Check out our guest blogs for Maryland Nonprofits
June 2016: A Message to Nonprofits: Stop Worrying So Much About Overhead Costs!
Funders are demanding that nonprofits produce measurable results. Yet common funding models are more consistent with compliance than productivity.
In the January edition of NPQ (Nonprofit Quarterly), Claire Knowlton makes the case for funding models that pay full costs. In her excellent article, “Why Funding Overhead Is Not the Real Issue: The Case to Cover Full Costs” she points out that the current approach to funding can be counterproductive, as it sets up a cycle of failure and distrust. Existing models discourage nonprofits from requesting the full cost of delivering services, for fear of not being funded. When nonprofits start out underfunded, they are more likely to under-deliver and fall short of funders expectations.
To reach desired outcomes, organizations need capital to invest in staff capacity, equipment, and systems, and the flexibility to change course quickly, if necessary to meet the needs of those they serve. Compliance-driven decision making, constrained by rigid funding requirements, is at odds with this kind of flexibility.
Additionally, the ability to measure outcomes can be very expensive. Both nonprofits and funders need to understand the true costs associated with developing and testing programs and reporting outcomes. Funders must be willing to bear these costs if they expect nonprofits to deliver measurable impact.
Knowlton concludes with recommendations for both nonprofits and funders:
1. Know your full costs.
2. Ask for your full costs.
3. Banish the overhead ratio.
4. Practice new ways to talk about administrative overhead.
1. Pay for full costs.
2. Create a safe space for nonprofits to ask for their full costs.
3. Banish the overhead ratio.
4. Directly support full costs through flexible funding or general operating support.
If your organization is challenged by these funding issues, I highly recommend that you read Claire Knowlton’s piece.
Most 501(c)(3) nonprofits shy away from lobbying and advocacy efforts that could result in government funding and important legislation that would benefit their clients. But according to the American Bar Association (ABA): “Getting involved in the legislative process and having a say in policy discussions is not just an appropriate role for nonprofits; it is vital. If nonprofits are not speaking on behalf of their often-vulnerable communities, chances are nobody else is either.
Lobbying is defined as an attempt to persuade members of a legislative body to propose, support, oppose, amend, or repeal legislation. Nonprofits are often nervous about lobbying because the IRS provides such vague guidelines. According to the legal site nolo.com, “a nonprofit will qualify for tax-exempt status as long as no “substantial part” of its overall activities relates to influencing legislation or carrying on propaganda. Unfortunately, this has never been clearly defined.”
A few IRS test cases have indicated that devoting less than 5% of an organization’s efforts to lobbying is acceptable, but devoting more than 15-20% is not. While these figures are useful, they have no official sanction from the IRS. What may be more helpful, is to realize that the vast majority of nonprofits devote less than 2% of their budgets to lobbying. If this is the case with your organization, there may be room for more activity in this area.
The ABA points out that, “Lobbying is just one form of advocacy that an organization may engage in to achieve its particular goals and serve its constituencies. Other forms of advocacy include educating policymakers and the public about broad social issues, encouraging people to register to vote, organizing communities, educating voters about candidate positions, litigating, and many other activities.”
Where to Turn for Guidance
In Maryland, where I live, our state association of nonprofit organizations (Maryland Nonprofits) offers a day-long legislative preview before each General Assembly session — to familiarize nonprofits with upcoming issues and key figures in each debate. They also offer free information about advocacy, and paid consultants who can help nonprofits navigate these issues. Most other state nonprofit associations offer similar resources.
The National Council of Nonprofits has free “Everyday Advocacy” resources to help train your staff and board members to be more pro-active advocates for your organization’s mission. (You’ll find the link in the Resources section below.)
Another great resource is Stand for Your Mission, which educates nonprofits about how to create positive change through Board of Directors advocacy (see the Resource section for their link).
If You Aren’t Part of the Legislative Discussion – You’re Missing Out
Regardless of your organization’s mission, there are likely to be legislative and funding decisions
being made by elected officials that affect your constituents. Be part of the conversation, advocate for your organization and your clients at the local, state, and federal
American Bar Association: http://apps.americanbar.org/buslaw/blt/2009-03-04/mehta.shtml
Council for Nonprofits: https://www.councilofnonprofits.org/everyday-advocacy
Stand for Your Mission: http://standforyourmission.org
Published October 22, 2015 | By Deborah Grayson Riegel (Reprinted with permission of the author.)
