suspect of being lead donors are supportive, and allow you to adjust your plans accordingly.
  4. Identify leaders and volunteers. You will need volunteers for a variety of roles during a campaign. Do you have people willing to fill those positions? Who do your stakeholders view as influential leaders?
  5. Check for competing campaigns. Even if it’s not public, perhaps another organization is preparing a campaign of its own. Depending on how much your constituencies overlap, this may affect how much can be raised.
  6. Collect organizational feedback. Is your organization well-known in the community? Do people know what the mission is? Is the leadership known and trusted?
  7. Show you have done your homework. Some donors, especially foundations and businesses, might ask if you have conducted a feasibility study before awarding a grant. They want to know a project they are supporting has a high likelihood of success.
  8. Cultivate potential donors. Potential donors will appreciate that they were engaged and asked for their feedback early in the process, increasing your chances of a gift when the time comes to ask for one.
  9. Gauge internal readiness. Do you have the staff and operational resources necessary to undertake a campaign?
  10. Find out how much can actually be raised. You want a campaign goal that is challenging and bold, but also realistic. A sound feasibility study will take all the above factors into account and give you an honest assessment of how much can ultimately be raised.

Shocking Statistic: Charitable giving has historically risen at about one-third the rate of the stock market (The Foundation Center).

Giving USA 2018 Takeaways

The annual release of the Giving USA report always offers interesting insights into who is giving and what they are giving to each year. While the effects of the new tax legislation didn’t take effect until 2018, the 2017 report offers some glimpses into how donors are responding.

Total Giving Grows—Will it Continue?

The good news from the top line is that total giving totaled $410 billion, topping $400 billion for the first time. As usual, this growth mirrored overall growth in the economy, and hovered around 2 percent of GDP.

In years past, it has been pretty easy to estimate total giving as a percentage of GDP, but this will be a key number to watch in next year’s report. If donors chose to give their 2018 gifts at the end of 2017 to ensure deductibility, or if they forgo giving altogether because they won’t experience a tax benefit, growth in giving may fall off pace with total economic growth.

Mega-Gifts Continue to Pace Giving

Despite raising the amount required to qualify as a “mega-gift” from $200 million to $300 million, these gifts still grew from $1.495 billion in 2016 to $4.1 billion in 2017. Even more telling is that just under $3 billion of that figure came from two households donating to their foundations—Michael Dell and Mark Zuckerberg/Priscilla Chan.

Although the definition of a mega-donor likely differs for your constituency, this underscores the importance of relationship building and engagement with those who are able to make the top-level gifts to your organization.

Growth Across the Board, but Signs of Changes on the Horizon

With the exception of international affairs, every sector saw growth in 2017. Religion remains the largest sector at 31 percent of gifts, but donations to foundations saw the largest growth at 15.5 percent (up to 11 percent of total giving). And as giving to foundations continues to grow, likely spurred by tax-incentives, giving from foundations will continue to increase at a higher pace. This will provide some protection from slow economic cycles, but also keeps a large amount of assets, that could otherwise be put to use by nonprofits, in holding.

The second and third fastest growing sectors were the arts and public society benefit organizations at 8.7 and 7.8 percent respectively. It’s possible growth in these areas was driven by the political climate—donors giving to the arts where public funds are being withheld, as well as the rage giving phenomenon fueling public society benefit organizations. This group also includes donor-advised funds, so chances are good it will show strong growth again for 2018.

More information on the Giving USA 2018 report can be found here.

Giving USA 2018: The Annual Report on Philanthropy for the Year 2017. Researched and written by Indiana University Lilly Family School of Philanthropy. Sponsored by Giving USA Foundation, a public service initiative of The Giving Institute. © 2018 Giving USA Foundation™

Create Hero-Donors with your Fundraising Communications

Create Hero-Donors with your Fundraising CommunicationsWe hear a lot about being donor-centered in fundraising. Typically, it’s in the context of major gifts, emphasizing listening to a donor, uncovering their philanthropic passion and aligning it with a funding opportunity at your organization. While we definitely don’t want to minimize the importance of being donor-centered in major gift solicitations, we challenge you to take a look at donor-centricity through another lens—annual fund appeals and marketing communications.

