Specifically, he said: “We must get people to stop asking what percentage of their donation goes to a cause.. and give nonprofits more freedom to spend their money on things demonized as overhead, so they have some hope of reaching a fraction of the scale of the social problems they are trying to confront.” He advocated that we stop using the word overhead, that donors stop asking questions about overhead, and that we throw out the watchdogs and build “a magnificent national assessment apparatus.”

Then there was the release of two studies at the conference that also called into question the work of watchdogs, saying their ratings “may be causing more confusion than clarity.” The reports were “Reframing the Discussion about Nonprofit Effectiveness,” and “Charity Rating Scales: The Challenge of Developing ‘Effective’ Measures of Nonprofit Organizational Effectiveness,” both available via the DMANF. The studies say the ratings affect donations, with watchdog approval leading to donor money. This is a problem, the thinking goes, because the ratings only measure how much money a nonprofit spends on “overhead” rather than how effective that charity may be. The DMANF said the first report concluded:

Those who want to learn about a nonprofit prior to making a financial contribution not rely on watchdog websites as “one-stop shops” for information, but to do “old-fashioned” research about a charity’s operations and programs to help make a more fully informed decision.

Hmmm…. I’m not sure what “old fashioned research” involves, but I can say it is unlikely to happen. It seems to me this whole watchdog-bashing is long on criticism but short on solutions. I love the idea of a magnificent national assessment apparatus, but that is a very, very long way away. In the meantime, what are donors to do? And what are we nonprofits to do?

Let’s review. Here’s the anti-watchdog position: Overhead doesn’t tell the full story about a nonprofit’s work. Therefore, it is bad. Kill the watchdogs. Donors should set out to do their own in-depth research on a nonprofit’s effectiveness - or we should await the magnificent national assessment apparatus.

Here’s what I like about that argument: Yes, overhead is only one limited criteria and the CEO’s salary doesn’t really tell you how many lives get saved by a charity. I agree with Pallotta that paying for talent is not bad, and fundraising is a necessary expense. And yes, it’s a shame that overhead is the only quick way to compare charities.

Here’s what I don’t like about what I heard: That anyone in their right mind thinks the solution is for donors to do “old-fashioned research,” taking time to go try to figure out which nonprofits are effective with in-depth analysis based on…? I don’t do that with my 401k - so I certainly don’t have the time to do that with my charities - if that data was even readily accessible. There is no single good source of information on nonprofit effectiveness, though some good people are doing their best to start trying to provide it. We don’t have the magnificent national assessment apparatus, so what do donors do in the meantime?

Today I called up Ken Berger of Charity Navigator today to ask what he thought - and to find out if he knew the claws were out. As he’s publicly said, he agreed that overhead is a one-dimensional view into charities. That’s why he, with partners like Great Nonprofits and GuideStar, got together and said as much. It’s also why Charity Navigator is adding two additional dimensions to its ratings. You see, here’s the funny thing: the watchdogs have gone on record agreeing overhead doesn’t tell the whole story. And Charity Navigator is working to add two more dimensions to its work. They have always done #1. They recently added #2 and are working on #3 with their partners:

1. Financial health – Is the nonprofit sustainable? Does it have robust financial strength to survive in good times and bad? Is the overhead not at the extreme end of the continuum?

2. Accountability – Does the organization have ethical practices, good governance and transparency? Is it accountable to its constituents?

3. Outcomes – Can the nonprofit supply information about meaningful and lasting change in the communities and lives of the people it serves? Can they show evidence that these changes are as a result of their efforts? Do they have systems and processes in place to effectively manage their performance?

These three dimensions will then be part of Charity Navigator’s star ratings - which is the only way any of the watchdog critics are going to get to their goal of a more well-rounded view into nonprofit effectiveness that donors actually use. They may hate the watchdogs, but we need a simple, watchdog-like system with an at-a-glance seal of approval. It would be nice if the seal told as full as a story as was possible in a sector where it’s not always easy to measure impact. People like to see stars - a simple, accessible and easily compared rating - and that is never going to change. Let’s not condemn a desire for simple ratings. And let’s quit trying to change that universal truth and constructively contribute to a way to make those stars as three-dimensional as is practical. A fuller picture is something everyone wants - but we need to do the work together of making that possible.

