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Special Report on Donor ManagementPages 17-21 HE ON ROFIT IMESSystems TM TThe Leading Business PublicationN For Nonprofit ManagementP • www.thenonprofittimes.com •T $6.00 U.S. September 1, 2014

Jimmy Fallon and guests take the ALS Ice Bucket Challenge on The Tonight A Seat At The Table Show Nonprofits spend $44 million on lobbying despite D.C. stalemate

BY MARK HRYWNA “During the current war in Israel, the illiam Daroff campaigned vast majority of my time is focused on door-to-door for a candi- that component as it relates to interac- date running for local tions with the president and Congress council when he was just 7 as well as communicating with con- W stituencies, local federations, news AY OOL years old. Fast forward 40 years. Daroff W C ! continues to work impacting the demo- media and the like,” said Daroff. “We’re An ‘icy’ reception by donors heated cratic process, this time as senior vice very engaged and work closely with president for public policy at The Jewish AIPAC [The American Israel Public Af- up dollars and awareness for ALS Federations of North America (JFNA). fairs Committee] and other Jewish As director of JFNA’s office in Wash-groups,” he said, as well as on issues re- ington , D.C., Daroff oversees a staff of lating to Medicaid policy, Jewish social BY MARK HRYWNA largest viral campaign for a charity since 17 -- including six registered lobbyists -- service agencies, hospitals, and nursing ou Gehrig’s Disease probably Invisible Children’s #Kony2012, the who work on issues ranging from agencies. For instance, JFNA is working hasn’t received this much expo- Washington, D.C.-based national office of poverty, Medicaid, social services and with both Democrats and Republicans sure since the Hall of Fame first The ALS Association and its 38 chapters charitable giving to anti-terrorism fund- to try to get $5 million into the appro- baseman’s famous farewell nationwide reported donations of more ing, Israel-U.S. relations and the nu- priations bill for Holocaust survivors liv- L than $31.5 million between July 29 and speech at Yankee Stadium 75 years ago. clear ambitions of Iran. This summer’s ing below the poverty line. The Ice Bucket Challenge dominated Aug. 19 -- several times more than the flare-up of violence in Gaza became the The Center for Responsive Politics social media in August, sparking a viral $1.8 million raised during the same time top priority for the office. (CRP) in Washington, D.C., home of campaign that had people posting videos in 2013. The organization gained nearly OpenSecrets.org, estimates the non- but also donating to the ALS Association 638,000 new donors at presstime. profit industry last year spent $44 mil- and other charities related to amy- ALS Association and its affiliates had lion on lobbying, which pales in otrophic lateral sclerosis (ALS), or Lou reported $4 million raised since July 29 comparison to the likes of the pharma- Gehrig’s Disease as it is more commonly with 75,091 new donors, heading into ceutical industry, which spent $226 mil- known. the week of Aug. 11, when the campaign lion or even the automotive industry at In what has probably become the Challenge, page 7 Lobbying, page 4 Charity Navigator Goes To 100-Point Ratings System

BY PATRICK SULLIVAN for the sake of simplicity and the intu- t might be time to dig out that re- itive understanding that people have,” tainer and tuba from your high said Ken Berger, president and CEO of school yearbook picture. Charity the Glen Rock, N.J.-based organization. I watchdog Charity Naviga- “Our educational system is tor changed in August the way it based on the 100-point system, issues its ratings. While the or- and grades are apportioned by a ganization has no plans to move numeric score. It’s a much more David Thompson, vice president to a letter grade system, the new familiar breakdown.” of public policy for the National system is based on 100 points, similar Users have expressed confusion at the Council of Nonprofits, and Tim to the school system and is more recog- ratings, said Berger. “We’ve gotten feed- Delaney, president and CEO, stand in front of the Minnesota state nizable to users. back over the years from users who have capitol after leading a regional The biggest reason for the change “is Charity Navigator, page 5 Advocacy Institute earlier this year.

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Editor-in-Chief Paul Clolery September 1, 2014 Vol. 28 No. 10 [email protected] In This Issue

Senior Editor Mark Hrywna [email protected]

Staff Writers Patrick Sullivan [email protected] Zach Halper [email protected]

Contributing Editors Rick Christ Susan Ellis S______PECIAL REPORT Herschell Gordon Lewis Thomas A. McLaughlin Donor Management Systems Tim Mills-Groninger 17 Amy Sample Ward Breaching The Walled Garden Y ARK RYWNA President John D. McIlquham B M H

Business Manager Barbara Nastasi [email protected] N______EWS ______Production Manager Jeff Nisbet [email protected] 11 A Seat At The Table BY MARK HRYWNA Marketing Director Deanna Quinones [email protected] 11 Way Cool! Advertising Sales Director Scott Vail BY MARK HRYWNA [email protected] (973) 538-3588 11 Charity Navigator Goes Business Development Dir. Peter Manfre To 100-Point Ratings System [email protected] BY PATRICK SULLIVAN (973) 401-0202 Ext. 219 8

Classified Manager Mary Ford 18 Jail Time For Fraudulent Donor Receipts [email protected] BY MARK HRYWNA & TIM MILLS-GRONINGER (973) 401-0202 Ext. 206

Corporate John McIlquham 19 Red Cross Gives Up On ‘Sandy’ Financial President & CEO Disclosure Battle