When writing annual appeals and marketing materials, our first reaction is often to tout how effective our organizations have been at addressing a social issue or how dire the need is for a particular group or service. Both of these are important aspects of creating a case for support, but they are missing a key link—positioning the donor as the hero who makes this important work possible.

Take a look at your past appeals and make a note of every time you mention your organization (or “we”). Now, how many times do you reference your donor, using their names or “you”? Most organizations tend to be heavier on the former. Think about the subtle but important distinction in how a donor interprets “Last year we served 1,000 children in our community” versus “With your support, we were able to serve 1,000 children in our community over the past year.”  The latter empowers the donor, framing him or her as a hero solving a problem.

Donors want the shortest path from their gift to the problem they are trying to address, and our organizations are just the conduit. Talking too much about ourselves, just like in any conversation, can be a turnoff. Whether we admit it or not, we all naturally enjoy being on the receiving end of praise and appreciation.

So next time you’re writing an appeal letter, make a point to brand your donor the hero. Find ways you can interject a simple word—“you”. When donors feel like they are the ones curing disease, educating kids, sheltering the homeless, or creating new and exciting art, they will be more likely to invest in the important work we all do.

Shocking Statistic: In 2018, 39 percent of charities failed to personalize emails with a name, down from 79 percent who failed to do so in 2013 (Dunham+Company).

Don’t Neglect Big Potential in Planned Giving

Don’t Neglect Big Potential in Planned GivingIt’s easy to overlook planned giving. Chances are good that by the time many of the planned gifts you uncover are realized, you will have moved on to another organization (or retirement!). The pressure is on to get dollars in the door now, so that’s where you spend your time. But nonprofits with a strategic, long-term view cannot ignore the planned giving opportunity on the immediate horizon.

In the next 20 years, $30 trillion will be inherited as baby boomers pass their wealth to the next generation.

That’s trillion. With a T. What makes this an even larger opportunity is the fact that only 6 percent of American adults include a charitable bequest in their estate plans, despite an estimated 90 percent who are giving to charity on an annual basis. Closing that gap by even a few percentage points has the potential for tremendous impact on the nonprofit sector.

Building the relationships necessary to secure planned gifts takes time, so if you don’t have a planned giving program, or if it’s been neglected, now is the time to get going. Here’s a few low-cost ideas to implement or revisit:

  • Build relationships with estate planning attorneys and financial planners. These are important gatekeepers in the planned giving process, and being top of mind for them when a client describes their philanthropic intention can be greatly beneficial for both parties.
  • Planned giving can get overwhelming quickly with annuities, trusts and other complicated giving vehicles. The vast majority of gifts will be relatively simple cash gifts from an estate or IRA, so it’s OK to reduce clutter and only focus on those as you start out, or if your resources are limited.
  • Whenever promoting planned giving opportunities, include a specific name and contact info. Would you want to call an 800 number or send an email to an info@ email address to discuss your final wishes?

With an opportunity this large, you can bet other organizations will be having planned giving conversations with your donors if you’re not. So start having the conversations now that could set your organization up for long-term success and sustainability.

Shocking Statistic: 70 percent of Americans do not have up-to-date wills. This stat and others from this post can be explored further in this article from the Stanford Social Innovation Review.

Donors and Dilemmas Post Time’s Up

Donors and Dilemmas Post Time’s UpOver the past year, the public has seen a number of powerful and high profile men brought down by allegations of sexual harassment. The #metoo and Time’s Up campaigns have brought to light issues that haven’t been spoken about for far too long. They will hopefully continue to move the conversation forward and more importantly, bring about real change.

Stepping away from the societal goals of these campaigns, they have also brought to light a question for all nonprofits—how do we react when a donor is accused of sexual harassment or any bad behavior?

The two major issues at hand are: 1) Should you keep the money donated by a disgraced donor; and 2) What should happen to any spaces or programs that are named in recognition of that donor?

The first question is a bit more clear-cut. Unless the money donated was obtained by illegal means, many organizations will choose to keep the gift. After all, why should the beneficiaries of this support suffer for the bad behavior of the donor? Some organizations have chosen to step away from gifts that were committed, but not actually paid yet, likely estimating the probability of actually receiving payments is much lower after accusations arise.

