Posts tagged ‘AFP’

February 23, 2014

Honoring Donor Intent: When it Works, When it Doesn’t

Donor-centered fundraising is smart fundraising. Part of being donor centric involves always honoring the donor’s intent.

The Association of Fundraising Professionals’ Code of Ethical Principles states:

[Fundraising professionals] recognize their responsibility to ensure that needed resources are vigorously and ethically sought and that the intent of the donor is honestly fulfilled.”

Honoring donor intent is essential for at least two reasons:

  1. It’s the right thing to do.
  2. It’s a fundamental way to earn and deserve trust. Without trust, fundraising would be virtually impossible.

To honor donor intent, you must first ensure that the contribution is received according to the donor’s specifications. This is particularly important for planned gifts when the donor is no longer around to make sure everything goes according to plan. The charity becomes the voice of the donor.

The next part of honoring donor intent requires that the organization use the gift for the purpose specified by the donor.

Unfortunately, honoring donor intent is not always an easy thing to do. Sometimes, it works the right way while other times it morphs into something ugly.

Let’s look at two examples.

The Pennsbury Scholarship Foundation learned of the passing of an elderly woman in the community. I first shared her story in my book, Donor-Centered Planned Gift Marketing. A member of the all-volunteer organization’s board knew the woman and knew the Foundation was in her will.

The woman’s attorney produced a copy of the will which included a nearly $1 million bequest for the Foundation and nearly nothing for her two estranged children. However, the children produced another version of the will where the charitable provision was whited-out, literally.

The attorney for the children approached the Foundation to negotiate a settlement agreement. The Foundation, under the advice of legal counsel, held firm and asked that the matter proceed to court as soon as possible.

The attorney for the children initiated a series of delaying tactics hoping that the Foundation would eventually negotiate rather than have the matter drag out. Under the advice of legal counsel, the Foundation held firm.

About one year later, surprisingly quickly given the circumstances, the court upheld the clean version of the will, and the Foundation received the full bequest.

In the Foundation’s case, the donor’s interest was in alignment with the charity’s. The Foundation was right to defend the donor’s wishes. By defending the donor’s interest, the Foundation ultimately benefited. More importantly, young people in the community will benefit for years to come as the Foundation provides scholarships that would not otherwise be possible to award.

Sadly, there are times when protecting the interests of the donor cross a line. In those cases, the organization goes from being donor centric to being self-centered, even greedy. This might be the case with the University of Texas.

Warhol's Farrah Fawcett portrait on exhibit at the UT Blanton Museum.

Warhol’s Farrah Fawcett portrait on exhibit at the UT Blanton Museum.

The University received a bequest from Farrah Fawcett. The Seventies icon left “all” her artwork to the University where she had studied art prior to the successful launch of her acting career. The collection included at least one portrait of Fawcett by famed artist Andy Warhol.

However, the Fawcett story is complicated. Warhol actually did two, almost identical pieces. According to Ryan O’Neal, the actor and on-again-off-again boyfriend of Fawcett, Warhol gave one portrait to Fawcett and the other to him.

January 17, 2014

Is it Ethical When an Ethicist Browbeats Prospective Donors?

Peter Singer, a professor of bioethics at Princeton University and founder of The Life You Can Save, not only thinks it is acceptable to browbeat prospective donors, it’s exactly what he did in an op-ed article published in The Washington Post.

In my opinion, Singer’s piece, “Heartwarming Causes are Nice, but Let’s Give to Charity with Our Heads,” contains a glaring ethical problem:

Coercive Manipulation. Singer suggests that people who donate to causes that he does not endorse, such as the Make-A-Wish Foundation, are guilty of murder.

Let’s look more closely at this issue before exploring other problems with Singer’s reasoning.

After pointing out that the Make-A-Wish Foundation does not save lives, Singer presents a variety of examples of how contributions to his select group of organizations, instead of Make-A-Wish, can actually preserve lives. Singer writes:

Yet we can still ask if these emotions are the best guide to what we ought to do. According to Make-A-Wish, the average cost of realizing the wish of a child with a life-threatening illness is $7,500. That sum, if donated to the Against Malaria Foundation and used to provide bed nets to families in malaria-prone regions, could save the lives of at least two or three children (and that’s a conservative estimate).”