Paul Clolery BY MARK HRYWNA Vice President/Editorial Director

______OLUMNS D______EPARTMENTS Circulation Manager Charles Mast C [email protected] 14 GENERAL RAMBLINGS 10 ICYMI On The Web Executive Offices Mack-Cali Lake View Plaza 12 Checkmate 201 Littleton Road, 2nd fl. BY PAUL CLOLERY 22 Technology Guide Morris Plains, NJ 07950 TECHNOLOGY (973) 401-0202 28 Resource Marketplace 13 Crowdfunding Dreams BY PATRICK SULLIVAN Postmaster Mail address changes to: 28 Advertisers Index The NonProfit Times BURNT OFFERINGS P.O. Box 433292 Calendar Creative Masterclass 31 Palm Coast, FL 32143-3292 14 BY HERSCHELL GORDON LEWIS 1-386-246-0103 31 NPT Jobs ON VOLUNTEERS 16 The Organizational Chart

THE NONPROFIT TIMES is published semi-monthly A one-year subscription is $65 US, $89 US Canada BY SUSAN J. ELLIS and $129 US for international. The NonProfit Times (ISSN 0896-5048) USPS #001-548 is a publication of NPT Publishing Group, Inc. Periodicals postage paid at Morris Plains, NJ and additional entry points. Unso- licited manuscripts are welcome, but The NonProfit Times does not assume responsibility for their return. STREETSMART NONPROFIT MANAGER None will be returned without a self- addressed, stamped envelope. No material in this publication may be photocopied or reproduced in any form whatsoever with out permission of the Publisher. Views expressed by Solving Insolvency independent columnists or correspondents are theirs and do not necessarily represent the views of NPT 26 26 Publishing Group, Inc. © 2014 NPT Publishing Group, Inc. BY THOMAS A. MCLAUGHLIN

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Continued from page 1 cluding the charitable deduction. done in a revenue-neutral way by taking $58 million, not including hospitals. The measure would make permanent away tax breaks, and the charitable de- Contrary to what sometimes is mis- several charitable giving provisions that duction is among those potentially on understood about nonprofits, charities expired in December, including the Indi- the block. As long as tax reform is talked can lobby, with some restrictions. Many vidual Retirement Account (IRA) Chari- about, it’s a threat, and will be talked have been involved during the past few table Rollover as well as a tax deduction about until it’s accomplished. It’s an im- years in trying to repel caps on the char- for donating food inventory and charita- portant time for the charitable commu- itable tax deduction and others have ble land easements and increasing dona- nity to be aware of what Congress is their hands in a variety of issues, fighting tion limits for both. The bill also would doing and to assert itself,” Shay said. poverty or securing funding for disease allow taxpayers to take a deduction on A Senate Finance Committee report research. charitable gifts until April 15 of the fol- on the bill would extend the measure “Much of our ability to advocate on lowing year, similar to making IRA con- one year, which Shay said would “leave us the Hill comes from relationships that tributions, and reduce the excise tax rate Much of our ability where we were before,” as of Jan. 1, 2015. federation leaders have locally, where on private foundations to 1 percent. Comprehensive tax reform is likely to they’ve known their senator since he or Among the things that must be done to advocate on the come up in the next Congressional ses- she was a city councilman or an aide. by Congress is approval of spending for sion, but it could be a matter of when They’ve grown up with them politically the new federal fiscal year that begins Hill comes from and how long that might take. and actually,” Daroff said. On charitable Oct. 1, be it through a continuing resolu- relationships that Elections are very good at covering giving-related legislation, several lobby- tion (CR), omnibus appropriations bill up where people agree because every- ists pointed to JFNA's senior tax policy or a single bill. federation leaders one is emphasizing the differences of counsel, Steven Woolfe, as their go-to Much also will depend on who holds their opponents, Shay said. “Democrats have locally. --William Daroff person. leadership positions of key committees‘‘ and Republicans have a tough time As nonprofits such as JFNA have their after November’s midterm elections. If (R-Wisc.) could take over as chairman of agreeing on whether it’s day or night, let hands in a variety of pots, one piece of Republicans take control of the Senate -- the House Ways and Means Committee. alone on tax reform. Complicated things legislation seems to unite charities work- which Democrats currently hold by just This is a unique opportunity and an tend to take a long time,” he said. ing across assorted subsectors of the in- six seats -- there’s speculation that they important time to try to win, according to Daroff expects some tax extenders to dustry. The America Gives More Act (H.R. might push legislation on matters such as Russell Shay, vice president of public pol- be approved if the America Gives More 4719) passed the House in July by a 277- tax reform into the next session, he said. icy for the Land Trust Alliance, which rep- Act isn’t the vehicle for those giving in- 130 vote and headed to the Senate. Presi- Ron Wyden (D-Oregon) succeeded resents 1,200 organizational members. centives in the short term, perhaps be- dent Barack Obama has threatened to Max Baucus as chairman of the Senate Fi- “Next year, we’re going to start the fore the end of the year, after midterm veto the bill for not offsetting deductions nance Committee earlier this year. U.S. commotion all over again about tax re- elections. For the most part, members of with more revenue and previously has Rep. Dave Camp (R-Mich.) will not seek re- form,” he said. “Everyone seems to sup- Congress understand how important the proposed limiting various deductions, in- election and it’s expected that Paul Ryan port reduced tax rates but it can only be Continued on following page

