It’s All Up to You Now

It’s that time of year once again. It’s the season when most charities raise the most amount of money, perhaps because that’s when most fundraising activity happens. However, how tough will it be to raise money as the end of 2019 approaches?

You might be concerned about a recession on the horizon. You should be. We’re experiencing a record for sustained economic growth that quite simply can’t go on forever. A recession is bound to hit eventually even without factoring in trade wars, political turmoil, disruptions to the global oil supply, and the threat of foreign wars.

Among ultra-wealthy Americans, those with an average worth of $1.2 billion, 55 percent believe the US will enter a recession within the next year, according to the UBS Global Family Office Report. About 45 percent of respondents are sufficiently concerned that they are boosting their cash reserves, and 45 percent are realigning their investment strategies to mitigate risk.

While recession fears loom, a major economic downturn has yet to take shape. In other words, the economic climate is currently good from a fundraiser’s perspective. Could it be better? Sure. Always. But, it’s plenty good enough for you to anticipate a successful year-end fundraising effort. Consider some of the following six economic factors (as of Oct 4, 2019):

Gross Domestic Product. GDP is growing at a rate of 2.0 percent. Overall philanthropy historically correlates closely with GDP. So, if GDP goes up, we can anticipate that philanthropic giving will also increase.

Unemployment. The national unemployment rate is 3.5 percent, the lowest since 1969. If more people are working, more people will likely have funds with which they can donate.

Wages. Wages have increased 2.9 percent over 2018. Individual giving closely correlates to personal income. So, if personal income is rising, we can anticipate a rise in individual philanthropy.

Stock Market. The stock market, while volatile, has been performing well. This year, the Dow is up 13.92 percent, the NASDAQ is up 20.30 percent, and the S&P is up 17.76 percent. This is good for fundraising for two important reasons worth mentioning here. First, stock growth means that foundations and donor-advised funds will have more money with which to donate. Second, many individuals own stocks that have appreciated in value. When donating appreciated stocks, individual donors can avoid capital gains tax. In other words, even if someone can’t claim a charitable gift deduction under the current tax code, they can still derive a tax benefit by contributing appreciated securities.

3 Reasons Why Your Year-End Fundraising Will Fail

Most charities raise more money during the last quarter of the calendar year than any other quarter. However, your year-end fundraising effort will fail to reach its potential unless you avoid the following three mistakes:

1. Failure to Tell Supporters What Their Previous Donations Have Achieved

Donors have choices about where they can give their money. Not surprisingly, they want to know that their giving is having a positive impact. If it’s not, or if they don’t know whether it is, they’ll take their support elsewhere. Chances are that your charity’s mission is not entirely unique. In other words, donors can fulfill their philanthropic aspirations by giving to another organization.

A few years ago, the Charities Aid Foundation conducted a survey that found that 68 percent of respondents said that they feel it is important for them to have evidence about how a charity is having an impact. Unfortunately, many donors still complain that the only time they hear from charities is when they want money. Make sure your charity doesn’t make that mistake.

Make sure supporters and potential supporters know how your nonprofit organization is putting donations to work. Let them know what supporters are achieving. Share impact stories in your organization’s print and electronic newsletters, annual reports, special events, website, and special gratitude mailings.

You should even highlight donor impact in your appeals. Consider this: I tested a straightforward appeal against an appeal that highlighted donor impact before asking for a gift. The impact appeal generated 68 percent more revenue! So, make sure people know that their contribution will make a difference by showing them the positive effect past donations have had and by telling them how their donation will be put to work.

 2. Failure to Ask for Planned Gifts

As the end of the year approaches, your organization is facing fierce competition for an individual’s checkbook. Over the next few months, people will be deluged with charitable-giving requests. Furthermore, people will be spending large sums on holiday gift giving, entertaining, and vacationing.

However, a donor’s checkbook is just one potential resource. Many donors can donate appreciated stock, contribute from a Donor-Advised Fund, and give from their IRA. Virtually anyone can include your charity in their Will or designate your charity as a beneficiary.

Make sure you don’t assume that supporters automatically know all of the various ways they can give. Instead, make sure they know by promoting such giving opportunities. Tell stories of other donors who have given in those ways, and not just the mega-donors. Ask prospective donors to consider such gifts. And make it easy for your donors to engage in planned giving. Provide them with clear instructions on your website and in appeals that highlight a given planned gift opportunity.

To read what the experts, including myself, say about planned giving, checkout Jeff Jowdy’s article in Nonprofit Pro magazine.

As Giving Lags, Alarm Bells Sound. Should You Worry?

While the story at some individual charities might be different, charitable giving in the sector for the first half of 2018 is lagging behind the first six months of 2017, both in terms of the number of donors and the amount donated. That’s according to a recent report from the Fundraising Effectiveness Project.

