Home Page

Info You Can Use: Like This Post And You Could Win….

August 20, 2012

by:

Joe Patti

..Well Actually I Can’t Promise You Will Win Anything.

That was one subject tackled in a slideshow/PDF Venable LLP posted from a talk they did in early August, How Nonprofits Can Raise Money and Awareness through Promotional Campaigns without Raising Legal Risk. The slideshow proper is followed by resource documents that delve a little deeper into many of the topics.

The collected information is a great basic resource on many of the legal questions you may have about different sorts of promotional and fundraising techniques like raffles, games of skill and chance. The laws of many states make it necessary to have the “No Purchase Necessary” option and the ease (or lack thereof) of taking advantage of that option is frequently a subject of legal action.

While every state has different laws, the slideshow helps to clarify the general distinguishing characteristics of these activities. For example, I wasn’t aware of some of the following:

Some less obvious examples that may satisfy the “chance” criterion include those in which: a prize is awarded to the “100th” store (or Web site) visitor on a particular day; the amount of the prize depends on the number of people who decide to participate; the prizes are of unequal value; or, a drawing is used to break a tie, or a single prize is divided between tied winners.

The document addresses some of the issues use of the Internet to solicit contributes raises in relation to social media and rules dealing with being registered as a charity in other states if a significant amount of contributions is originating from there.

One of the biggest legal situations they discuss is the commercial co-venture (CCV) where a business might promote that a portion of a purchase will go to benefit a charity. NY State launched an investigation regarding companies that did that in relation to breast cancer and turned up a great deal of fraud. Apparently half the states have laws regulating CCVs in terms of disclosure and the manner in which the relationship is promoted.

Use of social media for solicitations is apparently a gray area legally so the suggestion is to proceed with the same care you would if you were making the same appeals face to face or in print. There are also concerns that you respect privacy when collecting user data, especially from children, and protect the data from theft. Geolocating and behavioral advertising and tracking are identified as hot button issues.

However each social media service has a number of their own rules of which you need to be aware.

For example with Facebook:

-Promotion may not be administered directly on the site, must be administered through a third-party Facebook Platform application
– Cannot use Facebook functionality or feature as an entry mechanism; e.g., “Liking” a profile page or posting a comment on a wall. Also cannot condition entry into the promotion upon taking any other action on Facebook; e.g., liking a status update or uploading a photo.

• However, can condition entry on a user “liking” a Facebook page, checking in to a “Place”, or connecting to the Facebook platform based promotion application as part of the entry process. E.g, can require that users “like” a Facebook page and then submit a completed entry form to enter.

This was something of a surprise because it seems like I get requests to like things all the time and have seen it tied to a chance to win something. I have been trying to remember about how they have been structured.

Facebook is also pretty strict about requiring groups to provide notice that Facebook is not associated with the promotion really in any way.

Another area of concern is intellectual property rights. If you are encouraging people to submit some sort of creative project you can run into a number of issues,

“Incorporating user-generated content in a marketing campaign could expose the sponsor to liability for libel, copyright infringement, violation of one’s right of privacy/publicity, deceptive advertising, trademark infringement, or other violations.”

While social media sites and marketers are protected from liability for what people submit or post on their sites, if you turn around and use the submitted content to promote your organization or product thinking it is entirely original, you could be in quite a bit of trouble.

If you look at the slide show but have more questions, it is really worth looking at the additional resource documents at the end. There are some good short articles that deal with the Do’s and Don’ts of Social Media promotion and

Fundraising, Info You Can Use, Legal Topics

No Comments

Oh What A Tangled Web…

August 15, 2012

by:

Joe Patti

Today at lunch a musician friend was picking our brains about a fund raiser he wants to do for a cause he really believes in. He outlined his vision and then asked for ideas of places he could hold it. There were a couple assumptions he made about his budget that were unrealistic which we helped him to re-evaluate.

The discussion made me think of an article someone I follow on Twitter recently linked to by Nell Edgington, “5 Lies to Stop Telling Donors.”