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Continued from preceding page their deal will be.” need, it’s not as high a priority. Being vis- charitable sector is and how vital these Few nonprofits are bigger on the lob- ible throughout the year, talking about is- incentives are to ensure the nation con- bying front than AARP. The behemoth sues that you can project, they know tinues to be philanthropic, he said. representing Americans 50 and older is you’re a resource, available and under- Some see the gridlock in the nation’s armed with a 501(c)(4) and Political Ac- stand your position early on,” he said. capital as being worse than ever. It’s the tion Committees (PACs). “We obviously Thompson recalls a breakfast meet- “single most dysfunctional stretch in the have advantages over small nonprofit ing years ago where Sen. Lindsay Gra- city,” said Neal Denton. “I keep waiting shops just built in to being a large organi- ham (R-S.C.) proclaimed himself a for one of these elections to break the zation,” with the ability to focus on issues proponent of big ideas. “I just need logjam and it’s not,” said the senior vice that some small shops can’t specialize as some, so come see me,” he said. That’s president and chief government affairs of- much, said David Certner, AARP’s legisla- why Thompson stressed that elected of- ficer for YMCA of the USA. And Denton’s tive policy director and counsel. ficials need input. “Every nonprofit per- been around the Hill awhile, having held Thanks to its vast membership, AARP son knows their job better than a a similar post at the American Red Cross enjoys a big presence in every congres- politician does. Everyone in nonprofits after almost 20 years as executive director sional district and state so it’s visible both is an expert about their policy,” he said. of the Alliance of Nonprofit Mailers. in Washington, D.C., and back home. “There are key moments for any David Thompson, vice president of The latter is something that Certner said bill…but a lot of the work that leads up public policy for the National Council of small organizations can do, too: build a to that is building support for the poli- Sometimes colleagues Nonprofits, recalls running into Grover presence in their home district -- but not cies,” said Michael Markarian, chief pro- who are advocates Norquist of Americans for Tax Reform ear- just when faced with funding cuts or a gram and policy officer at Humane lier this year who agreed that the action is bad bill. “If you’re ramping up just in Society of the United States (HSUS) and for other areas are in the states. “Nothing’s going to happen times of crisis, it’s harder to see people. president of the Humane Society Legisla- surprised to see here for three years,” he said, in a refer- You can’t always get that meeting you tive Fund (HSLF). “We’ve been working ence to Congress not acting until after the on some issues that have been intro- orchestras in the next presidential election in 2016. “Things duced year after year in numerous Con- mix. --Heather Noonan just aren’t moving,” Thompson said. gressional sessions, sometimes it takes‘‘ a “All you can do is to be ready as each long time for an issue or a bill to get trac- Given the gridlock, it might be an op- train leaves a station, whether that’s a tion or critical mass of support,” he said. portune time for organizations to show committee or one body of the House or If nonprofits have any advantage when their face around Washington, D.C. “You Senate,” said Jim Clarke, senior vice it comes to lobbying, it’s their grassroots have to find the right advocates, and the president, public policy, ASAE: The Cen- support and organizing. “I think some- right stories, the right storytellers,” said ter for Association Leadership. thing that really impacts the effectiveness Denton. “There’s a member of Congress Clarke, who joined ASAE in 1997 after -- and it’s one of our strengths -- is our whose family has been affected by the being staff director for former Rep. grassroots are real. It’s big and it’s real very thing you’re advocating to protect William Clinger, Jr. (R-Pa.), said some fear and we make a big priority out of build- or the medical condition you’re trying to the lame duck session following this fall’s ing them, educating them and activating raise awareness about. There are folks midterm elections could have the poten- them,” said Chris Hansen, president of on the Hill who could tell that story as tial to be long and contentious. “There the American Cancer Society Cancer Ac- effectively. That requires research and a are things that will have to be contem- tion Network (ACS CAN). “You can’t just little legwork.” plated in a lame duck. That’s going to be go out to people cold, send them one At its Lobby Day on Capitol Hill this a very contentious period,” he said. message and hope to do something effec- month, ACS CAN – a 501(c)(4) offshoot of Despite what others might say, for a You can’t just go tive. You really have to feed it, you really American Cancer Society – planned to lot of issues, the nation’s capital contin- have to train it,” he said. focus on three issues: funding for cancer ues to be the place where concerns need out to people cold, The more that elected officials hear research through the National Cancer In- to be addressed, according to Daroff. Di- send them one from nonprofits and the communities stitute; increasing the federal tobacco tax; vided government off and on for the they represent, Shay said the more likely and, quality of life legislation focused on past 14 years has made both parties be- message and hope something will get done. “Sometimes it’s palliative care. While ACS CAN routinely lieve that they’ll have a better deal after the most basic, old-fashioned politics bumps up against tobacco companies re- the next election, he said, believing “the to do something that work: people keep asking for some- garding increasing taxes on its product, longer they can push pause, the better‘‘effective. --Chris Hansen thing, maybe they get it,” he said. Lobbying, page 6 CHARITY NAVIGATOR

