by Susan Detwiler | Sep 11, 2019 | fundraising, governance, nonprofit, sustainability
WHY IT’S IMPORTANT: Five CEOs of Wealthy Foundations Pledge to Do More to Help Charities Pay Overhead
This article in The Chronicle of Philanthropy is a long read, but hugely important to every nonprofit organization that relies on grant funding for at least part of its revenue.
It’s notable when five of the wealthiest foundations revisit their granting processes and decide that they’ve been underfunding the support (they call it ˜overhead‘) that makes it possible for nonprofits to deliver their missions. It prompted them to examine different ways they might change their granting structures to allow more flexibility in the operations and investments in infrastructure of their grantees.
No Reserves!
The foundations are: Open Society Foundations, John D. and Catherine T. MacArthur Foundation, Ford Foundation, William and Flora Hewlett Foundation and David & Lucile Packard Foundation. After engaging Bridgespan to research the effects of their giving on a subset of their grantees, they learned that 42% of the nonprofits had less than 3-months of operating revenue on hand. While the foundations have agreed that their funding processes need to change, each will make their own adjustments based on their own priorities, and as they experiment with their own grantees.
As my colleague Justin Pollock, has pointed out, restricted funding is not inherently a problem if it actually covers the true costs of a program. But when a nonprofit ACCEPTS restricted funding that only covers PART of a program’s costs, by default they are saying ‘we will restrict our own dollars’ to go towards completing the program’s budget.
These efforts by major foundations to look at their own practices are a welcome sign that change may come.
It may mean more unrestricted funding or it may mean restricted funding that truly covers costs. But it will take time for any change to spread. Wherever you are located, don’t expect immediate change. I doubt that any local foundation landscape will change rapidly. While smaller organizations can often be more nimble than larger ones, larger foundations have the staff and funds to research new methods and their implications. On the other hand, you may find that a handful of your local foundations may read about this research and be energized to make their own changes.
Definitely something to watch. And you may want to forward this article to your friendly funders, as well.
This series of Why it’s Important is meant to keep you abreast of news, research and articles that provoke thought about how we govern and manage nonprofits.
If this article has started some conversations, or even caused some deep thinking about funding, please let me know.
And watch for more curated articles. If you see an article you think everyone should read, please send it on. Or if you want to talk about facilitation or planning for your organization, I’d love to have that conversation.
More eyes “ more articles “ more wisdom!
– Susan Detwiler
by Susan Detwiler | Jul 23, 2018 | nonprofit
You need more than empathy to make your case.
Many people tell you that successful persuasion is built on understanding the other person’s values and frame of reference. What they don’t tell you is that you also have to know what they know.
No Jargon
We usually know enough not to use jargon “ the shortcut language that lives in a specific field. targeted immunotherapy donor-centric fundraising UHMW polyethylene flux capacitor[just kidding]
When we’re talking to people outside the field, we’re pretty good at spelling it out.
But even spelling it out assumes that our audience can connect the dots; it assumes they can understand why it’s important. We might say boosting a patient’s own immune system, but we forget to draw the line from that definition to its implications. We might ay, “the donor needs to feel important,” but we don’t draw the line to why that makes a difference to the organization. WHY is it important?
Dangerous Assumptions: Round One
Two recent conversations really showed me the hazards in making assumptions about someone’s knowledge base.
Actually, the first was pretty amusing. It was a late night conversation with my nephews. These are smart, intelligent men. One is a veteran and a lead machinist in the Army Corps of Engineers, returning to school for Engineering. The other just completed a law degree.
Late at night, we’re sitting on a couch in a rented flat. Somehow, as we caught up on each others’ lives, the conversation turned to nonprofits and fundraising and conflict of interest and controlling who raises funds in the name of an organization. I’m still not sure how we got there. It was a strictly hypothetical conversation (my nephews are nerdy cool like that) but I realized that these smart men, with considerable experience dealing with people and the world, had no clue about how nonprofit organizations work.
The idea that a nonprofit can end the year with a surplus to start the next year with, because nonprofit is a tax identity, not a business model. That you can’t let just anyone use your name in order to raise funds because one of the nonprofit’s greatest assets is its reputation “ good will and donations are built on that reputation. That there’s a difference between numbers being served and the impact on those being served. That overhead is a slippery term and just like commercial enterprises, you have to invest in infrastructure to have a greater impact.
