Will smaller donors pull us through?

I had conversations with development professionals at three public radio stations today who told me that they will meet or exceed goal in their membership programs. One said that, although they are not crying poor on the air, they think many of their listeners sense that their funding is very brittle right now and are doing wht they can to help balance the scales.

I’ve seen this before. During the New England recession of 1989-1991, a multitude of small gifts helped to offset drops in corporate funding and large major gifts.  Well-rounded organizations have individual giving programs that provide a wide range of giving opportunities.

Scam Watch: Pro Publica follows phony AIDS charity

One of our preoccupations is the misuse of non-profit status for private or political gain and outright fraud by supposed charitable organizations. Pro Public has been tracking the “work” of the Center for Aids Prevention for several months and finds that, despite the fact that the authorities know this is a scam, the group is still at it.

If you know of something similar going on in your community, please let me know.

Target National Index documents continued decline

Target Analytics National Index for the First Quarter of 2009 documents continued declines in giving and gifts that have now spread across all sectors. This information is more current than the annual survey conducted by Giving USA that recently documented the most serious decline if philanthropic giving in more than three decades. That survey showed one segment, religious giving, had escaped the financial downturn. The Target Index shows that the religious sector has been affected.

Oregon Legislature Breaks Trust

The Oregon Legislature has voted to steal $1.8 million from the Oregon Cultural Trust to close a budget gap. The trust was established to fund the arts in Oregon, which traditionally has a parsimonious approach to arts funding.  

Problem is, these aren’t public funds, in the usual sense of the word. The Oregon Trust represents voluntary contributions made by individuals through direct gifts, for which donors receive a tax credit, and proceeds from special license plates, for which purchasers pay extra.

The Legislature has broken the trust—both literally and figuratively—by redirecting privately contributed funds to public coffers. Doug Stamm, President of the Meyer Memorial Trust, which made an initial gift to establish the Cultural Trust, was diplomatically low key about the diversion. But asked what would happen if another organization were to divert non-discretionary grant funds from MTT, Stamm said it would be the last grant they would see.

We annually contribute the maximum amount matched by the tax credit and feel robbed.

Target Index documents giving decline

Target Analytics has released its 2008 Q3 Index of National Fundraising Performance. (Keep in mind that the period covered was prior to the biggest one-day decline in the stock marketing during 2008.)

Index revenue declined a median -1.1% from the first three quarters of 2007 to the first three quarters of 2008. This continues a pattern of decline that began in the last edition of the index in Q2 2008, when revenue declined -2.4% from the first half of 2007 to the first half of 2008.

Relief and animal welfare causes gained ground. Target Analytics provides the most contemporary data on direct marketing results among major non profit organizations. (Full disclosure: our firm does the back-end analysis for Target’s public radio and most public television clients, but we are not involved in the National Index.)

NP Sector personnel strategies during recession

During the Chronicle of Philanthropy’s on-line discussion on the recession and the non-profit sector, Richard Marker, principal at Marker Goldsmith Philanthropy, was asked about the agency management strategy of putting employees on contract. His advice, given my own experience, was excellent.

My own view is that it is a short term savings to reduce support for those you can still employ. It is better to fully invest in fewer employees than short change and antagonize many.

When I managed an organization during a recession, we quickly learned to get the bad news out of the way, reduce staff, and assure those who remained that it was our expectation that they would continue to have a job. The steady drip-drip-drip of bad news sets up uncertainty throughout the organization, damages morale, and virtually guarantees that you will lose your best people-those you most need during the bad period.

Chronicle experts peer into crystal ball

The Chronicle of Philanthropy hosted an online discussion, Outlook for 2009: What the Recession Will Mean for Your Organization. Among the findings:

• Foundations will focus on those with whom they have a relationship.
• Not all organizations will be affected in the same way, and many donors continue to give generously.
• Donations that depend on stock gifts will lag improvement in the market.

Also included, some great tips on strategies to survive and present your case.

ACLU blindsided by Madoff fraud

The ACLU told contributors today that two foundations that support its operations were victims of Bernard Madoff’s Ponzi scheme and have had to cease operations. “That means that $850,000 in support we were counting on from these foundations in 2009 simply won’t exist,” according to a letter sent out to donors by Alma Montclair, ACLU’s Director of Administration and Finance.

On Sunday, the New York Times reported that the Picower Foundation, ranked 71st-largest in the nation by the Council on Foundations, has joined the JEHT Foundation in being forced out of business by the Madoff scam. A number of Jewish charities, including Yashiva University, have been affected by the loss of promised grants.

Both had significant funds invested with Bernard L. Madoff, who was arrested by federal agents on December 12 and charged with running a $50 billion fraud scheme.

It may NOT be just “the economy, stupid.”

Word came to me within the past few days of a non-profit organization that is deep financial distress and has had to lay off personnel and curtail operations. News reports cite the economy.

Well, the economy is not helping this organization, but it’s not the total cause of its problems, either. Rather, much of the damage is self-inflicted.

Within the past few years, the organization has curtailed much of its fundraising operation. Two of its top people have been encouraged to leave.

This organization has really cut costs. (I’m sure the board was pleased.) But its revenue–its NET revenue, mind you–has tanked. It is its own worst enemy.

As a colleague once remarked, I am no longer surprised by how often we shoot ourselves in the foot, but rather by the glee with which we reload to shoot ourselves in the other foot.

Conducting a capital campaign during a downturn

If you’re contemplating a “must-do” campaign, what do you do? If your case is strong and your donors are with you, I advise that you move forward. It will take you longer to reach your goal than it would have two years ago, your pyramid may be somewhat flatter, and you will have to visit more donors, but you can make it. (In most campaigns, there are always some who are not contacted due to volunteer fatigue; now you will have to see more of them, and that requires more volunteers.)

A regional hospital foundation officer tells me they are proceeding with five separate hospital campaigns in as many communities. Of 30 donor prospectives whom they re-interviewed, only one advised them to pull back.

So again, is your case strong? Is it for a facility or improvements taht your community badly needs? Are your volunteers committed? If so, this may be precisely the right time, because those with less urgent campaigns may be withdrawing.