Focus on mission

My son has just been accepted to a program that sends roughly 100 high school sophomores and juniors from our area to Israel each summer. The Youth to Israel (Y2I) program was created by the Robert I. Lappin Charitable Foundation, whose mission is very simple: "Helping to keep our children Jewish." The program has been in existence for over 40 years, and provides a fully subsidized trip to these students with no means test. The only requirements are that they live in the foundation's service area - one of 23 cities and towns on Boston's North Shore - and the teen must be Jewish and consider him/herself Jewish and be raised exclusively in the Jewish faith.

Until last year Y2I was funded entirely by the Lappin Foundation. Unfortunately, Lappin was one of the victims of the Madoff Ponzi scheme, and the Foundation was essentially wiped out. In other hands this could have led to the end of the program. However, Mr. Lappin is clearly not an average philanthropist. He committed himself to find the funding to keep the program in existence, and last summer 95 kids went to Israel, only six months after the Madoff scandal broke. This summer, Mr. Lappin was able to raise enough money to send to Israel all 99 teens who applied. Gifts have come from the Goldhirsh Family Foundation, the Jewish Federation of the North Shore, Oranim Educational initiatives (the partner organization that provides the tour program in Israel), and an anonymous donor, in addition to the Lappin Foundation's own $100,000 contribution. The total cost of the program is just over $500,000.

Why is this important? Because a local philanthropist refused to throw in the towel and kept focus on his mission. He knew he couldn't provide all the funding right now, and was willing to make the calls necessary to find the funding to maintain a program he is passionate about, and that he feels is crucial to the mission of his foundation. He has said his "long-term plan is to restore his assets to a point that will sufficiently endow the Foundation to a level that the annual income will totally or near totally fund Y2I." Here is the foundation's statement on the future of Y2I.

Mr. Lappin has recently been recognized by the Boston Globe as one of their "Bostonians of the Year." Their reasons have nothing to do with his foundation or the trip to Israel, and everything to do with his handling of his employees' 401K plan, which was also wiped out by Madoff. In short, Mr. Lappin made the employees whole from his remaining personal assets. It is very sad that this action is seen as something unusual in our society. Wouldn't it be wonderful if every business owner and every philanthropist were as true to their missions. At PhilanthropyGlobal we work with organizations and philanthropists. Let us know if you would like help in focusing your mission this clearly!

Telethon Telethon

So here I am, a philanthropy professional for over twenty years, and I hate getting telephone solicitations. I even ran the telephone program at Brandeis for several years. I know, "dialing for dollars" is the most efficient way to raise funds from a house list. It has a much better response rate than direct mail, and is second only to face-to-face solicitation - even for major and campaign gifts. Yet I hate being on the receiving end of the calls. I always answer, I'm always polite, and sometimes I even engage in a bit of conversation with the caller (especially if it's a cause I like,) but I won't make a pledge over the phone. Am I being hypocritical when I tell my clients to use phoning as a tool in their fundraising program? I don't think so, since it is still effective with many, many people (just not me!)

I really think the combination of e-mail and phone might just be the best set of fundraising tools these days. Unfortunately they both have problems - answering machines/voicemail for calling, and spam filters for e-mail. Viral e-mail is probably the best way to go at the moment. Get your friends to e-mail their friends, etc. Of course viral phoning is the VERY best - get your friends to CALL their friends. Then it's not a telemarketing call! It's a personal solicitation! It starts with a relationship and builds on the relationship for the benefit of the non-profit.

As always, it's all about building relationships. If you'd like some advice about building your philanthropic relationships, e-mail or call me. I promise I'll answer!

Eleemosynary

The "word of the day" the other day was eleemosynary. It has long been one of my favorite words. It means, "of, relating to, or supported by charity." Did you know that?