Continued from page 1 traffic is at its peak and the most people ing at the earliest by the end of 2016, from them? said, ‘I don’t understand how (a score of) are looking.” Charity Navigator's website provided we receive the funding re- Feedback on the new 100-point sys- 65 gets four stars,” he said. “This way is received more than 1 million hits last quired to double our size and staffing,” tem has largely been positive, said cleaner and leads to less confusion.” December, compared to about 400,000 said Berger. Berger, but he expects more input from In the new 100-point method, a score this past July.. Results reporting will add another 15 users and some pushback. He said there of between 90 and 100 will translate to a The 70-point system comes from the metrics, making a 70-point system even those who will criticize anything the or- four-star rating, 80 to 89 will be three stars, founding of the organization in 2002, more cumbersome, Berger said. The ganization does. and 70 to 79 will get an organization a when there were only seven metrics it new facet will be more qualitative than “Charity Navigator is pretty unique in two-star rating. “We’re liberal in our grad- used to judge nonprofits. “Those seven quantitative and will be focused on how that we make judgments as advocate and ing system: a D (one-star rating) is 56 to are still looked at when it comes to fi- effectively an organization carries out its educator for donors, and advocate for 69,” said Berger. “We give you a little extra nance,” said Berger. “We added a whole mission. Metrics include: high-performing nonprofits,” he said. room for your D.” Any organization that new dimension (accountability and • Are there specified measures (indica- “Any time there’s a change is an opportu- scores 55 or lower will receive no stars. transparence), and that adds 17 (met- tors) to be collected and a plan to do so? nity to raise questions, and one of my Berger said the time was right to rics), so we’re up to 24.” • Does the charity publish feedback many challenges is to listen carefully and make the change because the summer is Charity Navigator is “in the middle of data from its primary constituents? differentiate between criticisms that are traditionally when Charity Navigator’s the infamous scaling-up process,” ac- • Does the charity publish evaluation thoughtful and we should listen to, and website sees the least traffic. “It also cording to Berger, and in January 2013 reports that cover the results of its pro- criticisms that are bogus from those who gives time to beta test (the change),” he began gathering the data necessary to grams at least every five years? don’t want to be accountable. We’re said. “The real test will be the holiday add a third facet of rating: results report- • Does the organization report back more under a microscope than any giving season because that’s when our ing. “Our goal is to have it affect the rat- to its primary constituents what it heard other charity I’ve worked with.” NPT

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Continued from page 5 dations and hunting groups like the Na- litical landscape, and within a particular there’s really no opposition to pushing for tional Rifle Association (NRA). There are state. Having bipartisan support and mak- more palliative care training of doctors, 65 groups that work in Washington, D.C., ing sure an issue doesn’t get caught up in according to Hansen. specifically interested in conservation partisanship, everyone agreed, is critical. Hansen calls palliative care an issue easements. “Sometimes some of our “We want to work on policies that are that’s time has come. “It’s not just for members don’t agree on everything -- achievable and have an impact. It’s not cancer patients. Palliative care is for any- that’s OK -- but we try to pull them to- just enough for us to have a position on one with a serious illness,” he said. But gether, when we recognize that they and something,” Markarian said. anything in the healthcare space is a lit- their members benefit,” he said. Nonprofits are limited in how much tle more difficult to move at the federal lobbying they do, which is one reason level right now because of debate sur- PLANNING STAGES why HSUS formed a 501(c)(4) social wel- rounding the Affordable Care Act. While legislation might not be getting fare organization, the Humane Society “Larger issues around the Affordable completed on the Hill or culminating in Legislative Fund (HSLF) as well as a polit- Care Act (ACA) have made some people new statutes, there’s a lot of activity on ical action committee (PAC). The social reticent to get involved in any issue draft policies or work on the committee welfare group can do unlimited lobbying other than its repeal,” he said. level, according to Heather Noonan of One of the things but contributions are not tax-deductible Lobbyists aren’t always only trying to the League of American Orchestras as they would be to a 501(c)(3), which affect legislation on the Hill, but also im- (LAO). She said she finds herself at com- United Way brings can do limited lobbying but the majority pact what the administration is doing mittee hearings or agencies as varied as to the table is more of work must be non-lobbying. within the regulatory environment, Den- the Federal Aviation Administration The biggest successes over the years ton said. “Often times a favorable or unfa- (FAA) and Division of Fish, Game and of a big picture, for ACS CAN have been related to to- vorable paragraph in the Federal Register Wildlife, representing LAO and its 900 bacco, whether increasing taxes on to- could be the difference between success members. holistic approach. bacco products or getting legislation --Steve Taylor and failure in your program,” he said. In addition to the primary focus on‘‘ enacted to prohibit smoking in various Hansen added that it’s important to funding for the National Endowment for United Way brings to the table is more of places, like restaurants, parks or build relationships with those agencies so the Arts, arts education, and nonprofit a big picture, holistic approach.” beaches. “We’ve picked the low-hanging your point of view is reflected in the rule- tax policy, LAO has addressed policy is- Most nonprofit lobbyists described fruit,” Hansen said, so policy wins are makings. “You’ll find yourself coming from sues including immigration (securing their approach to legislation as “very getting more difficult. behind often if you don’t have an eye on non-immigrant work permits for visiting pragmatic,” understanding that for the Hansen spent almost 30 years in gov- the regulatory process. Often times that’s musicians); new rules about elephant legislative process to work compromise ernment relations for Boeing, following where the real action is here in D.C.” ivory (small amounts used decades ago is necessary. “If on balance, legislation is by stints at AARP and the Technology Lobbying sometimes entails working on the bows of some string instruments); going to help the people and communi- Trade Association before getting a call with advocates and associations of op- and, issues related to traveling with in- ties we’re really trying to help through from a recruiter about ACS CAN’s presi- posing views in an attempt to reach struments in the cabins of airplanes. policy work, even if there are aspects we dent position. From his experience on common ground. At odds with a trade “Sometimes colleagues who are advo- don’t like, we’ll be inclined to support the corporate side, that’s more of “an in- association representing egg producers cates for other areas are surprised to see something if it’s a priority area for us,” side game,” he said. “We build everything due to the confinement of hens, the orchestras in the mix,” Noonan said. said Taylor. up with public support; they don’t have HSUS worked with the association and United Way has always been involved A good example of that was the reau- that,” Hansen said. They have to build a came up with an achievable timetable to in early education efforts, around issues thorization earlier this year of the Work- different kind of credibility, sometimes phase-in new, larger cages as old cages like preschool funding and Headstart. force Investment Act. “That legislation using other tools like campaign contribu- are replaced. It’s among the organizations aiming to was not perfect, but it largely reflects the tions. “We have more public support al- The unusual alliance, which also had get the Elementary and Secondary Edu- principle we’ve been advocating for,” said ways on those things but not the financial support of consumer groups and other cation Act (ESEA) reauthorized in the Taylor, who joined United Way Worldwide resources they have,” he said. stakeholders, ran into opposition in Con- current Congress. in 2007 after two years as general counsel Big business and industry has a lot of gress from the pork and cattle industry, “A lot of advocacy organizations are to Chuck Hagel (R-Neb.), who has since money that depends on government rules which feared the measure could set a very focused on a really narrow issue. become Secretary of Defense. Passage of but the nonprofit sector is “not inconse- precedent for national standards across You may have an organization that their the measure also was a pleasant surprise quential but we have different tools,” Shay industries, according to Markarian. whole mission is around some very that helps to restore some hope in the said. “Very few of us have PACs, very few of The Land Trust Alliance works with any small component of the ESEA,” said federal process, he said. us are handing out checks, but we repre- number of groups “interested in maintain- Steve Taylor, senior vice president of Taking an aggressive yet pragmatic and sent as much as 10 percent of the jobs in ing wildlife habitat in a fast developing public policy at United Way Worldwide strategic approach, Markarian said HSUS America and loads of people who depend world,” Shay said, including sports foun- in Alexandria, Va. “One of the things looks at what is achievable within the po- on us for what we do.” NPT