Full disclosure: I write this blog as an individual and not as a representative of my organization, but I should say my organization Network for Good partners with Charity Navigator and GuideStar.

So should you write off anyone remotely youthful?  Forget the Internet for the next two decades?  Errr…. no. 

The Heart of the Donor study said those in the 25-54 age range tended to give both online and through the mail.  Lisa McIntyre says:

“One thing we find interesting is this nexus in the 25-54 year old group—the donors who will be most important to us in the coming decade seem equally facile with both mail and online.  The point is this: if the goal of a nonprofit is to effectively target today’s best donors, then they should focus significant and smart attention on the donors giving the most money – seniors and boomers.  For example, the number of donors in the 18-24 group and 70-plus are comparable, but the 70-plus donor gives three times as much.  Does that mean nonprofits should turn a blind eye to the younger segments?  Of course not.  Their value will likely increase as they age.  But fundraising expenditures must be weighted according to a strategy that maximizes those who are giving now.”

Here’s what I think: focusing only the oldest donors is short-sighted, and we definitely can’t assume what has worked in the past will work in the future.  The fact that “older” donors give more does not mean we should do the same old fundraising.  Even the crowd here agrees on that: Boomers (who are not so ‘old’ for goodness sake) - and everyone younger - have a whole new set of expectations from their charities, from greater tranparency and accountability to a greater sense of engagement.  We have to start changing how we fundraise now or we’re going to be irrelevant very soon - and for generations to come.

More on that here.

1. GuideStar said today the giving outlook is grim (though as I always like to point out, online giving is up).  Notably, The Effect of the Economy on the Nonprofit Sector: A June 2010 Survey said:

•Some 40 percent of participants reported that contributions to their organizations dropped between January 1 and May 31, 2010, compared to the same period a year earlier.
•Eight percent indicated that their organizations were in imminent danger of closing.
•Sixty-three percent reported a total increase in demand for their organization’s services between January 1, 2010 and May 31, 2010, compared to the same period a year prior.
•In order to balance budgets, 17 percent of respondents reduced program services, and 11 percent laid off employees.
•More than 60 percent of participants reporting decreased contributions attributed the drop to a decline in both the number of individual donors and the size of their donations.
•Among organizations that use volunteers, 17 percent used one or more in what had formerly been paid positions.
•About a third (32 percent) of organizations increased their reliance on volunteers, whereas 9 percent experienced a decline.

2. We’re not doing a good job cultivating large donors.

This, according to Greg Ulrich, a management consultant who has worked with businesses and nonprofit groups. He led the study, Money for Good, and he said in today’s Chronicle of Philanthropy (article requires membership to access):

What we learned is both encouraging and frightening. On the encouraging side, we found that $45-billion in potential donations is available annually from people who make $80,000 or more a year. (Those people make up the wealthiest 30 percent of American households.) That figure includes gifts that donors would be willing to switch from the charities they support now and new money they would be willing to donate to organizations that appeal to them the right way.

On the frightening side, we learned that most nonprofit groups are pursuing the $45-billion in the wrong ways—ways that, despite their best intentions and efforts, are unlikely to be effective. And being ineffective is easy given that $150-billion of the donations that affluent Americans contribute annually is essentially out of reach. Donors are exceedingly loyal to the organizations they already support, and they are not likely to change their minds about how to distribute that $150-billion.

In case you are concluding this is my most depressing post ever, he has some good advice for you, which includes:

*Approach your donors with a focus on their motivations and behaviors, not simple demographics.
*Concentrate on just a few types of donors that may be attracted to your cause, not everyone!
*Be focused, consistent and simple in your marketing approach.

