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Info You Can Use: More Cell Phone Donations

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Back in February I wrote about using texting to donate to charities the way people were doing immediately after the Haiti earthquake. I had noted the high cost of setting something like this up was probably cost prohibitive for most. I also suggested that the costs would likely come down as its use became more prevalent or someone figured out a more efficient way to process the payment.

According to Fast Company , it looks like someone has done the latter. Mobile companies Obopay and Benevity have created a way in which you can text a word, choose your cause and have the money and acknowledgment issued immediately. Not only does everything get processed faster, but there is flexibility in the amount you can donate. According to a press release issued by the company:

“The new mobile giving solution enables charities to collect much higher amounts – up to hundreds of dollars – and provides the non-profit with much faster access to the funds, compared to other text-to-donate offerings that have been limited to $5 and $10 amounts and have taken over 90 days to get funds to the cause.

[…]

…said Bryan de Lottinville, CEO of Benevity. “As personal and corporate philanthropy recovers following the recession, mobile donations and campaigns will have increasing importance. We’re delighted to be part of a new solution that will provide companies and consumers with an easier way to give to causes that resonate with them. We’re also thrilled about making this functionality accessible to all charities and consumers, regardless of their size or the amount they can donate.”

No mention of the costs which I will grant, could be just as high as with the text giving I reported back in February. With faster receipt of funds and increased amount people can give, the costs can start to look more reasonable. Again, as people use it, the costs may come down. This partnership may or may not become the dominant player, but what the CEO says about donating by phone becoming more prevalent is likely true.

Since people tend to act on impulse with their phones, texting and calling their friends as soon as something happens, non-profits may benefit and receive more donations than they normally might if people had to pull their check books or credit cards out. I think it also likely non profits will face donors remorse in the wake of such giving and will need to formulate policies to address it.

Social Network Just For Non-Profits

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Via Non-Profit Law blog, Facebook co-founder Chris Hughes is launching a social network, JUMO, later this year to connect non-profits with supporters. If you watch the video accompanying the article, you will learn that while Hughes has left Facebook, he is still supports its use. Jumo users will be able to easily transfer their Facebook information over when he opens the service.

Hughes’ hope is to provide a way for organizations to develop relationships prior to requesting assistance. “Hughes thinks that the call for support should come only after people and organizations have built that connection with one another. All too often, said Hughes, the donate button on websites is big, flashy, and colorful, and email calls to action are usually in all caps, starting with the word “Urgent!” Hughes hopes that Jumo will move organizations toward a new era where relationships are forged and cultivated before calls to action.”

Earlier the article notes: “To do that, the platform will be broken up into three main components: Find, Follow and Support. First, Jumo will help you find non-profit organizations by learning the types of things that interest you and making suggestions. Second, the site will help you follow those organizations by receiving a stream of updates about the work they’re doing and how that work is affecting real people.”

In the comments section, some wonder if people will really join another social network. I don’t necessarily share that concern. I think people who are interested in causes will welcome a place that aggregates information and lets them connect with those causes. Non profit organizations should differentiate how they use the different technologies. You might encourage people who want information on ticket specials and the hot news about just signed artists to pay attention to your Twitter feed or Facebook account. Whereas you would provide information on outreach efforts and volunteering opportunities on the Jumo account.

Focusing on a few communication channels is about all most arts organizations have the staffing to handle in any case. Developing a separate flavor for each channel and leveraging it to serve the interests of different segments of your audience is probably better than replicating the same content verbatim on each is probably a better use of staff time in any case.

The real benefit to non-profits would be if people started using Jumo in ways not anticipated by the creators, spurring the development of features specific to the needs of non-profits.

Info You Can Use: Sponsorship and Fundraising Webinars

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Fractured Atlas is tackling sponsorship and fund raising in September with a series of webinars on Tuesdays and Wednesdays throughout the month. It looks like the sessions address Fractured Atlas’ criteria for the programs they run in these areas but also give tips for approaching companies for these things in general. Though if you are interested, you might check. The September 15 session seems to be geared for those who have been accepted into their sponsorship program.

If you have not heard of Fractured Atlas before, ” We help artists and arts organizations function more effectively as businesses by providing access to funding, healthcare, education, and more, all in a context that honors their individuality and independent spirit.” They are always working to expand their reach nationally and I think the timing of the webinars is an example of that. At first I thought they were running them 8:30 -9:30 AM which would put it in the wee hours of the morning for me and not be of much help. On second look, I realized it was in the evening which would serve me and everyone in the time zones between here and the U.S. East Coast much better.

100% Fundraising Expenses

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Some what apropos of my post on mandatory salary caps for executives of non-profits is a post by Dan Pallotta on the Harvard Business Review blog in which he makes suggestions that would likely see government entities really start screaming.

Palotta advocates for salaries of non-profit staffs on par with those of for profit businesses. But the bulk of the post is spent on the premise that low fund raising expenditures are actually inhibiting charities from doing the most good. His argument is that instead of touting 10%-15% expenditures on fund raising and remaining too small to make a big impact on a problem, charities should be spending 50%-100% on fund raising.

“The less an organization invests in fundraising the less it can grow. The less it can grow the more human suffering persists. We have institutionalized a mechanism for insuring the persistence of human suffering and called it “charity.”

[…]

“If we are serious about the value of human life, then we have to start thinking about 50 to 100% fundraising rates for the organizations chartered to save human lives. Those organizations should take no pride in telling donors or anyone else how low their fundraising costs are. Quite the opposite. I want to support the organization that’s going for scale, not the one that’s stuck where it is. Why would I support a cancer organization promoting its low fundraising investment while cancer remains uncured? We have the whole reward system backwards.