The naming question becomes a bit more difficult. First, it’s important that you have language in your gift policies and agreements that allows your board to review and revoke naming opportunities under certain circumstances. Every situation is likely to provide a different set of facts and issues, but this allows the board to gather the views of key stakeholders and make a decision. There has been a precedent for removing donor recognition. The University of Iowa and the University of Pennsylvania both removed Steve Wynn’s name from programs and spaces after multiple women accused him of sexual harassment.

Hopefully this is an issue your organization never has to deal with, but it’s important to be prepared (review those agreements and polices). Although cases in Hollywood and Washington receive most of the national attention, it certainly doesn’t mean that small towns or organizations are immune.

Shocking Statistic: The Time’s Up Legal Defense Fund has raised over $21 million from over 20,000 donors.

Changes to Google Ad Grants for Nonprofits

Changes to Google Ad Grants for NonprofitsEvery month, Google provides $10,000 worth of advertising to 35,000 nonprofits around the world. Organizations utilize these ads to attract donors and volunteers, and promote advocacy or community events. Recently, however, Google has announced that it will no longer fund organizations that generate clicks on less than 5 percent of their ads. This number is just below the average click through rate of 6 percent for nonprofits.

Another important factor for nonprofits utilizing Google Ad Grants is a maximum $2 cost-per-click (CPC). CPC rates are determined by a bidding process, where more general terms that would be sought after by more companies or organizations are more expensive than specific, targeted keywords. For example, placing an ad for the search “hospital donation” would be more expensive than “Ophthalmology hospital north Peoria donation.”

Meeting these two requirements can be a difficult needle to thread, and choosing the right keywords is critical. This starts with defining a goal for your ad campaign. Is it to drive volunteers, donations, or get people to show up at an event? Once your goal is defined, you can create a list of keywords that will help drive your desired action (some further research may be required here). And once your campaign is live, it will need tending to. Mainly, which keywords are performing well and what are your click through and CPC rates for certain keywords?

The goal here isn’t to scare you away from applying for a Google Ad Grant—they can certainly add value for many organizations, and the risk of trying it out is basically zero. To be effective though, will take some time and commitment. Like with any new initiative, it should be measured in terms of return and availability of resources, especially time!

Shocking Statistic: The average click through rate for nonprofits in February 2018 was 6 percent (Reuters).

The New 80/20 Rule for Fundraising

The New 80/20 Rule for FundraisingIf you work in fundraising, you have likely encountered the adage that 80 percent of your revenue comes from 20 percent of your donors. This is derived from the Pareto Principle, which can be extrapolated to just about anything—80 percent of traffic accidents are caused by 20 percent of drivers, 80 percent of beer is consumed by 20 percent of the population, etc.  Although the numbers may not always be exact, the theory holds that a relatively small audience is responsible for a disproportionate number of the results in many fields.

It turns out fundraising is a prime example of where the Pareto Principle is played out to an even greater extreme. According to data collected from over 7,000 small to mid-size charities by AFP and the Fundraising Effectiveness Project, 89 percent of giving comes from the top 14 percent of donors (those giving $1,000 or more). Taken even a step further, 76 percent of contributions come from the top 4 percent of donors, those giving $5,000 or more.

In short, 14 percent of donors are going to decide if you meet your annual or campaign goals. Don’t assume you know these donors off the top of your head. Some will likely come to mind, but others may fly under the radar. Pull a list to be sure. You should be building personal relationships and figuring out what motivates these donors and what they want to see from your organization.

If you’re looking at a campaign, assessing the feelings of these donors through a feasibility study is an important step. These are the people who will make or break your campaign, and you don’t want to find out they have concerns after you’ve already launched.

One word of caution. The 14 percent of donors who account for 89 percent of your revenue often start their giving as one of the 86 percent who make up 11 percent of your revenue. While it’s not feasible to have a personal relationship with every one of your donors, you do still need to have proper stewardship systems in place that promptly and thoughtfully thank donors and let them know how their gift is used. With proper stewardship, consistent and increasing gifts will help identify and build your pipeline of major donors.

Shocking Statistic: Thirty percent of $1,000+ donors made a first gift of less than $1,000 (Ben Miller, DonorTrends/AFP).