Singer goes on to say:

It’s obvious, isn’t it, that saving a child’s life is better than fulfilling a child’s wish to be Batkid [referencing a child who benefitted from Make-A-Wish last year]?”

Such adolescent logic is harshly manipulative. The taking of a human life is widely considered the greatest possible sin. By accusing people of this sin, Singer is using guilt to coercively manipulate donor behavior.

Mosquito by Ibrahim Koc

Mosquito by Ibrahim Koc

Rather than offering an unbiased exploration of the roles of emotion v. intellect in the philanthropic process, Singer uses the forum to browbeat people to meet his own personal philanthropic standards.

I’m not sure why Singer thinks he is better qualified to judge which charities are worthy to exist or not. Nevertheless, it is certain that Singer feels he has a better moral compass than the rest of us. And, unless we want to be murderers, we should support his anointed causes.

What I find particularly interesting is that, while Singer appears concerned about saving lives, he seems little concerned with the quality of those lives saved.

What happens to the child who has been saved from Malaria? Would Singer oppose donations to build a school to educate those children? After all, the money otherwise could have gone to buy more mosquito nets.

Singer’s op-ed article provides an excellent example of what nonprofit organizations should not do when trying to attract people to a cause. Instead, here are some of the things that charities should do:

December 5, 2013

Special Report: No Tax Reform Bill in 2013

[Publisher's Note: "Special Reports" are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. "Special Reports" are not widely promoted. To be notified of all new posts, including "Special Reports," please take a moment to subscribe in the right-hand column.]

 

A tax reform bill will not be introduced in the US Congress before the close of 2013, House Ways and Means Chairman Dave Camp (R-MI) indicated to The Hill.

US Capitol by Kevin Burkett via FlickrGiven that this is the first week of December and that House Republicans plan to leave Washington at the end of next week for the holiday break, the news is not surprising, even while important.

As soon as one month from now, the House could resume wrangling over a possible tax reform bill, according to Jason Lee, General Counsel for the Association of Fundraising Professionals. However, while the issue will be on the table in 2014, it will be a major challenge for Congress to move something as significant as a tax reform bill with the mid-term elections looming in November.

November 22, 2013

Is CFRE Spinning Its Wheels?

I’m not sure. CFRE International is either spinning its wheels or it is poised for growth. Either way, it needs and welcomes our advice.

I see articles and postings that promote the Certified Fund-Raising Executive (CFRE) credential from time to time. Most recently, I saw:

 “New CFRE Website and Online App” posted by Garvin Maffett in the CFRE International Network Group on LinkedIn (Oct. 31, 2013)

“Are You Certified?” by F. Duke Haddad in FundRaising Success (Nov. 8, 2013)

As someone who has held the CFRE designation longer than 89 percent of all others, I care about and support the credential. So, I’m pleased to see that CFRE Spinning Wheels by cpaparcuri via FlickrInternational has a new, easier to use, more robust, more service-oriented website. I’m also pleased to see others promoting the CFRE designation.

However, despite my enthusiasm for the CFRE credential, I continue to be troubled. Two years ago on this site, I asked, “Does CFRE Have a Future?” My concerns persist. As of 2012, there were 5,630 CFRE holders worldwide, according to the CFRE International annual report. That’s just a 5.7 percent increase over the number of certified professionals in 2007.

That’s a miniscule five-year growth rate.

Depending on how you count larger (expenditures of $500,000 or more) and active public charities, the sector has seen growth of approximately 12 percent in the US since 2004/05.

That means the CFRE growth rate of 5.7 percent has not even kept pace with the growth rate of the nonprofit sector in the US. Every year, CFRE has been becoming less significant, relative to the market, despite its modest rate of growth.

The number of CFREs relative to the number of development professionals is modest at best. The number of CFREs in the US and Canada is about 17 percent of the number of members of the Association of Fundraising Professionals.

November 15, 2013

Prospect Research v. Invasion of Privacy

Edward Snowden became a worldwide “celebrity” when he leaked classified information about the US National Security Agency’s spying programs.