(Qualification: I’m not sanctioning inefficiency. That’s a completely different conversation. Everything I’m advocating assumes maximum efficiency.)

What we are doing is not working. A world in which 10 to 15% fundraising ratios are the norm is a world in which our charities are woefully too small to confront social problems on any meaningful scale. It’s a world where growth occurs – if it occurs at all – at the pace of molasses — the pace of death — and where human suffering continues on an unimaginable scale with no end in sight.”

If you are like me and you are thinking if an organization is spending 100% of the money it raises on raising more money then no one is getting cured, then you are absolutely correct. That is exactly what he is proposing. Presumably, you would use all that money to find a new way to convince people to donate since you wouldn’t have any examples of those whom you have helped.

If you read down into the comments section where Pallotta responds to some of the questions, you get a little more detail. Addressing the idea that the fund raiser never gets around to doing anything, Pallota says,

“Think of it this way. Humanitarian organizations regularly engage in certain activities – a direct-mail campaign – designed to acquire new donors. Sometimes those campaigns can go for several years running 100% costs. But then comes the pay-off – huge fundraising databases with no new expense associated with them You turn that engine on and then you start producing revenues for programs and for the cause at volumes many, many times larger than you could have if you never made the investment and never tolerated the 100% cost ratios for a certain period of time. Understand? “

In response to the question posed by a commenter named Shaun, who asks “who wants to be the person who gives money just to solicit more money?” Pollota answers, “Think of it this way: if I told you your dollar could go directly to the needy, or that it could go to an ad campaign that would generate ten dollars for the needy, which would you choose?” To which another commenter, RachelAC, replies, “I might prefer that my $1 go to the needy now, rather than $10 going to the needy in five years.”

I think RachelAC’s response expresses the crux of the matter for me. In an ideal situation, Pallota’s approach works. But my concern is that the fund raising entity gets so enthralled by their success in raising money, that they never stop and fund the solution. As RachelAC implies, in many situations the dollar today can make a difference where the $10 comes too late. Though granted, whenever a solution to a massive problem comes, it arrives just moments too late for some.

My even bigger concern is that the officers will embezzle the money and run off as they have with so many charities in the past. The fact they are apparently not making as much as they could be according to Pallota only means the incentive to do so increases. I would prefer to know the thieves only absconded with the little I gave rather than what they parlayed it in to.

Big problems can require audacious approaches to solve them. I can see where the piecemeal approach isn’t getting people closer to a solution any faster. But will people continue to give if a theft on the same grand scale were to occur? I think the faith you lose in a charity when it betrays your trust cuts a lot deeper than when a company or person you have invested with misappropriates your money. You enter a relationship with the latter knowing there is a chance you will lose your money. With investments, we are told to diversify. Does it make sense to do the same with our philanthropy or are we just short changing an already under capitalized effort?

“The Monster Outside The Door”

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No, the title of this entry is not another riff on my new lizard mascot in the blog header. Last month I made a post quoting Robert Hewison in an article from The Art Newspaper saying citing the economic value of the arts is bad because “But the Treasury doesn’t buy it. They can see through the “multiplier” calculations of the cultural boosters.”

Today I came across a link on Artsjournal.com to economist John Kay’s website wherein he expounds upon that subject and advises valuing art for its cultural and commercial value.

“Thousands of people build hospitals and surgeries, and many small and medium-size enterprises manufacture hospital supplies. Illness contributes about 10 per cent of the UK’s economy: the government does not do enough to promote disease.

Such reasoning is identical to that of studies sitting on my desk that purport to measure the economic contribution of sport, tourism and the arts. These studies point to the number of jobs created, and the ancillary activities needed to make the activities possible. They add up the incomes that result. Reporting the total with pride, the sponsors hope to persuade us not just that sport, tourism and the arts make life better, but that they contribute to something called “the economy”.

The analogy illustrates the obvious fallacy. What the exercises measure is not the benefits of the activities they applaud, but their cost; and the value of an activity is not what it costs, but the amount by which its benefit exceeds its costs. The economic contribution of sport is in the pleasure participants and spectators derive, and the resulting gains in health and longevity. That value is diminished, not increased, by the resources that need to be diverted from other purposes.

Similarly, the economic value of the arts is in the commercial and cultural value of the performance, not the costs of cleaning the theatre….

…The relevant economic questions are whether the cultural and commercial value of the performance offsets these costs and whether these benefits can be translated into a combination of box office receipts, sponsorship and public subsidy. The appropriate economic criterion, everywhere and always, is the value of the output.”

I have often felt that economic benefit surveys often seem to grasp at straws in an attempt to find any activity tangentially related to arts events. Though I will grant you that if a downtown area empties out at night, it doesn’t matter how scarce parking is, the spaces in a garage are worthless. Activities that put cars in that lot help keep people employed. But then, the parking company can claim they provide economic benefits to the arts by providing a safe place to park within walking distance of the venue in an area with scarce parking. Your audience may even value the close parking enough to factor it in to their attendance decision. But as the arts organization in question, do you see the parking lot as keeping you employed? You might. But if everyone starts adding up the reciprocal value they offer to each other, the result may end up being ten times the actual amount of money changing hands in that particular business district.

When you think about it in that context, then Kay’s insistence that the only appropriate economic measure is the value of the specific output becomes more apparent. And it is logical to think that value only exists when the benefit exceeds the costs. The problem the arts have is that the measure of the benefit is so nebulous that we are driven to find some concrete method with which to prove that benefit does exceed the amount granted and donated.