Edgington lists the lies as:

1. X percent of your donation goes to the program
The distinction between “program expenses” and “overhead” is, at best, meaningless and, at worst, destructive… It is magical thinking to say that you can separate money spent on programs from money spent on the support of programs…“overhead” is not a dirty word…

2. We can do the same program with less money
No you can’t. You know you can’t. You are already scraping by…Politely, but firmly, explain to the donor that an inferior investment will yield an inferior result…

3. We can start a new program that doesn’t fit with our mission or strategy
Yes, that big, fat check a donor is holding in front of you looks very appealing. But if it takes your organization in a different direction than your strategy or your core competencies require, accepting it is a huge mistake…Don’t let a donor take you down that road.

4. We can grow without additional staff or other resources
Nonprofit staffers truly excel at working endless hours with very few resources…But someday that road must end…

5. 100 percent of our board is committed to our organization
If that’s true, then you are a true minority in the nonprofit sector. Every nonprofit board I know has some dead wood…It’s a fact that funders want to see every board member contributing. But instead of perpetuating the myth that 100 percent is an achievable reality, be honest with funders…It is far better to demonstrate that you are tirelessly working toward 90 percent.

I have frequently linked back to a post Andrew Taylor made about 6 years ago where he suggests non-profit organizations aren’t doing themselves any favors by keeping funders expectations high when they report everything went as good, if not better, than planned every single time.

In recent years “overhead” has come to the fore as a problematic measure of effectiveness. I think the whole idea about low overhead being a measure of effectiveness is the root of the other evils Edgington mentions in her article, in the pursuit of portraying themselves as having low overhead non-profits will say they can do more with less money, do more with same/fewer staff and the organization has a super efficient board.

An April article in the LA Times talks about why overhead is such a poor measure of a charity. In that column, Jack Shakely, president emeritus of the California Community Foundation, cites the example of a group that was buying its medicine in Canada but was using the cost of the medicine in the U.S. as a basis to report the difference in price as an in-kind donation in order to make their administrative costs appear to be a smaller portion of their budget.

Writes Shakely (with my emphasis added),

Don’t get me wrong. Low administrative costs could indicate prudence and sound judgment at a charity, but they could just as easily indicate inadequate staffing, insufficient salaries or, shall we say, fudging. Moreover, administrative costs aren’t the primary measurement of for-profit excellence. Are McDonald’s admin costs lower than Wendy’s? Apple’s lower than Microsoft’s?

[…}

But our intuitive thinking system wants an answer now, and because we are intuitively inclined to believe that the nonprofit sector is filled with soft, amateurish executives, we latch on to the pseudo-science of administrative costs as a measure of excellence. It’s hogwash; there is absolutely no way of telling that an organization with 5% administrative costs is superior to one with 20% costs based on that criterion alone. In fact, the exact opposite may be true.

As Shakely notes, it will be hard to get donors and funders to shift to better criteria when the overhead ratio appears to be so clean and rational a measure. But as both he and Edgington comment, no funder is going to use any other measure of evaluation if they aren’t told the criteria is unfair and unrealistic.

Think about what you can do to change assumptions as you make your next pitch or write your next grant proposal.

Advocacy, Fundraising, Leadership

1 Comment

Do The Arts And Millennials Share The Same Core Values?

August 14, 2012

by:

Joe Patti

Last month there was an article on Fast Company, Why Millennials Don’t Want To Buy Stuff, that claims the focus is moving away from acquisition of things toward access to ideas and relationships.

Though the article also admits it might be because they can’t afford stuff either.

They also point out many “goods” we consume are actually rented or licensed from services like Netflix, iTunes or Amazon’s Kindle. Exchanging money for a transient product is the norm for Millennials in a way it isn’t for previous generations.

According to the article, when Millennials do buy things it is motivated by one of three things. Either the item provides access to other experiences in the manner of most Apple products; the item can be used to develop a relationship or sense of community; or the item makes a statement about themselves to others.

