A Donor Offers You $5,000. Now What?

Congratulations! You’ve done everything right, so far. As a result, a prospect has offered to write a $5,000 check to your nonprofit organization. She only has one question: “Who should I make the check out to?”

So, what should you do next?:

A. Let loose with an enthusiastic, sincere, “Whoohoo!”

B. Thank the donor and tell her the proper name of the organization for the check.

C. Tell the donor the information is on your organization’s website.

D. Thank the donor, tell her the proper name of the organization for the check, and then say, “And, let me just ask, if I may, do you have any appreciated stock?”

If you’re like most development professionals, you probably answered “B.”

While that’s not exactly a wrong answer, there is a better one that will be more helpful for the donor and for your charity: “D.”

Sadly, many development professionals wrongfully assume that all donors of means know, at least, the basics of financial planning and tax avoidance. However, that’s simply not the case.

Sometime ago, I served on the board of a nonprofit organization. At one of the charity’s events that I attended, a modest donor came over to me and expressed an interest in donating $5,000. She simply needed to know the organization’s official name so she could put it on the check.

As in the above scenario, after thanking her and providing the information, I asked if she had any appreciated stock.

Puzzled by my question, she replied, “Yes, I do. Why do you ask?”

Special Report: IRS Scandal Shakes Washington

This week, the US Internal Revenue Service acknowledged and apologized for behavior that had long been rumored. The IRS improperly targeted for extra scrutiny conservative groups seeking tax-exempt status.

The IRS did not ultimately deny tax-exempt status to a single group receiving extra scrutiny. Some say this proves that the actions of the IRS were baseless.

The scandal has now shaken the nation’s capital:

President Barack Obama directed Jack Lew, Secretary of the Treasury, to request the resignation of Steven Miller, Acting IRS Commissioner.

Miller resigned and Lew accepted the resignation.

The Justice Department has initiated a criminal investigation.

Exercising its oversight responsibility, Congress has begun its own probe of the IRS scandal.

Obama addressed the nation on television saying, “It’s inexcusable and Americans are right to be angry about it and I am angry about it. I will not tolerate this kind of behavior in any agency, but particularly the IRS given the power that it has and the reach that it has in all of our lives.” He promised reforms.

When wrongdoing by the government is uncovered, it is rightfully news. But, this latest government scandal cuts deeper.

And Now for Something Completely Different

This blog post is a departure from my normal articles. It’s not about nonprofit management. It’s not about fundraising.

Despite the departure from my normally chosen subjects and my homage to Monty Python in the headline, this post is still about something quite serious that should concern you.

With this piece, I’m continuing a tradition here at Michael Rosen Says… April is National Child Abuse Prevention Month in the US.

Every April, I devote one posting to how we all can and must act to prevent child sex abuse. Whether or not you have children, there are things you can and should do.

Did you know that one in four girls and one in six boys will be sexually abused by the time they are 18 years old, according to the Centers for Disease Control?

Did you know that the vast majority of these child victims will be sexually abused by someone they know?

If you have children, here are three things you can do to help keep them safe:

1. Don’t rely on “stranger-danger.” Teaching children to avoid strangers or never to talk to a stranger will do little to keep them safe from sexual predators. Child sex abuse is a crime of opportunity. That’s why the vast majority of child sex abuse cases involve someone the child knows (i.e.: a priest, coach, teacher, babysitter, mom’s boyfriend, etc.).

While it is important to teach your children to be cautious with strangers, you should also closely monitor with whom your child has alone-time. You should minimize the number of times your child is alone with only one adult present. I recognize this will be difficult. For example, if you hire a babysitter, that person will have hours alone with your child. But, you can still protect your child by doing a thorough background check and by installing nanny cams in your home.

2. Respect your child’s personal space. Very often, a mom or dad will say something like this to their child: “Go give grandma a hug and kiss.” If the child refuses, the parent or the intended kiss recipient will become increasingly pleading and/or demanding. While perfectly innocent and seemingly harmless, this teaches children a dangerous lesson: Their body is not theirs to control.

Instead, respect your child’s personal boundaries. Let them know it’s okay for them to pick and choose with whom they will have physical contact. Don’t inadvertently send them the message that adults have power over them when it comes to contact. Make sure they understand they can say no to adults.

3. Read these prior posts. I’ve written two other posts about the prevention of child sex abuse: “10 Essential Tips to Protect Children from Real Monsters” and “National Child Abuse Prevention Month: What are You Doing to Help?”