A few years ago in a foundation board meeting we were reviewing a by-laws change, and the attorney had put in a phrase about the eleemosynary purposes of our work. I was surprised that several of the board members had no idea what this meant, and they were delighted that I was able to explain that it means charitable or philanthropic, that is just what they were doing as members of the board. I guess the fact that the lawyer used it shouldn't have been a surprise. It is a direct derivative of the Latin "eleemosyna", meaning, as you might have guessed, charitable.

So, what have you done today that is eleemosynary? If you need help raising more money for your favorite eleemosynary organization, give me a call!

Nonprofit? hospitals redux

So, there's another article on a nonprofit hospital system in today's Boston Globe. This time it's Caritas Christi Health Care, owned and operated by the Catholic Archdiocese of Boston. If this isn't a nonprofit system, what is?

But again, there isn't a single mention of nonprofit status in the entire article. What we read about is that, "By aggressively cutting costs and boosting revenue from medical care, the Boston-based Catholic hospital chain is on track to post operating income of $31.1 million for the fiscal year ending Sept. 30, compared to a $20.4 million loss last year." ... "The chain consolidated operations at its six Eastern Massachusetts hospitals, cut jobs and froze salaries, negotiated higher reimbursement rates from insurers, and recruited more specialists to perform more complex - and profitable - procedures."

Where is the mission? Where is the care for patients? The whole article is about cutting costs and raising revenues. I don't dispute that hospitals need to operate in the black, but there was a time when they were fully understood to be nonprofit organizations, and when they were not in the black donors stepped in to make up the difference. Nonprofit hospitals were founded by like-minded communities - religious, ethnic, neighborhood, etc., to care for their own. Now it seems all they care about is their bottom line and whether they might be a good candidate for acquisition by a bigger organization.

Is there any way to get back to the basics of nonprofit healthcare? I'm afraid that the issue is colored by our difficulty figuring out how to provide basic healthcare to everyone at a reasonable cost (dare I suggest "single payer"). As long as this situation continues, and hospitals keep talking like for-profit companies, it will continue to be very difficult to make the case for support for nonprofit hospitals. If you need help making the case for your nonprofit hospital give me a call.

Nonprofit hospitals - are they?

I just read an article in today's Boston Globe about Partners Healthcare's financial results for the quarter. Apparently Partners is reporting a large deficit for the first nine months of the year, but didn't do as badly in the third quarter as it had in the prior two. If the trend continues, the article says, it will be the first annual loss in the "company's" history.

What's missing from this article? There is not a single mention of the fact that Partners Healthcare is a nonprofit organization, and the parent of two of the best hospitals in the country (along with a number of other smaller units.) How does Partners (and Brigham and Women's Hospital and Massachusetts General Hospital, it's two big members) raise money from the philanthropic community with this kind of news? It's part of the problem that hospitals all over the country have in making the case for philanthropic support: they are treated in the media (and sometimes behave) like for-profit companies, and the general community gets confused.

In the whole current debate about healthcare reform, I have heard only one comment - on the radio the other day - that mentioned that most hospitals in the U.S. are non-profit. And hospitals are mentioned, for the most part, in the same breath as the other "villians" in the healthcare meltdown, big pharma and the insurance companies.

This is a real shame. I have always felt that medical care is a right, and the provision of it is a mission best served by nonprofit hospitals, and that those hospitals deserve the support of the philanthropic community. But how do we best make the case for that support? If you're interested in further thoughts on this issue, e-mail me, and I'll send you a copy of an article I wrote on this subject.

Which comes first?

I just read an excerpt from an interview with Charles Bronfman, a noted Jewish philanthropist. He makes the point that while the Jewish community in the U.S. has created a wonderful program to build new leadership (Birthright Israel) by sending young people on an educational mission to Israel, when they return they tend to stay away from the Jewish Federations that are trying to create the new leadership.

Why are they staying away from the Federations? He says its because, "when Birthright participants seek to become active with the federations, “they are usually given a list of names and told to solicit, because that’s what the federations focus on - getting money.”"