As I write this post, the stock market has just taken a two-day beating with the Dow Jones Industrial Average down 1,378 points.

I won’t blame you if you’re feeling a bit pessimistic about philanthropy these days. However, I will respectfully suggest that you shouldn’t be overly worried. As I wrote in the current issue of Advancing Philanthropy, the official magazine of the Association of Fundraising Professionals, there are actually plenty of reasons for us to be optimistic about the current fundraising environment.

In my article for AFP, I show you how you can be your own fundraising superhero with six tips that will help you control your fundraising destiny. I also detail nine reasons for you to be upbeat about the current philanthropic environment as you seek year-end gifts. However, for now, I’ll just highlight some of the reasons why you should be upbeat about fundraising as year-end and the start of a new year approach:

1. Stock Market Growth. Despite the hit the stock market took this week, it remains above the 52-week level. An adjustment was expected. While volatile, the stock market is likely to stabilize somewhat and even continue to grow.

2. Dire Predictions Really Are Not that Dire. Some have predicted that the new federal tax code will negatively affect philanthropic giving. While it’s too soon to draw a firm conclusion, we do know that even if the worst-case prediction comes true, overall philanthropy will once again be approximately two percent of Gross Domestic Product, where it has been for decades.

3. Economic Growth. GDP growth for the first half of the year has been strong. If economic growth continues, as the Federal Reserve believes it will, this will likely have a positive effect on charitable giving. Remember, there’s a long correlation between philanthropy and GDP.

4. New Tax Code. For both individuals and corporations, a reduction in taxes makes more money available for charitable contributions. For example, many corporations (e.g., Wells Fargo, Southwest Airlines, JP Morgan Chase & Co., Best Buy, BB&T, Apple, Ally Financial, and others) have announced commitments to significantly increase corporate giving.

Here are 3 Simple Steps to Avoid a Year-End Appeal Disaster

We’re now in the fourth quarter of the calendar year. It’s that special time of year when most charitable giving happens. That’s due, in part, to the fact that charities are out in force soliciting contributions as the year nears a close.

While there are many things you can and should do, I’m going to keep it easy. I’m going to give you three simple steps (and a bunch of useful tips) that will help you avoid a year-end appeal disaster:

Step 1 – Make a Year-End Appeal: You should test doing a beginning-of-the-year appeal in January/February since tax-avoidance is less of an issue for more people under the new tax code (see my post about this by clicking here). However, the fourth-quarter season-of-giving certainly remains the traditional time to ask for support. So, unless you have data for your organization that suggests otherwise, make sure you have a year-end appeal. The surest way to have a disastrous year-end fundraising appeal is not to have one.

As you plan your appeal, be sure to segment your prospect file. Treating your prospects as one homogeneous group may make your job easier, but it won’t help you keep your job. You’ll achieve much better results if you segment your prospect pool and target each segment with a tailored appeal.

For example, your message to existing donors will be different from your message to acquisition prospects. For starters, you’ll want to thank existing donors for their support before asking for another gift. Other segments might include monthly donors (You do have a monthly-donor program, right?), volunteers, past service recipients, event participants, etc.

In addition to tailoring your message to each segment, be sure to customize the ask. It’s inappropriate to ask an acquisition prospect for $1,000. Conversely, it’s also inappropriate to ask a $500 donor for $50. Just as bad, it’s a horrible mistake to not ask for a specific dollar amount or not to ask at all.

Step 2 – Have a Solid Case for Support: If you want people to give money to your organization, you need to make a compelling case for support. This is particularly true at this time of year when virtually every other nonprofit organization is out there looking for donations, too. Why should people respond to your direct-mail appeal (or phone solicitation, or face-to-face ask, etc.) instead of the appeal from another organization, perhaps one with a similar mission to yours? Address that question, and you’ll have greater success.

A strong case for support is particularly important when appealing to folks who have already contributed this year. They’ll want to know how you spent their money, the impact they have already had, and why you need more. Tell them those things, and you’ll increase the chance of getting another gift.

In addition to having a solid case for support, you’ll want to create some urgency. Why should people give to your organization now? If you’re the Salvation Army, people automatically get why you’re asking around holiday time. For pretty much any other organization, you’ll have to give prospects a good reason. And if that reason magnifies the impact that the donor’s gift will have, so much the better.

For example, you can have a challenge grant that matches all gifts received through the end of the year. Or, you could have the cost of your appeal underwritten by a major donor so you can legitimately tell prospective donors that 100 percent of their contributions to the appeal will go toward mission fulfillment. Both of these ideas will create urgency while magnifying the impact your donors can have.

Surprise! You’re Most Likely Part of the Top One Percent.

As you begin to make plans for year-end appeals, let’s spend a few moments considering the idea of entitlement. I’m talking about the idea that wealthy individuals and corporations should, perhaps must, “give back” simply because they have a lot of money.

