By Jim Simpson, CPA and director, Financial Technologies & Management
In the nonprofit community, outsourcing typically means long-term delegation of key operation to outside experts. The accompanying expectation is improvement of the quality, strengthening effectiveness, and lowering or controlling costs.
A key difference in the nonprofit sector is not only controlling costs, but becoming a more effective organization. Finance and accounting departments are two essential back-office areas in nonprofit organizations.
With limited resources, a nonprofit can outsource some or all its financial functions, which can help a nonprofit efficiently staff and conduct its financial operations. It also respects the board and executives limited time or expertise to manage the finance functions, and allow more allocation of resources toward mission and program outcomes.
Here are six overlooked, and sometimes unknown, benefits of outsourcing nonprofit accounting.
By Jessica Love, associate executive director, Prosperity Indiana
While nonprofits excel at providing work opportunities “that matter,” their employees oftentimes sacrifice salary or additional perks available to those in the private sector.
Most of the time, the intangible rewards of work outweigh the downsides of working for an organization on a tight budget.
But when an unexpected hospital visit or a car repair bill hits, it can often snowball into a full-blown financial crisis. When faced with those expenses and, the lure of fast cash available at a payday loan store may become tempting.
But sadly, this short-term solution often extends far deeper into its users’ pockets than originally promised. Because payday lenders encourage multiple renewals of loans — leading to interest payments frequently many times greater than the original loan amount, the product is generally considered a debt trap. Nearly 76 percent of payday loans are quick re-borrows or renewals.
Payday loan payments consume 36 percent of the typical borrower’s biweekly paycheck. However, the average payday borrower can afford only 5 percent a paycheck, making it difficult to pay the loan off in a standard two-week loan period. In Indiana, the average payday borrower takes out approximately nine loans per year. According to a recent report by the National Consumer Law Center, this recycling of the same debt results in typical payday loan fees in Indiana averaging 382 percent annual percentage rate.
But programs like the Community Loan Center — affordable small dollar loan alternatives — have recently become available.
Seeing the devastating impact of payday lending products, Prosperity Indiana has partnered with Community Loan Center of America to offer a ‘turnkey’ alternative to payday lending. Community Loan Center (CLC) loans are made to employees of participating employers, and borrowers repay through payroll deduction. All funds loaned are provided through a community-based loan fund, offered by a nonprofit acting as a local lender, not the employer.
CLC loans are unsecured and have a one-year term for a maximum $1,000 loan with an 18 percent interest rate and an initial $20 loan fee.
As a result, the CLC employer-based model meets the same short-term lending needs of payday lending without applying the burdensome fees, interest, and repayment period associated with payday loans.
The CLC program also complements other sources of financing by reporting borrower payment history to credit bureaus, which can increase borrowers’ FICO scores. Improved FICO scores help CLC borrowers qualify for other conventional financial products in the future, like credit cards, mortgages and preferred insurance rates.
Highlights and benefits of the program to participating employers include:
Attracting and retaining employees
Fully automated loan payments
Reducing financial stress, resulting in less employee absenteeism
Fewer payroll advances
Minimizing “presenteeism,” physically present, but distracted employees
Zero cost to employer
CLC loans also rarely end in default. Nationwide, the program has originated more than 10,000 loans with a loan loss of less than four percent.
Through Prosperity Indiana members, Brightpoint in Fort Wayne and HomesteadCS in Lafayette, this opportunity is now available in 22 Indiana counties in Northeast and West Central Indiana.
One participating employer in Lafayette is LTHC Homeless Services, a nonprofit that provides housing and supportive services to individuals and families who are experiencing homelessness.
LTHC Executive Director Jennifer Layton said, “As a nonprofit we are always looking for new ways to increase our benefit package to support our staff of 24. Partnering with the Community Loan Center Program was a great opportunity. This program allows my staff to overcome emergent needs as they arise and can assist them with building their own credit. It’s a win-win for LTHC Homeless Services and my staff.”
Prosperity Indiana plans to bring the CLC program statewide by expanding the network of lenders, working with local lenders to recruit more employers to the program and assisting local lenders to assemble operating and loan capital to serve new borrowers. It is currently seeking local lenders to bring the program to Central Indiana and other areas of the state.
If your organization is interested in being a lender, which comes with capital requirements, or becoming a participating employer to provide this free benefit, please let us know.
This program is open to any employer: nonprofit, for-profit and governmental entities. Establishing a stronger case for market demand could aid Prosperity Indiana in finding the right local lender to bring this service to your organization and community.
Jessica Love is the associate executive director for Prosperity Indiana and works with the executive director to provide team leadership for staff. She is responsible for developing and managing organizational systems for Prosperity Indiana to ensure effective management and control. She also provides one-on-one technical assistance to Prosperity Indiana members, informed by her media and grants management background. With 15 years experience in the nonprofit sector, Love’s consulting work focuses primarily on resource development and creating processes and tools for effective management and program compliance.
For more information about this program, please contact Prosperity Indiana’s Assets & Opportunity Network Manager Kelsey Clayton.
By Jennifer Pendleton, vice president Indiana, Aly Sterling Philanthropy
When an organization begins a fundraising effort, it tends to be special events.
We dream up creative new ways to hold auctions, cook-offs, bake sales and golf outings.
While these events bring people in our door – regardless of whether they are interested in our cause or not — we quickly learn the return on investment (ROI) for these events is low.
Each takes a lot of work and doesn’t necessarily yield long-term donors or relationships that lead to sustainable gifts. Many people just come to have fun and play golf with friends, not to get involved or learn more about the organization’s mission.
That’s when we get “it.” Fundraising is all about relationships. And we understand – firsthand – that we need to cultivate the donors with potential for the largest gifts. We know this is where the cost to raise a dollar is the lowest. So we work to screen our major gift prospects, cultivate the relationships and woo them by showing how we can work together to impact the community.
Then we wait and hope they fall in love with our mission and decide to make a sacrificial gift to our organization. The highs and lows of chasing major gifts are thrilling and exhausting, and can make planning for programmatic needs challenging.
World weary and seeing those closest with new eyes
At some point, however, we realize there are people who have been loyally giving to our organization over the years, sitting right under our noses.
Right under our noses!
These people are so close to our mission we’re practically neighbors. We don’t need to convince them we’re trustworthy or that our work matters. These donors next door are also already writing checks and volunteering to help. We don’t even need to convince them to act.
That’s when it dawns on us: perhaps we’re both ready for a deeper, more meaningful relationship…
Mature programs make room for all kinds of friends
Our mission already has a devoted crew of donors and doers. So, why do we ignore them to compete against every other organization in town for the same slate of big donors?
While these “usual suspects” are undeniably important, they only represent part of the picture. Every nonprofit should pursue a diversified spectrum of donors. What does the diversified spectrum look like? Is it one-time donors? Board member introductions?
Sustainable fundraising programs cultivate a range of donors with the aim of building loyalty and providing more and better ways for them to engage.
Getting started
An organization’s databases contain an abundance of next-level donors waiting for the invitation to do more! They have raised their hands, possibly multiple times, to show us they care.
It makes sense we should start by getting to know our middle-donor segment. Are they Gen Xers? Millennials? Baby boomers? Knowing who’s on our list (and how they like to engage) will help inform early decisions about outreach.
As we begin building relationships, we should develop a program to standardize communication with this group moving forward. Note what works and what doesn’t, and ask donors for feedback. Our goal should be to create a simple-to-operate program that offers meaningful engagement for everyone.
Finally, these are our donor-pyramid people. If they see the results and impact in their giving, they could invest a little more (or a lot more) each year. Is there a path for them? If not, create one that provides them with opportunities to deepen their involvement with the organization’s mission.
Now’s the time to take the first step to identify and connect with your donors next door to create deeper relationships that lead to more meaningful engagement and loyal support…
Jennifer “Jen” Pendleton is a self-described board governance “nerd” who believes sound leadership and strong organizational culture are keys to nonprofit success. She’s also driven to help these leaders identify their nonprofits’ unique qualities and roles in the community, with the goals of making nonprofit magic happen and bringing vibrant visions to life. Before coming to ASP, Jen served as president and CEO of the Community Foundation of Boone County (Indiana).
By Patrick M. Rooney, associate dean, Indiana University Lilly Family School of Philanthropy
With the myriad demands nonprofit professionals face for their time and attention, it can be tough to make professional growth and career advancement a priority. Here are some steps you can weave into your schedule that will help you in your current position and prepare you for your next opportunity where you are now or elsewhere.
Become an issue expert and share what you know. Research and educate yourself on a key topic, and then develop original podcasts, blog posts, and opinion articles. ““Blogging makes you a go-to person,” Joe Waters, a cause marketing speaker and coach, wrote in an article for HubSpot, noting that becoming an expert lets you become “the person in your organization that people seek out to understand an issue.” Waters says that the experience “prepares you for your next big thing,” whether that’s being noticed by recruiters, writing a book, starting your own nonprofit or becoming a consultant.
Volunteer at your organization and beyond. “Volunteering to help with an event or a special project at your nonprofit — particularly those that cut across functional boundaries — can help provide the sort of well-rounded experience that leadership roles require,” according to an article by Bridgespan Group. Volunteering elsewhere lets you observe which roles are of interest or a good fit for your next career step, and serving on a nonprofit board helps you gain skills including decision-making, fundraising and program direction.
Step up for a stretch opportunity. Accepting assignments that stretch your limits helps you grow and enables managers to identify whether you are likely to succeed with more responsibility, The Chronicle of Philanthropy
Job shadow and do informational interviews. Not just for first-time job seekers, observing and talking with people who hold the type of position to which you aspire can help you determine what that type of role entails and whether it is really for you. It can also show you what additional knowledge, training, and skills you’ll need if you pursue it.
Select an effective mentor. People with mentorsearn higher salaries, are promoted more frequently, and report higher job satisfaction than those without mentors, according to research by Audrey J. Murrell, Ph.D., of the University of Pittsburgh.
Form or join a peer-to-peer leadership group. Also called leadership circles, these small groups are made up of nonprofit professionals that meet periodically to listen to and coach each other. As the Center for Nonprofit Excellence says, “These circles provide a confidential setting in which peers can discuss and solve real-time problems with real-world experience.” For more information, see the March 14 issue of Indianapolis Not-for-Profit News.
Stay on top of developments in the field and in your issue area. Not sure which podcasts or newsletters are most helpful? Ask your peers, mentor, or other, more experienced professionals what they read, listen to, and follow.
Join a professional association and take advantage of the member benefits. Membership in professional associations offers numerous career-boosting advantages, including access to the latest information and best practices, professional development and training, conferences and networking.
Make time to participate regularly in professional development. Be intentional about blocking out and adhering to time on your schedule for professional development. Stick to the commitment as you would any other appointment. It’s easy to let the challenges of the day-to-day workload and over-the-transom projects derail your plans.
Earn a graduate degree. Increasingly, most of the people that Bridgespan Group spoke with agreed, formal degrees provide a distinct advantage for those aspiring to leadership roles. Article on developing oneself as a nonprofit leader. “I can think of several great nonprofit leaders who don’t have advanced degrees, but it’s an increasingly indispensable attribute,” said Stephen Pratt, CEO of MY TURN, Inc., a Brockton, MA-based youth development agency.
That thought was echoed by Sandra Gutierrez, COO at Latin American Youth Center, a Washington, DC-based nonprofit that serves youth and their families. She said, “the rigor and discipline required to complete a master’s degree program give nonprofit professionals a big edge. . . . You see a really big difference in people who come into a program manager role with a master’s degree compared to an undergraduate degree,” said Gutierrez, who also noted that most of the people she hires complete their master’s while working.”
Patrick M. Rooney, Ph.D., is associate dean for academic affairs and research at the Indiana University Lilly Family School of Philanthropy.
[content_box box_type=”normal”]The Indiana University Lilly Family School of Philanthropy recently announced that its master’s degree program can now be completed entirely online, offering working professionals more flexibility and convenience. Learn more.[/content_box]
By Cali Curley, assistant professor, IU School of Public and Environmental Affairs at IUPUI
Every March since 2012, Brackets For Good, an Indianapolis-based 501(c)(3) charitable organization, hosts online “competitive giving” fundraising tournaments. With March Madness as the impetus, there are now nonprofits in 10 additional cities involved, and a national competition.
