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Nonprofits lose an average of $15,000 a year due to spam filters, study says

By Feature, Finance

Nonprofits annually lose an average of nearly $15,000 because of fundraising solicitations intercepted by spam filters, according to a new study.

Donations made in response to emails accounted for about a third of online fundraising revenue in 2013, but one in eight emails never reaches an inbox — a percentage almost as high as the share of emails that are opened, the report says. Nonprofits could boost email fundraising revenue by around 14 percent by reducing their spam rate.

An organization’s emails may be sent directly to the junk mailbox — or not delivered at all — when an Internet Service Provider notices that many of its users are marking emails from a certain IP address as spam. Other triggers are emails from a sender that frequently are deleted without being read or are never opened.

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Cooper Union inquiry puts nonprofits on notice

By Feature, Fundraising, Governance

By James B. Stewart, New York Times |

In what should be a ringing alarm for nonprofit boards across the country long accustomed to minimal scrutiny or accountability, Attorney General Eric T. Schneiderman of New York has signaled that the laissez-faire approach to nonprofit governance is over.

Mr. Schneiderman’s office has sent letters to the board members of Cooper Union for the Advancement of Science and Art, the prestigious college founded in Manhattan in 1859 by the philanthropist Peter Cooper on the premise that it be “open and free to all.” Last year, after the school said it faced financial ruin otherwise, it began charging tuition.

The investigation, reported earlier by The Wall Street Journal, is focusing on the board’s management of its endowment; its handling of its major asset, the Chrysler Building; its dealings with Tishman Speyer Properties, which manages the skyscraper; and how it obtained a $175 million loan from MetLife using the building as collateral, according to people involved.

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From projects to people

By Feature, Fundraising, Governance

By Ken Banks, Ashoka fellow, Stanford Social Innovation Review |

Bill Siemering was about to jump in his cab to make an airport pickup when his home phone rang. It was the vice president of the MacArthur Foundation. “I was shocked,” said Bill, “when he told me I was being awarded a MacArthur Fellowship.” That phone call proved to be the turning point of his life.

He never did make that airport pickup.

Years before, Bill had been the director of programming of National Public Radio (NPR), where he had created the first signature program in public radio, All Things Considered. He had also crafted NPR’s first mission statement, and while vice president at WHYY-FM in Philadelphia, he was instrumental in bringing Terry Gross and Fresh Air from a local to a national audience. Not bad, you might think.

Despite blazing a trail, though, Bill had eventually found himself out of work; at that time, there just weren’t many opportunities in his sector. As he put it: “I’d spent over 30 years practicing the art and craft of my profession and had no way to use it. I felt like a pianist who lost the use of his hands.” Out of frustration and the need for a job—any job—he started training to be a driver for a car service at Philadelphia airport. He was about to go on his first driving assignment when he got the MacArthur call.

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Eight common innovation traps

By Feature, Fundraising, Governance

By Gabriel Kasper & Justin Marcoux, Stanford Social Innovation Review |

Innovation, it seems, is easier said than done.

Despite growing interest in applying innovation methodologies to social sector challenges over the past decade, more often than not, philanthropic efforts to support innovation fall short.

That’s because the processes, strategies, and structures that funders need to deliberately seek out and support innovation are often quite different from the ones they use for traditional grantmaking—a lesson many funders learn the hard way.

In our SSIR article “The Re-Emerging Art of Funding Innovation” last year, we highlighted many specific approaches that innovation funders are now using. But we find that many grantmakers still end up falling into one or more “innovation traps”—common mistakes that can prevent them from succeeding as they try to find and fund breakthrough social change.

Some of these traps are challenges related to execution and implementation; others are more conceptual, rooted in the way organizations think about what innovation is and what it can achieve. As you read through the eight common innovation traps below, ask yourself whether your organization has faced one or more of these problems, and consider sharing your experience in the comments.

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Building trust with donors

By Feature, Leadership, Uncategorized

by Andy Canada at Johnson Grossnickle Associates |

One of the most important things an organization can do to guarantee long term success and support from donors is to instill and cultivate trust between the organization and its donors. Millennials in particular value trust with an organization, with 84% saying they will only donate to organizations they trust and 90% saying they will stop giving if an organization loses their trust. Organizations should never take trust for granted as it is a foundational building block.

Here are some steps to help build trust between an organization and its donors.

Clear Communication

  • Spend enough time talking to donors and explaining your mission
  • Give updates on projects and initiatives
  • Present clear and concise case statements
  • Ensure staff and volunteers are communicating the same message

Provide Transparency in Philosophy and Finances

  • Be specific about how contributions are being used
  • Clearly explain how unrestricted funds are used
  • Use giving guides that show specific mission-driven uses for funds, i.e. “your donation of $25 will feed a family for one week”
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A guide to nonprofit overhead

By Feature, Finance

By Jan Masaoka & Steve Zimmerman, Blue Avocado

Calculating overhead rates and managing overhead expense are important staff roles. Board members are not required to know how do staff accounting work, but we do need to bring an informed perspective to oversight: Harvard’s indirect cost rate is 68% while Iowa State’s is 48%. Should the board members of either institution be concerned? As an alumnus of one or the other, should these numbers affect our donations? As a parent of a high school senior, do these numbers influence where we want our child to go? Should they?

Amid the crosstalk about nonprofit overhead, board members and staff do need to understand what the conversation is really about, and how to interpret “what is overhead” for our own organizations. Here are eight key ideas to know about overhead:

  1. Apples, oranges, and alligators: One of the more surprising facts about overhead is that while it seems that everyone is talking about it, everyone is actually talking about the different things. The word “overhead” isn’t an accounting term, so different people define it differently.
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The Overhead Myth

By Finance

By Art Taylor, president, BBB Wise Giving Alliance, Jacob Harold, president/CEO, GuideStar USA,Ken Berger, president/CEO, Charity Navigator |

To the Nonprofits of America:

We write to ask for your help to end the Overhead Myth — the false conception that financial ratios are a proxy for overall nonprofit performance. Last year we wrote a letter to the donors of America asking them to consider the results (especially outcomes and impact) created by nonprofits, and to not judge you solely on percent of charity expenses that go to administrative and fundraising costs. While overhead can help us identify cases of fraud or gross mismanagement and serve as a part of an organization’s dashboard of financial management metrics, it tells us nothing about the results of your work (i.e., how you meet your mission). … To that end, we ask three things of nonprofits.

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A brand new approach

By Feature, Indianapolis

By Lynn Sygiel, editor, Charitable Advisors

Tangram-Logos-Main_1The name was direct and to the point — Independent Residential Living of Central Indiana – and it served the Greenfield-based nonprofit agency well for over 20 years. The organization referred to itself as IRL.

When the agency moved to Indianapolis in the mid-2000s, Chief Executive Officer Connie Dillman was alerted to a potential problem. In Indianapolis, the auto racing capital of the world, IRL stands for the Indy Racing League and although there was no confusing the missions of the two organizations, name recognition was clearly one sided. In Indy, if you say IRL, you think of fast cars, Memorial Day weekend and the Indianapolis 500.

Dillman knew her nonprofit needed a name change, but she also knew it couldn’t happen overnight.

After nearly two years and thoughtful discussions with board members, clients, community donors and stakeholders, IRL made the switch to Tangram in 2008.

If the goal was to put distance from the racing series, Dillman certainly succeeded. But why Tangram?

“We just weren’t hitting on the right name,” said Dillman.

After starting the process informally, she was reminded of a national speaker whose words ultimately provided the tagline: reshaping the idea of a disability. For staff, the name had to convey the traits of people with disabilities – brave and strong. Paging through the dictionary one evening, something her grandfather had done, she came across tangram, a dissection puzzle that creates many shapes.

Dillman isn’t alone. She is among a growing number of nonprofit leaders reinventing their brands or at the very least, raising questions to determine if their names still reflect their missions and work.

classicalmusicindy-logo   In the past several years, other area nonprofits faced similar situations:

  • Early Learning Indiana changed from Day Nursery in 2014
  • Fort-Wayne based Headways Counseling changed from Family and Children’s Services in 2012.
  • Classical Music Indy changed from Fine Arts Society in 2014
  • Indiana Downtown, Inc. switched from Downtown Indy in 2014

Downtown_Indy_ColorEach nonprofit approached the rebranding process a little differently.

External help varied, but all hired consultants, several paid for with grant dollars. Some parsed out the project, hiring different consultants for specific tasks, and three hired consultants that shepherded the entire process. The costs for these rebranding efforts ranged from $20,000 to over $100,000.

ELI_ComboLogo (2)The shortest effort lasted six months, and the longest took two years. In general, all agreed that swift name changes are not recommended because the public needs time to digest the changes, especially with veteran nonprofits that have deep ties to the community.

Three leaders — Early Learning Indiana’s CEO/President Ted Maple, Downtown Indy’s President Sherry Seiwert and Classical Music Indy’s CEO/President Charles Stanton – were new to their positions, and within the first year announced name changes.

8_8 logo ideasWhen Maple was hired in 2013, his board had just completed a three-year strategic plan with an emphasis on communication. Armed with a grant from Lilly Endowment, the 115-year-old nonprofit hired Well Done Marketing and embarked on a process that might or might not include a name change.

After two months of market research and interviews, what became clear was that families were looking for a solid educational experience. The name, over a century old, did not convey that, and sounded like a place to buy outdoor plants

The nonprofit’s statewide role had expanded, adding preschool advocacy and teacher training. It also provides resources to other child-care providers through its Child Care Answers program. The name Day Nursery was no longer sufficient to describe the daily work. The entire rebranding process took about 18 months, and included a new logo, website, signs for its centers and marketing dollars to share the change publicly.

A nonprofit’s moniker is more important than ever. With the rise of Facebook, Twitter, blogs and other online media, an organization’s name has constant public exposure. Large nonprofits have known this, but smaller ones are now not only aware but are spending time critically reviewing their brands.

When Stanton arrived, first as a consultant, the board and staff was aware that the 47-year-old organization’s name, Fine Arts Society, no longer fit. Started by Lilly employees, originally it put on events that integrated fine arts. Over time, its focus changed to just one fine art – classical music. Stanton believes that what an organization does should be evident in its name.

“Overwhelmingly, the feedback from the community members and people who listen was ‘I think classical music should be in the name,’” said Stanton.

“The fortunate part for me when I came into the organization, the board and staff had already decided that they needed a name that better reflected the work that they do. And that was really their only stipulation. It made it very easy because they had already self-identified what their primary weakness was that they wanted to overcome,” said Stanton.

When Downtown Indy’s Seiwart arrived at the organization, one of her first tasks was to oversee the co-creation of a five-year strategic action plan for downtown.

“Our agency didn’t have its own strategic plan, but had partnered with the city. Out of that planning process several tactics emerged, including refreshing the brand and name to be more reflective of the vibrancy of downtown,” said Seiwert.

The agency had hired a consultant to redo its website and database, and the refresh was an add on.

“They were the ones who suggested the name change,” she said. The community wanted the 21-year-old organization’s name to reflect a vibrant downtown, and thought that “Inc.” was too corporate sounding. While the organization didn’t officially change its name, it hit the refresh button and is essentially doing business as Downtown Indy.

Both Dillman and Stephen Jarrell, Headwaters Counseling’s executive director, were longtime employees, and had witnessed other changes. Jarrell, a 17-year-veteran, said there had been talk about changing the name during his entire tenure.

“In Indiana, there were a number of family and children’s services. A lot of us started as children’s organizations and family organizations that merged. We were incorporated in 1947, and in 1948, along comes the welfare department, which became known as the Office of Family and Children.

“Many people thought we were, in fact, the welfare department,” said Jarrell. The nonprofit’s new name incorporates its services (counseling) with a bit of geography. In Allen County, headwaters refers to the source of the area’s three rivers. The agency did not legally change its name.

All five nonprofits spent time researching and learned through interviews or surveys what the public’s perception of their organizations were and insisted on a thoughtful process.

“I think there is always risk in change, and regardless of whether it’s a name change or changing a logo or changing a program. I think the risk is extremely minimized when you go through a proper process and you allow for input,” said Stanton.

“We reached out to all of our most significant, most dedicated listeners and donors and other community stakeholders in the arts community and the community at large. We asked them their thoughts in general about what the organization does, what the community would like to see us doing. There were no leading questions. It was simply: Will you give us some suggestions?

“That was round one. And round two was synthesizing that information and rolling it into a few bite-size questions,” said Stanton.

For all organizations, clearly just changing a name is not enough – spreading the word is critical. Some did it with social media, others with paid ads and new websites. Early Learning Indiana added billboards to capture audience attention.

Seiwert said even the little things are important. Downtown Indy partners with many organizations and has its name on many things, including pocket parks and signs along the canal.

“We thought we had a done a pretty good inventory, but the other day, I was walking and looked down and saw our old logo on small signs along Washington Street.”