Plenty of people are willing to say that the arts aren’t worth very much in today’s environment. Many are just as willing to listen and believe them and that makes all of us in the arts really nervous and sends us scrambling for evidence. Kay doesn’t offer much help in making that argument and in fact, he raises the stakes a little by adding commercial success as a measure of the value. That doesn’t leave much hope for the group that only had 80 patrons, but touched them incredibly and deeply, only it is tough to demonstrate the degree.

Which is not to say he doesn’t wholly believe there is an intrinsic value to the arts.

“We need to put out of our minds this widely held notion that there is such a thing as “the economy”, a monster outside the door that needs to be fed and propitiated and whose values conflict with things – such as sports, tourism and the arts – that make our lives agreeable and worthwhile. Activities that are good in themselves are good for the economy, and activities that are bad in themselves are bad for the economy. The only intelligible meaning of “benefit to the economy” is the contribution – direct or indirect – the activity makes to the welfare of ordinary citizens.”

I am not quite sure if he is differentiating between economic value benefit to the the economy since presumably having a job cleaning a building would directly contribute to the welfare of an ordinary citizen. Assuming he is separating the two, I would use those concepts to make the following point—

Ultimately, economic benefits are replaceable and interchangeable. Back in 2007, I covered an article that noted that a group seeking funding for the arts in England cited priorities that would be served by the grant that were among the exact same benefits then Prime Minister Gordon Brown promised the 2012 Olympics would provide.

Studio 54 contributed to the economy by employing cleaning people when it was a Broadway Theatre, radio and television studios for CBS, a disco, and then back to being a theatre again when it was purchased by Roundabout Theatre. Let say all these entities existed at the same time and are arguing which gets to use the building based on economic benefit they bring. Who gets to use the building?

Now lets say the criteria used is the cultural value each organization brings. Now who gets to use the building? Maybe it is CBS both times. In the first example, they might win because they would be spending the most on payroll and other expenses. In the second, they might win because their programming reaches more households and thus touches more lives. But when it comes to determining the value offered by a night club notorious for its hedonism and excess versus theatres, the decision may be tougher to make.

My point is, while it is hard to define in concrete terms, cultural value is a much more specific property of an organization than economic benefit and is worth citing as a reason for others’ support.

Remembering It’s Not About You

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I finally got around to reading the report WolfBrown generated following a study of what motivates donors in the San Francisco Bay area, “It’s Not About You … It’s About Them: A Research Report on What Motivates Bay Area Donors to Give to the Arts and Artists.” As you might imagine, it encourages people to focus on the interests and needs of the potential donors rather than the needs of the organization.

Much of it is very interesting. The study revealed five different motivation groups in which donors fell- Values-Driven Intrinsics, Community Altruists, Progressive Artist Champions, High-Touch Social Givers, Supportive Audience; and discussed what characteristics each group possessed as well as the percentage of the audiences these segments comprised. The report included a number of case studies on Bay area arts groups and identified the way the groups’ approaches successfully met their donors’ needs and interests.

Rather than doing a lengthy summary, I just wanted to cite the things that popped out for me. The first was regarding elements that influenced relationships:

Live conversation: Talking directly with potential donors can increase their interest in an artist and his or her project. Direct conversations can also energize the person seeking the contribution….

• Online giving: Two-thirds of FFAMC donors have made donations online, and more than 60% of those who have not given online would consider doing so. …

• Giving time as well as money: FFAMC donors are almost twice as likely to be volunteers with organizations to which they give than are donors to large institutions….

• Contact pre-gift is more important than post-gift: Two-thirds of all donors surveyed indicated that they prefer to have attended an organization’s performances before they make a contribution. 42% of FFAMC donors indicated they prefer to get engaged with an organization personally before they make a gift; only 21% of FFAMC donors suggested they need a lot of postgift attention.

• Write your thank you notes: Most FFAMC donors and donors to other cultural organizations desire timely acknowledgment of their gifts, information about the impact of their contribution and regular notice of upcoming programs or invitations to special previews or openings. There are outliers at both ends of this spectrum – people who want a lot of information and some who prefer very limited post-gift contact. Asking a donor which kind of contact they
prefer is an important part of getting to know them.

I was actually surprised about the pre-gift contact being more important than post gift. I can understand that developing a relationship with an organization is a strong motivator for that initial gift, but it is interesting to know people don’t value post gift contact as much. Which is not to say they don’t want acknowledgment. I wonder if this might be regional or even generational based since so many of the donors in this study were younger than the usual arts attendee/donor. But perhaps our assumptions about what all donors want has been flawed from the start.

The other thing that caught my eye was the way The Shotgun Players survey their audiences. When we have conducted surveys, we try to keep it short but also try to capture as much pertinent demographic information as possible. The response rate is mixed, but generally very light. From the way I read this report, The Shotgun Players asks two questions on a raffle questionnaire, a serious one about motivation or demographics and a silly one related to the show, “During our Rosie the Riveter show, it was “If you were a power tool, what kind of tool would you be?” They get a 85%-90% response rate. It was a sort of “duh” moment for me when I recognized getting the answer to one important question a show from a meaningful number of people is more helpful than getting a handful of people to answer 6-8 questions.

Later in the report were some comments that belied the idea that artists don’t want to get involved in the business end of things. (And even if the idea is true, the sentiments expressed by an artist may provide a challenge to think differently where administrators may sound like nags.) Philip Huang said of his grant seeking experience:

“I liked the matching requirement very much. I would have never done this project on my own, without the match. I never would have changed artistic direction, or changed medium on my own without the endorsement of the FFAMC grant. I believe that artists should chase things slightly outside of their personal comfort zone. For me, fundraising from individuals was definitely that. Having an externally imposed timeline and an externally imposed mandate was good. I think the match was also a motivator for my donors. Once I got clarity about what I needed and I asked for it, people responded to my sense of propose and vision.”

