Oh-Oh ...disturbing stats about nonprofits' fundraisers

A recent Chronicle of Philanthropy post cites a new national study by CompassPoint of 2,700 development directors and nonprofit leaders that details disturbing findings. Here are some:

• more than 50% of executive directors state they cannot find well-qualified staff to head up fundraising. Many organizations have had their Director of Development (DOD) position vacant for months - some even years.
• Half of chief fundraisers reported they intend to leave their jobs within two years or less and 40% are considering quitting fundraising completely.

I understand that many smaller nonprofits may not be in any position financially to hire directors of development. Nevertheless the implications and lessons drawn from this study apply to everyone.

Unhappy development directors blame their organization leaders for lack of understanding or commitment to fundraising. Some of these leaders, they say, are prone to invest their entire fundraising operation in a single individual,  creating unreasonable expectations. There is no doubt an effective DOD must possess a broad range of skills - event planner, major donor cultivator- schmoozer, grant writer, and interpersonal relations star. That combination is rare and may account for the vacancy rate. Assuming such a paragon can be found, success will be futile unless the organization as a whole is prepared to support not only the position/function, but also the importance of fundraising to the realization of the organization's mission.

Hold on...what do you mean? Some organizations don't think raising money is critical? The answer lies in defining "organization." Too many nonprofits look on development departmentally - occupants in a  table of organization box toiling away on reaching a monetary goal.  The objective should be to have fundraising be an organization-wide activity, infused throughout the design and culture of the nonprofit. It has to be a team effort.

Key team members with the DOD are a) the board and b) the executive director or CEO. Ultimately boards are or should be charged with fiduciary stewardship of the nonprofit. Executive directors (EDs) are responsible for directing the organization- with daily oversight of its programs and smooth operation. They are also its primary public face, whose knowledge of and passion for the mission are constantly on call. Seventy-five percent of EDs in the study claimed their trustees were inadequately engaged in raising money. Thirty-six percent said their boards had no fundraising committees and seventeen percent had no involvement in fundraising whatsoever.

Board engagement is critical. The members are connectors to the community, as well as perceived leaders. Unless they are prepared to raise money - directly and indirectly - and understand that fundraising is part of their responsibility as trustees, the nonprofit will suffer. "Friendraisers" as a substitute just won't cut it. Too often, as one survey respondent stated, "boards associate development with desperation and with having to give money themselves." The latter, at least, should be a given.

The relationship between the ED and DOD is important and a test of whether the desired teamwork is working. The ED should be thinking of development strategically. I had the great fortune at Maymont Foundation in Richmond of, for some years, having Judy Ford as DOD, from whom I learned a lot. We formed a partnership, along with a committed board, that succeeded in building a robust development operation and most notably raising $18 million in a three year campaign to build and endow a new Nature and Visitor Center. Judy was, and is, the paragon cited above. Additionally she  showed us that fundraising could even be fun!

Junior staff must also be included in the organization-wide development team. They work hard to advance the mission and can influence a potential donor's perception of the nonprofit.

If the entire institution - staff and board - embraces fundraising and creates a culture conducive to philanthropy chances are good that the dim results found in this survey can be turned around. In an interview in the latest issue of the magazine Inc., the billionaire art collector and philanthropist  Eli Broad said: "Philanthropy is not charity. Charity is writing checks. Philanthropy is an investment where you can see return."  Amen.

Fiscal Cliffhanger for Nonprofits

Who would have thought the scholarly Federal Reserve Chair Ben Bernanke would have been cast in the role of a catchy phrase-maker, the envy of any marketing brand guru? That he did in February of 2012 when he described as falling off a "fiscal cliff" the economic effects of severe tax increases and spending cuts mandated to take place on January 1, 2013 by the Budget Control Act of 2011, passed by Congress after the legislative and executive branches failed to reach agreement on deficit reduction that summer. It was a classic case of "solving" problems using a manana approach. Now, unless the Obama administration and the Congress, chiefly the House, can agree on alternatives, it is over the cliff we go.