The hour got later and later as I found I had to keep backing up to explain the background of different concepts. It was like a midnight course in nonprofit governance, hitting all the highlights. Not having another frame of reference, their knowledge of how nonprofits run was based on limited personal experience and what they read in the media. A lot of fun, intellectually stimulating, and exhausting!
Dangerous Assumptions: Round Two
The second instance wasn’t hypothetical. It was working with a client whose frame of reference came from being part of the bureaucracy of a larger entity. He knows his specialization inside and out, and he’s a really great asset to my own understanding of the organization. But when it comes to community relations and nonprofit governance, he has no context. Fortunately, he has the confidence to stop me in mid-conversation and ask me to connect the dots “ why is it important to hold off on accepting help from a potential donor right now; what’s the best way to maintain contact with them; what’s the role of a board in helping to break a legislative logjam to release additional funds and accelerate a process?
The naiveté of my nephews and my client’s willingness to ask for that tutorial made me wonder: How many times do we not even realize that our audience isn’t following us? How many people we talk to think they know what you’re talking about? Do your new board members “ heck, do your returning board members — really understand what you’re saying? They’ve heard the terms before and have built an image in their heads of what the words mean. But how much context are they missing?
It’s not enough to avoid jargon. To really connect, you have to start by knowing what they already know.
You can reach me here for a conversation about where to start with your audience; or to ask about facilitating meetings and decisions. Let’s see how I can help.
by Susan Detwiler | Aug 31, 2015 | nonprofit
It’s that time of year. Nonprofit organizations are asking their board members for their annual financial commitment. Yet despite the obvious need of almost all organizations, according to one survey, an astonishing 55% of organizations reported that they did not have 100% board giving.
But foundation executives and major donors expect 100% participation of nonprofit board members. In the words of an executive of Piper Charitable Trust,
“We wouldn’t consider a grant to an organization if the directors weren’t 100 percent in their giving. Why would we? If they don’t care enough for their organization to give to it, why should we?
There is no excuse for not making a financial contribution to any organization that you’re on the board of.
But I give time! That counts for something!
Yes, your time counts for a lot! I am very, very grateful to all the leaders who give of their time so freely to work on the board. Our social sector absolutely could not function without the volunteers. Your labor, your thoughtful discussions, your planning are crucial to building the world we want to live in. The organizations that benefit our community rely on you. As a member of society, I am very grateful to you for standing up and being part of the fabric of our society.
Yet volunteers can give time without being on the board. The difference is YOU are a leader. And leaders lead the way with their gifts, as well as their time. You, dear board member, lead the rest of the community by example “ not just with your time, but with your treasure, as well.
But not all our board members are financially able to give a lot of money!
Wow. This is such a caring objection. It almost trumps the 100% giving mandate. I hear you “ and I agree with you. Those unable to give a lot of money SHOULD be included on the board. A strong organization needs to have a wide variety of voices represented on the board. Those who are wealthy – and those who are not – bring unique and diverse perspectives.
But the 100% requirement doesn’t name a dollar amount. It just says that a board member should give. If board expectations are set appropriately when you first invite the new director, then the expectation is that each board member gives a personally meaningful gift. To a successful attorney, it might be personally meaningful to give a $10,000 annual gift. To an early childhood teacher, that personally meaningful gift might be $100 per year.
A good rule of thumb is that while you are on the board of an organization, it is one of your top three or four philanthropies.
Leaders lead by example. Be able to say, I give. Please join me.
Would you like some help moving your board along the giving continuum? I’m happy to have a no obligation conversation! Reach me at sdetwiler@detwiler.com
Susan
Susan Detwiler
by Susan Detwiler | Jul 2, 2015 | philanthropy
Frustrated by supporters who want to restrict their gifts? Maybe it’s time to rewrite your Gift Acceptance Policy so it can open a world of opportunity.
Across the Internet, we can find all kinds of essays about why it’s important to have a Gift Acceptance Policy. And most of them point you to pretty standard templates. But instead of thinking of how the policies can limit your liability, what if your Gift Acceptance Policy opened up opportunities?
Taking a cue from Creating the Future, let’s start by asking how a gift acceptance policy can support your mission, vision and values.