Do you think the top one percent income earners should pay higher taxes? Do you think they should donate more money to charity?

You might feel a bit differently after I share some news with you. If you earn at least $32,400 a year (or approximately 30,250 Euros, 2 million Indian Rupees, or 223,000 Chinese Yuan), you are part of the top one percent of income earners in the world, according to a new report in Investopedia. If you’re reading this post, I’ll bet the odds are that you’re a one-percenter. Congratulations!

So, as a global one-percenter, do you feel under-taxed? Do you feel cheap and that you don’t contribute enough to charities, particularly global non-governmental organizations? Should fundraising professionals in the USA and around the world expect, perhaps even demand, that you donate more? Should they shame you for not giving enough? Are charities entitled to more of your money just because you’re a one-percenter?

You might think so. I do not.

I believe that charities must behave ethically, provide great services, develop a meaningful case for support, and inspire people, foundations, and corporations to give. Charities must partner with donors, report to them, engage them. Simply thinking that the rich, or anyone for that matter, should do more is not going to get the job done.

I want to share a bizarre story with you that would be funny if it were not true. It’s about fundraising for a wedding. It nicely illustrates my point regarding the failure of an entitlement mindset.

Susan and her fiancé were childhood sweethearts. The couple worked on her family’s farm before attending community college. Then, they went to work to “become financially stable.” The couple continued working hard and eventually saved $15,000 for a wedding. Unfortunately, that wasn’t enough money for the “extravagant blow-out wedding” Susan wanted in order to properly celebrate their “fairy-tale” relationship.

Susan figured her ideal wedding would cost $60,000. So, she decided to look for financial help. She says, “All we asked was for a little help from our friends and family to make it happen.” Specifically, the-bride-to-be sought cash gifts. “How could we have our wedding that we dreamed of without proper funding? We’d sacrificed so much and only asked each guest for around $1,500.” As Fox News reported, Susan also said she “made it clear. If you couldn’t contribute, you weren’t invited to our exclusive wedding. It’s a once and a lifetime [sic] party.”

Do Not Make This Year-End #Fundraising Mistake

The fourth quarter of the calendar year is a popular time for charities to send out fundraising appeals. As a result, nonprofit organizations raise a lot of money during the fourth quarter. In addition, many nonprofit organizations host galas in the fourth quarter. Love it or hate it, #GivingTuesday is in the midst of the holiday season.

‘Tis the season to fundraise.

If you doubt that, just Google “year-end fundraising.” You’ll get over 20 million results!

Unfortunately, despite all of the terrific how-to articles, blog posts, books, webinars, and seminars, most nonprofit organizations continue to make a massive year-end fundraising mistake:

They overlook planned giving.

When developing a year-end fundraising strategy, most charities fail to include planned giving for a variety of reasons including:

1. They don’t have a planned giving program.
2. They think all planned gifts are deferred.
3. They think that planned gifts are not time-of-year sensitive.

Let’s take a moment to look at the above reasons more closely.

If your charity does not have a planned giving program, it probably should, assuming you have individual donors. The effort does not need to be elaborate or fancy. The most common planned gift is the simple Charitable Bequest through the donor’s will.

While Bequests are the most common type of planned gift, not all planned gifts are deferred. Don’t over think it. Planned gifts are simply any gift that requires planning. Here are some examples of planned gifts that result in current, rather than deferred, giving:

Gifts of appreciated stock or property (i.e.: real estate, art, collectibles, etc.):

When a donor makes a gift of appreciated stock or personal property, she can avoid capital gains tax and receive a charitable gift deduction. Sadly, many fundraising professionals believe that individuals with appreciated stock or property somehow already know about the advantages of gifting such assets. However, that’s not always the case. Consider this true story from my book, Donor-Centered Planned Gift Marketing:

A member of the board of a scholarship foundation was approached at a cultivation event by a modest donor who wanted to give a $5,000 cash gift. The board member thanked the donor but asked, ‘Do you own any appreciated stock?’ The donor was a bit puzzled by the question, but replied, ‘Yes, I do. Why do you ask?’ The board member then explained that if the donor contributed appreciated stock valued at $5,000, rather than cash, she could avoid the capital gains tax, thereby resulting in a savings. The donor replied, ‘I can avoid giving my money to the government, by giving the foundation stock? That’s a great idea! And, since I really don’t need the money, why don’t I just increase my gift by the amount I’ll save in taxes?’ She did exactly that. However, her generosity did not end there. She was so moved by the work of the foundation and the good advice she had received that allowed her to avoid some capital gains tax that she consulted with her family and her advisors eventually giving over $15,000 to create a namesake scholarship fund.”

Since over half of all Americans own stock (Gallup, 2015), it’s very likely that some of your donors are in a position to donate appreciated securities to your organization. They just need to understand how they can benefit and what the mechanics are.

Gifts from a Donor Advised Fund: