The Foraker Group

Raising charitable revenue to perform our missions is part of the nonprofit equation. Organizations rely on different levels of charitable funding, and each organization has strengths and challenges depending on how much of its budget is driven by charitable contributions as opposed to mission-related earned income. That said, often our staff and board teams overall are undertrained, underprepared, and yet incredibly optimistic about what it takes to raise and appropriately steward charitable revenue and relationships.

I appreciate the optimism. We need that kind of energy and belief in our missions, but optimism without a solid plan, useful research-backed training, and a good dose of myth-busting makes this work harder than it should be.

Recent federal tax changes are now in effect and will impact charitable giving. These changes will primarily affect individual and corporate donors. In a many-year, bipartisan effort, the universal charitable deduction was passed. This allows all individuals and household tax filers to take a deduction for their charitable giving. It is great news since the tax changes in 2017 meant that Alaska went from 22% of households that itemized their taxes and could claim a charitable deduction to 2%. Now, everyone who donates and files their taxes can take the deduction. Importantly, the average donor to an organization isn’t thinking about giving because of the tax incentive, but it sure is a nice offer for doing the right thing. The more challenging side of the new tax law is corporate philanthropy. The law places both a “floor” and a “cap” on corporate giving. This review explains all the tax changes more fully and provides some next steps for nonprofits to be well-positioned. Please take time to share this with your team and to plan your fund development strategies.

We are unsure yet if the tax changes will be positive or create more headwinds. Either way, we know the science of fund development still holds true, that relationship-centered strategies connecting donors to mission, not just to a single person in the organization, along with efforts to retain current donors are still the two “go to strategies.”

While not new, these two strategies are still elusive for too many organizations. The reasons are varied but often come down to a few reasons:

• It could be the desire to focus on asking first, like holding an event or writing a proposal, before considering who the “right audience” is at the “right time” and then picking a “right way.” Indeed, the science of fundraising tells us over and over that a gift is received when “the right person, asks at the right time, for the right reason, in the right way.” The answers to those questions are never a “one-size fits all” approach.
• Or it could be that many of our organizational leaders are operating with no plan to be strategic in relationship creation and stewardship,
• Or not prioritizing donor database management to track connection and retention details,
• Or there is too little support to do the work, and often it is left to one person or one committee on behalf of the whole team.

Whatever it is, often we do less than we can to set up our missions for success in raising charitable revenue, all while wanting to be more successful.

Setting your organization up for success in raising charitable revenue is not magic and takes more than a single person. A team approach that includes the board and staff, if you have them, means all are working together from a plan that focuses on the organization’s values and its donors. Putting both at the center of your plan and your efforts ensures it is not a one-sided “what can you give me” position for the organization. Instead, it ensures a deeper desire for the donor or potential donor to want to stay connected.

We suggest addressing five primary audiences to build relationships and charitable support. Grounding ourselves in a single question for each audience keeps both sides of the fundraising relationship in focus as we craft successful goals and strategies.

Let’s take a look.

Let’s look a little deeper at each audience and the questions.

Public/Governments: While public or government funding is not charitable in nature, charitable support is a great leveraging tool to maximize every public dollar invested in our missions. The nonprofit sector, in its very creation, is a partnership with government. They give us the power to exist and they regulate our accountability. For many, but not all, government at many levels is a partner to ensuring communities get essential services and quality of life programs that make each community survive and thrive. Alaska’s constitution clearly articulates a role for nonprofits as an essential partner to government. Indeed, we are often the way that government delivers services that it is required by law to provide. Yet somehow this relationship feels far from equal, and nonprofits are often working harder with no pay to do this work and with too little understanding from our government leaders that if we went away, their work would be far more expensive and, in some cases, impossible to deliver. Approaching our government as an equal partner that has charitable resources to offer, expertise to give, and on-the-ground access for success is step one for every nonprofit leader. Step two is exploring together how we leverage all these assets, including funding, to achieve the results we all want in our communities.

Foundations: While vastly different in scope, scale, and formation, all foundations, both private and public, are nonprofits too. They have boards, missions, values, and goals just like us. The power of money sometimes makes it seem like we are not all the same at some fundamental level, but focusing first on what we have in common can position our conversations to be much different from the too common approach of thinking of foundations like giant ATM machines that should just dole out money if we enter in the right keys on the keypad. Positioning ourselves in every conversation – from the first to long into the relationship – to be about how we can both meet our missions better together means that not just both missions do better, but our impact in our communities is longer lasting as a result.