Vats of ink have spilled on this issue, so I will be brief. As of this writing, it would appear that, although the scene changes daily, President Obama and Speaker of the House Boehner are not yet in accord. Some pundits ( from the Sanskrit meaning "learned" although that should not apply to all) suggest even if they reach agreement, the Speaker may have a hard time selling it to his colleagues - or even that he may want to wait until January in order to save his Speakership. Others even posit a strategy that a voluntary dive over the cliff may be desirable in order to compel action to mitigate the effects of the austerity mandates (c.f. Samuel Johnson's "Nothing focuses the mind like a hanging.").  All of this conjecture is swirling around in the whirlpool of politics.

Whatever the actual details on the outcome, there is no doubt that the result will affect nonprofits. At the top of the list is the allowable tax deduction for charitable gifts, adjustment to which some believe has traction at both the White House and Congress. Capping the deduction in some fashion seems to be favored. There is some disagreement as to how much impact such an action would have on giving. Nonprofits should  know that there has been a very active lobbying--yes lobbying--campaign undertaken on their behalf by the umbrella group Independent Sector and such powerhouses as the American Red Cross -with the deduction matter at its core. Still, some charities are even suggesting to their larger donors that they uptick their giving in 2012 to take advantage of the deductability regulations in place.

Then there is the matter of large tax increases, especially on the wealthy, cutting into disposable income, some of which presumably would be directed to charitable giving. Changes in entitlement programs, such as Medicare, would bring further pressures on those nonprofits that provide social services.  Specialized federal programs, such as the Arts/ Humanities Endowments and PBS, long on the far right's chopping block, are facing curtailment at least. There is no shortage of grim scenarios.

Nonprofits, by their nature and necessity, have had to be resourceful. Adversity is not novel to them. This case however, may present challenges of historic proportion because its impact is potentially both deep and widespread. Organizations and their donors alike will feel pain, the degree of which is not yet known, regardless of whether or not we are forced off the cliff's edge. We will know soon enough.

Finally, I am reminded of Shakespeare, from "As You Like It" (Act 2) : Sweet are the uses of adversity/Which , like the toad, ugly and venomous/Wears yet a precious jewel in his head..."  May we, in the end, find the jewel.

Stay tuned. Courage! Best wishes for the holidays and the New Year. See you then.

Getting the dog back...

I'll get to the dog in a minute (it's not Mitt Romney's dog by the way). Thankfully the 2012 presidential and congressional elections are over. Millions of dollars, words, and volunteer hours have been expended. Our democracy has once again done its job, whether or not you like the outcomes.

The election has prompted this post, which is about politics, politicians and nonprofits. Tip O'Neill, the late Speaker of the House, famously said: "All Politics Is Local." In other words, politicians at their peril ignore local issues and concerns of their constituents. By the same token, nonprofits, at their peril, ignore politicians or "elected officials" - at all levels of government. Too often, once an election is over, the need to be engaged with politicians and the political process fades from consciousness.

The fact is elected officials can have an ongoing impact on the fortunes of nonprofits. There is of course the possibility of legislative funding that, although shrinking, will likely continue to exist in some form or another. There are also issues of policy and regulations at every level of government.. Nationally, as we edge up to the "fiscal cliff," on the negotiating table will be the level of tax deductibility for charitable donations, the existence of federal agencies that directly fund cultural organizations (NEA, NEH), the Public Broadcasting System, etc. At more local and regional levels, are zoning regulations and, as government budgets shrivel, growing scrutiny by cities and counties of nonprofits' property tax exemptions.

I am not going to lay out a grand scheme here but simply to suggest nonprofits should get to know their elected officials and vice versa as soon as possible. There are bound to be new players in the game. Don't get acquainted with them at the cusp of a crisis -that may be too late. Here's an example. Say you have just heard  your county government intends to widen the road that goes by your organization and that you fear that will impede client/audience access to your facility. You call your appropriate county supervisor. You don't want to hear the response: "You' re who, and with what again?"