Finally, what I thought was really excellent were instructions in the appendix prepared by Alan Brown on how to conduct the interview portion of the study. I have read a lot of studies over the years and I have never seen something like this included. There was just a very accessible and comfortable element to the instructions. Had I been conducting the interviews, the instructions would have calmed any anxiety I felt. And from various parts of the instruction, it appears Brown was training people who were not professional researchers and may have in fact been members of the commissioning organization.

“Sitting down with ticket buyers and donors and asking them about their experiences sounds simple enough. In reality, few cultural institutions or funders conduct qualitative research on a methodical basis, and many have slipped out of touch with their constituents.”
[…]
During most interviews, a great deal of data is communicated non-verbally, through body language, hesitation, gestures, and intonation. No matter how good the researcher, it’s just not the same as experiencing the interview in person. This is why the exercise is participatory – you’ll be doing the interviewing….With the researcher out of the way, the “filter” between you and your interviewees is gone.”

Some of the instructions are just good reminders for talking to donors and supporters in informal settings.

Good interviewing also requires a good set of questions. Asking the wrong questions (or avoiding the hard questions) is a waste of time. You may feel good by the end of the interview, but nothing is gained. Asking the right questions the right way, however, can unleash passionate, emotional, or even angry responses – which can be extremely informative.
[…]

Which brings us to the hardest part of interviewing – listening. A good interviewer is a good listener. Listening requires a great deal of concentration. A good listener understands what the respondent is saying, and also thinks about what the respondent is not saying, or trying to say…. A good listener hears when the respondent is having difficulty answering a question, and re-phrases the question or illustrates a response drawing from her own experience. “Maybe I can help you with this question by telling you how I would answer it for myself…” Perhaps the most difficult aspect of interviewing is simultaneously concentrating on what the interviewee is saying and also having a sense of where the interview is going – whether to probe deeper or move on to the next question.

Some questions are direct, while other questions involve asking people to tell personal stories. For example, “Can you remember when you felt especially proud of a gift you made?” Storytelling can be extremely useful in getting people to explain important events in their lives and to open up about difficult issues….”

Crucial Policy Decision: Unwelcome Solicitations

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The Chronicle of Higher Education has a series of articles about sexual harassment in fund raising today. Unfortunately, you need a subscription to read them, but if you have a subscription to the Chronicle of Philanthropy, the same articles appear there.

I really had no idea that sexual advances on development officers by donors was such a prevalent problem. But upon reading the main article, it makes sense that the potential would exist.

In many cases, those women are appealing to older, powerful men for large donations. To succeed, fund raisers must build long-term relationships with donors. And they often visit donors in their homes or meet them in social settings where alcohol and personal information are plentiful.

To be sure, unwelcome sexual advances are not a daily occurrence for most fund raisers. But the problem happens often enough that they and the organizations that employ them should have better guidance on what they can do to prevent and deal with harassment, says Polly Aris Stamatopoulos, a Washington consultant to nonprofit groups.

Ms. Stamatopoulos says she has rejected inappropriate sexual requests from donors and observed several incidents in which other donors or trustees made sexual overtures toward fund raisers she supervised. People who raise money for a living, she says, should be required to take “a class in the sexual politics of fund raising.”

It occurs to me that this may be an even bigger problem in the arts where the development office is often comprised of one person with few people to turn to for support or to shift a donor to. Given that the executive director is often the primary fundraiser in many organizations, the situation can even be worse with no one but the board to turn to for support. One of those interviewed in the articles spoke of feeling an obligation to keep the donations coming. Her sense of obligation was entirely self imposed because when she spoke to her supervisors after tolerating the advances for two years, they readily assigned the donor to another staff member. The donor never gave to the organization again. It isn’t hard for me to imagine that in some situations staff supervisors or board members would discourage the affected person from rocking the boat too much lest they endanger fund raising efforts.

Most organizations have sexual harassment policies that cover employee behavior, but I suspect few have explicit statements that employees should expect reasonable treatment from patrons and donors as well. Dealing with advances from members of the public is much more complicated than similar situations with employees. That only means that clear policies should be generated so that people can confidently and knowledgeably handle the situation.

It makes sense for organizations to train fund raisers about how to carry themselves as a representative of the company in social situations far away from the work environment. Instruction on how to handle every manner of uncomfortable situations, including unwanted advances is a logical component of such training. But I am guessing it not the sort of training many arts organizations provide.

The Chronicle of Philanthropy is hosting an online discussion on Wednesday, July 14 about coping with unwanted advances if anyone is interested in exploring the topic.

Info You Can Use: Considerations Before Forming A Non-Profit

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Last month, as many non-profits were faced with losing their status due to a change in the tax filing laws, Board Source President/CEO Linda Crompton suggested the situation might be good for the non-profit world by removing duplicative and ineffective/inactive non-profits. Because non-profits really aren’t required to generate a business plan or survey the need and competition before filing for status, she feels there may be too many non-profits in existence.

No for-profit company would start up without doing a thorough analysis of the competitive landscape; that analysis would be baked into the business plan and would inform all other decisions — one of which might be “not here, not now.” It’s incumbent upon our sector to school itself on this point: just because we have an idea, and a mission, and a great, good heart, does not mean that we need to start our own, brand-spanking new organization to fulfill that mission. The same truth applies to organizations in all stages of their lifecycle. Boards should be asking themselves: are we still relevant? Are we fulfilling our mission effectively and sustainably? Is there another organization across town doing the same thing, only better? Should we be discussing merger, or even dissolution?