Corporations: From the multibillion-dollar multinational corporations to the Alaska business on your main road, their interest in investing in nonprofits is as varied as the nonprofits themselves. There are so many ways these investments happen – through employee giving, in-kind contributions of inventory and space, to matching funds, and challenge grants, to marketing investments, to the corporation itself making a direct contribution with no strings attached. While all these ways are may be available, the challenge can be in our approach. We position ourselves too often with a “what can you give me for (fill in the blank – our silent auction, donation, space, etc.)” and less with an understanding that at the beginning and end of every day, the company is focused on thriving as a business that makes money. Repositioning your approach to ask yourself, “how is our nonprofit good for business,” recognizes the business goal and your mission goal. And then remember that the answer will look different depending on the business. For example, it could look like external marketing and celebration of their brand, it could look like supporting a community or area where their employees live or have an interest, it could look like meeting their corporate goals or matching their corporate values, or it could look like building their customer base with common goodwill. It could look like so many things. So slowing down, reading their materials, meeting the owners (if they are local), being considerate in your approach, staying aware of their economic pressures, and more is not just nice, but essential to showing up as a good partner. I promise, you will stand out in a crowd if your position is “how can I help,” not “what can you do for me.”

Nonprofits: It might not have occurred to everyone on your team that your fellow nonprofits are a source of charitable support. Not all of them obviously, but maybe more than you think. Our sector is filled with amazingly philanthropic organizations – civic clubs like the Moose, Elks, Masons, Shriners, Soroptimists, Rotary clubs, and other nonprofits that donate to causes that align to their missions – or groups like unions, faith congregations, fraternities, sororities, and business leagues, including chambers and professional associations. This category also includes funding intermediaries like United Ways who are often a source of philanthropic support when goals align. Not unlike our foundations that live in the same sector as us, these nonprofits all have similar structures, with volunteer boards, core values, and mission-driven goals. And while they might not have as much money to donate as a foundation, they do want to engage in philanthropy alongside you when there is alignment, which can include bringing their membership and volunteers with them into the relationship. And, while in many cases the amount of money is less than you might need, the value of the community support and broader buy-in for our mission-based ideas is priceless. We know mission cannot be achieved on our own, this is one of the many ways we can show our community and other investors how we are working together. In turn, this serves to amplify community engagement and deeper interest—a win-win cycle for all.

Individuals: There has never been a one-size-that-fits-all T-shirt for this group of donors or potential donors. They give to the missions and larger causes that matter to them based on what they care about every day. More than 89% of households report giving each year. It happens every day, in so many amazing ways. Through big gifts or many smaller gifts, immediate cash, sustaining recurring gifts, donor advised funds, and/or gifts of assets that long outlive the donor but show their deep caring for generations to come. While the ways people give, how often they give, and how much they give, are vastly different and require different approaches, the common thread is that people give to causes and missions that matter to them. So, focusing on how we create a bond between what they each care about and our mission and values is essential. Not every person in our community will care about our mission, nor should they, but if they are not grounded first in our mission and our values, AND we don’t communicate well about them to specific audiences in ways they can hear us, then the person never gets a way to figure out if they want a relationship with us in the first place. Our grounding question places importance on building the relationship, not asking for the money. The money part comes later when more authentic relationships are in place. This is not a new idea, but one that is worth repeating as often as necessary to get our organizations to make sure we are looking inward to get our house in order before we look outward to building solid and long-term relationships.

Getting good at raising charitable money for our missions is not magical and not random. It takes focused planning, a clear grounding in our action, and a deep willingness to “go slow to go fast.” The five questions give us solid ground to stand on – even in uncertain times. By slowing down to look inward first, we can more likely ensure we are doing this work with our donors and potential donors as our partners in mission rather than considering them as something tangential to mission.

Together, we can be successful in raising the resources we need to do mission work in our community. Need more help? Ask us.

Laurie

PS. For more ideas on positioning your organization for success, check out this blog on moving from scarcity to abundance or this list of ways to consider positioning your organization in an abundance mindset. Or check out our upcoming fundraising offerings. And don’t forget to check out the latest changes in tax implications and philanthropy.