Non-Profit Chas

I need software. As a long-time tech guy, I have high standards. But I just can’t find what I’m looking for. I’m asking for your help.

Here are two “user stories” to consider how the software might be used.

User Story 1

A donor writes a check. We log the donation, making sure his contact info is up to date. A review of the donor’s giving history shows that the gift is a step up from previous gifts, prompting me to make an extra phone call to thank him.

User Story 2

We’re working on a new campaign and are identifying prospective major donors. We produce a report of all gifts in a certain time range, over a certain amount, and from certain segments of our people. The report reveals a prospect with close ties to one of our board members, who helps secure a significant lead gift.

Requirements

The user stories help determine requirements, but I’ve also given a lot of thought to features. These are usually split into “Must Have” and “Nice to Have” lists.

Must Have

1. Web based – Our team is made up of volunteers all over the area
2. Multi-user – We have several people who need access to the data
3. Giving history – pull up all previous gifts from a donor
4. Reporting – arbitrary reports such as gifts in a date range
5. Restrictions – noting that gifts are restricted for a specific purpose
6. Export – it’s our data, and if we need to use it outside the software we need to be able to export it

Nice to Have

1. Campaigns – Indicate that gifts are part of a specific campaign
2. Helpful reporting – some systems offer suggestions for donors who are more likely to give and why
3. Accept online donations – we don’t have any online donation system yet but we plan to – some web-based systems actually handle this for you
4. Integrate with online giving – at the very least, we’ll need to get that data into the system and it would be great if we could automate that
5. Alerts – email alerts or reminders of certain things – hitting campaign milestones, major gift anniversaries, etc.

Hmmm…

So, for a small non-profit with relatively small budget and no paid fundraising staff, what options would you recommend? What’s easy enough to learn and use, but powerful enough to provide value?

Every non-profit fundraising and marketing consultant I’ve met recommends hosting a single “signature” event each year. This event becomes part of your brand and continues to grow in revenue over time. Many organizations rely on this event to produce their entire operations budget, even without any program fees.

When I started at Camp Fire, we had a dozen or so events each year. These ranged from program- to fundraising-oriented events that usually took place over a few hours or a few days. We held a yard sale where we collected and sold all kinds of donated goods. It took a month to collect stuff, most of it never sold, and in the last year we did it we brought in something around $750.

That’s $750 more than we had before. Not bad, you say?

How much did we spend on this fundraiser?

Say we had 10 people average 20 hours to collect, organize, price, set up, and run the event. I believe it was far more time than that, but let’s just estimate.

So for 200 hours, we made a whopping $750. That’s $3.75/hour. Given that the people running this included a handful of paid staff, we lost a lot of money running such an event. Not only did we lose money, we wasted valuable time that could have been better spent marketing, developing programs, and more efficiently raising money.

Crunch the numbers

In order to make a wise decision about fundraising, consider some basic factors:

• What is the profit we’ll make from this event on an hourly basis?
• Are the people who do this work worth more per hour than this?
• What other activities could we focus on that would generate more revenue?
• Are there indirect or intangible returns: marketing, publicity, relationship building?

Why an Hourly Rate?

Federal minimum wage right now is $6.55 an hour. So at the very least, you could get a minimum wage job and donate all of the paycheck to your organization. So your baseline should start at $6.55. Now hopefully you’re talented enough to get yourself a job that pays more than minimum wage. Now that baseline goes up again. Say you’re at $10/hour. But in reality, that’s only a $20,000/year salary. Your board members probably make more than that, right? So they don’t want to work for $10/hour for your organization – their time is worth more than that. In fact, if given a choice between working for $10/hour and simply paying you the $10/hour (because they make a lot more than that) they might just pay you instead. See where I’m going with this?

If your board member is a lawyer who makes $300/hour, is he going to volunteer for your fundraiser all day to make a measly $100? Or would he just offer to work an extra hour and just donate the extra cash?

You have to determine how much your fundraiser will make per hour worked and, if that’s acceptable, then get the right people to do that job.

I’m not an MBA, but I play on one my blog

Let’s look at a sample model I drew up for a small fundraiser. We assume two staff members both making $10/hour and an additional six volunteers. Everybody would work 48 hours each.

Expected revenue: $10,000

$10,000 from 384 hours of work means that our hourly rate is $26.04. That’s not trivial, especially since we can pay a couple of staff members $10/hour to coordinate and recruit another 6 volunteers to help for free. We still make a profit on the staff members, and the volunteers’ time is pure profit.

What else could we do?

The real question is whether this is enough to warrant doing the fundraiser. Would the staff and volunteer time be better spent developing our fee-for-service programs, or sending appeal letters to our mailing list? How about making visits and calls to schools to promote our camps? One of our board members responded to this by offering to just pay $26/hour to not have to work the event. He’s clearly not the right person to be working at it, but in the past the board was the de facto source for volunteers.

What you don’t know can definitely hurt you

What staff or volunteer activities are more profitable than others? How can we maximize the return on our time and payroll? Unfortunately, many organizations don’t even ask these basic questions. The answers aren’t always easy, but they’re worth pursuing.