Tax Changes and Giving Trends to Watch in 2018

Tax Changes and Giving Trends to Watch in 2018Much has been written about recent changes to the tax code and how they could affect philanthropy. Many forecast decreases, sometimes in the billions, for charitable giving. There are both positive and negative aspects of the tax bill when it comes to fundraising, and the overall impact will depend on which effects outweigh the others. Here are a few keys to watch:

  • Largest impact on midlevel donors. The largest change to the tax code affecting fundraising is the doubling of the standard deduction. While the deduction for charitable giving remains, the number of people who itemize their taxes, and thus realize the tax benefits of making a donation, is estimated to drop from 30 percent to 5-10 percent. The good news is this likely won’t impact your top-level donors, who will still fall into the 5-10 percent who itemize. It will also have little effect on lower level donors, who will continue to simply take the standard deduction. The largest impact will be felt by those who move from itemizers to taking the standard deduction. Keep an eye on your organization’s gifts falling in the 25th to 75th
  • More volatility in giving. Because of the aforementioned changes to the standard deduction, some donors may choose to concentrate their gifts in one year versus spreading them out over a pledge period. As an example, a donor who wants to make a $50,000 campaign gift may choose to pay the entire gift in one year, itemize their tax return and take the charitable gift deduction in the year the gift is made. Spreading the gift out over five years may not get them to the threshold for itemizing, forcing them to take the standard deduction and thus eliminating the tax benefit of the gift. These changes may also accelerate giving to donor advised funds, encouraging donors to make large contributions to their funds and receiving tax benefits in one year, and simply making distributions from their funds in other years. This effect may create large fluctuations in giving from year to year.
  • Increases in discretionary income. While the decrease in those who itemize their taxes will have some negative effect on charitable giving, it is also estimated that many Americans will see an increase in their take-home pay. Many studies have shown a correlation between discretionary income and charitable giving—how much will donors (and which donors) increase their giving with more dollars in their pocket? Some companies, like Wells Fargo, have also signaled they will increase their philanthropic giving due to the reduction of the corporate tax rate.
  • Changes in the estate tax. One of the less publicized aspects of the new tax plan is the doubling of the estate tax provision (from $5.1 million to $11.2 million for individuals, $22.4 million for couples). This only affects high capacity donors, but is worth discussion as you steward existing estate gifts or ask for new ones

In short, there are pieces of the new tax bill that could both increase and decrease charitable giving. While there seems to be more that would discourage giving, the ultimate question will be how much deductions actually incentivize giving? Although studies have shown this is often relatively low on the list of reasons donors give, the next few years will show how true that actually is.

Shocking Statistic: According to Forbes, the new tax bill will decrease the number of taxable estates from 5,000 to 1,800 in 2018.

Giving Circles and What Donors Want

Giving Circles and What Donors WantAlthough they come in all shapes and sizes, giving circles are broadly defined as a group of people pooling their money and making a donation to a nonprofit organization. According to the Collective Giving Research Group (CGRC), the amount donated by these groups has tripled over the last decade, surpassing $1 billion in grants.

The growth and granting power of giving circles should grab your attention. So should what they might be telling us about what donors want. First, donors want to have a BIG impact. While an individual in a giving circle may only contribute $50 or $100, the group’s gift will be much larger. This shifts a donor’s mindset from thinking their modest gift doesn’t really make a difference, to feeling more like a major donor (with proper acknowledgment, of course).

Second, giving circles show that donors want to see the impact of their gifts. The same CGRC report showed that 84 percent of groups make grants in their local geographic area, preferring smaller, local organizations to larger national groups. This allows often overlooked organizations to take on ambitious projects that otherwise would never get done. And it allows giving circle members to track the progress of their grant—not just formally from the organization itself, but because of the locality it may also be discussed on the news, in board meetings and at holiday parties.

So research what groups may be in your area and find opportunities for impact projects you could pitch to them, based on their typical grant size. And don’t forget that all your donors, no matter the size, want to create big impact and see how their gifts are changing their community for the better.

Finally, from all of us at AMPERAGE Marketing & Fundraising, we wish you and your family, friends and colleagues a happy and joyful holiday season. We look forward to hearing about all the great work your organizations will do in 2018!

Shocking Statistic: Seventy percent of giving circles have a majority of women as members (CGRC).