Listen to this:

It turns out that only about one-third of all donors do any research before making a donation, and the vast majority of those who do, research simply to validate their gift (not to look for the charity that will make the greatest difference with their donation). Donors also want simple facts and figures and look to the nonprofit itself for that information. So make that easy to find. You don’t need to provide them with 15 key measures of performance or an abundance of information that does not matter to them (like, for instance, the size of the problem you are trying to solve).

Great advice in my view. 

3. While we may stink at fundraising and giving is down, at least we’re tweeting!  Yikes. Maybe our time would be better spent following Greg Ulrich’s advice.

Hat tip to Agitator for highlighting this data:

“We always need to remember that behind almost every great moment in history, there are heroic people doing really boring and frustrating things for a prolonged period of time.”

Our work is sometimes boring and often frustrating, but it’s leading somewhere eventually—a slow motion miracles played out over a very long time.

A couple of my favorite points:

1.  Priming can be a key principle in fundraising.  Priming is presenting a person with subtle cues or context that then affects their behavior.  Dooley likes to cite a study by Greg Miller and Kathleen Vohs that shows that if you get people to think about money by putting posters of currency around them, they tend to be more anti-social and less generous.  They concluded that priming people with money puts them in a state of mind where they don’t want to depend on others and don’t want others to depend on them.  He says good fundraisers prime their audiences by focusing on good works and great stories, not dollars and cents.  I agree.

2. People and images matter.  Dooley also says that study after study shows that when presented with a web page or flyer, people look first at any human face present on the page.  If the face is gazing at something, like a headline, the viewer’s eyes follow the trajectory of the gaze.  When you’re trying to get people’s attention and direct it, pick a person’s image to do the job.  Remember this in your fundraising appeals.  While we’re on the topic of images, he also notes that people are very sensitive to their own image.  When people look in the mirror or can see their own image, they are more conscientious and generous in their actions.  I guess we can’t put a mirror in our appeals, but we can use images of donors – not just recipients – to create that connection.

This is the title of a great eBook by Andy Robinson from the Institute for Conservation Leadership, available for free here.

Here are my favorite quotes:

“[While most fundraising is still offline…] Emerging technologies create great opportunities to engage donors, which can result in deeper commitment, a new pool of volunteers, greater board involvement, and more generous offline giving. The sweet spot is the place where old techniques and new technologies come together.” - Andy Robinson

“Much of what is true for successful offline fundraising is also true for online methods. The method is not the panacea; it’s all about the time and attention invested in creating a compelling message and a well-thought out plan; frequent and regular contact with potential donors; and tracking results and adapting accordingly. In the online world, there is faster access to data and greater opportunity to adapt, so over time it will cost less to deeply engage potential donors.”
— Meredith Emmett, Third Space Studio and Institute for Conservation Leadership consultant

The eBook looks at successful campaigns based on email outreach, friends-to-friends giving, contests, and integrated online-offline campaigns. It concludes:

•Despite the proliferation of communications tools, personal contact and relationship-building trump everything.

•Email may not yield a lot of online gifts - an easy-to-use link to the donation page will improve your returns - but repeated contact with donors and prospects will boost offline giving.

•Websites are still essential for effective fundraising - online and off, because offline donors research organizations online.

•Social networks like Facebook remain a lower-tier fundraising strategy — at least for now.  They are for relationship-building, not dollars.

•Online recurring gifts are the future of fundraising: it’s easy for donors, it’s lucrative for nonprofits, and the renewal rates are extraordinary. If you have an online fundraising strategy — or even if you don’t — it’s time to prioritize monthly giving as part of the pitch.

•Perfect conditions never exist, so do what you can with what you’ve got — and do it now.  Online efforts may take time to pay off, but that’s all the more reason to start now!

Here are some tips on avoiding this pain at our nonprofits…

We must change.

In fundraising, we tend to focus on what we can extract from our donors. Instead, we should focus on what we can give our donors: gratitude, social impact, good feelings. Thank people more and the money will follow.

It is a very personal, emotional choice to give away money to something you care about. You, as the organization these donors support, want to handle those strong feelings of your donor with care. They have acted in a way that is deeply meaningful to them. If the only way we react to their gift is with a tax receipt, we’re not only being rude, we’re being disrespectful.