One of my favorite rituals when my twins were babies was to give them their nightly bath. I loved the one-on-one (-on-one) time with them, playing and splashing and just being together. Over time, they advanced from baths to showers, and from needing my help to wanting complete privacy, thank you very much!
But one bath-time ritual that my daughter Sophie didn’t seem to outgrow during her tween years was keeping me company in the bathroom when I took a shower. Each evening after work, I would hop in the shower and pull the curtain closed, and then hear Sophie sneak into the bathroom, close the lid of the toilet, sit down and say, “So let’s talk.”
I was torn: I missed the privacy of being alone with my thoughts and my loofah, and I also appreciated the opportunity to have some deep conversations with my growing girl. But one day, my curiosity got the best of me and I asked her,
“Sophie, why do you always want to talk to me when I’m in the shower?”
Her answer caught me with my pants down:
“Because it’s the only time I know you won’t check your phone while you’re talking to me. It’s the only time I have your complete attention.”
There was no shower long enough or hot enough to wash off the sting of that pointed and painful
Ever since then, I’ve started: Paying a lot more attention to paying attention!
I realized that I did it consistently with my clients (who pay for my complete attention), but I didn’t do it consistently for my family, who are, in fact, the reason that I even have clients. And it’s still hard – every day. There are a million things competing for my attention, between emails, calls, dinner, errands, the expected and the unexpected interruptions. But I am well aware that because of how hard it is to give someone your complete attention these days, it is a more precious gift to give and to receive than ever before.
In a recent New York Times article, “Stop Googling. Let’s Talk.” the author cites that the costs of dividing your attention with people you care about include empathy, connection, and trust. And while technology is surely a factor in what makes this challenging, what is also a factor is our willingness to settle for less than someone’s complete and undivided attention. We need to learn to ask for what we need from others in our personal and workplace relationships to feel heard, connected and respected and we need to stop making excuses for ourselves for why it’s ok to not be fully present for another human being with real and immediate needs and challenges.
In the 7th and 8th cohorts of the Jewish Coaching Academy that I facilitated last week (email me for 2016 dates), we discussed 10 behaviors that let someone know that you were committed to being fully present for them. They include:
How do I know these work? Because I use them with my clients, my friends and my family and they thank me for not just being there for them, but for really, fully being there for them. And I also know these work because I now, blissfully, shower alone.
The State of Grantseeking Report™ is a fantastic resource for fundraisers. For those of you who haven’t gotten your copy of the Spring 2015 edition, I wanted to share this message from Cynthia Adams, President & CEO of GrantStation.com, Inc. – Elise Saltzberg
The Spring 2015 State of Grantseeking™ Report
GrantStation is pleased to announce the release of the Spring 2015 State of Grantseeking™ Report.
This report looks at sources of grant funding in several ways: any funder, the largest source of total funding, and the funder of the largest individual award. In addition, the median value of the largest individual award, in total and by various subcategories, is provided as a benchmark figure throughout the report. We hope that the information and benchmarks in the report will assist you in your good work.
In addition, we have released Fact Sheets by annual budget range, mission focus, and a comparison by funder type. Check back regularly at the GrantStation State of Grantseeking™ webpage – we will be adding more Fact Sheets in the days to come.
The Spring 2015 State of Grantseeking™ Report is made possible by the participation of the respondents, the support of our underwriters (the Grant Professionals Association and PhilanTrack, an Altum Company) and the collaboration of our partners and advocates.
President & CEO | GrantStation.com, Inc.
(p) 877-784-7268 | (f) 815-301-8188
Gail Perry, founder of Fired-Up Fundraising, is one of the most respected leaders in the field. She is an international fundraising consultant, trend-spotter, and thought leader, who has helped nonprofit organizations raise hundreds of millions of dollars.
