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

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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?

What If They Don’t Want To Be An Executive Director?

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On the Harvard Business Review blog site, Anne Kreamer asks “What If You Don’t Want to Be a Manager?” (h/t Daniel Pink) where she talks a little about the alienation one might feel moving from being a producer of material to a manager. While she talks about an experience in a corporate environment, it was easy to see the same situation cropping up in the arts when someone moves from creating content to producing revenue reports and reviewing labor laws.

One of the options Kreamer suggests, other than leaving the company and striking out on your own, revolves around changing the existing work environment. It was her last two sentences that resonated with me (thus my emphasis).

This is something more companies need to address. To remain globally competitive, organizations need to devise innovative ways to encourage and reward creativity. The unorthodox titles embraced by start-ups — directors of fun, ministers of information — can seem ridiculous, but the emphasis on improvising new ways of doing business is important. Furthermore, research conducted by Office Team found that 76% of employees did not want their boss’s job. If employees are no longer responding to the old carrots, it’s time for companies to establish new means of rewarding talent.

This reminded me of the Daring to Lead and Ready to Lead reports I had written on in the past that reported young arts leaders were chomping at the bit to gain greater responsibility in their arts organization, but didn’t necessarily want to assume an executive role.

It got me to thinking that while there is a lot of discussion about exploring new business models for arts organizations like the B Corporation and L3C, maybe there needs to be a corresponding discussion about changing arts job descriptions so that people actually want to assume the roles.

Two issues that seem to rise to the top for executive directors is work-life balance and that the position seems 75% about fundraising and increasing. It may be time to institutionalize the idea that marketing and development aren’t the sole province of those departments by spreading the responsibility around in job descriptions.

I have read a lot of criticism of Michael Kaiser’s ideas, but I have never seen anyone say he is wrong when he advocates for paying attention to the interests of potential donors and connecting them with your corresponding needs rather than viewing them as the source of a lot of money to answer the need you have prioritized.

With the proper training and expectations declared at the outset, marketing, education and artistic staff could take a more proactive role in identifying, engaging and meeting with donors than they do at present. Hopefully freeing the executive director to balance their personal and professional lives, improve their job satisfaction, connect back with the parts of the organization that excite them, and perhaps encourage others to crave their position.

The same can obviously be done with marketing where development, education and artistic, etc. are more active in expressing and advancing the organizational message.

I think people are already cognizant of this interdependent need based on a Twitter exchange between Adam Thurman, Howard Sherman and others this past September.

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Dancing On The Street Where You Live

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Producer David Binder did a short TED Talk about arts festivals. He mentions a number of new festivals which are engaging directly with communities in site specific events.

However, it was the first one he mentioned, Minto: Live Sydney Festival 2011, that fired my imagination most. The people of Minto, accompanied by some cooperating artists, performed on their lawns, driveways and garages as the audience moved by. I am not sure if it was planned or spontaneous, but one story Binder relates almost sounds like some residents who weren’t part of the original tour got caught up in the spirit and began performing on their lawn.

I saw a lot of applicability to the current discussions about creative placemaking and community engagement.

But what I saw as the most compelling element of this practice is that it reinforces the value of the arts and play for kids right where they live. When asked about what got me started in the arts, I often refer back to a role in my 8th grade play.

But like a lot of people in the arts, the reality is, my siblings and I would perform for our family and friends at gatherings.

A festival like this would demand greater sophistication, but heck with arts in schools, performing at home would reinforce the value of the arts for the kids, the parents and the whole community literally right where they live. It would be interesting to see if residents of Minto felt the experience changed their perception and participation in arts activities.

Just as annual tours of historic homes emphasizes the value of their presence and engenders a sense of pride in the neighborhood, (though perhaps some resentment in the kids who have to help clean their home in preparation), a neighborhood arts festival could advance the cause of the arts, inspire pride and perhaps surprise people with the hidden talents of their neighbors.

I don’t really think this would or should be a substitute of arts in schools, though it might spur renewed community interest in offering instruction. Rather, I was thinking that at one time a home piano was once the center of family activity. Participation in a neighborhood arts festival might serve to fill that absence to a small degree.

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Info You Can Use: Too Many Calls To Action

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I had meant to post this link a few weeks ago, but you know how things get around the holidays. Back in May, Jeff Brooks at Future Fundraising Now listed 20 Mistakes that Drive Away Donations. He saw the applicability to fund raising of the same list by Greg Digneo on Copyblogger who listed 20 Mistakes That Undermine Calls to Action in commercial marketing.

Given that so many non-profits are making a fund raising push for the end of the calendar year, I thought the list might be valuable to look at. The good thing about the list is that it covers mistakes that the beginner, intermediate and advanced practitioner will make.

One thing that caught my eye from Digneo’s list,

6. Multiple Calls to Action

What’s the one thing you want readers to do on your blog?

Do you want them to sign up for your list? And click on ads? And buy your products? And go to your social media profiles?

When you have too many calls to action on your site, your readers become paralyzed by the choices and leave your site.

Pick one or two actions you want your readers to take, and build your design around that. Don’t leave readers confused about what they’re supposed to do next.

Since a performing arts organization’s website is generally used for provide information that will move people toward buying tickets, as well as donating and perhaps a number of other things, it can easily devolve into something that does none of those well. I think it is good advice to focus on having your website call to visitors to take a couple actions and let everything else take the backseat.

At this time of year, many performing arts organization present shows that sell themselves well: Nutcracker, Christmas Carol, Handel’s Messiah, etc., it might be worth temporarily diminishing the ticket sales focus of home page a little and shift the emphasis to donations.

Digneo lists other mistakes that are worth pondering that might be applicable to your operations: Wrong Offer, No Urgency, No Empathy, No Social Proof; as well as some reminders about smart graphic design and positioning.