In mid-career I was actively involved with the political process, as executive director of the National Assembly of State Arts Agencies, then as chief of staff for a U.S. Congressman  and later as Director of Government Affairs for the American Association of Museums. I learned that Tip was right and that politics is also about people (the same can be said about fundraising). 

In the late '80s, there was a big battle in the U.S. House Ways & Means Committee about the Unrelated Business Income Tax, which if changed would have resulted in taxing income of museum shops for example. The big guns rolled in - the Metropolitan Museum of Art et al., some armed with paid lobbyists.  I happened to discover that the lady volunteer president of a small roadside historical society in Texas might be acquainted with Rep. J.J.(Jake) Pickle, the Ways & Means Subcommittee Chairman hearing the issue.  I called her, outlined the situation and she drawled: "Why sure I've known  Jake for years, we were schoolmates, I'll call him - they shouldn't be taxing our postcard sales!"  The taxing matter died. I can't say the "lil 'ol lady" in Texas provided the tipping point, but she certainly helped.

Speaking of Texas, it's time to get back to the dog, At a meeting I attended with a constituent group lobbying then U.S. Rep. Pat Williams of Montana, a great supporter of the arts and humanities, Williams told a story that originated with LBJ. Johnson loved to tell about the sign he'd seen over a storefront in an east Texas town that read: "H.H.Wilson- Veterinary and Taxidermy - 'Either Way You Get Your dog Back.' " The moral was that you might not always get exactly what you want; close might have to be good enough.

Either way it's best if you know your elected officials and they know you. If you don't, start now

Comments always welcome below. 

The Duct Tape on the Carpet

After a few weeks at a new job directing a nonprofit, I noticed a pattern. There seemed to be a pride taken by some staff in being "on the cheap." The fraying administrative office carpeting had duct tape covering the rips. When the 10 year old Hoover quit, it had been routinely sent out for repair.  The organization, though not awash in cash, did have an endowment well into the millions. I thought  the shabby carpet sent a wrong signal to visitors/donors and the the person who operated the vacuum cleaner might find her job easier with the latest model. That begged the question: Might there be a benefit derived from employees in nonprofits having a pleasant work environment?

The question goes to the heart of an issue in current discussion these days: the value in judging the effectiveness of nonprofits by their low administrative costs. Since the advent of rating organizations such as Charity Navigator, such judgements can be made based on indices, such as program/administrative cost ratios. But is this fair or accurate?

In an article in The Los Angeles Times last April, retired community foundation executive Jack Shakeley answered the question in the negative. Although he admits low administrative costs might indicate prudence, they might equally demonstrate inadequate staffing and sub par salaries, which can affect turnover and/or  performance. He believes that the rise of evaluation through analysis of overhead costs is based on the human propensity for "quick answers and gut reactions."  That, plus the difficulty in assessing the merits of nonprofits programmatically, has created what he calls the lazy pseudoscience of judgment by level of administrative costs. In fact, he claims some nonprofits have under-reported overhead costs to gain a competitive advantage.

The writer/consultant Don Pallotta has weighed in on the subject. He is the author of the book "Charity Case: How the Nonprofit Community Can Stand Up for Itself."  He was the guest October 2 in a Chronicle of Philanthropy Online Discussion entitled "How Charities Can Fight Overhead Myths. "  The solution he offers lies in systematic education of  the public in the mission and programs that drive the organization. He states "low overhead will never inspire anyone" and that "maintaining low overhead at the expense of mission is a betrayal of the donor."  The nonprofit must make clear its goals, the progress it is making in reaching them and how it measures that progress.

A regular target of the overhead detectives is the cost of fundraising. Pallotta challenges a popular perception - that donors don't want to fund fundraising. Does a donor want to be the only one? If the donor believes in the organization's programs wouldn't he want others to join in?   If the organization has been boasting about low overhead in its appeal to donors, then the outcome of the "ask" is up for question.