It is far easier to keep and cultivate a donor than to go find a new one and convince them to care about your cause. That’s one reason to give thanks early and often in your online outreach. Another is that your gratitude bonds the donor to your cause. And, because most nonprofits stink at online relationship-building, if you are good, you are going to stand out. 

So how do you stand out?

An amazing nonprofit shared this story with us.  Get inspired – and get grateful.

We (my husband & I) run a small non-profit in Harlem, NY that supports youth in the Harlem community through giving them a chance to change their lives by understanding the discipline and power that come from practicing a martial art.  We say that my husband is the face of our organization and the head instructor and I am all the other stuff.  Our staff includes 9 additional board members of which 3 are active students and a sister of one of our students volunteers her time in the office 6-8 hours a week.  (Basically, our board is our staff and our staff is our board!)  We are very small.

Our membership includes regular paying members as well as scholarship students.  One of our members just finished her training to become a non-profit consultant.  She did a SWOT analysis for us and came up with a few suggestions, her first being Donor Recognition.  This was at the end of December.  Since I wear 7 different hats for the non-profit, work a full time job, and have 2 young boys, I just couldn’t imagine putting something like that in place even though she said it would be relatively easy.

2009 was an extremely tough year for us and we were concerned that we might not make it through this year.  One of our board members began a campaign among their contacts to “Save” our programs, by asking them to donate a scholarship, $1,440 for the year.  It was right around this time that I downloaded the Non-profit 911 Donor Thank You presentation by Katya and Jocelyn Harmon.  After listening to that, I realized how important saying thank you is and I immediately began designing a Thank you card that we could send to all our donors.  Once the card was designed, I emailed it to the board with a note saying we needed to get some sort of Donor Recognition in place.  They loved it.  We decided that anyone would receive a thank you card within 2 weeks of their donation regardless of the amount they donated.  For those that donated a full scholarship, a picture of the student that received the scholarship would be included.  All cards are personalized with a note from a board member.  (You should receive one shortly.)

Best thing we ever did was invest in a color laserjet printer.  We keep a stack of pre-printed cards and envelopes ready so all we have to do is write the note and put the address on the envelope.  It takes less than 5 minutes!  We are also lucky in the fact that some of our board members are also students, so there is at least one other board member there at any given time so I am not always the one writing the notes.  As long as we do it right away, then we are able to keep up with it.  I have authorized our volunteer to keep me in line with that.  I think that is the key.  Not letting things get piled up so that you start to feel overwhelmed and then don’t do anything at all! 

The second part of the thank you campaign, was to send out an email newsletter to all our previous supporters (here is the link to our first one).  The first was entirely focused on saying Thank you for their support over the past years.  It included the poem that is part of our Thank You card.  It was sent to our 422 email contacts, of which 85 opened it.  Of those 85, 7 replied saying thank you to us for saying thank you, and 2 of them committed to donating again.  Another lady I work with actually said to me at work that the newsletter we sent out was so nice and she looks forward to making a donation as soon as she receives her tax return!  Even though the numbers are very small, for us they are huge and we learned an important lesson - it is never too late to say Thank You!

Our challenge is now to follow-up on those first thank yous by keeping our donors updated on the progress of their student (if they donated a full scholarship) and all donors on the progress of the program in general.  We are starting work on our next newsletter in which we will be highlighting the scholarship students that will complete their belt promotion test in a couple of weeks and how 12 NEW children have been able to join our program because of our donors support.  Another piece of the donor cultivation and retention puzzle!

I personally have found it easier to stay on top of things when there is excitement about what we are doing and sharing the successes of our program certainly keeps people excited.  As long as we keep our goals and expectations reasonable, we are able to accomplish them without feeling like we are reaching for the impossible.