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CHALLENGE

Continued from page 1 baseball team captain, who was diagnosed with ALS five money or do something constructive. really took off: years ago and worked with the ALS affiliate in Boston “It’s natural for people to want to be counter-intu- • Aug. 11, $1.4 million, 29,816 new donors for years, posted a challenge on Facebook in late July, itive of something that everyone is really into, especially • Aug. 12, $1.64 million, 34,746 new donors using a Vanilla Ice song rather than dumping ice on among the “online chattering class, but you can’t argue • Aug. 13, $1.920 million, 37,937 new donors himself (because “ALS and ice don’t mix”). The stunt with that fact that millions of dollars have been do- • Aug. 14, $1.926 million, 37,048 new donors took off locally and spread virally, with celebrities tak- nated,” Rothman said. To the campaign’s critiques about • Aug. 15, $2.06 million, 38,623 new donors ing part, increasing exposure. donors not being involved, Kessler points to runners The premise was simple: dump a bucket of ice over “What resonates on social media today are authen- who register for a charity 5K race: some don’t always your head; post a video to social media; and, challenge tic, social experiences that don’t feel manufactured. have an interest in the cause but their dollars still count. three friends to do the same within 24 hours, or they The key to organizations replicating the magic is to The closest thing to the Ice Bucket Challenge that can opt out and make a donation to ALS Association. make sure they’re tapping into what makes people res- Rothman can point to might be Movember, in which peo- Most folks apparently did both, dumping ice water on onate with people,” Rothman said. ple grow facial hair for the month of November and their heads as well as making a donation. chronicle their progress on social media all the while “Most organizations have a big moment. This is the also soliciting donations for an organization dedicated to moment for the ALS Association, and it will be impor- men’s health. It’s similar in that Movember also asks peo- tant to capitalize on it for lasting and engaging change,” ple to publicly do something goofy -- but not too risky -- said Andrew Rothman, director of digital communica- while also tapping into the narcissism of social media. tions at Blue State Digital. The key will be turning this Scott Paley, managing partner at Abstract Edge, a one-of-a-kind moment into sustained, long-term advo- “digital marketing company for do-gooders,” said the cacy and financial support for the organization, and Ice Bucket Challenge worked “precisely because, more continuing to engage new donors while turning them than anything else, we put ourselves first.” The cam- into repeat donors, he said. paign helped people reinforce their self-identities by Today Show anchor Matt Lauer takes the Ice Bucket Challenge. “It’s great that they have a sudden surge of millions tapping into deeper psychological needs, he wrote on of dollars but if this time next year, the vast majority of “What’s interesting is it arose organically, it wasn’t his blog: new donors haven’t given again, and don’t really un- the ALS Association hiring an agency and sitting around • People like to be seen as having a sense of humor derstand what the illness is or what the organization a table coming up with clever ideas,” Rothman said. and being a bit mischievous does, then they won’t have done their job.” “It’s sort of like they won the lottery without buying a • Being challenged makes us feel popular In a message posted on Aug. 16, ALS Association ticket,” he said. • A bit of public peer pressure doesn’t hurt in driv- President and CEO Barbara Newhouse promised to “in- Winning the lottery is almost as hard as hitting a ing action vest prudently in helping people with ALS and their hole-in-one. That’s how Leigh Kessler describes it as he • Challenging others provides a sense of schaden- families and caregivers in the battle against the disease, advises charities to avoid trying to become the next viral freude while resolutely pursuing all avenues to extend, im- sensation. “You have very little control over it, and so Once ALS started releasing fundraising numbers it prove and ultimately save lives.” Increased awareness many unique things must come together to make it go was the ultimate response to those calling it just a social and unprecedented financial support will “enable us to viral,” said Kessler, vice president, communications, for media stunt, according to Rothman. “It’s proof of the think outside the box,” she said, adding that the organ- CharityEngine, a McLean, Va.-based agency. Instead, concept that greater awareness and engagement can re- ization plans to continue to fund groundbreaking re- nonprofits should build their infrastructure and use ally lead to success in terms of dollars raised, which usu- search in laboratories across the globe. technology to motivate do-it-yourself fundraising op- ally happens on a much longer timeline,” he said. It’s ALS Association supports 98 active projects and re- portunities where people can come up with their own usually more of a “slow burn” for nonprofits, getting cently announced $3.5 million in funding for 21 new unique or goofy fundraisers, creating pages that go viral people in the door, getting them to take meaningful ac- projects, she added. a few degrees. “Enough of those and you will have suc- tions and ultimately converting them into donors or ad- The ALS Association put out a press release Aug. 6 cess,” he said. vocates. “The entire cycle unfolded over the course of a inviting people to take the #IceBucketChallenge but Any viral campaign is not without its critiques. Some few weeks, which is an encouraging sign. Activity on so- the organization credited Pete Frates with inspiring the called it typical “slacktivism,” taking the easy way out to cial media really can impact the bottom line, even if it’s social media campaign. The former Boston College “raise awareness” via social media rather than donate hard to measure directly,” Rothman said. NPT

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THENONPROFITTIMES TM PRESENTS FUNDRAISING? Be careful choosing words –Be VERY careful – Jail Time For example: What's For Fraudulent Donor Receipts the difference between "While you read this" BY MARK HRYWNA AND TIM MILLS-GRONINGER (http://listserv.fundsvcs.org/) since 1994, shar- and New Jersey accountant was sen- ing fundraising related news and information. "Even as you read this"? tenced to 18 months in prison and The IRS issued final substantiation regula- will be barred from working in the tax tions in 1996, outlining requirements for non- A preparation business for 10 years profits and articulating what was and what was after his release. Kellar Covington, 62, of Hillside, not deductible for contributions. Prior to that, N.J., admitted preparing false tax returns for Taylor said, all people needed was a canceled clients by fabricating and inflating Schedule A check to claim a deduction but after that re- itemized deductions, Schedule C expenses and quired a receipt for anything more than $250 Schedule E losses, “such as those for gifts to and anything for $75 or more that they received charity, job expenses and real estate losses.” benefits in return. The Internal Revenue Service (IRS) estimated Since the 1996 regulations, the IRS began it was defrauded of approximately $140,000 as putting out Publication 1771, which has been re- a result of the fraudulent returns. Covington vised seven times, typically updating the annual owned and operated KCJ Financial Corp., and inflationary adjustments regarding the benefits assisted in the operation of DFC Tax Pros, Inc., that are given. both of which were tax preparation businesses There are multitudes of IRS publications that in Irvington, N.J. pertain to charitable giving but Publication 526 When it comes to issuing receipts for contri- discusses “at a 30,000-foot level, what is and is butions, nonprofit financial managers must be not tax deductible,” Taylor said. Publication 561 aware of what is and is not deductible and share offers instructions about calculating gifts of in- that information with donors. And, never, ever kind contributions or noncash donations and fudge the amounts. Publication 8283, substantiates more valuable The IRS is concerned about issuing “gross in-kind contributions. In his horror movie directing career, valuation overstatements” or “false or fraudu- The IRS also has two categories of benefit lim- lent” gift receipts, according to John Taylor, prin- its, according to Taylor. The “tchotchke rule” al- Herschell Gordon Lewis cipal with John Taylor Consulting in Durham, lows nonprofits to provide items of nominal value is not known for nuance. N.C. and of counsel with Atlanta, Ga.-based to donors in exchange for a gift and not worry Alexander Haas. “The actual commission of tax about declaring the value. The values are adjusted But when it comes to writing fundraising fraud is something an individual does when they annually for inflation and this year a donor would knowingly file a return claiming more deductions have to make a minimum gift of $52. The maxi- appeals, the direct response guru shows than they should,” he said. mum value of a tchotchke -- such as a lapel pin, Nonprofits are processing contributions and bumper sticker or coffee mug -- must be less why you shouldn’t use a chainsaw when very frequently receipts are being issued that than $10.40. “That’s the cumulative value of all a slight twist of phrase will do the trick. don’t reflect the true tax deduction of the gift, benefits that you can be given,” Taylor said. Taylor said. “Sometimes that’s ignorance, some- The more substantial benefit rule follows that In just 60 short minutes – one thin hour – times that’s head in the sand, sometimes it’s a any other contribution, a nonprofit can give vice president saying you’ll issue them this donor items of value without declaring as long as you’ll learn which words work in print and way,” he said. the fair market value of the items is less than 2 online and which words will cause donors to run. “Nonprofit organizations, particularly on the percent of the total amount given, or $104 advancement services side, are processing (again, adjusted for inflation). charitable contributions and very frequently, re- Nonprofits might host fancy recognition You’ll even get to ask questions. ceipts are being issued that don’t reflect the true events at the end of the year, maybe even in- tax deduction of the gift,” said John Taylor, prin- clude a dinner and/or open bar, for donors of a Herschell has been teaching a direct response cipal with John Taylor Consulting in Durham, certain dollar amount. The law, however, limits MasterClass for decades. He has written for N.C., and of counsel with Atlanta, Ga.-based firm the benefits given to donors to just 20 percent of Alexander Haas. “Sometimes that’s ignorance, their gift. The NonProfit Times and other publications sometimes that’s head in the sand, sometimes If you’re inviting $1,000 donors, that’s just for just as long. it’s a vice president saying you’ll issue them this $200. In that case, “you better be serving peanut way,” he said. butter and jelly” at a year-end dinner, Taylor said. Sign up today for this one-of-a-kind webinar. “The reality is there’s an educational process An organization can’t even invite a donor at that that’s necessary,” Taylor said, adding that the level or higher if their contribution was made October 8, at 2 pm Eastern time laws for what constitutes tax-deductible contri- through a donor-advised fund (DAF) or family butions are a half-century old. It’s the responsi- foundation. “The IRS prohibits that but it hap- $59.99 bility of nonprofits to be forthcoming with that pens all the time,” he said. information to donors, something that became It’s like speeding on the highway -- one ei- Register now at prominent in the mid-1990s after the Budget ther follows the law or not. “The problem is -- Reconciliation Act of 1993. “You’re talking two and I hear this all the time -- everybody else is bit.ly/1nTbQZZ decades ago and people are still not following doing it. I say, the fact that you don’t think you’re the law,” said Taylor, who has run a listserve going to get caught makes it OK?” NPT

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Red Cross Gives Up On ‘Sandy’ Financial Disclosure Battle BY MARK HRYWNA ARC hired New York law firm Gibson Dunn and initially claimed • $49.8 million in financial assistance, food and other relief he American Red Cross (ARC) has given up its fight “internal and proprietary methodology and procedures for items for victims, compared with $129.6 million as of June 2014; against ProPublica, a nonprofit news organization fundraising, confidential information about internal operat ions and • $35.5 million for deployment of staff and volunteers, includ- seeking communications between the disaster relief confidential financial information,” in seeking redactions of the 25- ing air travel, rental cars, meals, lodging for 17,000 volunteers, T charity and the New York Attorney General’s Office re- page letter. compared with $46.1 million; lated to fundraising and expenses after Hurricane Sandy. Borrengo said Red Cross retained the law firm to interact with • $30 million for permanent program resources included in The ARC had challenged the release of parts of a July 2013 let- the Attorney General’s office since staff lawyers are not experts on Sandy response; this figure was unchanged by June 2014; ter to the AG’s office, citing possible trade secrets. ProPublica had the state’s law and working with the AG. She declined to say how • $6.1 million for equipment, maintenance and repair, such as filed a Freedom of Information Law (FOIL) request with the Attor- much outside counsel cost. The organization classified $5.4 million the rental of portable showers, forklifts, trucks and heaters, com- ney General’s Office this past May. as legal on the Statement of Functional Expenses in its most re- pared with $9.1 million; ARC received and allocated $390.3 million in donations for dis- cent Fo rm 990. • $3.5 million for professional and consulting services, such as aster relief between Oct. 28, 2012 -- when Sandy struck the payments for services like telethons, direct mail, etc., versus $4.7 Northeast -- through March 31, 2013. In its communication with Our concern was that the million; the AG’s office, the Washington, D.C.-based organization said it • $2.6 million for communication, shipping, freight and other honored donor intent and allocated all $187 million that was re- letter contained numbers operational costs, compared with $6.6 million; and, stricted for Sandy but also allocated another $112.2 million in dis- from March of 2013, which • $1.9 million in compensation for temporary staff, such as aster relief funds to Sandy relief operations. By Nov. 27, 2012, it “disaster workers engaged for higher level/critical positions that returned to its normal practice of allocating disaster relief dona- are 16 months old. --Anne Marie Borrengo cannot be filled by volunteers,” while that figure rose to $13.1 mil- tions to disaster relief efforts. lion by June 2014. “Our concern was that the letter contained numbers from The letter also noted the surge in the media coverage and men- As of June 30, 2014, the Red Cross said it has spent or made March of 2013, which are 16 months old. These numbers were dif- tions of Red Cross and Superstorm Sandy in the days after the firm commitments to spend $302 million for Sandy, nearly all of ficult to derive, and took time and resources to manually calcu- storm, as well as the drop in mentions after just a few weeks. New the $311.5 million raised for Sandy work. The main difference be- late,” Anne Marie Borrengo, director, media relations, for American‘‘York City media mentions of Red Cross and Sandy fell off sharply tween the $239 million in disbursed funds and $302 million in Red Cross, said via a statement. “We sought confidential treatment after the first two weeks. The letter includes citing an external media spent/committed funds is due to contractual agreements to pay for for parts of the letter because we were concerned that it contained monitoring firm’s analysis of 2,000 New York market area media grant programs as work progresses. information, including financial data that we do not ordinarily re- outlets mentions of Red Cross and Sandy in the second week fell by The remaining roughly $9.5 million are dedicated to helping lease, partly because the data could easily be misinterpreted with- 85 percent from its first-week high, and by Nov. 26, declined 98 per- people impacted by Sandy to move into new housing and grant out additional context,” she said. cent from their height, down to just two mentions per day. funds to “high-performing grantees” addressing remaining is- “However, with all of the disasters the American Red Cross re- Direct expenditures as of March 31, 2013, as outlined in the sues, programs that are expected to continue late into next year, sponds to and the peak of the hurricane season fast approaching, letter to the AG, were $129.3 million. Red Cross said more recent according to the organization. By the two-year anniversary of the it simply isn’t worth our time and resources to continue these ef- numbers show $239.2 million has been disbursed as of June 30, storm, Red Cross expects to have spent approximately $290 mil- forts over a year-old letter,” Borrengo said. 2014, with the following breakdown: lion. NPT