In the process, Snowden’s revelations have fueled discussions around the globe about privacy and access to information.

The Economist recently published a chart by the Boston Consulting Group that looks at how people around the world feel about the privacy of different types of information:

Privacy - The Economist 1113  

As you can see from the above chart, people around the world, particularly in the West, value their privacy. For example, the vast majority of Americans consider financial data and information about children to be “moderately or very private.”

That might explain why alumni from New York’s prestigious Dalton School were upset when volunteer solicitors were given information about the children of fundraising prospects. Specifically, solicitors were told about the children of prospects who had applied for admission to the School but who were rejected.

An alumna who had previously donated to the School described the situation to The New York Times as “horrible.” That’s the last thing you want someone to feel about your development program. It’s the last thing you want someone to say about your organization to a reporter.

The head of Dalton issued a public apology and a promise to do better.

It’s easy to understand the tension that exists between nonprofit organizations and their donor prospects. Organizations want to gather as much useful information as possible, and they want their professional and volunteer solicitors to know a great deal about the people they will approach in order to maximize success. However, this posture is often at odds with prospects who want and expect what they consider their personal information to remain private.

Charities face two issues when it comes to prospect research and privacy:

October 30, 2013

Special Report: Two New Books Acknowledge Rosen

[Publisher's Note: "Special Reports" are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. "Special Reports" are not widely promoted. To be notified of all new posts, including "Special Reports," please take a moment to subscribe in the right-hand column.]

 

We’re honored to report that two new scholarly books have acknowledged the assistance and helpful insights of Michael J. Rosen, CFRE.

American Charitable Bequest Demographics (1992-2012), by Russell James, JD, PhD of Texas Tech University, provideRussell James Books an extensive review of the changing nature of American charitable estate planning. The book presents over 50 charts and graphs in simple, visual fashion with each page containing one graph or chart, comments on the importance of the information, and details about the methodology behind the data.

With James’ book, you’ll learn about the estate planning trends that affect planned giving; you’ll discover how different demographic factors (i.e.: age, race, gender, family status, etc.) affect charitable estate planning; you’ll see the impact of giving and volunteering on charitable estate planning. You’ll also gain many other useful insights.

You can purchase a paperback version of James’ book at The Nonprofit Bookstore (powered by Amazon), Alternatively, thanks to the kindness of Russell James, readers of Michael Rosen Says…may download a FREE copy of the e-book version here, for a limited time.

October 4, 2013

New Pew Report Sheds Light on Tax Deductions and Philanthropy

[Publisher's Note: Michael J. Rosen, CFRE will be interviewed by CausePlanet in a free webinar about his award-winning book, Donor-Centered Planned Gift Marketing. Learn more and register for the October 17 program by clicking HERE. If you need a speaker or trainer, contact Rosen today.]

-

A new report issued by the Pew Charitable Trusts provides valuable insights into the effect that tax deductions and credits have on charitable giving. The report comes at a critical time as federal and state governments continue to look for additional sources of revenue including cuts to charitable-giving tax deductions.

The Pew report, written by Elaine S. Povich, looks at the impact of tinkering with tax write-offs for charitable giving in a number of states including Kansas, Michigan, Missouri, New York, North Carolina, and Vermont. The report nicely summarizes the impact of tax policy on philanthropy:

Tax incentives for charitable giving directly affect donations, particularly from high-income donors, according to Jon Bakija, an economics professor at Williams College. ‘Tax incentives for charitable donations in the US succeed in causing donations to increase, probably by about as much or more than they cost in terms of reduced tax revenue,’ he wrote in a paper published recently by the journal Social Research.”

Bakija went on to write:

This strengthens the case for the tax subsidies for donations.”

In an illuminating case study, the Pew report looks at what happened in Hawaii when the state government imposed a cap on the charitable giving tax deduction. According to Mallory Fujitani,Money Grab by Steve Wampler Photography via Flickr of the Hawaii Department of Taxation, the state expected the move to generate about $12 million to the state treasury. Unfortunately, the move cost charities $50 million to $60 million in lost donations, according to Tim Delaney, President and CEO of the National Council of Nonprofits.

In other words, Hawaii found that for every new dollar of tax revenue it generated from the cap on the charitable giving deduction, charities lost five dollars!

David L. Thompson, Vice President of Public Policy at the National Council of Nonprofits, summarized the experience of the various states that have tinkered with the charitable giving deduction:

What we learned in the states is that the charitable deduction is not just a nice thing for taxpayers, it’s vital to the communities. All politicians from across the political spectrum have come to the same conclusion that we are hurting our communities by discouraging giving to charities.”

Given the crystal clear Pew report, the experiences of various states, and the findings of academic research studies, a number of important questions come to mind:

July 6, 2013

WARNING: Do Not Stick Your Head in the Sand!

I’ve warned the nonprofit sector.

Over the years, I’ve warned the nonprofit sector many times.

Most recently, I provided a warning last month in my post “Special Report: America’s 50 Worst Charities Named”:

As a profession, we must do more to self-regulate. If we do not, we can expect others to fill the vacuum. The ["50 Worst Charities"] investigative report is one example of how those outside the nonprofit arena are filling that vacuum. It’s only a matter of time before government regulators become even more engaged.”

Well, sticking one’s head in the sand did not work. Declaring that most community benefit organizations efficiently do good did not work. Instead, just as Head in Sand by tropical.pete via FlickrI predicted, government has stepped into the void. Due to the nonprofit sector’s failure to self-regulate or to lead the way with government officials, politicians are taking action to further regulate charities.

Oregon has become the first state in the nation to “eliminate state and local tax subsidies for charities that spend more than 70 percent of donations on management and fundraising, rather than programs and services, over a three-year period,” according to a report in The Statesman Journal. This might be a model law that other states soon consider.

Recently, the good leaders at GuideStar, Charity Navigator, and the BBB Wise Giving Alliance penned a Letter to the Donors of America. In the open letter, the authors stated:

We write to correct a misconception about what matters when deciding which charity to support.

The percent of charity expenses that go to administrative and fundraising costs—commonly referred to as ‘overhead’—is a poor measure of a charity’s performance.”

Reading the opening paragraphs of the letter, one might be led to believe that overhead costs should not factor into our giving decisions. However, the authors are quick to point out:

That is not to say that overhead has no role in ensuring charity accountability. At the extremes the overhead ratio can offer insight: it can be a valid data point for rooting out fraud and poor financial management.”

In Oregon, state legislators were clearly motivated to act by the behavior of charities at the extreme.

The Statesman Journal reports:

The Oregon Department of Justice has already identified the top 20 ‘worst of the worst.’

They include charities such as Michigan-based Law Enforcement Education Program, which spent just 2.7 percent of its funds on programs over the past three years; California-based Shiloh International Ministries, which spent 3.2 percent on programs; and Florida-based American Medical Research Organization, which spent just 4.2 percent on programs.”

As a result of the Oregon law, donors to the disqualified charities will no longer be able to take a state tax deduction for their contributions. Also, the disqualified charities will no longer be exempt from property taxes.

June 28, 2013

It’s Not Just What You Say, But How You Say It

I learned a long time ago, as a development professional, that having a great case for support is nearly meaningless unless you also develop compelling messaging.

Later, when attending the Association of Fundraising Professionals Faculty Training Academy, the workshop leader made this same point in the context of making presentations. The AFP/FTA takes good speakers and turns them into the best.

Unfortunately, a great many nonprofit organizations continue to send the same dull, institutional-focused direct mail that prospects easily bypass in the paper shuffle. Charities continue to make uninspiring calls, publish informative articles few read, run ads that donors will only glance at and soon forget.

GCheeseiven the pressures we face in our daily lives and the enormous demands on our time, I understand first-hand how simple it can be to take the easy way. Knowing the content of our message is important, we’re sometimes lulled into the belief that that is enough to make the message compelling.

Well, it’s usually not. It’s not just what you say, but how you say it that counts.

Let’s step away from the nonprofit sector for an example that will make what I’m suggesting crystal clear.

My wife and I are foodies. We live in Philadelphia, a fantastic restaurant city. We’re choosey about where we eat. And we’re even pickier about which restaurant email lists we subscribe to. However, like I said, we’re foodies. So, we’ve ended up on a lot of restaurant email lists, though just the good ones.

Recently, my wife received an email from Tria, a wine, cheese, and beer café that we enjoy. It read, in part:

Cheese, Please

With due respect to our current cheese menu, variety is the spice of life. We’re introducing a brand new list of summer fromage that we’re excited to brag about share with you.

Announcing! The Tria Spring Cheese Menu

Out with the old list, in with the new. Starting today, we’ll be replacing every single cheese on our menu with a new alternate for the summer. No, we aren’t throwing out tons of delicious cheese (the horror!) from our current list – as one is finished, a new one will take over the former’s place on the menu. Pop by and scout out the arrival of a new ultra-creamy Crottin-style cheese from Georgia, a funky thistle-rennet cheese from Spain that redefines luscious, the best cheddar in the world, and much much more. We promise drool-worthy images on our Twitter and Instagram feeds as the curds switch up.

When: Today through the rest of the summer

Where: Tria Rittenhouse and Tria Wash West”

You can see the full message here. 

Tria used humor to capture our attention, and great descriptions that engaged our senses to hold on to our attention. The message also gave us important information about the new offering including when and where we can find it.

The café could have imparted the same core information far more simply. Tria could have said:

Tria has begun offering its summer cheese menu. Visit our Rittenhouse or Wash West location to try the new cheese selection.”

Both messages impart the same basic information and address the what, when, where questions. However, there is no doubt that the original message is far more engaging and, therefore, far more effective.

My wife, also a development professional, agrees on this point. She liked the email so much, she took the unusual step of sending this response:

June 7, 2013

15 Common Planned Giving Myths Debunked (Part 2)

Last week, I presented eight planned giving myths that were identified and debunked by fellow fundraising professionals from the Smart Planned Giving Marketers Group on LinkedIn.

Myth by YaelBeeri via FlickrThis week, I’m presenting the seven additional myths I promised along with a bonus myth.

Continuing to embrace planned giving myths can be harmful. Doing so will make you less helpful to your donors, less able to raise money, and less able to realize your career aspirations. That’s why I felt it important to identify and debunk some common gift planning myths.

Judging from the large number of readers Part 1 attracted, I know plenty of folks around the world agree with me. While I have numbered the myths, strictly for reference purposes, I am presenting them here in alphabetical order by contributor:

Michael J. Rosen, CFRE, President, ML Innovations:

In my book, Donor-Centered Planned Gift Marketing, I go into detail when debunking five planned giving myths which I’ll summarize here:

MYTH 9 — Planned giving is very difficult.

Gift planning can certainly be challenging, However, for the most part, it involves fairly simple gifts: Bequests, CGAs, appreciated property (i.e.: stock).

MYTH 10 — One needs to be a planned giving expert to be involved in gift planning.

Nope. While it would be helpful to be a planned giving expert, it’s not necessary. The vast majority of planned gifts will come from Bequests. CGAs and appreciated property are two other simple, popular types of planned gifts. You don’t need to be an overall planned giving expert to master those planned giving vehicles. However, you should be familiar with other gift planning options and know who to call for assistance when a donor wants to talk about those other options.

MYTH 11 — All planned gifts are deferred.

No, they’re not. For example, a gift of appreciated stock is a current gift. Even with a deferred gift such as a Bequest, depending on the age of the donor, you might not need to wait all that long for the gift to be realized.

MYTH 12 — Good marketing focuses on organizational needs.

Nope. Good marketing actually involves being donor centered.

MYTH 13 — Planned gift marketing should be passive.

Many development pros think it is inappropriate to actually ask for a planned gift. However, 88.7 percent of donors say otherwise. So, why have only 22 percent of Americans over the age of 30 been asked to make a planned gift?”

Charley Shirley, CPA, Senior Consultant, Donor By Design Group LLC:

Follow

Get every new post delivered to your Inbox.

Join 706 other followers

%d bloggers like this: