The Gift of Giving to Non-profits

As a development professional, I am passionate about my belief in the gift of giving to non-profit organizations. At this time of year, mailboxes are brimming with appeals from a variety of organizations, many groups who rely on fundraising dollars to support their worthwhile missions.

Aviv Centers for Living recently sent out an appeal that quoted the Talmud as saying, “One person’s candle is a light for many.” We took a walk down memory lane recalling that when the original founders of Aviv gathered in 1945, the world was a very different place. Gasoline cost about 15 cents a gallon. Elvis Presley debuted at age 10. Harry Truman was sworn in as the 33rd President of the United States as George and Barbara Bush wed and the United Nations was formed. While the darkness of World War II clouded the universe, a group of citizens gathered in Lynn to create light for seniors and founded the Jewish Convalescent Home, fondly called “the Home.”

Well over 66 years ago, while the world was a different place, the desire for good people to galvanize for grand purposes was just as important as it is today. As you prepare for the holidays, take a moment to look in your heart and make a donation to a non-profit organization. It may be the best gift you give this holiday season.

Fundraising in a Turbulent Economy

So the stock market is a mess, and all signs point to a very weak recovery, if not a double-dip recession. What's a development officer to do?

First, DON'T PANIC! Well, actually a little panic probably won't hurt. I met with a friend today who just started a new development job. In her first two weeks on the job, two major donors to the organization have said they will be reducing their gifts next year by a total of $400,000! Interestingly, neither one of them cited the economy or the stock market as the reason. That said, finding a new $400,000 in the current economy probably won't be easy. So what do you do?

I would suggest sticking to fundamentals. Remember that development is about building relationships, and that people make gifts (especially major gifts) to the organizations they feel closest to. So now is the time to turn to your organization's current friends for renewed, increased, and new gifts. Don't make the case that you are in trouble because of the economy; rather, make the case that their help will help you keep your programs strong and ride out the storm.

Now is also the time to make new friends. Ask your board members and other volunteers to think about people they may know who could become interested and involved with your mission. Look for people with some connection to what you do. Then ask them to join you! Ask for their advice and involvement first; then ask for their gift. Remember, the more involved the person becomes, the more likely it is that you'll get a major gift for your organization.

These tactics may not increase your fundraising results immediately, but they will build your base for the long haul. And your current friends might surprise you by stepping up with the gifts you need! Don't fall into the trap of thinking you shouldn't ask people for gifts right now because of the economy. Remember, the number one predictor that someone won't make a gift to your organization is that they weren't asked. So ask, and ask often. It is our job to ask, and the donor's job to decide on the answer! Turbulent economic times require us to ask more than ever. The answer won't always be the one we hope for, but often it will be, and the more you ask, the more you'll get!

If you need some ideas for strategies for building stronger relationships with your organization's friends - old or new - or asking for support from them, let me know.

Volunteers: Friend or Friend?

One of my favorite volunteer board members - the chair of the development committee at a university I worked for - once said to the entire board, "Remember, WE volunteer board members are the fundraisers here. The staff is hear to help us do our jobs." This resonated for me because I started out in development as a volunteer for one of the large Jewish Federations. We (the volunteers) always understood that the task of asking for gifts was OUR responsibility, and that the campaign wouldn't be successful if we didn't do our jobs. Believe me, it was difficult, and took a lot of time; and we all had day jobs, too (mine was in the real estate business.)

By the time I was working at that university, development had changed - fundraising was much more in the hands of the professional staff, with limited support from the volunteers. That trend has continued, and the large size of the development staff at some institutions is evidence of it. But that volunteer chair still understood the power of the volunteer ask!

I still believe, as he does, that the best development work is done by volunteers. When a business person asks a peer to support an organization that he or she believes in, the ask is almost always successful. When a development staff person makes a similar ask, the result is not nearly as assured. Peers asking peers still works best! Perhaps it works even better today because it is not as common.

This is not to say that development staff isn't important. I still work in development, and believe that my work in cultivating and soliciting major prospective donors is crucial to the success of the organization I work for. But I also believe that when I can get the Board Chair, or another volunteer, in the room with the prospect, it is much more likely that we will get the gift we are seeking. Sometimes it takes a volunteer just to get the phone answered or the appointment set! Someone once said that when you get the right person doing the ask for the right project at the right time, magic happens. As a professional development officer, I aspire to succeeding at that task, and really try to find the "right person", knowing that it is sometimes me, but is much more often a volunteer!

It really pains me when I hear development staff members deriding volunteers as unskilled or "adding work" to "our already busy days." I am currently volunteering myself (yes, I sometimes take a "bus man's holiday") with an organization that has a half-time development officer who wouldn't be accomplishing nearly what she does if it weren't for a small group of volunteers dedicated to the success of the organization who are doing the hard work of developing strategies, cultivating, and soliciting major donors. I have never heard her complain about a volunteer!

Volunteers are our best friends in development. If you would like some help in figuring out the best ways to work with yours, give me a call.

Tax time?

Recently there has been some discussion in the media that one of the possible "fixes" to the Federal deficit crisis would be to reduce or eliminate the charitable tax deduction. Here's an article from the New York Times on this subject. The reaction from many in the nonprofit sector is nothing short of panic, and I wonder what's really driving that panic. It seems that many are afraid that their donors will stop giving if the charitable deduction goes away. I don't believe that will happen. Do you?