Of course, there tends to be a lot of overlap between these motivators since sharing experiences enabled by a product can make a statement about yourself which can be shared with like-minded people.

If the article is correct, arts and cultural experiences are pretty well suited to Millenials. The experience is transient and can’t be possessed as a concrete object. It can provide a sense of community and opportunity for relationship building and can make a statement about the person to others.

Of course, as has oft been discussed, what Millennial wants the statement they are making to be that they like hanging out at a performance hall cultivating a relationship with old people.

The fact that this article just provides a slightly different perspective that brings us back to the conclusion that if you want to attract Millennials, you have to provide an experience they find attractive should be comforting. It means that the answer is so simple and evident that we keep reaching the same conclusion.

Or I suppose that we are so fixated on the idea of attracting Millenials, we lack the imagination to interpret it in any other manner.

There is something to be said for the research that shows people tend to orient toward arts and cultural experiences at a certain age range when they have reached a level of personal and economic maturity. In that respect, there is perhaps too much expectation placed on the Y generation to start attending now.

At the same time, I think that: 1- It never hurts in the cause of creating general awareness to let Millennials know now that the opportunities are available when they are of a mind to attend.

2-The product and approach you used to attract their grandparents and parents isn’t going to work on them so you might as well make your mistakes now while they aren’t really paying attention than trying to refine your approach later when they are.

I am encouraged by the thought that the Fast Company article might reflect the values being embraced by Millennials because I think it plays to the real core strengths of arts and culture. The message that the arts are what you get involved with to exhibit you are mature, cultured and refined is an ill-fitting suit in comparison. We have just been wearing it so long we have mistaken it for our identity rather than garb donned when an opportunity presented itself.

Arts in an Age of Technology, Audience Relations, State of the Arts

6 Comments

Put Your Board On A Diet

August 13, 2012

by:

Joe Patti

The Chronicle of Higher Education had a piece about the problems inherent to large board size on their website today (subscription required). While the article is about large boards in higher education, there are lessons to be learned.

Governance experts say such large boards dilute accountability and invariably allow a small group to seize control of an institution, leaving the remaining trustees on board merely to cut ribbons and big checks.

But it is easy to see why a college might want a big board. It is simpler to add trustees than to remove members who are no longer pulling their weight, and growth can be justified as an effort to broaden the diversity of opinions in a group. It is also true that there may be no better way to cultivate donors than to give them active policy-making roles at a college.

These two paragraphs appear to outline all the major problems faced by boards-lack of accountability, small number of people really in control, some members not engaged in the board functions and valuing board members pretty much solely for their fund raising capacity.

Obviously, these problems can plague boards of any size. In fact some of you may privately be wishing you were “cursed” by a larger board figuring if the ratio of valuable to problematic members stayed true, you would have enough useful people to accomplish something. But the problems and dysfunction can become more pronounced and harder to avoid as the group grows larger.

The article provides a number of examples where weak controls and oversight brought on by large board numbers were the source of financial and sports related scandals. While the article doesn’t draw a direct link, it occurred to me that having large numbers at a meeting means that certain people never get a chance to talk and therefore are never invested or feel responsible for the decisions being made.

Perhaps a small group of people on the executive board make the decisions or perhaps the feeling of personal accountability is diluted across numbers. As they say, no raindrop feels they are responsible for the flood. Either way, the environment can contribute to bad decisions being made.

Another contributing factor seemed to be a lack of board education. The article spent some time on anecdotes from various university presidents who discovered their boards really didn’t have a sense of the business of higher education. The schools embarked on efforts to make their boards more knowledgeable.

Recently when I read about board relations, the importance of educating boards about their governance and oversight responsibilities seems to be discussed with greater frequency. In fact, the idea that board members are fund raisers and need to “give, get or go” seems to have taken a back seat to the importance of boards contributing to good governance and planning.

Perhaps the conversation has turned in this direction as reaction to Sarbanes-Oxley or perhaps the non-profit sector has started to recognize the importance of the board to organizational leadership.

Boards, Info You Can Use, Leadership

No Comments