I have experience regarding this issue. When I started at Maymont Foundation in Richmond in the early '90s, there was no development department. I asked the board to fund a development director. A debate ensued within the board - one faction saying fundraising was the director's (my) job; the other saying yes, but there had to be staffing for that function as well. The funding to start what was to become a powerful development engine (6 years later completing a $18 million capital campaign) came about because the board was persuaded by the argument that it was an investment that would eventually pay off - and it did. The board leader in that fight used to say "You have to spend it to get it."

I am not preaching profligacy but some nonprofits have such a tradition of mendicancy that they risk developing a self-image of martyrdom. Such an attitude is not conducive to raising funds or to promoting positive community perception of mission and programs. Donors prefer to give to opportunities rather than to desperate organizational need. If the latter is the central message, success will be limited. The key concept to hold is the appeal to donors of investment in mission and the definition of the return on that investment.

As for the vacuum cleaner, the staff housekeeper was consulted. She was pleased to be asked and chose repair- she liked the Hoover. The carpet was replaced and the offices spruced up. Both external and internal image were enhanced. "Poor little me" and "judge us by our frugality"  became attitudes connected with the past.

Spend It All?

 "Spend it all Jay!" - opposition bumper sticker seen during U.S. Sen. John D. Rockefeller IV's first Senate run in West Virginia.

An article by Jim Dwyer in the August 8 edition of The New York Times profiled the remarkable philanthropist Charles F. Fenney and his efforts to do just that - spend it all. "All" includes the $6 billion he has already given away since 1982 through his group of foundations called Atlantic Philanthropies. His goal is to dispose of the remaining approximately $1.5 billion by 2016.

Mr. Feeney, now 81, made his fortune by inventing and operating airport duty-free shops internationally. He sold the business in 1997, at which time he revealed that his wealth was the source of Atlantic Philanthropies,which he had managed to run anonymously for 15 years, even though it was one the largest grant makers in the world. Gradually he has opened himself up to publicity in an effort to encourage others of great wealth to become major philanthropists. Warren Buffett has termed Feeney the "spiritual leader" in that effort.

He resembles Mr. Buffett in his eschewing the trappings of wealth. His clothes come off the rack, he lives simply, on a side street in Manhattan, not on Park Avenue in a penthouse, and until recently he flew coach. He believes the problems of the world need attention, now before the solutions become even more expensive. Dwyer quotes Mr. Feeney: "When you've got the money, you spend it. When you've spent it all, let someone else get going and spend theirs." And so,with the exception of bequests for his five children, that is what he intends to do, or as he puts it: "I want the last  check I write to bounce."

It probably won't surprise you then that no building made possible by a gift of his bears a inscription with his name. Furthermore, he set up his philanthropies in Bermuda to avoid disclosure requirements, but because he did, he could not take tax deductions for his contributions.

This completes the counter cultural picture of Charles Feeney's philanthropy. For one thing, it is counter to the culture of "naming" as a reward for contributions. Who hasn't seen capital campaign appeals that list naming opportunities, sometimes even before making the case for support of the project. Paving bricks, exhibits, theatre seats, wings, entire buildings, etc. In a recent visit to a Boston museum, I even rode in an elevator named for a donor.

Please don't misunderstand me. As an administrator of nonprofits who has taken part in helping to raise some millions of dollars for capital projects, I know the power that the opportunity for public recognition brings to attracting contributions. It works. Certainly it can be overdone, where donor names clutter up space in a kind of philanthropic wallpaper. And occasionally  the background of a major donor  causes embarrassment. In the late '80s the Saudi Arabian international arms dealer Adnan Khassogi pledged millions to American University, where he was a trustee, to build a sports and convention center. When finally constructed it bore his name.  An outcry ensued and the name was removed only after he reneged on the remainder of his pledge.

Sports stadium naming has become a huge income source for both professional and amateur teams. It is a form of high profile marketing. In 1999 the internet service provider PSINet spent $100 million to have the new Baltimore Ravens stadium named PSINet Stadium. Then the company went broke and M&T Bank got the stadium name. Just as well, as apparently many Baltimoreans had trouble pronouncing PSINet and resorted to nicknaming it the "Piss Bowl." 