I hope that our success can inspire others to realize how easy it really can be and how the simple things can go a long way.  Thanks again for the work you all do.
Andrea

It’s April 20th and you’ve just learned that due to an explosion on an offshore oil rig, crude oil is leaking freely into the Gulf of Mexico.  You don’t yet know that in the coming months over 3 million barrels of will flow into the Gulf causing the largest oil spill in U.S. history, but you do know that a serious environmental disaster is unfolding.  The media is holding a major corporation – BP  – responsible for cleanup and reparations.  But you know that it will take more than just BP’s response to rebuild businesses, reclaim livelihoods, reestablish wildlife and restore the environment.  It will take a network of dedicated nonprofits, concerned citizens, government intervention – and BP’s commitment – to restore the Gulf Coast to is former state.

The question is, should your nonprofit respond? And if so, how?

Since the oil spill was a manmade disaster and BP is being held accountable, the role for nonprofits has not been clear.  When natural disasters like the Haiti Earthquake or Hurricane Katrina strike, there is a strong call to action to get emergency supplies on the ground and provide assistance to those affected.  And nonprofits know whether their expertise, programs and staff are needed.  Not so with the oil spill where the immediate priority was for BP to cap the well and then figure out how to compensate those affected. 

Framing your organization’s call to action in the wake of a man-made disaster requires understanding your resources, expertise and audience.  After observing how several nonprofits are making a difference for oil spill cleanup, we’ve developed a set of questions to help your organization decide if, when and how to respond when these types of catastrophes emerge:

•Does your organization work in communities affected by the disaster?
If the disaster is affecting your constituents, there is a clear mandate to help.  If your mission and program focus is not directly related to the disaster at hand, your role may be more indirect, but you can still contribute by telling your supporters how they can help or supporting other organizations who are more directly involved (PR on your blog, loaning staff, in-kind gifts of resources, sending volunteers or other ways).  Helping other organizations that may be overwhelmed by the magnitude of the immediate need is not only the neighborly thing to do, but it also strengthens the nonprofit sector and builds good will for when your organization is on the front lines.

To illustrate, EarthShare, an organization that manages workplace giving campaigns for environmental charities,  is serving as an information and volunteer opportunity clearinghouse during the oil spill cleanup effort.  It offers several volunteer opportunities from member charities, posts easy ways for citizens to speak up for safer, cleaner energy and provides resources for people to stay up-to-date with oil spill developments.  This is a great example of a nonprofit highlighting the work of a set of organizations involved in the response.

• Does your organization have staff, programs, tools or expertise relevant to the disaster response?If you can contribute resources that other organizations can’t, be they nonprofit, government or for-profit, then you are particularly well-suited to take a strong role in the response effort.  You know your mission and program focus better than anyone, so don’t hesitate to speak up if your expertise needs to be heard.

For example, the Louisiana Bucket Brigade, an environmental health and justice nonprofit, in conjunction with students at Tulane University, established an oil spill crisis map that displays the disaster’s impact on the environment, wildlife, health, livelihoods and other factors. The organization’s unique understanding of the environment and technical expertise resulted in a very useful tool to monitor the disaster.

•Is your supporter base looking to your organization for guidance on ways to help?Even if your mission and program focus is not directly related to the current disaster, your community may see you as a resource.  If you are overwhelmed by supporters asking for you to help them get involved, you can serve a curatorial role to provide relevant information about the disaster and concrete ways to help.  Or you can band together with other like-minded organizations – other nonprofits, media partners or companies – and organize events, volunteer opportunities and other programs that mobilize your supporters and other citizen philanthropists to help. 

Sometimes, it takes a collective effort to make a lasting impact.  That is the opinion of CitizenGulf— a collaborative initiative among Andy Sternberg, Citizen Effect, el-studio.com, Live Your Talk, Sloane Berrent, Social Media Club, Taylor Davidson and Zoetica— which is calling for a National Day of Action on August 25th. In alignment with the week of the fifth anniversary of Katrina, CitizenGulf’s National Day of Action will benefit Catholic Charities of New Orleans to help fishing families find a new, more sustainable future by providing an educational program for their children.  To attend a local CitizenGulf benefit event near you, visit here.