Fundraising

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.