Take the time to create a budget, project revenues, and evaluate even your smallest events. Because sometimes, you’ll find that the same amount of work goes into the tiny events as the biggest ones, with very different outcomes.

Beth Kanter cracked me up today when she wrote, “if the bulk of your audience is from the baby boomer and older and you don’t plan to reach out to younger people—perhaps social networking sites are not the best Internet strategy for your organization.”

I’m hyperconnected. I read a lot of blogs, belong to a bunch of social networking sites, and maintain more websites than is probably healthy.

I’m not the average user, and I know it.

The key is to realize that your own usage patterns do not necessarily mirror those of your audience. And if you’re a non-profit, one of your biggest audiences is prospective donors. Knowing your audience is critical to any organization’s marketing or business efforts, so let’s take a look at prospective donors.

There are varying approaches to the average age of donors, including segments of gift sizes or retention rates. The biggest groups range from the upper 40s to mid-60s. Your biggest online donor segments are still no younger than 45 years old. In fact, the 18-24 and 25-30 ranges are ridiculously low in both gift size and retention rates. They don’t make major gifts and they aren’t as likely to keep giving.

Check out the graph for one such breakdown of online and offline donors by age ranges. Graph source:Target Analysis Group and Donordigital

If your average Facebook user is under 30 and is highly unlikely to give, let alone build a relationship with a non-profit, is it worth investing your time and money into that area? Though as many have demonstrated, a large number of small gifts is often easier to gain and maintain than one large gift.

NonProfit Times shares some tips from a conference presentation about how to raise the first $100,000.

A couple of the tips:

• Fundraising from people is asking for money and is not a quick fix, but it is dependable and renewable, is internally controlled and provides multiple sources.
• 76 percent of fundraised money in 2006 came from individuals, according to Giving USA.
• Big money comes from individuals who are asked.
• Getting money from individuals? Begin with the board, then membership dues, annual donations, major gifts and special events.

Notice something? They talk about fundraising from individuals, not corporations or foundations. That is, most gifts come from people. If you think about your donors as human beings, with varying backgrounds, interests, and motivations, you will begin to understand how giving works. Donations are not transactions, they are the culmination of a positive, two-way relationship between an organization and a person.

What an awful title. Kool and the Gang… eesh.

As the hideous parody title indicates, it’s all about delegation. That’s become my defense against small non-profit woes - too much to do with too few people and too little time. Getting others to do the work for you. After all, you can’t possibly do it all yourself.

Small businesses often struggle to find new work. One of the common suggestions is to ask your current customers for referrals.

This extends really well into the non-profit sector, where your current donors are probably some of the best sources of potential donors. Have your current donors provide prospect recommendations or introductions. If your donors are properly invested in the organization, you can even ask them to help make the ask.

This process does wonders for donor engagement.

That’s right, I said what we’ve all been thinking. Chameleons are dumb.

Or, at least, emulating a chameleon is dumb.

In the unending quest for funding, it’s tempting to apply for all kinds of grants. These grants are intended to address a wide range of issues: literacy, poverty, environment, etc. Of course, the hot new issue has a lot of cash behind it.

It seems natural…you need money and they have money. So you apply, tweaking your program to best suit the grant. Ever agile, you nimbly position your organization to best meet the grantmaker’s criteria.

And you lose. Even if you get the money, you lose.

You lose your identity.

You’ll have to do the same kind of organizational gymnastics to meet the next grant that comes along, and ultimately you’ll become an ambulance chaser. After all, how can you represent a vision for something you don’t truly believe in?

Stick to your mission. Find funding sources that match your organization’s goals. And don’t shift your colors every time a new backdrop appears.

I don’t think donors really care about tax breaks.

I think most philanthropists care about supporting a cause, investing in their community, and making the world a better place.

It’s just a hunch.

Seth Godin reinforces my hunch when he writes about Charity Auctions: “The goal of a non-profit seeking money needs to be to create an environment in which the community congratulates itself on overpaying.”

Hardiness is a term used to describe plants’ ability to survive adverse growing conditions. That is, a plant can exist with very little water, sunlight, soil, and so on. Imagine a flower in the desert—or as the photo shows, a tree growing up through solid rock.

A hardy non-profit organization is one that survives—even thrives—with few resources. With very little funding and declining numbers of volunteers, they find creative ways to keep going just a little longer.

For many organizations, this feels like a weakness. But for potential donors, this is a piece of the story. If you routinely have to stretch one dollar into fifty, that’s not a weakness: it’s a huge return on investment. Show how much you have done with what little you have, and donors will see an opportunity.

One of our new board members has worked in several not-for-profits in a variety of fundraising-related roles. I’ve been looking to him for insight into this process. Recently, he told us, “Don’t ask for money. Tell a story and you won’t need to ask.”

The idea is that your donor has to believe in what you do and the story does this. It says, “look what we’ve been able to do with so little.” You leave it up to the donor to take the next step and wonder, “What could you do with more?”

Of course, I’m new to fundraising and can’t speak from experience on this. Still, it’s an interesting theory.

From nonprofiteer:

Many harried nonprofit executives also are so uncomfortable with “the M-word” that they recruit people to their Boards without telling them, in writing, that recruits are expected to write checks (and for how much?) and secure checks (and in what context?).

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