I’ve learned a great deal from Gail. So I’m delighted that she has given her permission to reprint this blog post from her site. It’s full of valuable suggestions for nonprofit fundraising. – Elise Saltzberg
Top Fundraising Strategy to Raise More Money in the Coming Year
BY GAIL PERRY
Today I am sharing the #1 Strategy that you really need to implement for 2015-16 where the easy money is for your wonderful nonprofit.
Build Up Your Donor Loyalty
Here’s how you create and nurture a whole cadre — an entire bandwagon, even — of raving fans and donors who just LOVE your organization and would do anything in the world for you.
Wouldn’t it be wonderful to have that kind of rabid base of supporters? Bet you could change the world a lot faster if you had donors like that!
All the pundits and gurus – Roger Craver, Lisa Sargent, Pam Grow, John Lepp, Jay Love, Lynne Wester, etc – we are all also saying the same thing:
Donor Retention Is Your Place of Greatest Fundraising Opportunity.
WHY is building donor loyalty such a profitable strategy?
Because it’s one of the most cost effective fundraising strategies around. And it’s simple.
It’s even fun – because it focuses on cheerfully connecting with your donors instead of asking for money all the time.
If you spent time and energy on your wonderful donors, if you could show them such a totally lovely experience — then they would brag about you, spread the word, jump on your bandwagon, and even bring their friends to your cause.
They would love giving you money over and over, too.
Then you would not HAVE to emphasize the ask so much.
This is a Sea-Change Shift in Your Fundraising Philosophy and Strategy
It’s a huge deal.
Renewing donors is the easy part of fundraising.
We all know that it’s much, much easier to get a current donor to renew than it is to secure a brand new donor. #fundraisingnobrainer!
But alas, we are failing to renew our very special, fabulous, generous current donors!!
We are actually failing quite miserably.
And because of our sloppy attempts to communicate and thank them, they are abandoning us. We’re even pushing them away.
Our donors are slipping away, like the proverbial leaky bucket.
Across the nonprofit sector, nearly 6 out of 10 donors do not give again in the next year. YUCK.
What’s YOUR donor renewal rate? Dare I ask?
And check out your brand new donors.
These are the ones you are working the hardest to bring in the door.
Only about 30% of them are likely to renew their gift. (What kind of business could survive with customer retention stats like that?)
So here is the money you are leaving on the table.
You May Not Even Know How Much $$ is Just Flowing Through Your Fingers
Not convinced? Then try this:
1 Pull a report from your database of the donors who gave in calendar year 2013 but who did not give in 2014.
2 Add up the money that these donors were giving – money that didn’t get renewed.
3 When you see the total that walked out the door, you’ll probably faint.
4 Then pick yourself up and take donor loyalty seriously.:)
So how do you build up your donor loyalty?
And you need to thank them in amazing ways. Download Pamela Grow’s Thank You Letter Template here for some quick guidance!
20 Ideas To Garner Donor Loyalty and Raise More Money
1 Organization-wide commitment.
Get everybody on board – from the from the front desk to the CEO – to adopt donors as a HUGE high priority.
2 Tell better stories.
Send your donors fabulous, emotional stories about how they are helping make your important work happen.
3 Give your donors credit for the work that YOUR organization is doing.
This is what donor-centered really means. Remove your organization as the intermediary between your donor and the wonderful results you achieve.
4 Thank your donors over and over!
John Lepp says “say thank you until your donors tell you to stop.”
Remember the old fundraising axiom: “Find 7 ways to thank your donors and they will give again.”
5 Ask your donors their opinion.
It’s so easy to survey your donors.
Check out Pam Grow’s story about the amazing donor survey she received.
And Lynne Wester’s sample donor survey here. And Mary Cahalane’s survey here.
6 Try creative thank you’s like:
Fun hand-written or drawn thank you notes.
7 Thank donors via social media.
Lori Jacobwith says “Hold a special Facebook, Pinterest, Instagram, or some other social media “Thank a Donor” day, week, or month. (I love this!)
8 Host a focus group of donors.
Bring donors together to share their experiences and give you feedback.
I once facilitated a focus group for the NC Symphony – and the donors loved it!
9 Have board members hand write thank you notes.
Bring note cards to your next board meeting and take a few minutes for them to pen personal notes.
10 Ditch your “Donor Appreciation Event.” (Yawn)
Instead have a fun cookout, or throw porch party honoring all your donors.
11 Recognize long-time donors.
Based on how long they have been giving, not their gift amount, says Tom Ahern.
12 Celebrate holidays with your donors:
Send them Valentines, Thanksgiving cards, April Fools notes – you get the idea! (have some fun!)l
13 Send them videos of your work in the field.
You could even stream live videos for them. (!)
Nothing would make your donor feel closer to the cause!
14 Hold a Thankathon for your donors.
15 Have your board members make thank you phone calls.
It’s a great way to introduce your board members to fundraising. AND donors will give substantially more when they get a phone call thank you!
16 Tell them over and over about all the wonderful things in the world THEY are making possible.
17 Give them special “donors only” events.
Like tours, briefings, conference calls. And yes, parties!
18 Make personal thank you visits.
What an easy and nice way to connect deeply with an important donor!
19 Send them a thank you very very very quickly. And it needs to be perfect.
Steven Shattuck of Bloomerang says that “Over half of donors lapse because of poor appreciation; gift acknowledgements that are slow to arrive . . .
20 Make your thank you’s gushy, personal, emotional.
Write to them like you are just thrilled to receive their money. Which you are, of course.
Are YOU ready for an organization-wide shift in how you treat your donors?
Let me know YOUR favorite ways to LOVE your donors. (fyi – To leave a comment for Gail, visit gailperry.com)
Most nonprofits rely on individual donors to fund at least some of their activities. And it is far more expedient to care for and cultivate current donors than to acquire new ones. Donor retention was a dominant theme at the Association of Fundraising Professionals annual international conference, which took place in Baltimore this year.
Cost of Fundraising Rises with Rate of Donor Attrition
According to research by the Urban Institute [http://www.urban.org/research/publication/donor-retention-matters], many nonprofits experience, “very high turnover rates in their donor rolls. This pattern leads to high costs of fundraising for some organizations. Other groups, though, see much higher rates of retention year after year, suggesting that it is possible for more organizations to trim costly acquisition campaigns and the loss of potential long-term supporters.”
New Donors Have Higher Rates of Attrition than Repeat Donors
Adding to the importance of retaining current donors are studies that indicate repeat donors have a much lower rate of attrition compared to new donors. Data from firespring.org indicates that new donor retention averages less than 25%, compared to repeat donor retention of 64%. Retention is also higher for donors giving larger gifts ($250+), presumably because they feel more invested in the organization.
According to fundraising expert Dr. Adrian Sergeant,
[http://www.studyfundraising.com/about-us/professor-adrian-sargeant/] improving retention by 10% can double the lifetime value of an organization’s donor database.
Causes of donor attrition
There are many reasons that donors do not continue to give, which range from no longer being able to afford a donation to feeling that the organization asked for inappropriate amounts.
But among the biggest reasons are four that organizations can readily address:
• The don’t feel connected to the organization
• They don’t remember that they have given in the past
• They don’t know how their donation was used
• They were not reminded to give again
Best Practices for Donor Retention
How a nonprofit cares for current donors depends on the resources of the nonprofit and the expectations of the donors. But at the heart of all donor relationships is good communication.
Here are a few ways that organizations can show donors how much they are
The 7 Touches
The 7 Touches approach, which originated in marketing circles, is based on the premise that someone needs to be “touched” at least seven times a year to feel connected to an organization and want to continue giving. (Because of the overwhelming number of communications people are exposed to everyday, some experts say the number should be closer to 13.) These 7 Touches include communication that does not include a request for another donation.
Regardless of the exact number of touches an organization chooses, the key is to communicate regularly, to keep donors informed and the organization fresh in their minds.
Here are examples of appropriate, donor-centered “touches” that build strong relationships and lead to greater retention
• Prompt thank you letter or phone call – within 48 hours for most donors
• Regular newsletter (monthly or quarterly)
• Birthday/holiday cards
• Invitations to events
• Annual Reports
• Public acknowledgement of donors via website, newsletter, social media, annual report, etc.
• Volunteer recognition cards (i.e. thank you cards sent to volunteers)
Donors want to know where their money is going and feel that their contribution is making a genuine impact. Newsletters, solicitations, and other communication tools should share stories that illustrate the impact that donors have had in the past and can have in the future.
Concierge Stewardship for Wealthiest Philanthropists
All donors are important and should be treated this way. But when an organization works with very large donors, the organization must take the time to understand how very wealthy donors expect to be treated.
Robert E. Wahlers, CFRE [https://www.linkedin.com/pub/robert-wahlers-ms-cfre/9/89/521], of Meridian Health Affiliated Foundations and an Adjunct Professor at Columbia University Masters of Fundraising Management Program, offered advice on how to provide concierge stewardship to the highest level donors.
• Wealthy philanthropists expect organization to “go above and beyond.” Wealthy donors are treated like VIP’s in other aspects of their lives, and they expect no less from the nonprofit organizations they interact with.
• The nonprofit needs to understand each donor’s specific interests in the organization.
• Donations must be acknowledged within 24 hours (rather than standard 48).
• Personal phone calls and visits are expected when asking for gifts.
• 2% of the gift is industry standard for special recognition treatment.
• Understand donor expectations and behavior based on generation cohorts (see below).
Traditionalists – Born before 1946.
• Trust Charities
• Have significant resources
• Interested in: Bequests, Current Gifts, Gift Annuities, Naming Opportunities
Leading Boomers – Born 1946-1954
• Less trusting (need to see proof of impact)
• Low savings
• Most generous of all cohorts
• Interested in: Social Justice with an emphasis on “What’s in it for me?” (i.e., how will helping the cause also benefit their lives)
Trailing Boomers – Born 1955 – 1964
• Cynical, competitive, control freaks, lack trust
• Interested in: Tangible proof of impact, charities that make it easy to give, visual presentations
Gen X – Born 1965-1976
• Self-interested, value work-life balance, entrepreneurial, less likely to marry, trust friends and peers above others, don’t like traditional stewardship events, lack brand loyalty
• Interested in: Meaningful involvement. The more involved they are, the more likely they are to give
Millennials – Born 1977-1984
• Don’t trust authority, hopeful, idealistic, have more traditional values than parents
• Interested in: Social justice, with an emphasis on Peak Experiences (i.e. memorial events, such as meeting VIPs)
As with a hotel concierge, the stewardship provided by nonprofits to high-level philanthropists is tailored to the needs and expectations of the donor. Mr. Wahlers shared a story that highlighted the difference between very wealthy donors and most others: One of the largest benefactors of a hospital needed emergency health care for a family member. Rather than heading for the emergency room or calling an ambulance, the donor contacted the hospital’s Director of Development, who arranged for the donor to bypass all standard protocols and be seen immediately.
Nonprofits that enjoy the benefits of having very wealthy donors should be prepared to go the extra mile to keep these donors connected and happy.
This spring I attended the Association of Fundraising Professionals annual conference in Baltimore, Maryland. One of the highlights of the event was a workshop led by Shaun G. Lynch, CFRE, President of Adventum Philantropic Marketing, entitled “Become a Better Major Gift Negotiator.” Here is a summary of Lynch’s main points:
Major gifts from individual donors are a significant source of funding for many nonprofit organizations. Not only do big gifts provide financial support, they are a tangible demonstration of the value of the cause.
Through this lively presentation, Lynch demonstrated how standard negotiating techniques can be applied to major donor fundraising.
Key elements of successful negotiations:
• Taking the time to cultivate and understand the needs of each prospective donor
• Understanding negotiating techniques
• Appreciating the psychology that underlies giving
Tools for securing major gifts:
• Cultivate a friendly relationship with potential donors by establishing shared interests – everything from sports teams to hobbies to business concerns.
• Invite potential donors to express what they like about the organization. This is a two-way conversation between peers.
• In cases where a donor has directly benefited from the organization, as with school alumni, describe future support as payback for what the organization has already given.
• Solicit for more than you think a donor will give, then lower the ask.
• If applicable, create a sense of scarcity. For example, the donor may be motivated by an exclusive naming opportunity.
• Position yourself and your organization to be authorities in your field. People tend to rely on trusted authorities to streamline decision making.
• Once someone makes a public commitment he or she will feel internal and external pressure to follow through: Invite board members and other prospects to declare their giving intensions publicly.
Power, Process, and Appreciative “Moves”
When negotiating for Major Gifts, it’s important to understand where things stand and respond appropriately.
Mr. Lynch introduced three types of “moves” and explained how to use each appropriately:
1 When a potential donor sees no need to negotiate – Respond with “Power Moves”
2 To prevent the solicitation process from impeding the negotiation – Use “Process Moves”
3 When talks stall because the prospect feels pushed or misunderstood – Respond with “Appreciation Moves”
When a prospect is showing no willingness to engage, use power moves to rouse the prospect’s interest in negotiating. Even if you don’t anticipate needing them, always be prepared to use one or two power moves.
1 Offer High Value Incentives
– Naming opportunities
– Governance opportunities
– Opportunities to meet people of interest, such as an author or artist
– Opportunities for influence, such as 1-to-1 progress meetings with the CEO
2 Use negative incentives
– Point out the negative consequences of not completing the project
– Indicate that other major donors are considering opportunities above
3 Bring in VIP Support – Enlist a negotiator the prospect can’t refuse, such as the CEO or a senior volunteer
Poor negotiation techniques can cause a solicitation to stall. Process moves are designed to create clear, open communication with a prospective donor. This allows for the content of the conversation to be the focal point, not the process itself.
1 Be Proactive, before a solicitation or campaign begins
– Plant seeds for solicitation early, so a donor isn’t caught off guard
– Plan on long cultivation time, don’t expect a rapid response
2 Focus on meeting the prospect’s objectives (not the organization’s)
3 Build consensus
– Make the prospect a partner in planning and executing
– Include people in the discussion who are key influencers of the prospect
It is essential to keep the negotiation focused on the prospect. In most cases a prospective donor has no obligation to make a contribution, and wants to feel that the organization will truly appreciate the gift. Appreciation moves are designed to build trust and elicit the prospect’s perspectives, opinions, and ideas.
1 Have an open dialog regarding the request
– Let the prospect know how this amount falls in relation to others’ gifts
– Let the prospect choose from recognition alternatives
– Understand what impact the donation will have on the donor
2 Don’t rush the process
– Take the time to discuss a prospect’s concerns
– ALLOW PROSPECTS TO TALK THEMSELVES INTO THE GIFT
3 If negotiations stall, ask the prospect to suggest an alternative approach
Each donor is unique. However, a good negotiator will keep the following in mind:
– Donors don’t want to feel pushed, cornered or caught off guard
– Giving a major gift can be a stressful process
– Procrastination is often more comfortable than making a decision
– Ambivalence toward making a gift may reflect a fear of making the wrong decision
– Clear, genuine deadlines can make it easier to come to a decision
A good negotiator will exercise patience, and use the tools above to help donors make a good
decision, with no regrets.
The AFP Annual Conference is an essential event for everyone involved with fundraising. I’m so excited that Baltimore will once again be hosting the annual conference, and proud to be a featured advocate. Scroll down to see my testimonial at the bottom of the announcement.
See you at the conference!
I was fortunate to attend the 2014 AFP Fund Raising Day in New York City. The whole day was inspiring, but I found one session particularly compelling. The title was “Getting to Yes: The Role of Outcomes Assessment and Evaluation in Preparing Winning Proposals.” Its purpose was to help nonprofits better understand how to evaluate program outcomes, and communicate meaningful data to foundations and individual philanthropists. The presenters represented both the nonprofit and foundation sectors:
• Benjamin Kim, Public Health Solutions
• Dr. Ruth Finkelstein, Columbia Aging Center
• Dr. Andrew Grant, Hebrew Union College – Jewish Institute of Religion (moderator)
• Sarah Winters, Alfred P. Sloan Foundation
How the Nonprofit Community Views Outcomes Assessment and Evaluation –
Over the past 30 years funders have become increasingly focused on measurable outcomes. Dr. Grant’s opinion (shared by many nonprofits) is that funders are now “outcome-obsessed.” This emphasis on outcome assessment and evaluation is rooted in the “Venture Philanthropy” movement. Venture Philanthropists, like Venture Capitalists, invest in programs with the hopes of seeing significant returns on their investment. In the case of Venture Philanthropy, the anticipated returns are social benefits. The funders’ logic is understandable: “Without assessment, how do you know if the program was/is successful?” However problems arise when time horizons are mismatched. Businesses evaluate success quarter by quarter and year over year. But for nonprofits, meaningful results may take decades to achieve, and interim reporting doesn’t always reflect the actual success of a program. Specific Concerns about the Outcome Assessment and Evaluation Model Expense – Outside evaluation is expensive and time consuming. It pulls resources away from programming and operations. Increases Proposal Complexity – Proposals generally require that nonprofits include an evaluation design. To achieve this, the nonprofit may need to invest in evaluation design, before a program is even funded. This may mean finding outside evaluation consultants who can write the evaluation section of the grant. Grant Periods Aren’t Long Enough for Meaningful Evaluation – It can take five years to see real, measurable results for a new program. It’s difficult (some would say impossible) to get meaningful, measurable outcomes in a 1-year grant period. Working with these Concerns While the emphasis on Outcome Assessment and Evaluation presents a real challenge, there are ways for nonprofits to work successfully with this model. Keep it Simple – Evaluations do not need to be overly complex. Nonprofits should keep the evaluation process as simple as possible, while meeting funder requirements. Use Existing Tools – Many evaluation tools already exist. It’s not necessary to reinvent the wheel. An online search will turn up a wealth of information. For example, the Kellogg Foundation (www.wkkf.org) website has good information on logic models and evaluation methods (see Resources below). There are many Logic Models available, which help map out the progression from Input to Outcome. (Keep in mind that a Logic Model is a living document, as inputs, outputs and outcomes will change over time.)
Include Evaluation Costs in Program Budget – Assume that program evaluation will be 5-10% of direct program costs, and budget accordingly. Take a Creative Approach to Evaluation Design – Evaluation consultants can be expensive, but there are approaches that can lower or defer the costs. Some nonprofits enlist university faculty (or grad students) to design the evaluation.
The Funder’s Perspective
Sarah Winters of Alfred P. Sloan (www.sloan.org) acknowledged that her Foundation is very outcome oriented, and offered this perspective: Funder’s View of Evaluation Design
• Grant funding is the R&D money of the nonprofit world
• R&D always assumes there will be many failures along the way
• Success doesn’t mean meeting every goal
• Grantors want to see that nonprofits are taking a thoughtful approach
• Trustees’ Bottom Line: “Did you do what you said you would do?”
• Learning curve: “If you were to do it again, how would you do things differently?”
Advice for Nonprofits Ms. Winters emphasized that funders want nonprofits to be successful and she encouraged organizations to work closely with them after they receive a grant. She offered the following words of wisdom: Indirect Costs – Nonprofits should understand that most foundations don’t fund indirect program costs. Sloan’s guidelines allow for some indirect costs, but recognize that the amount may not cover everything. Formative Evaluations – Formative evaluations are made over the course of the program. It’s usually acceptable to make mid-course corrections. But it’s essential to let funders know about desired changes and ask permission before making them. Summative Evaluation – The summative evaluation is the final report. It should spell out exactly what happened, supported by measurable results. There should not be any surprises for the funder. Proxy Variables – For programs where long-term outcomes can’t be measured, it’s acceptable to use proxy variables, which stand in for the actual variables that you can’t measure.
A Grantee’s Perspective
Dr. Ruth Finkelstein represented one of the Alfred P. Sloan Foundation’s grantees. She offered these highlights from her experience.
• The Columbia Aging Center uses sophisticated evaluation designs, which are then shared with other nonprofits.
• She suggests a “What do I need to know at what standard of convincingness?” approach to evaluation design.
• Reality is infinite. You can’t measure everything
• Set reasonable standards. Evaluation goals need to be meaningful, but not so high they can’t be reached.
• Types of Evaluations:
Feasibility: New, truly innovative projects should begin with a feasibility evaluation, which includes a cost evaluation that provides a baseline for measuring future cost effectiveness. Process – It’s important to state whether or not the organization did what it said it would do. Outcome – This is where measurable results are particularly useful: Who was involved; how were they affected? Impact – This is a long-term evaluation, which can’t be measured within one grant cycle. Dr. Finkelstein calls this “the holy grail.” ROI – Return on investment is assessed based on how much improvement is gained for each dollar spent. Dr. Finkelstein pointed out that once an award is given, the relationship with the funder changes. The Program Officer becomes much more available and the nonprofit should take advantage of this. Find out exactly what kind of assessment and evaluation the funder wants. A grantor may also be willing and able to help the nonprofit build relationships with other foundations. As a Resource Development Consultant, I write grants on behalf of many organizations and have personally witnessed this shift in emphasis to measurable outcome assessment and evaluation. At times I do find it challenging to meet funders requirements and am not always convinced that this is the best approach to philanthropy. As Albert Einstein famously said, “Not everything that can be counted counts, and not everything that counts can be counted.” I valued the balanced views presented during this session and want to share what I learned with others in the grant-seeking community.
All of us who write grants know that funders now demand measurable results as a condition for support. But this hasn’t always been the case. At a recent workshop led by Dr. Susan Raymond and sponsored by the Chesapeake Planned Giving Council, I learned more about how this shift came about.
What’s Driving this Emphasis on Results?
Competition – The rate of growth in the nonprofit sector has greatly outpaced giving. In recent years the number of organizations has increased by 70%, while giving has grown by only 30%.
Younger Donors– Among wealthy donors, the prevailing sentiment for generations has been one of “giving back.” But younger donors are setting a different tone. They view their gifts as “investments” in the future and want to see a return on those investments. This change probably stems from the fact that only 8% of this group inherited their wealth, while 92% earned it.
Philanthropy vs Problem Solving – Younger donors aren’t interested in the traditional model of philanthropy. They see problems and want to fix them. They don’t care if the solution comes from a nonprofit or a for-profit company. Younger donors often apply business models to their giving philosophy: They are interested in “social enterprises,” “social franchising” and “social ventures.” Examples of this are bonds for vaccinations in Africa, and the Global Health Fund at J.P. Morgan, which is guaranteed by the Gates Foundation.
Donor Involvement – Younger donors are eager to do more than give money. They want to be directly involved in affecting social change, and they want a degree of control. Bringing a business-oriented focus to grant making gives donors a greater sense of engagement.
What Does this Mean for Nonprofits?
This approach to funding presents significant challenges. Complex social issues are generally not fully understood and don’t lend themselves to quick fixes. What are the long-term implications for the nonprofit community? Here are a few possibilities:
Risk Aversion – The emphasis on objectives and results leads to nonprofits becoming risk adverse, more likely to run programs with predictable outcomes than ones with enormous potential.
Fear of Failure – Failure regularly precedes important breakthroughs. But with greater risk aversion comes greater fear of failure. If nonprofits can’t risk failure, they limit their potential for success. (It can take a decade or more of consistent failure before a breakthrough happens.)
Changing Social Contract – Traditionally the “deal” in civil society has been that philanthropy tackles the biggest social problems, working to create opportunities for people to better their situations over the course of years, and even generations. The new focus on short-term, measurable results has the potential to undermine long-term success.
How Nonprofits Can Succeed in this Funding Environment
Nonprofits are adjusting successfully to the new funding guidelines. Here are a few tips for fulfilling an organization’s mission, while giving funders what they ask for:
Articulate Objectives – This is an opportunity for nonprofits to take a fresh look at their mission and actually articulate short term and long-term goals and objectives. (If organizations aren’t clear about their objectives, funders are likely to set the agenda for them.)
Determine What Can Be Measured – What results are genuinely important and can be measured? Long-term goals often do have short-term, measurable outcomes that will satisfy funders.
Tear Down the Walls – Funders and nonprofits share the same ultimate goals, even if they may disagree about how to achieve them. Nonprofits and funders need to have an open dialog about taking on risk together and embracing bold ideas.
Encourage the 10% Solution – Granters should be encouraged to set aside 10% of their funds for high-risk projects. (This is consistent with the way “Angel” investors invest in start-up businesses.)
The reality is that money is tighter than it used to be and nonprofits have to be more strategic than ever. But if nonprofits and funders can work together, it’s possible for both grantors and grantees to get what they need.