I've always believed (and when I was involved with the Federation it's what they preached) that involvement comes before giving which comes before asking. If the first thing you ask someone to do when they return from an exciting mission is to solicit gifts, my guess is they'll run for the hills. But, if you provide them with a level of involvement in the activities of the federation first - serve on a committee or task force, or attend several lectures of interest - they'll be much more likely to make their own gift commitment. Once they've invested their own funds, they'll be much more interested in asking others to join them.

Someone once told me, "If you ask someone for money, you'll get advice. But if you ask them for advice, the money will follow." I have always found this to be true. If you need help figuring out how to get someone involved - to develop prospect strategies - give me a call.

How big a board?

I had a conversation yesterday with a colleague who asked me how big I thought the board of a non-profit organization should be, and how I would suggest managing diversity on the board. These are two important questions that all non-profits deal with from time to time.

First, how big should the board be? Well, I'm reminded of the old joke that asks, "How long should a person's legs be?" The answer is, "Long enough to reach the ground!" The related answer to, "How big should the board be?" is, "Big enough to get the job done." Then you might ask, "What job?" It seems to me the answer to that is that the board must make sure the organization is working to fulfill its mission. That means managing the executive director (or president in some cases), being sure the professional leadership is focused on the mission, and assuring that the organization has the resources (money, staff, supplies, etc.) it needs to fulfill that mission. When we talk about the board's "fiduciary duties" we're usually talking about resources.

I met with the development committee chair of a client organization last year to discuss the development plan we had been working on. In the course of our planning process we had discovered that the organization's budget for the coming year was going to be out of balance by over $100,000. One of the tasks in the development plan was the hiring of a development director, a new position. The board chair asked whether we thought the new development director would be able to raise that amount of new money in the first year. I said, "no, you'd be setting the person up for failure if you start them out that way." My suggestion was that the board should commit to close the budget gap for the next two years (either by giving it themselves or raising it) in order to give the new development director a chance at success. The development committee chair agreed with me, and said it was her understanding that that's what boards do; they give the money to fill a temporary budget gap! I think she was right on target. If the board won't fill the budget gap, how can anyone else be expected to give?

So, one of the answers to the "how big a board" question must be, "Big enough to close an emergency budget gap." This leads to at least part of the answer to the question about managing diversity on a non-profit board.

There is no question that diversity of a non-profit board is crucial, especially if the organization's mission involves working with or supporting diverse communities. The board should look like its community. But diversity can (and should) also mean diverse skills and backgrounds. And in every case, fundraising ability (both giving and getting) must be a primary consideration for board membership. If the board doesn't have the ability to get the organization through a financial crisis, then the organization has a very high risk of not surviving. If the board believes in the mission, they should be both willing and able to support it! If they don't believe in the mission enough to support it financially, maybe they shouldn't be on the board.

This isn't to say that there should never be anyone on a non-profit board who can't make a major gift. However, if you aren't paying attention to fundraising as you populate your board, you run the risk of the organization failing. The most wonderfully diverse board in the world - however you define that diversity - will fail the organization and the mission if it can't give or raise the money to fund the mission.

So, how do you manage diversity on a non-profit board? Use a matrix to figure out what skills, education, ethnic groups, geography, and other diversities you need, and always remember the importance of fundraising to the success of the organization.

How big should the board be? How diverse should the board be? Big enough and diverse enough to succeed.

If you'd like to talk about ways to build and/or diversify your board, give me a call.

Death of a Theater

I was saddened to read this week about the closing of the North Shore Music Theater in Beverly, Massachusetts. This non-profit theater had been around for 54 years, but couldn't survive a combination of a fire, borrowing to rebuild (beyond what the insurance paid,) an apparently rocky transition of leadership, and the precipitous downturn of the economy. I don't know all the details, but what I have learned about NSMT over the past several months seems to provide some lessons for non-profit arts organizations, and other non-profits.

Full disclosure: I learned about NSMT this past fall, as I was in the midst of negotiating with them for either a consulting contract or employment as their full-time VP for Development (it wasn't clear at the time which way they wanted to go, then became clear that neither would be possible due to their financial disaster.)