When you read my prior posts, you’ll find more powerful tips as well as the names of organizations you can contact for more information or assistance.

If you do not have children, or even if you do, here are some additional things you can do:

If You Don’t Care About Them, Why Will They Care About You?

A reader of Michael Rosen Says… recently contacted me with her/his own unfortunate experience with a nonprofit organization. S/he provided me with a copy of an email exchange s/he had with a theater company. I’m going to share this person’s story with you because it contains a worthwhile lesson about the importance of reciprocity.

Before I get to the story, however, I want you to know that I am editing the emails for brevity and any identifying information. I’m protecting the name of the theater company, the name of the Managing Director of the theater company, and the reader who contacted me because neither party knew, at the time, their one-on-one communications would find their way into the press.

From time to time, I write about the blunders that some nonprofit organizations make. I’ve done this, not to shame them, but so others can learn from someone else’s mistakes. It is much less painful if we learn from someone else’s missteps rather than our own.

The story begins when my reader — let’s call her/him “Sam” — received an email from a theater company. Sam, who had purchased two season subscriptions, immediately opened the email. The message promoted an interesting lecture by a well-regarded nonprofit leader in the community. The lecture dealt with leadership and tied-in with the company’s current play.

The event appealed to Sam. Just before clicking through to the organization’s website to accept the invitation and purchase tickets, Sam noticed the date of the lecture: Monday, March 25. Unfortunately, this meant that Sam would not be able to attend because that date was the first night of Passover, an important Jewish holiday.

Annoyed that the theater company would schedule a special one-time program on Passover, Sam wrote to the theater company:

Disappointing scheduling of an otherwise appealing, academic lecture.

So, add this to your discussion: Does a good (nonprofit) leader ‘dis’ a large portion of the region’s top arts patrons through thoughtless event scheduling?

We’ll be celebrating first Seder.

We really would have enjoyed hearing the address on this topic. The speaker is a dynamo.

Sam”

The theater’s Managing Director responded the next business day. This was very good. The Managing Director did the smart thing by responding soon after receiving the complaint:

Dear Sam,

Thanks very much for writing. I’m very sorry for the scheduling inconvenience. We truly do our best, but we present special events all season long and it is not possible to avoid all holidays on the calendar. For example, this event takes place on the first night of Passover, we have a performance of XXXXXXX on Easter, etc.

If you’re interested in history, I hope you’ll consider joining us for the talk on Monday, April 1 with ZZZZZZZZ. He’s truly fantastic.

All best,

Fran”

The response was good in three ways:

1. A high-level person sent an immediate, personal response.

2. The message contained an apology.

3. The author suggested another program that the individual might enjoy.

Unfortunately, the goodwill these positive points might have earned was largely negated by the defensive and dismissive tone of the email. Sam responded:

Do You Know How to Navigate in the Gray Area?

I recently published a post about how City of Hope plans to host a special fundraising event at odds with the organization’s mission. Most readers who responded to a poll at the end of the post felt the event is inappropriate with many even finding the event unethical.

The unscientific poll reveals that 49 percent of respondents feel that the “Let Them Eat Cake” event is “Inappropriate but Not Unethical,” 27 percent say the event is “Unethical & Inappropriate,” 13 percent say the event is a “Great Idea All Around,” and 10 percent believe the event is “Appropriate, Whether on Mission or Not.”

I’m comforted to know that over three-quarters of the respondents feel the same way as I do about the City of Hope event. However, some of the comments I’ve received on this blog site, on LinkedIn, and via email concern me a bit.

Perhaps the comments are a result of how I worded the post or phrased the poll responses. Some people seem to be under the impression that one’s actions are either purely ethical or purely unethical. In certain cases, those folks would be correct. Some actions are clearly ethical or not. Stealing money from Girl Scouts selling cookies (this really happened) is clearly unethical.

However, not all situations are black and white, ethical or unethical.

While the legality or illegality of an action is certainly a guideline, such as the theft incident I just described, something can be unethical without being illegal. Some situations in which we find ourselves put us into a gray area. The most challenging ethical dilemmas often involve situations that are not black and white. If they didn’t, they really wouldn’t be dilemmas, would they?

When considering the possible, multiple responses to a situation, we will often find some alternatives are more ethical while some are less ethical. In the case of City of Hope, the organization could choose to continue to host its “Let Them Eat Cake” event without any changes although many readers found it at odds with the nonprofit’s mission and, therefore, unethical. Alternatively, the organization could choose not do any event.

However, the organization has other options. For example, City of Hope can run its cake event but offer healthy alternatives and educational material as well. Or, the organization could host a different event like the Healthy Chef Competition in Vancouver, Canada that Rory Green, a development professional and blogger, told me about.

Again, some alternative courses of action are more ethical or less ethical than others. The objective should be to always choose the best option, make the best decision.

The most challenging ethical dilemmas of all, however, do not have any good, ethical solution. They’re no-win situations. Think of the novel/movie Sophie’s Choice or the “Kobayashi Maru” test from the film Star Trek II: The Wrath of Khan. Even in these no-win situations, we must cope as best as we can to be the best we can.

As those who work in the nonprofit sector, we must understand that our greatest asset is the trust of the public. The more trust people have in charities, the more likely they are to donate. And, with greater trust comes larger contributions.

Do Not Let Them Eat Cake!

April 15 is an important date on the calendar. In the United States, it’s the deadline for people to file their federal tax return. It’s also when one charity will hold its eighth annual “Let Them Eat Cake” fundraising event.

The charity promotes the event as “Philadelphia’s Wedding Cake Design competition for professionals, students and those who love to bake to create.” Originally conceived by the charity to attract brides-to-be, the occasion now attracts over 1,000 foodies who pay a minimum of $40 each to taste the creations.

This sounds like a great idea for a fundraising event, right?

Wrong!

In this case, the idea of “Let Them Eat Cake” has a major problem: In runs counter to the host organization’s own mission!

The event benefits City of Hope, a National Cancer Institute-designated Comprehensive Cancer Center that conducts independent biomedical research, treatment and education in the fight to conquer cancer, diabetes, HIV/AIDS and other life-threatening diseases.

As is well-known, consuming sugar can be a life-threatening issue for those suffering from diabetes. Over consumption of sugar can help lead to Type II-Diabetes. Compelling research demonstrates that over consumption of sugar contributes to the growth of cancer. This is why organizations like the Center for Advancement in Cancer Education advocate a low-sugar, low-fat diet.

My wife is an Ovarian Cancer survivor. So, it stunned me when I saw an anti-cancer charity promoting the eating of processed sugar and fat. Indeed, City of Hope has placed the consumption of fat and sugar at the very heart of its upcoming fundraising event without any disclaimers or caveats.

I had to understand the thought process behind the event. I had to know if I was missing something. Therefore, I called and spoke with Christopher Fanelli, Event Coordinator at the Philadelphia Development Office of City of Hope and the event’s organizer.

I asked Fanelli to explain how his anti-cancer, anti-diabetes charity reconciled its event theme with its organizational mission. He indicated that there was no issue to reconcile. He stated, “Everything in moderation.” He said that the event successfully raises money and builds awareness for City of Hope “in a fun way.”

When pressed on the idea that the event stands in opposition to the organization’s mission, Fanelli said, “I don’t believe it does it at all. It points people to what our mission is.”

Ok, the event “points people” to the organization’s mission. I probed that point.

“Will the event feature any healthier dessert choices?,” I asked.

“No,” responded Fanelli.

“Will any healthy-eating leaflets or information be available at the event?”

 “No.”

“Will any information be available at the event that explains the dangers associated with eating too much sugar or fat?”

“No.”

Fanelli then went on to explain once again how this fun event raises money and awareness for City of Hope.

I then asked, “So, are you really suggesting that the ends justify the means?”

What to Do When You Mess Up?

[Publisher’s Note: Before getting to this week’s post, I want to mention that Michael J. Rosen, CFRE, was a guest on The Nonprofit Coach Radio Show hosted by Ted Hart, ACFRE on Tuesday, February 26, 2013. Michael discussed his book, Donor-Centered Planned Gift Marketing. You can download a free podcast of the show by clicking here.]

Have you ever messed up at work? Stumbled? Blundered? Bungled? Botched? Made an oversight, gaffe, or mistake, big or small?

If you say you haven’t, I know that one of the following is true about you:

1. You’re not telling the truth, to others or, perhaps, just to yourself.
2. You have a selective memory.
3. You haven’t been paying attention.
4. You have virtually no work experience.
5. You need to be more creative and experimental.

Because I believe we have all made and will make mistakes during our careers, I’m going to share five tips with you that will ease the sting when such incidents occur:

Own it. When you make an error, resist the temptation to pass the blame. Instead, take responsibility. When we own our mistakes, we’re more likely to earn and retain the respect of those around us. Moreover, it puts us in the best possible position to do something positive in response to the problem.