Looking around at your community, you see clients, staff, board members, and supporters. What should the gifts acceptance policy do for each of them? For your clients, you want to have the maximum amount of flexibility so you can serve them in whatever way is necessary. You want your staff to have clarity as to what they should do when offered a gift. You want your board to know that the resources you receive are used appropriately and transparently.
And you want your supporters to know that the resources they are giving you “ their gifts “ are truly making a difference.
In a spirited online conversation among nonprofit consultants, we debated what to do about restricted gifts. How do we handle gifts that are designated for a specific program, but may not take into account administrative costs? That’s when Hildy Gottlieb produced a policy that is brilliant in its simplicity. Without tying anyone’s hands, the policy says to the donor “ Thank you for caring about the people we serve. Thank you for using us as a way to help them. Let’s work together to figure out the best way that your funds can help.
“When we have the opportunity to receive restricted gifts, it is our policy to work with each donor to co-create the best possible result of improving life for the people we serve.
“As part of that policy, we will learn both the immediate thing / service the donor wants their gift to purchase, as well as understanding what the donor hopes that gift will make possible for the people we serve.
“As part of that policy, we will work with the donor to co-create how their intended results will be achieved, and the true allocation of resources for achieving that result – how their monies will be used, as well as how other resources will be leveraged to achieve that result.
“This policy of co-creating results is rooted in our core values of trust, transparency, and building deep relationships, because that is what builds strong communities.”
As John Baker, CFRE, Executive VP of Delaware Alliance for Nonprofit Advancement, commented, I bet their gifts will soar. Simply being able to promote a policy like this in ones materials, and then to live it, leaves me with a reenergized sense for Resource Development.
What does your gift policy say? Are you inviting your supporters to co-create your future?
by Susan Detwiler | May 4, 2015 | fundraising
Why doesn’t a nonprofit board fundraise? There are a lot of reasons. At a recent Bloomerang webinar, Getting Your Board on Board, I offered ways to move board members along the continuum from ˜I’ll do anything except ask for money,’ to ˜I’ll ask a major donor for a gift.‘
Since we couldn’t get to all the questions, I promised to answer some directly, and some of them in this post. If you want to see the first set of questions and answers, shoot me an email, and I’ll send it along.
And now, here are some of the questions that we couldn’t get to:
Board members who don’t give
Q.
What if your board recruits for new board members, but because they don’t give themselves, they don’t require new members to give? The cycle just perpetuates!
A.
It sounds like your board members may not see themselves as responsible for the future of the organization. Once they consider that thinking about the future is part of their job, you can ask what ensuring the future looks like to them.
In this case, you may have to start by NOT talking about money. Instead, talk about the future, and the kinds of people you need on the board in order to make that future possible. Times have changed since the organization was established, and you’ve been able to change with the times. What kind of people do you need on the board in order to continue keeping up with society? Who might you need on the board in order to build the future you want? That way, board member responsibility for being donors becomes only one part of the whole package of being responsible for the future. By talking about the other board attributes first, the conversation can naturally migrate to money as a part of the whole.
Jump-starting a Development Committee
Q.
Other than sharing this webinar, what other things can be done to “jump start” a development committee?
A.
Oh, so many things. And I wouldn’t start with this webinar. I likely wouldn’t even start with talking about money. I would start with envisioning the future. What does your community look like if you and your organization were 100% successful with everything you decided to do? Beginning with vision is exciting. The dollars and other resources are just a means to that end. Once you and your committee are excited, it’s so much easier to contemplate raising the dollars to make that vision possible.
Qualifications of a Board Member
Q.
Can you share a board member outline for qualifications to be used by the nominating committee?
A.
There are many places to go for a classic grid that looks at demographics and skill sets for board members. The best advice I’ve heard, though, is to decide what you want to accomplish in the next three to five years, and figure out what skills and attributes will help you get there. Then, while seeking those skills and attributes, seek to balance the age, demographic and social circles that are represented. This post talks about Five Essential Qualities of board members, and includes links to some sample qualification outlines. This one talks about the need for people of different ages.
Thanks for asking! If you have questions about helping your board see the future, and their role in making it happen, I’m happy to talk. Just reach out and let me know.
Any other questions? Let me know and I may answer them here!
Susan
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