Fundraising

Info You Can Use: NP Orgs Exist In Shadow Universe (Great Resource Guides Too)

by

My Twitter feed delivered me two great resources for arts professionals on the same day this week.

The first came courtesy of Sydney Arts Management Advisory Group. I guess I should have known that when they talked about a guide developed for “WA Artists” they meant Western Australia and not Washington State. In my defense, they link to a lot of prominent U.S. arts sources (like me!).

The guide they shared, Amplifier: The Arts Business Guide for Creative People, from Propel Youth Arts, is really one of the best guides for creatives just starting out that I have come across. If you cut out the resource guide at the end of the booklet, 98% of it is applicable to a creative anywhere.

The guide is really accessible with fun illustrations and interviews that will probably make you want to move to Western Australia. It also walks you through all sorts of planning processes with questions and checklists: project management, business plans, identifying markets, goal setting, evaluation, finances & funding, legal, product, pricing, place and promotion.

It doesn’t just deal with performance, but also tackles film, visual art and publishing, delves into copyright law (which appears almost identical to U.S. law) and licenses.

The guide also spends a few pages on risk assessment and insurance for events which is something I have never really seen in similar guides even though it is very important.

The second resource comes from the Wallace Foundation. This one is more geared toward arts groups rather than individuals starting out and is focused on administrative issues like finances, board oversight and administration.

You may have seen some tweets about it but not followed the link. It is really worth stopping by to take a look.

Some of the guides and case studies are what you might expect “Building Stronger Nonprofits Through Better Financial Management” and How to Talk About Finances So Non-Financial Folks Will Listen.

But there are some with more intriguing titles like: “Efficiency” and “Not-for-Profit” Can Go Hand in Hand,  and The Looking-Glass World of Nonprofit Money: Managing in For-Profits’ Shadow Universe.  

The latter is described as” Especially useful overview for board members with little exposure to the unique nature of finance in a nonprofit context.” I  never really thought of NP orgs as operating in a shadow universe. Sounds so cool! Does that mean Rocco Landesman was the dark emperor or something while he headed the National Endowment for the Arts?

There are also proposals like “The Nonprofit Starvation Cycle” which advocate for changes in the way foundations support non-profits.

The part of this resource I have seldom seen in other places was a whole section of five articles, including a podcast, on figuring out the True Cost of programs. They specifically have a calculator for figuring out the cost of after school programs, but following the steps outlined in some of the other articles can help reveal truths like social media isn’t actually free.

I haven’t read through everything in the guide, but I am definitely going to bookmark it for future reference.

Info You Can Use: Development Directors Need Love Too

by

You may be aware of the recent report commissioned by the Evelyn and Walter Haas Jr. Fund and conducted by CompassPoint about the careers of development directors. I already had a pretty good idea that development was a thankless task and there was a lot of turnover, but Under Developed: A National Study of Challenges Facing Nonprofit Fundraising, brings the reality to the fore.

I was astonished to learn that a quarter of development directors were novices or had no experience in the field at all. My guess would have been closer to 5%.

One in four executive directors (24%) say their development directors have no experience or are novice at “current and prospective donor research.” Among the smallest nonprofits, the number rises to 32%. When it comes to securing gifts, executives report that 26% of development directors overall—and 38% among the smallest nonprofits— have no experience or are novice.

Half of all development directors vs. 34% of executive directors contemplate leaving development in two years. 22% of development directors had either given notice or were actively looking at the time they were surveyed. 40% of those surveyed said they weren’t sure they would stay in development as a career.

A quarter of executive directors reported firing their previous development director for performance or incompatibility with organizational culture.

As might be expected, organizations with bigger budgets reported greater retention rates. Being able to offer better salaries enabled them to attract talented people from other organizations. Some of these organizations reported something of an arms race with the best development professionals being able to name their own price in the face of an ever shrinking talent pool driving costs up across the board.

I have given some attention to the difficulties with attracting and retaining executive directors over the years so I thought it important to turn some attention to the development arm.

In fact, the report makes many of the same recommendations you will find in respect to the executive director positions: recognizing and celebrating emerging leaders, having better training/mentoring and having transition plans.

One of the central things they suggest is nurturing a culture of philanthropy. If you have read this blog for any length of time, you know a common refrain I have is that marketing and development aren’t the sole province of those departments followed by an inevitable link here.

The report talks about the need not to silo responsibilities. They define culture of philanthropy as:

Most people in the organization (across positions) act as ambassadors and engage in relationship-building. Everyone promotes philanthropy and can articulate a case for giving. Fund development is viewed and valued as a mission-aligned program of the organization. Organizational systems are established to support donors. The executive director is committed and personally involved in fundraising.

While they specifically mention executive director in the definition, the board is mentioned frequently enough in their discussion of the concept they probably should appear as well. They acknowledge at length that asking for money is a difficult endeavor for all those involved. They felt the fund development process would be much easier if the goal permeated all areas of the organization because it would naturally bring more support and resources to bear and make the director feel more empowered.

“I think the fundraisers don’t always manage up because they think, ‘It’s all on my shoulders.’ They forget that you’ve got 20 some board members and another group of volunteers, an executive director, and other direct staff — that this is a partnership.
—Executive Director

This is the one area in which smaller organizations can be compete with larger ones. While they may not have the money to pay high salaries and support the newest development software, (and the software gap is getting increasingly smaller and affordable), the more close-knit working environment can have the staff more easily integrate with development than in larger organizations where the function is more departmentalized.