Do not hide it. In politics, there’s a saying: “It’s not the crime, it’s the cover up.” The idea is that the cover up is usually more damaging than the trigger offense. It’s harder to fix a problem if you cover it up or simply pretend that there is not a problem at all. Furthermore, if people suspect you’re hiding something, they’ll apply that suspicion beyond the one instance. Honesty really is the best policy.

Apologize. If your misstep damages or offends another person, apologize immediately. Ok, I know that lawyers often frown at the idea of an apology. They fear it is an admission of guilt that can expose you and your organization to liability. I say, if it’s appropriate, suck it up and apologize anyway. At the very least, express your regret, which might lower the risk of legal liability since it is not an admission of guilt. (By the way, since I’m not a lawyer, I’m not giving you legal advice.)

Learn from it. When we learn from our mistakes, we’re far less likely to repeat the stumble. In some cases, learning from our missteps will allow us to improve our skills or our processes. In other words, if we look at mistakes as an opportunity to grow, our organizations and we can actually be better off than before the incident.

Turn a negative into a positive. I like the expression, “When life gives you lemons, make lemonade.” We can often turn blunders around into something good. In 1928, Alexander Fleming slipped up. He mistakenly failed to cover a Petri dish containing a Staphylococcus culture. However, it’s a good thing he messed up. When he examined the exposed Petri dish, he observed that mold growth had impeded the spread of the bacteria. Fleming’s mistake, and subsequent observation, led to the use of penicillin as a life-saving antibiotic.

In recent weeks, the news media have shared a couple of stories that nicely illustrate the points I’ve just made.

Do Not Let This Happen to Your Organization

It happened recently to a prestigious private school.

New York’s Dalton School inappropriately released private alumni information to its volunteer fundraisers. The New York Times reported the blunder that sent a shockwave through the School’s community and may have a chilling effect on fundraising.

Do not let this happen to your organization.

While volunteer and professional fundraisers must have useful information to effectively perform, organizations must protect sensitive items and keep them confidential. I’m going to provide you with eight tips that will help you keep your organization safe and your prospects and donors happy.

But first, let me tell you what went wrong at Dalton. Here’s what The New York Times reported this month:

But recently, one of the top Manhattan private schools, the Dalton School, might have been a little too open with the data it had about some graduates. The school said [February 7] that it had given out to some alumni who had volunteered to raise money for Dalton information about several other alumni whose own children had applied to the school. The information included whether those children had been admitted, information that most parents prefer not to be shared, especially in cases where the answer is no.”

It is common and acceptable practice for nonprofit organizations to share prospect and donor information with both volunteer and professional fundraisers. Such information often includes contact information, spouse or partner data, affiliation, giving history, volunteer involvement, event participation, and interests.

Dalton ran into trouble when it disseminated information about whether the children of prospects applied for admission and were rejected by the School.

The Times article quoted an upset alumna:

’It’s horrible,’ said one alumna who has been financially supportive of the school, and like nearly everyone interviewed about what happened, declined to be identified for fear of upsetting school leaders. ‘Why should anyone know how much I have given and whether my kid got in or didn’t get in or even applied?’” 

Prospects and donors care about their privacy. They do not want to feel that they are being spied on. They do not want private information about themselves or, especially, their children disseminated to friends and acquaintances. Dalton overstepped by releasing admissions information about alumni children, something acknowledged by the School:

’We apologize for and deeply regret the release of this information,’ said the letter, written by Ellen Stein, the head of school. ‘We are reviewing our protocols to ensure that information about the admissions status of all Dalton families and applicants is protected and remains confidential. We have reached out to apologize personally to those 11 alumni whose names were listed.’” 

While I applaud Dalton for reviewing its data protocols after the inappropriate release of private information, it would have been far better if it had had this review before a problem occurred. You now have that opportunity.

Before a crisis happens at your organization, take the time to review your organization’s own prospect research and information sharing protocols.

Here are some tips to guide you during your review:

To Sue or Not to Sue Over Unpaid Pledges?

Sometimes, nonprofit organizations sue philanthropists over unpaid pledges. This was recently the case with the Kansas City Art Institute. When a charity pursues this type of legal action, it sends shockwaves throughout the nonprofit and philanthropic sectors.