One of the stories I heard from several sources was that while NSMT has always been a non-profit theater, it didn't like to admit it! That is, under the previous administration, the theater attempted to operate on its ticket revenues (and education, etc.) alone. It really didn't want to behave like a non-profit by making a substantial effort at development. Only in the past year or so had the theater begun putting a donation envelope in all of its programs and mentioning that it depended on contributions to help fund its programs in its evening-opening announcements.

After the fire in 2005, there was apparently some fundraising done, but the loss from the fire, the shortened season, and the reconstruction was apparently more than $4 million, and this debt was never paid down by fundraising or any other means. Understand that I am not suggesting that a campaign to pay down debt would have been easy - it's never easy to fundraise to pay down debt. However, the rebuilding campaign that was held apparently did not raise nearly enough. Perhaps this is a case (I've seen this kind of behavior in other institutions) of wanting to build a certain kind of facility, and deciding to do so whether or not the money has been raised. "We can borrow the money to finish the building, and then raise the money later to pay off the debt." Too many non-profits say this, and then end up in trouble. The truth is that the board has the responsibility to either find the money to pay for the building at the time, or find the money to pay off the debt. Too many non-profit boards don't live up to their fiduciary responsibilities to oversee the staff when it comes to making realistic financial decisions, or to raise the money to fund those decisions. This is the hard work non-profit boards must do, and too often do not. North Shore Music Theater is not the only non-profit in the Greater Boston area that has had financial difficulties in the past few years because of overspending on construction projects not fully funded by donations or income.

We hear often about how important it is for non-profits to behave more like businesses. This is true especially when it comes to living within your means, but this is also one of the most difficult things for non-profits to do when it comes to fulfilling their missions. It is very hard to say "no" to mission-critical expenditures. So where does the money come from? It is the responsibility of the board to provide the funds needed to fulfill the mission of the organization. That doesn't mean board members need to give it all themselves, but if they aren't willing and able to participate fully in the process of raising the funds needed for the organization to fulfill its mission, they probably shouldn't be on the board. What this really means is working to develop relationships with potential funders (mostly individuals and families, but also including corporations and foundations) that will lead them to make gifts to the non-profit. The hardest thing for most organizations to figure out is that you can't just turn on the spigot of charitable contributions. If you haven't built relationships before you need the money, you almost certainly won't be able to raise the money when you need it! This is the sad cause of the failure of the North Shore Music Theater. The new administration had recently begun building relationships with potential funders, and there were some promising starts; but unfortunately there weren't enough potential donors ready to step in when the crisis really hit.

So we must sadly say "good-by" to the North Shore Music Theater. There are apparently still some options for rebuilding. If a buyer can be found to take over the property and lease it back. Or if an "angel" comes forward. Unfortunately, there were not enough relationships built with those who might be able to help for any of these possibilities to be very likely. Too bad.

So what's the takeaway? It's never too early to start a development program, but unfortunately it can get to be too late. People make gifts to organizations they feel connected to - especially large gifts. So they won't respond to emergency appeals if they haven't already been connected. Want to talk about ways to better connect your donors? Give me a call.

Why are board members afraid of development?

I have had several conversations in the last couple of weeks that are variations on the same theme: Why is it so difficult to get board members of non-profit organizations to help with development work?

It seems to me there are two main reasons. First, we often don't ask. Someone once told me that the number one predictor of someone not giving to a charity is that he wasn't asked. The same holds true for action by board members. If we don't ask them to get involved in development work, they won't. Of course, you don't need to ask them directly. Try asking them to call people to thank them for their gifts. Or try asking them to host a parlor meeting at their home to cultivate some prospective donors. Once they've participated in activities like these you can tell them they've been helping with development!