Participating nonprofits organizations rally enthusiastic donors to out fundraise their opponents in order to advance into the next round of the tournament. By generating stakeholder excitement, promoting the tournament, and soliciting corporate involvement, nonprofits earn increased exposure, raise funds, gain access to free fundraising tools and are introduced to new donors.
Dollars from donors translate to points, giving participants the opportunity to advance in their bracket. Competing nonprofits keep donations received during tournament play, no matter how far they advance. The winning organization in each city receives an additional Championship grant sponsored by corporate sponsors.
This year’s tournament concluded last week with more than $3.5 million raised for nonprofits across the country. That total eclipsed the amount that the organization helped raise in its first five years combined. Indianapolis led all areas with more than 7,000 individual donations.
Capitalizing on the excitement of this bracket-style tournament, Brackets For Good teamed up with myself and SPEA at IUPUI colleagues Drs. Jamie Levine Daniel and Marlene Walk to better understand the impact that competitive giving, as a new fundraising strategy, has on nonprofits, their donors and the community at large (e.g., sponsors, participating cities).
Guided by input from Brackets for Good, this ongoing research reflects community needs and holds academic and practical relevance. For instance, a grant from the IUPUI’s Sports Innovation Institute made it possible for the SPEA research team to incentivize donors with additional dollars to donate in exchange for donors’ participation in a survey. Data from the donor survey provides insight into donation frequency, donation reasoning, expectations and the impact of “competitive giving” on supporters’ decision to give. Additionally, participating nonprofits were surveyed to paint a clearer picture about the sector’s capacity to adapt to the evolving forms that philanthropy is taking.
As millennials become even more central participants in philanthropy, fundraising innovations such as ‘competitive giving’ becomes even more important.
SPEA’s collaborative-competitive-giving research team will begin investigating the results to answer questions central to understanding the implications of using competition in philanthropy.
Keep an eye out for future publication of findings.
Cali Curley joined SPEA IUPUI in 2014 after receiving her doctorate in Public Administration and Policy from the Askew School at Florida State University. Her research focuses on the intersection of policy and local government. Her primary interests revolve around the individual level motivations, incentives, and barriers related to policy participation decisions.
By Ann M. Merkel, Senior Vice President and Chief Market Development Officer, The National Bank of Indianapolis
You are sitting at your computer, working happily away on a project, when you receive an email from a co-worker or friend, encouraging you to open an embedded link or an attachment. Or maybe it’s an urgently worded email from your organization’s executive director, instructing you to immediately wire funds to a new vendor. Or worse, the message instructs you to email to them the W-2 information of all your employees. Curious or eager to help, you click on the link or open the attachment.
Unfortunately, you’ve just exposed your organization to Business Email Compromise and the potential loss of confidential information, as well as funds.
In recent months in Indiana, nonprofits, governmental entities and private corporations have all been targeted by cybercriminals who gained access to information, mostly through emails containing embedded links or attachments. Cybercriminals threaten to steal your data, encrypt or destroy it or make confidential records public. If you’re “lucky,” they may offer to give the data back…for a price.
This hijacking of data and demand for payment has created its own apt name: ransomware. Unfortunately, ransomware can be purchased for less than the cost of a smartphone or a designer handbag. It’s also a faster and less expensive way to steal than credit card identity theft. Nationwide in 2014, there were 783 cyberattacks and breaches, exposing 85.6 million records. In 2015, there were 781 attacks, but the number of records exposed soared to approximately 169 million. Cybercriminals then share the stolen data through social media outlets. Intel Security (McAfee) and the Center for Strategic and International Studies (CSIS) estimated the likely annual cost to the global economy from cybercrime is between $375 billion and $575 billion.
There is no shame in being hacked; criminals are smart in appealing to your interests and making emails look legitimate. The loss of data, however, is a serious threat. Key is educating your employees when to be suspicious. Following are some questions to ask of your organization, and topics to discuss.
Recognizing fraudulent emails:
Even if you know the sender, verify that the message is legitimate. Pick up the phone and call or walk down the hall and ask the sender about his or her request.
If you receive a request via text message, don’t respond to the text. Instead, call the number you have on record for the sender and verify the request.
Although false emails can look professional, many do not. Notice misspellings or badly formatted content.
Be leery of third-party emails. Hover your cursor on links to see phony addresses. It’s best to search separately for the actual URL.
Never respond to a request for sensitive information through an unsecured email.
If your organization doesn’t already have a policy on internet usage, create one. Let your employees know that they shouldn’t be using their work emails for personal activities. If you use online banking services, consider dedicating a PC for this purpose only.
Suggestions for protecting your information.
Firewalls. Contact your local technology companies and consultants, who often have special rates for nonprofit organizations on firewall technologies, which are designed to prevent unauthorized access, and keep this product current. Heed all security software warnings on links and attachments and do not download if advised not to.
Back up, back up, back up! Viruses aren’t just about your health any more. Computer viruses, ransomware and malware (software that disables computer systems) are less threats if you back up your work daily. If your data is compromised, you can always go back and retrieve updated files with minimal loss of information. Cloud storage is recommended, but regardless, files should be stored in a separate location.
Saving data. Many nonprofit organizations cannot afford nor do they need a high-tech individual server. Consider, instead, free data storage cloud services that Google and Microsoft offer to nonprofit organizations.
As your bank’s fraud prevention software has become increasingly impenetrable, cybercriminals are focusing their attacks on you and your employees, instead. With information gleaned from a nonprofit’s website or from public domains, they use social engineering/phishing to gain access to your organization.
Cybercriminals believe employees are your weakest link. However, with some training, they can become your strongest asset in fraud prevention.
In her role as Senior Vice President and Chief Market Development Officer for The National Bank of Indianapolis, Ms. Merkel is responsible for cultivating and maintaining high profile corporate, individual and community relationships that strengthen the Bank’s brand and reputation.
By Mark Shreve, business development manager, SmallBox
Nonprofit organizations are not immune to the same challenges presented to for-profit businesses. You must survive economic swings, respond to political orders and actions, address shifting demographic needs, compete for attention, and increase impact to those you serve and do all this with shrinking budgets and teams.
Shall I say more?
But most nonprofits also are serving their audiences — members, donors, students, patients — with greater attention, a byproduct of operating in the Experience Economy, where people want to move beyond consumption and focus on participation.
As you battle for their attention, you’re also fighting for their support. Nonprofits often have the added challenge of asking these same audiences to fund the experience delivered to them. In order to adapt to these forces effectively and efficiently, and to generate meaningful experiences that will attract, engage, and retain their audiences, we believe, nonprofit organizations should turn to human-centered design principles.
Human-centered or design thinking provides a framework to understand how audiences — members, donors, students, patients — think, act and feel. This process allows a deeper investigation than just proposing initiatives that may satisfy your audiences. It demands thinking about the entire experience delivered, and do it with contextual data to yield greater results. When every penny counts, this process ensures failing forward and finds lasting impact faster.
Design thinking empowers you to be a more creative and effective problem solver
If you have ever wished to take a timeout and disrupt your approach to work, now is your chance. Human-centered design has been helping healthcare, education and cultural institutions.
SmallBox follows a five-stage and circuitous process that builds on empathy, encourages collaboration, and yields a prototype to test with audiences. The idea here is to be inclusive, thorough, exploratory, and not just innovate for the sake of innovation. Make the investment of time to do this right, and it will benefit those the nonprofit serves and those who lead the work.
Let’s move beyond theory and into practice. The first step in a human-centered process is to empathize with your audiences. It’s their experience you’re developing so understand their point of view is critical to success.
Our approach is to ask, listen (not always obvious!), and involve your audiences. Here are a few examples from recent projects:
Ask your audiences and improve communications: A small college wanted to explore their alumni communications to maximize resources, align their team’s efforts and to increase engagement among their audiences. First step, we surveyed 3,000 people to understand how they wanted to receive communications and what they valued most from different touch points. Insights gathered from this survey directed our work to redevelop the experience of creating and distributing content in the alumni magazine, which resulted in just one touch point with their audiences.
Take away: As you seek to understand what your audience needs, consider asking them to envision a future state to shed them of their current blinders!
Listen to your audiences and increase the value of membership: A large state university sought to redesign the membership experience for segmented generational groups. The perceived value of membership varied between boomers and millennials. After listening to alumni via participatory ideation sessions, a new “freemium” option was added to mirror the discounted services model this group was accustomed to receiving before they invested more.
Take away: Human-centered design keeps audiences at the center of the problem so if you ask, be prepared to listen!
Involve your audiences and attract donors: A hospital foundation wanted to attract more donors in the Indianapolis community. So, rather than pitch to prospective donors, we asked them to pitch to the foundation. During a participatory focus group, we provided scenarios to foundation volunteers and community leaders and challenged them to create experiences to tie donors to the work of the foundation. What we heard in those sessions will inform messaging and touch points with the community.
Take away: Involve your audiences in the process for more buy-in!
After each of these organizations empathized, they moved to the next phases of the process – framing their insights and takeaways, ideating on new solutions and then prototyping and testing the viability of those solutions.
So, when was the last time you stopped juggling your tasks to really connect with and talk to your audiences?
Take the first step. Like the idea, but not sure where to begin? Convene a group of stakeholders to determine if the experience you’ve created is the one most aligned with those you serve. If not, turn to a human-centered framework to guide you as you redesign the experience.
Mark Shreve has supported nonprofit organizations for over a decade and is currently the business development manager at SmallBox, a brand experience agency that helps with organizational alignment and customer engagement.
SmallBox collaborates with organizations dedicated to creating impact and serving others. Initiate a conversation with Mark at mark@smallbox.com.
By Jim Simpson, CPA and director, Financial Technologies & Management
Nonprofits are complex organizations that are built around mission and outcomes, which must be supported by the right revenue and expense models.
Dashboards are one way to simply communicate and give an overview of the organization by using a graphical summary of important information. It is an easy way for decision-makers to see where and whether the organization is on the planned financial path, and additionally can be used with funders and stakeholders to transparently show progress towards desired goals.
But a dashboard without metrics is useless to the organization, it is important to develop the associated metrics and constantly review to ensure you are actually measuring success for the organization.
Effective dashboards
Charts and graphs are not considered a dashboard unless that have the following characteristics:
Align success definitions across organization
Encourage communication regarding progress towards goals
Identify successes and challenges
Actual data and evidence to make decisions
Strengthen relationships between different activities
A properly designed dashboard allows a nonprofit to monitor its effectiveness as evidenced by the financial health along with the impact of the programs and services provided. Board and staff should develop strategy and goals to create dashboards with focused conversation and collaboration.
When you select the dashboard elements, you should understand the data you will track and how that data will influence decision making. Questions to ask include: Are the metrics for the organization or particular function? Is the tool for the board, staff, or funders?
Successful dashboards achieve the following:
Successfully communicate strategic-level results
Present data in a user-friendly visual format
Create snapshot of current status and trends over time
Show performance against defined targets
Highlight out-of-the-ordinary results
Create a manageable set of key performance indicators
Consider each revenue and expense stream and the factors that influence the reliability and predictability and what contributes to the increasing or decreasing of these streams.
Performance indicators (KPIs)
it is important to determine the program-delivery mechanism that influences results. Different types of nonprofits have different organizational models with different drivers for success. It is important to select Key Performance Indicators (KPI’s) that focus the organization on data that will support decision-making. Consider whether you need a dashboard that reflects trends over time or performance against goals.
In order to get started, focus on the most important part of the process, which is to define the key drivers and metrics while focusing on the most pressing issues to start. This will help you start the process of developing your organization’s key performance indicators and the related dashboards to move your organization towards data driven decision-making.
When creating a dashboard and KPI’s, you should do the following:
Start with the big picture
Identify the audience and how to engage it
Define business model drivers and key levers inherent in program delivery
Choose KPIs in a thoughtful, team-based process that is inclusive
Re-evaluating KPIs is an ongoing process
Establish a culture of data driven decision making
Successful Key Performance Indicators (KPIs) achieve the following:
Represent business model drivers
Reflect progress towards intended outcomes
Guides priorities and decisions
Limited number of KPIs that can be realistically monitored
Should be periodically reassessed
When putting the dashboard reporting into action make sure you consider the following:
Where does data come from?
Who is responsible to collect data?
How will dashboard be updated and how often?
What platform or tools should we use to update dashboard?
Jim Simpson, CPA and director of Financial Technologies & Management, is a nonprofit financial leader and trainer, CFO, controller, forensic consultant and software advisor, including Abila MIP Fund Accounting since 1999. He has served CFO, controller and software advisor for over 25 years to over 350 nonprofit organizations.
Contact Financial Technologies & Management to see how we can help your nonprofit with accounting solutions. You can schedule an appointment directly from the website at WWW.FTMLLC.COM, emailinfo@ftmllc.com or phone at 317-819-0780.
By Tim Ardillo, consultant, Johnson, Grossnickle and Associates
Did you know development programs that rely solely on transactional giving, like direct mail and special events, generally have a return of investment (ROI) of about 200 percent, while programs that are relationship-based and major gift focused can enjoy a much higher ROI of 500 percent or more?
That’s why it’s so important to have a diversified development program with a strong and systemized major and planned gifts component. Now is a good time to evaluate your major gift practices to make certain that you are being as effective as possible when you, your volunteers, development staff, and CEO are cultivating major gift prospects. Though this blog focuses on major gifts, it is important to remember to approach conversations with donors and prospects holistically – integrating annual, planned, and major gifts into the discussions when appropriate based on the donors’ needs.
Johnson, Grossnickle and Associates recently hosted “Essential Elements of a Successful Major Gift Program,” a free webinar to review and share best practices in major gift fundraising. I encourage you to watch a recording of the webinar, which includes a thorough and integrated five-point checklist to help you make sure your major gift program is primed for success.
In addition, here are four fundamental steps you can take to develop a process for identification and cultivation of major gift prospects that is purposeful, organized, and ongoing:
Identify prospects to be included in prospect management.
Prospect assignments for organizational leadership and development staff should include a balanced pipeline of major gift prospects in cultivation, solicitation, and stewardship. A list should be compiled based on previous giving levels, recommendations from staff and board members, and additional research conducted by the staff. Prospects who should be assigned for contact management include those who are anticipated to have the capacity and inclination to make a major gift to the organization. What constitutes a major gift depends on the size of the organization, its operating budget, and its donor base. For some organizations, a major gift may be $10,000; for others, $100,000 or more.
Assign identified prospects to specific staff members.
After the list has been complied, development staff leadership should review the list and begin determining who has the best relationship with the prospective donor and can engage the prospect in a strategic and meaningful way.
Commit to personal visits with donors and prospective major donors.
Organizational leadership and development staff must set aside time for personal visits as a top priority. Engaging major gift donors will require multiple visits, increased overall correspondence, and a focused effort – and will require the organization’s leadership, including board members and staff, to engage donors and prospects in new ways. A full-time development officer who has no additional responsibilities other than cultivating major donors should be expected to complete 125 personal visits with donors and prospects on the cultivation continuum per year, or the equivalent of two to three visits weekly. Some of these personal visits will likely involve cultivating the same prospect more than once.
Meet on a regular basis to review current portfolios and activities.
The development staff should meet frequently, perhaps every other week, to review recent activities and plan out next steps. These regular meetings for reporting and strategizing help to create urgency and hold everyone accountable for their assignments and results.
Integrating these strategies into a major gift program will ensure that you are maximizing the gift potential of your current major gift prospects and also help to identify and qualify future donors. This systemized approach forces you to have a strategy in place for each donor’s future trajectory with your organization.
Tim Ardillo, CFRE, brings JGA’s clients guidance from a breadth of fundraising experience across a variety of nonprofit sectors. With a development career that spans more than 20 years, Ardillo has experience in fundraising efforts ranging from annual fund development, major and planned giving and campaigns. His most recent experience as Director of Institutional Advancement for the Indianapolis Zoo gave him the opportunity to serve as campaign director to complete a more than $34 million capital campaign and the launch of a $10 million endowment campaign. Ardillo holds a Bachelor’s degree in Public Relations and Marketing from the University of Louisiana, Monroe.
By Jessica Love, associate executive director, Prosperity Indiana
Generally, nonprofits are established to make a difference for the people or places they serve. As a result, the impact and outcomes are inherent in the work.
But these days, meeting an individual or community need is generally not good enough for a nonprofit to thrive, or even survive, in a world “competing” for donations, sponsorships and grants. Nonprofits must prove they are doing the good they set out to accomplish – and that they’re about outcomes as much or more than they are about outputs.
The National Council of Nonprofits cites this same challenge in an article, titled Impact and Evaluation of Outcomes. The article highlights concepts from Leap of Reason (2011). Of note is that measuring outcomes is not just about attracting resources to your nonprofit, but about mission. A nonprofit will only know that it is indeed helping individuals, solving problems in communities, and protecting the environment, etc., if it is evaluating its performance and then communicating the impact. The article also provides helpful links to numerous resources to improve outcome measurement.
Unfortunately, tracking outcomes is often disjointed from one organization to another and from one funder to another. Additionally, outcomes are often just tracked to meet external requirements or cite specific accomplishments, and may not tell the larger story of the organization’s or program’s success.
According to Andrew Means, co-founder of the Impact Lab and founder of Data Analysts for Social Good, technology is one example. The nonprofit sector often doesn’t see technology as a set of tools created to make jobs better. Means suggested that nonprofits, acting as partners in creating a social sector powered by information, have a huge opportunity “to actually use data and data technology to inform the way that we program.”
He also suggested that nonprofits beginning to use data to measure impact should first start “where they are.” As their work advances, they should seek to invest wisely and align themselves with data experts so as to not waste time with bad data. It is critical, according to Means that nonprofits work together to take advantage of the data.
“No nonprofit has the market concentration of Amazon, or Netflix, or Google. We need to come together, and share our data, work more collaboratively with one another to really understand and identify ways of increasing our impact. If you want to do really great data work, you have to do it collaboratively with other organizations,” he said.
That’s where a new initiative of Prosperity Indiana – the Outcomes Platform – will support its members in a more meaningful way.
In a survey of the membership, 90 percent of respondents said they use data to support their programs and to document and demonstrate success. More than half of all respondents indicated Excel is the tracking tool of choice.
Prosperity Indiana values the importance of developing specific, measureable, aggressive yet achievable, realistic and time-bound goals, but realizes that without a dynamic system for collecting, measuring and tracking goals, strategies, actions and accomplishments, it’s difficult to determine whether those aspirations were achieved.
Because limitations are inherent across the field and clearly identified by Prosperity Indiana’s member survey, Prosperity Indiana wants to provide a way to overcome the challenges of time, staff and financial resources and training.
Providing/developing a cloud-based system for use across the membership to collectively measure impact by tracking of organizational outcomes and planning initiatives against community-level indicators, Prosperity Indiana’s new data collection system will give a clearer picture of impact through a tool that creates visual representations of the data with a web embed option.
Through an evolving relationship with an award-winning online database developer, Insightformation, Prosperity Indiana hopes to provide access to this cloud-based tool for at least 100 nonprofit members with the specific goal of meeting the community economic development sector’s diverse data needs.
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The initiative
Goals of Prosperity Indiana’s initiative include providing the system at low- or no-cost, reducing the amount of staff time it takes to track outcomes while providing a better system for doing so, and developing in-house capacity to provide training and technical assistance to members on the data collection, measurement and reporting processes. Prosperity Indiana is also seeking collaboration with other associations and funders to develop a system that meets the needs of the field in such an all-encompassing way that reporting redundancies can be eliminated.
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And according to the authors of the Stanford Social Innovation Review article in July 2015, Architecting for Data, we are right on track.
Prosperity Indiana seeks to provide a system that meets four criteria: “organized (stored in a consistent structure), well described (documented formally or informally so folks know what it is and where it came from), accessible (easy available for folks to find and use), and usable (stored in a format people in your organization know how to wrangle).”
Those interested in learning more about Prosperity Indiana’s Outcomes Platform may contact Jessica Love, Associate Executive Director, at jlove@prosperityindiana.org.
Jessica Love is the associate executive director for Prosperity Indiana and works with the executive director to provide team leadership for staff. She is responsible for developing and managing organizational systems for Prosperity Indiana to ensure effective management and control. She also provides one-on-one technical assistance to Prosperity Indiana members, informed by her media and grants management background. With 15 years experience in the nonprofit sector, Love’s consulting work focuses primarily on resource development and creating processes and tools for effective management and program compliance.