I have mentioned a number of times over the years that I have often many arts organizations have been started that could have easily been part of an existing group or that could have merged with other groups when it was clear that their service area couldn’t support both groups very well. I will admit that I have seen many more groups in merger talks over the last few years since the economy has gotten worse than I had during previous economic down turns. It was good to see people considering this route. But I have also seen new groups peel off because of personality differences or a desire to perform a slightly different genre. Admittedly there is a difference between classical and modern realism, but Shakespeare festivals manage to produce both without compromising their souls.

To be honest though, I don’t know if the IRS would be in a position to evaluate whether there was or wasn’t a need for any type of non-profit, be it an arts organization or social service agency. Imagine the work involved in developing criteria to measure if there was a sufficient support base for the organization in a community. Imagine the bad press the IRS would get for denying someone non-profit status for a social service organization serving a very emotionally charged cause.

Which doesn’t mean due diligence shouldn’t be done. In a comment to Linda Crompton’s entry, Don Griesmann links to an entry on his blog in which he enumerates all the considerations that should be made before creating a non-profit. He also footnotes his arguments with the largest number of stories on the difficulties faced by non-profit organizations I have ever seen.

His entry came at the end of 2009 and he proposed that no new non-profits should be allowed to be created in 2010 unless a whole multitude of conditions were met. A brief sampling:

•Unless you understand the nonprofit will not be “your nonprofit” and you have enlisted an incorporating board that is interested in the concept and capable of performing the necessary tasks of incorporating and operating the organization and

•Unless you understand there is no “free money” from the federal or state governments. The federal government distributes funds through scholarships, fellowships, contracts, grants and loans. Each requires an application, meeting eligibility requirements, demonstration of a task to be undertaken, proof that the task was performed and the money used appropriately and in many instances a report evaluating the use of their funds…

….•Unless you have a concept of what it costs to develop and operate a nonprofit in terms of shared leadership, time, thought, study, serious planning, hard work, evaluation and annual reporting as well as money and
•Unless you have no intention of attempting to raise more than $5,000 a year for the next 5 years…

…•Unless you have performed due diligence and created a board of mixed talents, diversity, shared passion and vision concerning a truly unserved issue or need supported by some empirical evidence. If the need is an underserved need, why not join with the current providers and increase the service or product? And
•Unless you understand that there simply are not grants available to pay for the incorporation process. If you and others cannot raise the first $1,000 or so to incorporate, then where do you think you will get the money to run the organization? When someone asks, as many do, does anyone know where I can get a grant to start my nonprofit, we should either not respond or tell the truth – you are not ready to start a nonprofit. Go volunteer at a local nonprofit….

One of his next “unless” includes having a business plan that answer 19 different questions. One of his other conditions might be that you shouldn’t form a non-profit if you don’t have the patience to read his whole entry. While it is very long, it asks many pertinent questions and raises many points that ought to be considered. It is good to see people starting to advocate for this level of consideration prior to forming a non-profit.

Of course, non-profit status covers a lot of situations, including block associations and other purposes that wouldn’t necessarily be competing for grants from a shrinking pool of resources. These will certainly benefit from being well planned, but aren’t likely to struggle to stay in existence or become a drain on their community if they don’t meet every criteria.

End of Multi-venue Cultural Facility Construction?

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The Nonprofiteer reports that the Kresge Foundation has decided to cease providing support for the construction of new theatres.

The Nonprofiteer’s reaction seems to imply those who hadn’t jumped to build when everyone else did are being penalized while those with established facilities will continue to benefit under the new focus.

“Granting funds instead for renovation and repair means the new Kresge posture will benefit the arts groups that got while the getting was good (or, perhaps, have some other basis for grantworthiness, e.g. re-purposing of an historic building). But arts groups which have been thinking about building from scratch are now stuck contemplating Max Bialystock’s mantra: “He who hesitates is poor!”

Yes, inevitably those who received support in their capital campaigns may not find themselves the beneficiary of programmatic and capacity building support. This is a common story as the financial situation changes for everyone from governments to families. Entities who have a need at the right time get resources that others didn’t/won’t. (And Mom loved her best too! *sniffle*) Also, the way Kresge Foundation sees it, the operating environment is shifting in a direction that can not support new construction.

“Kresge was a critical player in the 20-year cultural facility building boom that swept the arts sector.” Carle continues. “But numerous signs suggest that the building boom is over, halted by a combination of the economic recession and the staggering challenges of running capital campaigns and then covering steadily rising fixed costs. Our new grantmaking strategy is designed to assist organizations in successfully making this transition and positioning themselves for long-term sustainability.”

Their focus now will be on “Institutional Capitalization, Artists’ Support Services and Arts and Community Building.” Renovation, repair and generating a building reserve funding can be applied for under the Facility Investments and Building Reserves section of the Institutional Capitalization area. It appears to be the only area one can apply for openly. Unsolicited applications for all other sections of Institutional Capitalization as well as the Artists’ Support Services and Arts and Community Building areas are not accepted.

They do leave the door open slightly to new construction projects: “On occasion, we will entertain applications for new construction associated with exemplary sustainability practices or those that embody key principles of urban and community planning to enhance the quality of life in a place.” So perhaps if you had a project to reclaim a portion of downtown storefronts for arts use as part of a revitalization project focused on creating a walkable neighborhood, you could have a decent shot at funding.

When All Non-Profits Are Not Equal

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Stuff to think about from Gene Takagi at Non-Profit Law Blog. He links to a piece on The Chronicle of Philanthropy about the increasing scrutiny on charities. (Not that there aren’t people abusing non-profit status, but shouldn’t the hammer really be coming down a little heavier on big bank misdeeds?) A symposium was conducted earlier this month “focused exactly on the issue that is first in the minds of policymakers in Washington who are interested in the tax-exempt sector: whether there is merit to a broader review and consideration of what is a charity. More specifically, should there be an effort to distinguish between types of charities?”

The piece links to articles which examine how many companies with non-profit status seem to be operating as thinly veiled for-profit businesses. In this context, most arts organizations probably wouldn’t worry because there is little chance of anyone accusing them of making massive profits. However, writing about the symposium agenda, the writer asks:

The question for tomorrow is should we move beyond just reforming certain sectors but instead look at broader changes to the subsidies for charities? For example, should there be line drawn that would allow for greater tax subsidies to charities that provide direct support to the poor? What lines should be drawn? What lines can be drawn?

Since governments often tend to think there is a binary choice for funding non-profits- your show or dying orphans, Carnegie Hall or criminals running free and houses burning down– my concern is that creating a scale for subsidies and donation exemptions will present a clear judgment about the value of organizations in the community. How will people’s perceptions change when 100% of their donation to Juvenile Diabetes is deductible, but only 80% of the donation to the opera? True, so much of it is already unspoken or written up in editorials and blog posts, but that might solidify perceptions. I would think there is a very real chance of arts organizations ending up on an uneven footing with other non-profits. It is politically much easier to advocate for better consideration of health and human services than the some times controversial arts.

There hasn’t been a follow up post on the Chronicle of Philanthropy site so I don’t know how the discussion played out. There was a mention of one of the speakers, the chief of staff for the US Senate Finance Committee mentioning that perhaps Congress should create a “for benefit” corporate status. But I haven’t seen anything much more about the meeting.

On a semi-related topic, Takagi also linked to the IRS’ new rules dealing with “Tax on Unrelated Business Income of Exempt Organizations ” Unless you have been wondering how to find these rules and enjoy reading IRS publications, this may not be of great interest to you.

He also linked to a site addressing what to do if you are a for-profit who wants to help raise money for a charity. The answer given isn’t really extensive, but it is a starting place if you are considering partnering to create one of those programs we often hear about where a “portion of the proceeds is donated to…”

Development Is Everyone’s Job Too

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The assistant theatre manager and I had a meeting with our development officer today. I haven’t had a lot of faith in the foundation people since I took this job but today’s meeting gave me cause for optimism.

In the past, my interactions with the foundation people have mostly consisted of them telling me not to do things. I wasn’t to try contacting people, except on a very limited basis or write appeal letters, but rather give them a list of our needs and depend on the phone bank for the annual appeal. In the last six years we have had five development officers and no consistency or follow through from one to another. I have hosted four receptions in cooperation with them where there was no ask for donations. That would be fine, but there was also no follow up with the invitees to help them develop a greater investment in the theatre.

Despite all the promises and plans that were made, not only am I no closer to the endowment they keep telling me they want us to develop, but my annual contributions have been flagging every year, even before the recession. So I pointed all this out, noting that this was the fifth time I have pretty much had this meeting and asked what would be different.

The development officer acknowledged the foundation hadn’t really done well by us and then proceeded to talk about how the focus of the donor cultivation would move from her to us. We would take more ownership of the process so that if she was hit by a car tomorrow, the effort would still move forward. We aren’t going to depend heavily on gala events and chasing corporate money. We are going to clearly define giving opportunities and the case for giving to the theatre. Then we are going to start cultivating people on an informal basis.

I was glad to hear this because I figure I am already ahead in the game. I started actively cultivating relationships with people about a year ago. I was talking to a person I had specifically targeted as a prospect just last Friday. After a number of years of discussion, I am finalizing the arrangements for the donation of new carpeting for the lobby and seating areas. I had also started sending out targeted solicitation letters on the theory people give to people they know, not anonymous phone banks representing institutions. I decided if there was a foundation person to take umbrage, there was a good chance they wouldn’t be here in a year to prevent me from doing it again anyway. Yes, it might be a cynical outlook, but it has doubled my donor base. (Admitted, not a hard thing to do at this point.)

Since I regularly echo the idea that marketing is everyone’s responsibility, I am certainly on board with the idea that development requires everyone’s investment as well. When the topic of creating a case for what makes us worthy of donations came up, it was quickly decided we needed to include the technical director in some of the encounters with potential donors. He has been with the theatre for over 30 years. He has a great institutional memory and is probably the best qualified to talk about what has made us special over the years. I took it as a positive sign that the foundation was ready to give up some control when everyone quickly saw the value of having the guy with sawdust in his mustache talk to potential donors.

My suspicion is that the impetus for ceding some control and involvement is a result of the economic downturn. With staffs being shrunk, it probably became clear that the foundation couldn’t sustain the level of engagement with donors they needed to with those who remained. (The “small staff” motif was frequently mentioned by the development officer.)

I don’t know if they will be promoting the same sort of dynamic with everyone in the system. I’ll be the first to admit, not everyone is suited to advocate on behalf of their program. There are situations that really are best to defer to the professionals. The chancellor knows I have been chafing under the restrictions imposed on us and may have had a hand in getting the reins loosened a little. It may have helped that the theatre staff and I worked together to gain the donation of the new carpeting and some lighting instruments independent of the foundation.

So we will see how things unfold. The assistant theatre manager is pretty energized. Partially I think, because he hasn’t sat through this same meeting multiple times before. I am obvious still a little cautious and skeptical about the whole thing. I didn’t lay all my cards on the table in terms of possibilities I have been pursuing and after this meeting, there is less of a need to do so until the time is right.

Who’s Auditing The Auditors?

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Credit where it is due, Peter Hansen of NJPAC posted a link on the Performing Arts Administrator’s group on LinkedIn about the £2.3 million judgment entered against former London Philharmonic Orchestra (LPO) General Manager Cameron Poole for financially defrauding that organization.

Even though it was supposed to take 4 people to issue a check, Poole was able to take advantage of operational distractions to perform all the required functions himself, included forging countersignatures. The executive director, Tim Walker, admits some negligence on his part, but is amazed that not only did he and the board not catch it, but the auditors from Deloitte missed it on three separate audits. LPO is currently pursuing a negligence suit against Deloitte.

It raises the question of whether you can really be certain you have proper controls and diligence in place. Deloitte missed, or at least didn’t comment on something that became apparent to Poole’s successor in a couple weeks. Four of the biggest accounting firms in the country never made a sound about the suspicious nature manner in which Bernie Madoff financial reports were generated. (An entirely separate issue from the strangely superior returns his fund was generating.)

One would think that after Arthur Andersen’s accounting arm lost credibility following the Enron scandal, reducing the Big Five accounting firms to the Big Four, greater attention would be paid. But I think people may attribute more competence and honesty to organizations of great size and prestige than is warranted. Even on the non-profit front, I was aware of a number of scandals in the United Way, but I had no idea that there has been large scale mismanagement and embezzlement at four or five locations and alleged smaller scale fraud at over 20 others. One of the Spanish members of the LinkedIn group cited a case similar to LPO’s at Barcelona’s Orfeó-Palau de la Musica Catalana where the general manager embezzled millions of euros (some stories I have seen claim 23 million in over 30 years).

The piece I linked to above about the United Way claims “The nonprofit world has accepted that multi-million embezzlements are a cost of doing business.” As much as I am dismayed by the idea that making great efforts at due diligence may not guarantee security, I would hope no one hiring me would do so assuming there was a good chance I will make off with some of the money.

There is a price for lack of scrutiny when people begin to lose faith in you. About a year ago, there was a piece in the Washington Post about 21 Washington DC area non-profits withdrawing from the local United Way, which had been the subject of one of the larger scandals, in favor of another emerging charitable organization.

I am encouraged by the news that it didn’t take long for Poole’s replacement at the LPO to notice something was strange. It means that misappropriations can be spotted with a little healthy scrutiny that makes no personal judgments about the individual holding the books when you ask to see the raw data rather than the summary reports.

Still, most of us don’t have three weeks to pour over ledgers sorting through it all. So the real question becomes, how do you know you can trust your auditor to be meticulous enough on your behalf? I am sure I could find editorials about how the big firms are so big and so motivated to process as many audits in a year as possible, companies aren’t getting the competence and effort they deserve. I am also pretty sure that laziness and incompetence afflicts the small operations as well as the big ones.

There was an argument back during the Enron scandal that rotating accounting firms would help avoid the conflicts of interest that develop over a long term relationship and cause auditors to look the other way. That was countered by the idea that is wastes a lot of time and money when you have to get a new auditor up to speed about the way your business runs.

I am pretty much on the side of rotating. I don’t think most arts organizations and non-profits in general are so big that it will take too much longer to explain their operations to a new group every few years. That way you avoid any conflicts of interest and lack of rigor.

Info You Can Use: Cell Phone Donations

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If you have been excited by the prospect of using cell phones as a mode of donation after hearing of the success in raising funds for Haiti, you may want to do some research and calculations. The cell phone and credit card companies have gone out of their way to make it easy to donate for Haiti relief and waived most of the ancillary costs.

You on the other hand, probably won’t be so lucky.

Hawaii Public Radio had a short piece covering a meeting sponsored by a local foundation on the subject of cell phone donations this week. (link downloads mp3 file. This link if first doesn’t work. Look for raising funds..social media) A representative from a cell phone company talked about the costs to set something like this up- $500 set up fee, $400 monthly fee and a a .35 per transaction fee.

With costs like that, it would likely only be worth your while if you had a large group of people already giving that you wanted to provide an alternative mode for donating.

Now that said, I can easily see the costs coming down as those for whom it makes sense use the service. Once all those involved with the transactions create more efficient processes, the service may become more affordable. Someone is likely to invent an app for the iPhone or Facebook which will facilitate the whole exchange and two years from now it will be a $2 billion business in $25 average increments.

Another observation that is made in the story related to social media was in regard to who one puts in charge of coordinating it. One speaker cautioned against putting the youngest person in the office in charge of social media just because they understand the software the best of anyone. “They know the tools, but they don’t understand the sophistication of your message and they don’t always understand the intangible qualities…of how you actually communicate with people out there.”

I have a suspicion this is something a lot of people have already thought to themselves but were afraid to say it for fear of showing just how out of touch with social media and its great power they are. It just takes a visit to sites like Failbooking.com to see some pretty poor choices when using Facebook. Though to be fair, I sort of question the wisdom of this water safety ad by Royal Life Saving Society Australia.

Only 15 Minutes Of Fame For Tragedies?

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Lucy Bernholz at Philanthropy 2173 makes some fascinating reflections on the impact of technology on giving vis a vis the Haitian earthquake relief efforts.

I confess a huge amount of skepticism when I had first heard that one could donate to the relief effort via text messaging on your cell phones. I wondered how much the phone companies were profiting off this and how big a cut the donation processors would be taking. Apparently I wasn’t the only one because according to Bernholz, the phone companies have waived the fees under pressure of public opinion.

She also talks about the possibility that those who received funds may be under greater scrutiny. I remember after Hurricane Katrina, many people were horrified to learn how great a percentage of their donations were going to administrative overhead at the Red Cross and similar organizations. The Red Cross has shown some transparency by tweeting near real time updates of the climbing donation totals. Bernholz suggests that Twitter may become the platform where this is not only reported–but where people also question what has been done with the money.

The suggestion that really grabbed my attention was her idea that technology might cause/allow people to acquire “Donor Attention Deficit Disorder”

That people all over the world can be so instantly engaged and moved to donate is certainly a good thing. But does it come with costs?

On Wednesday, January 13, #Haiti was a trending topic on Twitter all day (a measure of what the millions of tweets are discussing). By Thursday, January 14, it was gone. Does the ability to give instantly and painlessly (mobile donors won’t even see a charge for the gift until they get their next phone bill) make it extra easy to give and move on? Will “donor fatigue” be replaced by “donor A.D.D.?”

The concept that even tragedies have only 15 minutes of fame before people move on is pretty chilling. If the best tactic for successful fund raising is providing people with an opportunity to give at the point where the emotional appeal is greatest, it is going to be increasingly difficult to sustain any sort of long term support. And how long will it be before people become inured to solicitations of calculated to concentrate a great deal of emotional response in a short span. Such an approach might stunt efforts to gather support for true tragedies.

It probably doesn’t help that we are told to just give money. Granted, in this case, it just isn’t practical to become physically involved. Much less so that after Hurricane Katrina. There is also something of an underlying message that once you have given, you no longer need to be engaged with the problem. All you are being asked to do is just give money and you can accomplish that by doing something you enjoy doing everyday–text a number.

How Much Am I Bid For This Sweaty Towel?

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When it comes to fund raising, I imagine there have been quite a few people who have looked around their buildings wondering how much they could get for various objects laying around.

They probably aren’t the first, but Philadelphia radio station, WXPN has started an auction section on part of their website in the hopes of shortening their fund raising drives. They offer a mix of objects from access to special seating sections at concerts and dinners with artists to old stuff they found laying around their former building.

There are times I have joked about selling the towels artists have used on eBay to raise funds, but sent them all to the washing machine. I wonder if I have been too shortsighted….

If you are like me, your problem isn’t that you don’t have plenty of interesting stuff to auction off. It’s that your budget is so tight, you have recycled the stuff so many times you can’t decide which significant performance to claim it belongs to.

In fact, it may have more value to schools teaching art restoration. Students can practice removing successive layers of paint to analyze the techniques used. Most of the stuff you have is probably good for at least five-ten semesters of instruction before they reach the original finish. This is probably the way to go anyway since the multiple attempts to repair the objects over the years have endowed it with a good three pounds extra in glue and screws and a strange tilt when placed on a flat surface.

But in all seriousness, it is something to consider to raise some extra funds. Certainly, it can’t become a veritable business unto itself for your organization or else the IRS may be stopping by to review your non-profit status. I know there are a few theatres around that rent/sell costume pieces just before Halloween to clear out their storage areas and generate a little income.

XPN’s auction site seems to be created via AuctionAnything.com. Services like theirs can provide a more professional environment than something like eBay can. However, given the cost, it would likely only be worth it over the long term, (as opposed to single use around a special event), if you intended to offer things consistently and had someone tasked to attend to the arrangements.

Fear Of The Fundraiser

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Hat tip to Seth Godin who reproduced Sasha Dichter’s Manifesto in Defense of Raising Money which begins “I’m sick of apologizing for being in charge of raising money.”

It seems to me a must read for anyone who is in the position of raising money which includes pretty much everyone in an organization since theoretically everyone must be part of the organization’s narrative. As you read, don’t get side tracked with thoughts about how his cause is so much more worthy of donations than your own. There are many elements that contribute to personal and societal health.

Dichter basically feels people approach fund raising from the wrong perspective seeing it as a chore rather than an opportunity to evangelize about the change you want to effect. For me the third point he makes after asking why people are so afraid to ask for money seems the most salient.

“…wealth is associated with power, and not having wealth can feel like not having power. So going to someone who has money and saying, “You have the resources, please give some of them to me” doesn’t feel like a conversation between equals.

How about this instead: “You are incredibly good at making money. I’m incredibly good at making change. The change I want to make in the world, unfortunately, does not itself generate much money. But man oh man does it make change. It’s a hugely important change. And what I know about making this change is as good and as important as what you know about making money. So let’s divide and conquer – you keep on making money, I’ll keep on making change. And if you can lend some of your smarts to the change I’m trying to make, well that’s even better. But most of the time, we both keep on doing what we’re best at, and if we keep on working together the world will be a better place.”

One of the other points Dichter makes is that storytelling is more a skill than a talent and I think communicating the sentiment in an effective manner would take cultivated skills. There are already organizations using this approach except they are saying, you make money, you keep giving me the money and don’t pry too much about what I am doing with it.

It occurs to me that if you are approaching fund raising as evangelizing rather than as a necessary evil, you aren’t waiting for people to ask but rather reporting back before being asked. I am certainly in a better mood when I am writing to our donors about our successes than I am filling out the final report forms for a foundation. The format of the first allows you to tell people what events you perceive as progress. The format of the second forces you to try to recast your success according the the criteria by which the foundation is measuring progress. Something tends to get squeezed and lost when you try to stuff your excitement into the box provided.

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Butts In The Seats by Joe Patti is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
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