Finally, in a bizarre use of naming influence, Penn State University suggested last April to the Paterno family that it would rename Beaver Stadium for Joe Paterno in exchange for the family agreeing not to sue the university. The family declined.

The selfless philanthropy of Charles Feeney is rare.  How many have or will follow his example? The important message that everyone in the nonprofit field hopes will stick is that the very wealthy will want to open up their wallets wide to support nonprofit missions. A naming here and there is welcome and appropriate. Spend it all? Charles Feeney raises the bar, challenging especially those at his level of wealth to join him in making a big difference to society.

How Far to Stickle

I am readying to leave the first week of August for two weeks "Down East," so I will join in the spirit of summertime by being brief, if not breezy, this month.

On July 20,  the Harvard Business Review blog site posted an entry by Kyle Wiens entitled: "I Won't Hire People Who Use Poor Grammar. Here's Why." Wiens, CEO of Ifixit.com, the world's largest online repair manual and Dozuki, which helps companies write technical documentation, requires every job applicant to take a grammar test, regardless of the nature of the position. Wiens admits "we write for a living" and perhaps has higher standards about language usage than most (by the way he takes into account extenuating circumstances such as dyslexia and English as a second language). Poor test scores or errors like mixing up "to" and "too" means the application goes into the circular file. Period.

Wiens would be known as a grammar "stickler" the term Lynne Truss uses in her delightful book "Eats, Shoots & Leaves - the Zero Tolerance Approach to Punctuation."  Wiens defends his stern policy as being a way to ferret out sloppiness and inattention to detail. He claims that those who do better in the grammar test will make fewer mistakes even in non-writing tasks, such as labeling parts or stocking shelves.

I have reviewed hundreds of resumes and cover letters in my career and sympathize with Wiens's position. Improper spelling and screwy usage is an effective filter, for reasons Wiens outlines. These days, with tweets, emails and real time online chats, the chances grow that sticklers will be faced with greater challenges.

Added to spelling and punctuation whoppers are the odd phrases that have cropped up in everyday life. For instance, "you're welcome," as a reply to expression of gratitude or a compliment for good service, has been replaced by "no problem." I keep wanting to respond that I was not aware of there having been a problem in the first place. And what about that supremely irritating "Whatever..."  This dismissive word,with its tone, indicates the speaker can't be bothered with further discussion. If we ever see this written at the end of a Supreme Court opinion, we are in trouble.

Job applicants can't depend on computer spell checking either. It has been long corrected, but in 2008 when I happened to type in "Obama" in a document, the dreaded yellow outline was superimposed and suggested I should correct it to "Osama."  Ironic, no?

My friend and mentor the New Orleans attorney Thomas B. Lemann (see my blog of January) deserves a place in the Stickler Hall of Fame. He is well known to newspaper editors, including The New York Times, who have received any number of complaints regarding improper usage. On his desk is a plaque given to him by an admirer: "Which Hunter."  The frequent misuse of "which" for "that" is a favorite target of Mr. Lemann.

Sticklers enjoy debates among their number. James Thurber and his editor (THE editor) of The New Yorker Harold Ross had a famous long-running battle over the use of commas.  Ross favored them; Thurber did not. An example of this style dispute can be found regarding the description of our flag. Thurber wanted red white and blue; Ross insisted on red, white, and blue. Thurber complained: "All those commas make the flag seemed rained on. They give it a furled look. Leave them out and Old Glory is flung to the breeze as it should be."

How far to stickle? The Wiens approach is not an academic exercise; it results in action, unfair or not. He believes that good writing is important and indicates clarity of mind. If its basic rules are violated, then that sends a behavioral signal.  It is arguably an extreme position. By the way, his blog prompted 2400 comments, ranging from Boo to Bravo. Quite a few even challenged his grammar.  Perhaps you will want to take a crack at mine. I would be delighted. It means you have read the blog and I can always stand corrected. Now I must return to my packing.

Comments always welcome below ot at: info@geoffreyplattconsulting.com

Cavalier, Indeed

Some weeks ago I posted a blog about proper treatment of volunteers in nonprofits (“With Volunteers, Thank, Don’t Spank” 4/23). Here the lesson regards proper treatment of CEOs.

The University of Virginia (UVA) sports teams are known as The Cavaliers, and their logo is a crossed sword.  The original Cavaliers (the word means horsemen, from the French) were Royalists supporters of Kings Charles I and II in the 17^th century English Civil War. I am not sure why UVA took on that moniker, but Virginia does have an Anglophile tradition.

“Cavalier” also means haughty or disdainful, as in treating someone in a “cavalier manner.” Ironically that’s what best describes how the UVA governing board leadership recently handled the removal of UVA president Teresa Sullivan. The ouster was masterminded (or miniminded if there is such a word), by UVA Rector (UVA’s term for board president) Helen Dragas, who informed  Dr. Sullivan on June 10 that she had enough board votes to oust her. However, the full board was never convened to take a vote.  The popular Dr. Sullivan, in office for only two years, resigned. 

Then the proverbial excrement hit the fan, as much regarding the decision-making process as anything else. Students protested en masse, the faculty Senate demanded Sullivan’s reinstatement, some donors threatened to exit, and the media erupted into a high frenzy. The Board appointed an interim President from the Faculty, who later announced he would refuse to serve.  As a former Virginian (1992-2006), I know how passionately UVA grads feel about their school, and well they should, as it is one of the premier universities in the country, with fine sports teams to boot.

The board, known formally as the Board of Visitors, is composed of sixteen members, all appointed by the Governor for  four year terms, with legislative approval. As Virginia governors themselves are limited to one four year term, in this case eight of the Board members were appointed by either Democrat former Governors Tim Kaine, now running for U.S. Senate, and Mark Warner, a U.S. Senator, and the other eight by the present Republican Governor Bob McDonnell, mentioned as a possible Veep choice for Matt Romney. Thus this fracas took place in a politicized environment.  Governor McDonnell finally announced the Board had to take action at its specially called meeting on June 26, one way or another, on any possible reinstatement of Dr. Sullivan or he would fire them all.  Tim Kaine on June 22 called for the reinstatement of Sullivan.

As the matter unfolded, it became clear Ms. Dragas, a successful real estate developer from Virginia Beach, had co-conspired with some other big money board members, notably  Vice Rector Mark Kington (who subsequently resigned),  to effect the ouster.  I guess they believed in the golden rule: “Whoever has the gold, makes the rules.” 

But they underestimated the passion of UVA supporters and their outrage at foul play. Slate’s John Dickerson writing on June 22 suggested the Rector’s coup d’état entailed an unreasonably high degree of risk and advised: “When you’re climbing a tricky pass on El Capitan, don’t wear an anvil.”

The denouement of this drama took place at the special meeting of the full Board on June 26, where, by unanimous vote, Dr. Sullivan was re-instated as President. At the same time the Board expressed confidence in Ms. Dragas’ leadership. This apparently was a compromise, as Dr. Sullivan had previously declared she would not accept reinstatement unless Ms. Dragas resigned. Outside the Thomas Jefferson-designed Rotunda where the meeting was held, student and faculty awaiting the result broke into cheers at the news that Dr. Sullivan would regain the presidency.

The brouhaha drew national media attention, questioning the manner of dismissal, while musing on the financial strains faced by universities in general and public universities in particular.

Finding and retaining superior talent to run not only universities but any nonprofit these days is difficult enough without the example of a board such as UVA’s engaging in shabby and underhanded behavior. Some may lay blame on the fact that the UVA board is politically appointed and/or that is made up largely of big donors.  But any governing body in the nonprofit world, however constituted, can ill afford to make decisions in such a manner, which runs the risk of alienating the very constituencies - in this case, students, faculty, and alumni - it is pledged to support.

At a high cost to UVA’s reputation, it took sixteen days for the Board to right the wrong.  Let the Biblical admonition of reaping what one has sown be taken to heart.

Comments always welcome