Balancing the Mission Checkbook

How can you appeal to donors at a time when costs and demands for services are increasing? How about a letter or email detailing your line by line budget increases? Probably not – because what it costs to provide services isn’t compelling. It’s what results from the services that makes the case. By results, though, I don’t just mean a nice story or picture. I mean results. I’ve been reading and hearing more and more frequently about measuring, quantifying, and communicating the results of nonprofit programs, but somehow we (as a nonprofit community) still seem to be coming up short in public perception.

Once again, a study reports that public confidence in charities is declining. Less than 20% of respondents expressed the highest level of confidence in charities’ practices in using financial resources or in managing programs and services. This annual survey, conducted by Professor Paul Light from NYU’s Wagner School of Public Service, was recently summarized in The Chronicle of Philanthropy. Professor Light was the speaker at Charities Review Council’s Annual Forum in Saint Paul last week. After summarizing the survey results and trends, he focused on two key factors related to confidence. The essential question about confidence, he said, is whether or not the public (and your donors) believe that charities spend their money wisely. Not about what line items are in your budget, or how much is spent on program vs. management – the concern is whether money is spent wisely to accomplish something of value. The second, parallel question is how a nonprofit conveys and demonstrates their value. What benefits occur because of your program? Harlem Children’s Zone’s annual report, for example, is full of data about results, progress, and success. The data demonstrates that money is spent wisely because the results are so real. Professor Light repeated his mantra several times - measure something!

In late November, I wrote an entry about the deluge of year-end appeals for individual contributions. As promised, I kept all the solicitations we received at my house between Thanksgiving and December 31. Here’s my report. We received 66 solicitations for funds in the mail from 55 different organizations (we got more than one each from nine organizations). The nonprofits range from arts, housing, international relief, youth and health care. I know why we’re on some of the mailing lists while others baffle me. My best guess is that I know someone who knows someone who volunteers or is on the board of directors. As I said in November, we responded with a check to a select number of the requests and put the others aside. I saved them all in a show box.

The most interesting way to analyze them, I decided, was to categorize the appeals into four types.

• First, and most compelling to me, were the thirteen requests that told a great story about their work.
• Second are the nine appeals that shared clear numbers and statistics about services and impact – numbers of meals served, children taught, small business financed, etc.
• There is a third group that I call “neutral”. These seventeen letters describe the organization and their work but fail to tell a story or to give much detail.
• The last category – ten letters – are the needy letters. “We need money to pay our rent!” “We face cuts in our budget without you!” “We can’t get enough in grants!” This type of request might make the case for some people but it doesn’t work for me. I want to know what the nonprofit does, not about how bad off they are.

The Chronicle of Philanthropy reported that 2006 was a good year for fundraising, with some organizations exceeding their goals. Anecdotal reports indicate that giving from IRA accounts made possible by tax law changes in August 2006 account for some of the surge, as well as a strong stock market and economic stability. The tax law change is a short-term opportunity so learn about it from Independent Sector for 2007 fundraising. Recent research conducted by Harris Interactive for the Wall Street Journal revealed that 83% of Americans donated to a charity in the last 12 months. These reports are good news for everyone who understands the role that nonprofits play in the community and the world.

I also wrote in November about recent research and trends in donor relationship management. Donors want to have more say about how they hear from organizations they support and what kind of information and solicitations they receive. I was pleased that three of the letters offered us some choices about communications, and one was clearly customized based on our attendance at a specific performance. Now I need to get back to all the other organizations and either get off their lists and save them some postage or start the kind of relationship that I - the donor - want to have.

The annual deluge of year end requests for contributions has begun in earnest. I received four letters at home yesterday, two at work, and three emails.

One of the letters and emails were from the same organization.

I think this year that I’ll make a stack of them and do an analysis after the holidays are over. I will certainly respond to some of them with a check, but others will not get more than an annoyed glance. Annoyed is the operative word. Like most people, my husband and I have a number of organizations that we support regularly because we are committed to their work, believe they are well-run and have a meaningful impact. There will be many other requests, though, from organizations either no connection to our lives, our issues, or our interests. But we’re still on their list – again and again and again. An article in the November 23, 2006 issue of the Chronicle of Philanthropy called “The Vanishing Donor” really struck a nerve with me. The article addresses the high donor dropout rate experienced by many organizations – donors will make one or two gifts and then disappear from the list.

But the biggest reason by far for the loss of donors is that many of them are just as angry as Ms. Medicus about the number of mailings they receive and other aggressive fund-raising tactics, experts say.Even so, most charities that rely heavily on direct-mail and telephone appeals have been slow to change how they interact with new donors, says Penelope Burk, a Chicago fund-raising consultant and author of Donor-Centered Fundraising: How to Hold On to Your Donors and Raise Much More Money.“It is difficult to transition out of the old system to a new one that is better for the times,” but the need for change is long overdue, says Ms. Burk, who has conducted in-depth research on 250 donors to determine what they want from charities and why they stop giving. Charities, she says, “are now in a state where the entire country is over-solicited and donors have hunkered down, looking for ways to get out from under these negative aspects of fund raising.”Donors tell Ms. Burk and other researchers that they are asked for money too often, provided with only token acknowledgments of their gifts, and offered little meaningful information about how their money was used. Donors also complain that they are not given sufficient choices about how a charity communicates with them. (November 23, 2006 Chronicle of Philanthropy).

Join a live discussion with researcher Penelope Burk on December 4th for more on this topic.

The research findings and recommendations were music to my ears:

• Ask donors what method of communication they prefer and how frequently they want to hear from you.
• Put effort into learning what your donors want from you. Do they want information about an issue, information about activities, or simply a thank you letter?
• Reduce the frequency of solicitations.
• Finally, thank your donors personally and sincerely.

I’m going to keep my stack and report back after the holiday. I’m also going to contact the organizations that we do support and invite them to have a different kind of relationship with us – a relationship that fits our preferences and needs. Next year I’ll take that into consideration when it’s time to write the checks.