This brings us to the second reason: board members are afraid of development work. Even the most sophisticated (about development) board members harbor the fear that when they are asked to help in this area it means they are going to be handed fifteen or twenty names of people they have never met and asked to solicit each of them for thousands of dollars (or more!) That's why it is so important to ask board members to participate in the kinds of activities mentioned above. And its important to be sure they understand that development really is about the cultivation process - building relationships with people so they feel more connected to the organization. People make gifts to the organizations they feel connected to, and they make large gifts to the organizations they feel most connected to. If board members are hesitant about "doing development work", just ask them to help people feel connected to your organization. When the time comes for the solicitation, they won't panic because it will seem like a natural part of the relationship building.

How can you help your board members become more comfortable with their development role? If you need some additional suggestions, please give me a call! I'd be happy to help out.

New ideas in fundraising

So, everyone is trying to figure out new ways to raise money. There is tremendous fear that direct mail won't work anymore, that telephoning is too intrusive (it is, but it works!), and that the economy is too terrible for people to come to galas. So what's a non-profit to do?

It seems to me that it all comes down to development, not fundraising. Now that won't help you if you need to raise a lot of money today or tomorrow, but development is what is needed to build philanthropic income. People give to the organizations they feel connected to and passionate about. And they give major gifts to the organizations they feel most connected to. And, the most cost effective way to raise money is through major gift solicitations. I even read an article many years ago that argued that annual giving programs should be abandoned because they cost too much, and for the same expenditure in major gifts much more money would be raised. I'm not willing to go that far because I think annual giving programs can provide a base of income for the organization, as well as broadening the base of potential major donors (especially true for organizations that don't have a "natural" constituency like alumni or grateful patients.)

So what does development mean? Developing relationships that make people feel connected to your organization. I know... this is development 101. But I think all too often we forget the crucial importance of relationship building in the rush to figure out how to raise a lot of money by tomorrow. If we've been doing the relationship building, and suddenly have a crisis that requires more money, we have the prospective donors ready to call upon to fill the gap. If we haven't built the relationships, we're forced into an "emergency" direct mail letter, or telemarketing program. These might raise the money, but they won't make anyone feel good, and they won't build for the future. The big challenge is to continue to build relationships that provide a pipeline for future gifts, while at the same time raising current gifts.

One of the best ideas I've seen recently is also one I have seen in the past. It's the "virtual" gala. A number of years ago, a library foundation sent out an invitation to people to "stay home and read a good book," and send us a gift. I never heard how much it raised, but it sounded like a great idea to me. I have just heard about the International Hillel Foundation running a similar program, but with a twist that makes it development in addition to fundraising. They have recruited volunteers around the world to host small house parties on the same night. Each has a fundraising goal, and each will also serve the relationship building function. To bring everyone together, there will be two live web feeds that can be viewed in real-time, or delay if appropriate, coming from the house party being held at the home of the international chair. Sounds like fun to me, and it sounds like the kind of event that could raise money now and build relationships for the future!

Do you have ideas for new ways to build relationships and raise money? Do you need some? Give me a call if you'd like to explore some possibilities.

More bad news for non-profit hospitals

So, today there's an article in the New York Times talking about how the American Hospital Association is trying to fight the possibility that the healthcare reform legislation currently working its way through Congress might have in it a requirement that non-profit hospitals provide a certain amount of charity care. I heard about this from a posting from the Association for Healthcare Philanthropy, which is also gearing up its members.

The article quotes a bulletin sent to hospital leaders from AHA that says,“Ask your senators to oppose charity care proposal,” in big bold type.“A formulaic, one-size-fits-all charity care standard will hamstring hospitals’ efforts to respond to the unique needs of their communities,” the bulletin said. “It would penalize children’s, teaching and research hospitals and those in rural areas because they provide community benefit in a variety of forms other than just charity care.”