There are some depressing findings in the report, but I think it is worth reading because I suspect it will also reveal that the problems one faces in ones organization aren’t as uncommon as you might think. That realization will hopefully allow people to feel a little freer to discuss these issues rather than assuming they face them alone and everyone else is operating effectively.

Americans Need A Cultural Stipend?

by

Via Marginal Revolution, we learn Brazil’s Congress has approved a monthly Cultural Stipend for poorer workers.

“Now we are creating food for the soul; Why would the poor not be able to access culture?” the minister said.

Suplicy said the new incentive, approved by Congress and endorsed by Rousseff late last month, is expected to be introduced some time this year. “The money will be put in the hands of the worker who will decide how to spend it, by going to the movies, to the theater, to an exhibition or the museum,” she explained.

Other possible uses include purchases of books, music or DVDs.
[…]

Employers will cover 90 percent of the cost of the stipend but can then deduct the amount from their income tax. Workers will pay the remaining 10 percent, but can opt out if they choose to do so.

The first time I read about it, I thought it was a government funded program and might be hard to implement on a national level in the U.S.

However, since it is largely employer funded, the plan could actually work quite well in the U.S. since it allows the businesses to write it off their taxes much like companies and individuals can write off charitable donations in the U.S. I am not sure the government would have to create any new laws to make it possible. Though their encouragement would certainly help. The arts community could just make a big push for companies to declare their participation.

I imagine it would be great publicity for companies since they could collect testimonials from employees about the enjoyment they derived from books, music, performances and museum attendance thanks to their employers’ involvement.

Since employees have to contribute a little bit toward putting money on their culture cards, it gets potential audiences in the habit of paying to participate but doesn’t place the entire burden on them.

Granted, audiences may not end up using the money to purchase experiences at non-profit arts organizations. This won’t absolve arts organizations from the responsibility of making their offerings relevant and interesting. But along the lines of my letter to the president post, it starts to institutionalize the idea that all citizens should participate in cultural experiences.

When I did think this was a government program and was trying to devise a way to adapt it to the U.S., I thought about the dividend Alaska pays to its citizens from the oil proceeds. With that in mind, I was going to propose NY State use some of the tax money it collects from its great native resources- Broadway and Wall Street- to offer these cards to all citizens of NY. The population of the state has been dwindling so I thought it would be a great way to reward those who stayed and hopefully stimulate arts organizations in other parts of the state.

I suspect much of it would find its way back to Broadway. Though parts of Rochester NY are one of America’s Top 44 ArtPlaces so I wouldn’t count other parts of the state out.

Info You Can Use: Fundraising Must Benefit The Group, Not The Individual

by

The approach of the holidays provides me with a little more free time so I have been catching up on my “come back to and read” list. I got to reading a piece by Non-Profit Law blogger, Emily Chan addressing activities athletic booster clubs engage in that may endanger their non-profit status.

Since these clubs are organized under 501 (c) (3) just like arts organizations, I became a little concerned because I see similar things happening with some arts organizations.

The potential conflict Chan addresses is in making the amount of money a person raises directly correlate with the benefit to an individual like crediting against the payment of tuition/dues or travel expenses.

Furthermore, such a credit system still raises private benefit concerns regardless of whether a parent is considered an insider or even involved in the booster club. Lois Lerner, the Director of Exempt Organizations at the Internal Revenue Service, recently affirmed that crediting amounts raised by a participant against that participant’s costs (e.g., dues, travel expenses) is a private benefit violation that may jeopardize the organization’s exempt status.

What immediately came to mind is that a lot of dance schools have their students sell tickets, Entertainment coupon books, etc., keep track of what each person sells and rewards the kids. I don’t think there is any problem with one child only getting to choose glitter stickers because she sold less than the child who was able to claim a stuffed animal.

However, if those sales determined who got to perform or helped one person defray more of the cost of going to see a show in New York than another, there could be a problem. If it defrays the cost of everyone equally, or even a specific class within the group like sending the cast of a show to perform at a festival, then it isn’t problematic.

Really, it is mostly a matter of benefits specific to individuals. This also likely includes fund raising to benefit a specific individual, say the medical expenses of a musician who was in a car crash.

Individuals should not be soliciting contributions from donors with any suggestion or intention that the contribution will be directly used for that individual who solicited the gift. Additionally, the booster club should not accept any contributions that have been earmarked by the donor for a particular individual. Not only would such contributions not be tax-deductible for the donor, the booster club would likely be acting as a conduit in violation of the federal tax laws regulating private inurement and private benefit by allowing such money to pass through the organization to the individual without having exercised any control, oversight, or discretion over those funds

I wonder how this might apply to organizations that try to forge a deeper connection with donors by having them sponsor a student. Keeping in mind that I am not a lawyer, my guess is that if the organization is selecting the student being sponsored, there isn’t a problem. The money went into a general pot with no specific expectation of which student would benefit.

But what happens if the student drops out and the donor has taken a shine to another student and wants the sponsorship applied to her as a replacement? This is a tricky situation if you are hoping for the long term, continued support of the donor.

I also wonder if something changes with the student’s status that requires more funding than for any other student, say their place of residence changes so they must pay higher out of state tuition, can the donor be solicited or even direct additional money to benefit a specific student without endangering the non profit tax status?