I do believe there are times when a nonprofit can and should sue a donor. However, this should only be done as an absolute last resort. The three instances when a lawsuit might be acceptable are:

1. The donor dies with an outstanding pledge and an heir challenges the will. In that case, the nonprofit might need to sue the estate to establish its claim and collect.

2. The nonprofit incurs real expense based on the donor’s commitment. For example, based on a pledge agreement, the nonprofit breaks-ground on a new building. The nonprofit might need to sue simply to survive.

3. The donor is about to or has entered bankruptcy. Suing the donor would be a way for the nonprofit to establish its claim. (By the way, I suspect that this fear might be what may have triggered the Art Institute case.)

In any case, suing a donor should only be done after careful consideration and only when all other options have been exhausted.

To sue or not sue over unpaid pledges? That is the question. The answer, offered by Brian M. Sagrestano, JD, CFRE and Robert E. Wahlers, MS, CFRE, is: Avoid the problem in the first place!

Brian and Robert are friends of mine. They are both seasoned, wise development professionals who have served on the national board of the Partnership for Philanthropic Planning. I’m pleased that they have offered to share some of their wisdom below as they introduce us to the concept of “concierge stewardship.”

Brian and Robert both generously provided insights and material for my book, Donor-Centered Planned Gift Marketing, for which I won the AFP-Skystone Partners Prize for Research in Fundraising and Philanthropy.

Now, Brian and Robert have written their own book, Philanthropic Planning Companion: The Fundraisers’ and Professional Advisors’ Guide to Charitable Gift Planning, and I’m honored to have been included in their comprehensive volume. The book is part of the AFP/Wiley Fund Development Series.

The official description of the book notes, “For fundraisers and professional advisors alike, The Philanthropic Planning Companion is the one-stop resource you’ll keep by your side to help your donors/clients meet their charitable and personal planning objectives.”

So, do you want to avoid a nightmare at your organization? If so, read on:

 

The Kansas City Art Institute recently sued Larry and Kristina Dodge for failure to pay $4 million on a $5 million pledge that was to be used to pay for construction of a new building, according to The Kansas City Star.

When the Dodges attempted to defend themselves (rather than hire an attorney they indicated that they could not afford), they made procedural errors and a default judgment was entered against them for the full $4 million due on the pledge. According to The Star, the Dodges made three payments on their pledge before their financial situation was impacted by the Great Recession, limiting their ability to fulfill the commitment.

In the article, Larry Dodge is quoted, indicating that he and his wife were in negotiation with the Institute to come up with a payment plan when it unexpectedly filed suit to collect on the pledge.

Regardless of the outcome, the reputations of both the Dodges and the Institute are forever harmed. Prospective donors will think twice before making a major commitment to a charity that would sue them to collect on a pledge. Meantime, the Dodges reputation, despite their many years of generous philanthropy, will be forever tarnished.

We cannot judge the merits of the Art Institute’s action or the ability of the Dodges to pay on their pledge, as we are not privy to all of the facts of the case. However, it raises a much larger issue about charities and pledges.

Special Report: Lance Armstrong Confesses, Finally

Lance Armstrong finally got around to confessing that he engaged in illegal doping. He admitted that he would not have won the Tour de France a record seven times if he had not doped. He acknowledged that he has been a bully. He demonstrated to the world that he is a liar.

Armstrong’s confession in his interview with Oprah Winfrey did not surprise everyone. However, many people did stand-by Armstrong up until the interview. Some of those folks ended up feeling foolish. 

I received an email from one of my readers yesterday. Months ago, the reader had responded to one of my earlier posts about Armstrong. The reader had expressed support for the cyclist and said he should not resign from the Lance Armstrong Foundation (LIVESTRONG) board. This reader’s view was shared by 49 percent of those who responded to my survey.

In yesterday’s email message, the reader apologized to me for having been “incredibly naïve.” I want this reader, and everyone who was duped by this doper for so long, to know that you are not the one who has anything to apologize for. While I appreciate the gesture, I can find no fault in this reader’s desire to see good in a fellow human being. If Armstrong has made anyone more jaded and less trusting as a result of his lies, it’s just another of the many offenses he’s committed.

Unfortunately, it will take us more time to understand the complete fallout from Armstrong’s actions. Will his past connection to LIVESTRONG hurt the nonprofit moving forward? Will LIVESTRONG’s slow reaction time as events unfolded be held against the organization? Now that the world  knows that Armstrong is a liar, will that erode the public’s trust in the charity he created?