It worries me that non-profit hospitals are going to be seen as being against charity care. Even though that's not what the bulletin says, my guess is that's how it will be spun. And this is another example in a long history of non-profit hospitals acting like, and especially sounding like, big for-profit companies. It's why this proposed rule has made it in to the legislation in the first place. If the AHA and AHP aren't careful, non-profit hospitals will cease to exist, and that could be a major tragedy. As I've said in an earlier post, I believe that healthcare is a mission, and that mission is best served by non-profit organizations.

Medical Mission

I read an article in the Boston Sunday Globe today that reminded me that the idea of health care being provided by hospitals as a "mission" seems to have been lost. The article talks about the "community benefit" local hospitals provide, and then compares that to the amount of tax savings they realize by being non-profit organizations. It concludes that in general the larger hospitals in Greater Boston save more money by not paying taxes than they provide to the community in benefits. By constantly referring to the hospitals as "companies", and briefly discussing the good being done by one for-profit hospital in Worcester, the article tries to convince us that non-profit hospitals don't deserve their tax exemptions, and that they shouldn't be receiving tax-deductible gifts from donors.

The article describes the calculation of the community benefit and the calculation of the tax savings at some length, admitting that these calculations are complicated, but only in passing does it mention that these calculations may not take into account everything the hospitals do that could provide benefits to the community. Nearly all of the hospitals mentioned are major academic medical centers, which in addition to providing care for all (one of the arguments against them is that almost no one in Massachusetts is uninsured due recent changes in state law), also provide education to a new generation of physicians and on-going research that may lead to cures to some of the diseases being treated. Neither of these activities is "reimbursed" by insurance companies (an unfortunate term hospitals have been using for a number of years.)

One of the problems non-profit hospitals have these days is they have been talking like for-profit businesses for many years. They have also been merging into systems and acquiring medical practices and other ancillary businesses that help make them look too much like for-profit businesses. I would argue, however, that even with all that, non-profit medicine is still crucial to our communities, and that even if Congress manages to pass legislation providing for health insurance for everyone (by no means assured at the moment), non-profit hospitals still have an important mission of education, research, and patient care, and still deserve their tax exempt status. We should all try to remember that non-profit hospitals were created by communities - regional, ethnic, religious, and others - to care for their own because no one else would. They all assumed that good health care was a right that must be provided. As we have changed, and continue to change, the way we pay for our health care, we should keep in mind the history of non-profit health care and its on-going mission. And we should all consider giving to our local hospitals.

Philanthropy

What is going on in the philanthropic community these days? An article in today's Boston Globe about potential downsizing in Jewish agencies in the Greater Boston area got me to thinking. Is this just a result of the economy and Madoff, or is it a result of something more serious. Are philanthropists still giving? If giving patterns have changed, is it a short term issue, or something bigger?

This is the beginning of my thinking about philanthropy, both in the U.S. and around the world (hence PhilanthropyGlobal.) I don't have a quick answer, but I do have a sense that giving patterns have been changing, and no one seems to know quite what to do about it. Over the past five years or so, several of the Jewish federations around the country have commissioned studies (or in some cases considered studies and decided not to do them.) Most of these studies have shown that Jews are today giving more money to non-Jewish causes than to Jewish causes. This appears to be a generational issue, at least to some extent.

In my home town, the Jewish Community Center finds itself in financial difficulty. Part of the reason is said to be the economy, and part of it the opening of a brand-new YMCA across town. But what about the fact that there is nothing particularly Jewish about the JCC beyond its name? It is a health club and day care center and camp operator. What's Jewish about that? Have the local Jewish Philanthropists lost interest because they haven't been engaged? That's my guess, and it mirrors what I see at many non-profit organizations. No one can understand why giving is down, but no one is doing anything to better engage volunteers, donors, and prospective donors so they will be willing to give and give more.

Philanthropy (literally the love of mankind) has always been based on the notion that people are generous, and want to do good works. But in bad times, we all need to focus on priorities, and the job of non-profit organizations is to better engage volunteers and donors so they make the non-profit a priority. Philanthropists want to be loved, too!

If you'd like to talk about ways to make your donors feel more loved, give me a call.