Nonprofit (501(c)3) organizations receive a number of benefits from the government: they pay no income tax on any income that is related to their charitable purpose; they pay no real estate taxes (in nearly all jurisdictions); in most jurisdictions, they pay no sales taxes (California is the biggest location where this isn't true - everyone pays sales taxes in California!); and contributions made to these organizations create a tax deduction for the donor. For the moment, only this last benefit seems to be in danger (and probably not much danger, at that). But why should we care?

The largest number of charitable gifts - the small ones - get no tax deduction because they are made by people who don't itemize their deductions, and therefore get no tax benefit from charitable gifts. And the bigger the gift, the more likely it is being made for other reasons than tax treatment. Charitable intent and a relationship with the organization, for example! I still believe that the main reason someone makes a gift to an organization is a belief in the mission of the organization (and that they were asked). It is possible that in some cases the size of the gift might be impacted by tax considerations - a tax savings could make a gift somewhat larger possible. But I would argue that this increase in size is marginal both for the donors and the organizations. If someone is making charitable gifts only for their tax-sheltering properties, I would also suggest that there are much more efficient ways to reduce one's taxes.

Note that I am not a financial planner; I am basing my statements on many years of working with philanthropists, and on anecdotal information. I haven't conducted a scientific study on this issue. However, indications from past changes in the deductibility of contributions (the amount of savings was reduced in 1986 and giving went up the following year) suggest that there will be minimal or no negative impact of a reduction or even elimination of the charitable tax deduction.

A word about estate planning and planned gifts: Estate planning often includes making provisions for charitable gifts. You probably know some of the terms: gift annuity, charitable remainder trust, charitable lead trust, etc. Much of the work of planned giving involves some amount of creating ways of making gifts and bequests that will reduce the amount of estate (and other) taxes that must be paid upon the death of the donor. These arrangements do, indeed, intertwine philanthropy with reducing taxes, but I believe that most of the time a planned gift gets made because the donor has a charitable intent and a relationship to the organization receiving the gift - not just because the gift reduces the tax bite. People with large estates work with advisers who help them minimize the taxes they must pay. Sometimes that minimization involves charity and sometimes it doesn't, but while the existence of the tax benefit might help increase the size of a charitable gift, it doesn't create it. The organization's mission and case for support, and the donor's charitable intent does.

If your organization is worried that your gifts will dry up because the charitable tax deduction goes away, I'm worried about your organization! If you don't have the faith that your mission is important and attractive to potential donors, we should talk. Perhaps I can help you better communicate what makes your mission compelling and reshape your case for support. There are hundreds of thousands of nonprofits in the U.S. My experience is the vast majority were created to fulfill a valid and compelling mission, and that mission is supportable by donors with or without a tax deduction!

Some things to think about...
What do you really know about the impact of the tax deduction on giving to your organization?
What is the ratio of donors in your data base who take the deduction to those who don't?
Can you run a report to find out?
What will you do proactively with what you learn?

Call me if I can help.

The Common Good

When did we stop caring about one another? We live in a neighborhood that has a neighborhood association and some land that is jointly owned by 97 homeowners. Some of the roads are town roads and some are private. Recently, a couple of the private roads were in serious need of repair. The town has historically done this work (even on the private roads), although when they are repaired, the condition is often worse than it was before the work was done. And much of the damage is caused by other town work like snowplowing and street sweeping.

So the issue was raised: "Should we ask the town to fully repave the private roads, or should the association pay for this work?" In addition, the neighborhood is split between those who abut the private roads and those who don't. Will the whole neighborhood pull together to pay for the repaving, or will the non-abutters refuse to pay their share? As you might guess, the consensus was to ask the town. But the town says they don't have the money to do this work. They did do a patch job, which brings us back to the beginning of the story.

Why doesn't the town have the money to pay for road repair? (private or public, the roads in our town are a mess!) Because in our state there is a law that restricts the ability of the cities and towns to raise property taxes above a certain level without a referendum. And this fall, every tax increase referendum in our town failed. Yes, I understand that we're in a recession, but the whole conversation about these roads has led me to the same conclusion: We don't care about one another anymore. No one thinks about the "common good".

This lack of concern for the common good is also part of the question in the neighborhood association. We accepted the town repair of the roads - bad as it is - so that we don't need to deal with who will pay for the full repaving project (since the town doesn't have the money). We don't want to have the discussion about whether this is an association responsibility or should only be paid for by the road abutters.

This is true for non-profits too. Much of the community work that we refuse to tax ourselves to pay for has become the responsibility of nonprofit organizations. But then we don't give them enough money to do the work either! We say we care about one another, but then we don't put any money behind our words. In particular, giving to federated campaigns (United Ways, Jewish Federations, Catholic Charities, etc.) has dropped in the past several years. And many federated campaigns now encourage "directed giving". This means the donor can specify where the money goes, instead of having it allocated by the community leaders who serve on the allocation committees. Why? Because we no longer seem to believe that there is a common good that can best be served by having a group of community leaders determine the priorities.

I firmly believe that there is a common good. That some projects must be paid for whether I benefit from them or not. That's part of why I have spent most of my career fundraising for nonprofit organizations. It's also why I am so frustrated by the current political climate. It's all about "I have mine, and I don't want anyone else to get theirs because it might cost me a piece of mine." It's why we continue to elect people who promise to lower our taxes, rather than people who promise to continue providing services, and we need to pay taxes to pay for them. If our society continues down this path, we won't continue for long.

If you agree, I'd love to hear from you! If you don't, I'd love to hear your reasoning, too. I'm willing to accept that I might not be right, but I want to know what keeps society functioning if there is no recognized common good and we don't care about one another?