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ATLANTIC PHILANTHROPIES practices that other organizations can about the foundation’s wind-down. the detailed strategies that had domi- APPROACHING THE END learn from or emulate. The report outlines some of the shifts nated a ‘steady state’ of annual grant There’s not really a handbook when “Harvest Time for The Atlantic Philan- made by the board and changes to the making,” before closing around 2017, you are the largest foundation putting thropies,” by Tony Proscio, associate di- original plans while also focusing on the according to the report. A new phase yourself out of business. More than a rector for research at the Center for human resources aspect of spending emerged with the board adopting a decade after The Atlantic Philanthropies Strategic Philanthropy and Civil Society down the organization, balancing a fourth stage -- Global Opportunity and decided it would give away every penny at Duke University’s Sanford School of shrinking grant budget with staffing and Leverage, or GOAL --“meant to be a final it had rather than operate in perpetuity, Public Policy, was released recently ex- professional development. burst of activity and a new way of think- the foundation is moving closer to its amining 2012-2013 at Atlantic. The 56- “The final stage was to consist of ing about the foundation’s ultimate pur- end date and trying to develop best page report is the fourth in a series three or four years spent winding down pose and how it would conclude.” The end date would remain the same but the method of ending would change, with a “crescendo of major grants and expan- SEE A DEMO TODAY sive ambitions,” rather than the gradual [email protected] reduction originally envisioned. As of the end of 2012, the most recent 866.737.8222 year available, Atlantic Philanthropies had net assets of approximately $1.4 bil- lion – of which $764 million already has been committed to grantees. Since the organization decided in 2002 to commit all of its assets by approximately 2016, At- lantic has been on course to donate close to $7.5 billion by the time it closes. At- lantic Philanthropies is aiming to wind down operations and conclude grant- making by 2016 or 2017, with a lot of core programming winding down in the next year or two, according to Maria Pig- * nataro Nielsen, human resources direc- tor for The Atlantic Philanthropies. There are fewer than 70 employees now, with a headcount of about 55 ex- pected by the end of the year, Nielsen said. Staff numbered closer to 140 about three years ago. Staff reductions occur twice a year – in June and December – in an effort to reduce anxiety or stress of employees regularly leaving various departments. Senior management meets with em- ployees to devise a roadmap and pro- jected end date. At the end of their tenures, employees can apply for “fel- lowships,” in which the foundation will pay all or a portion of the employee’s salary and benefits at an outside organi- zation for up to a year, provided that work is closely related to Atlantic’s pro- JUST SO YOU KNOW, gram objectives. The position must be a new one and not displace an existing employee while also not paying more WE DO IT ALL IN ONE than other comparable positions at the same organization. Nielsen said that the board has ap- proved about five or six fellowships and WHY DOES ONE PLATFORM FOR FUNDRAISING & DONOR MANAGEMENT MATTER? over the next several months could get :KHQDOORI\RXUGDWDLVLQDVLQJOH&50DQGHYHU\WKLQJLVEXLOWWRZRUNWRJHWKHU\RXJDLQSRZHUDQGHɝFLHQF\

10 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:53 PM Page 11

Grant Thornton, LLP, said that the new support, that help them make better normal for salary increases, at both man- choices. And that when you do make a agement and non-management levels, is mistake, give you a hand up so you can 3 percent. What is also becoming normal recover, and move on to the next phase is variable compensation or variable pay, of your life,” President Barack Obama whereby employees are rewarded, said during the town hall at Walker Jones sometimes throughout the year and Education Camp in Washington, D.C. sometimes at the end, for performance My Brother’s Keeper “isn’t some big, above certain expectations. new government program, it’s actually a Adkins said that although a recent team effort. It’s all about a whole bunch survey showed only 17 percent of organ- of folks – educators, business leaders, izations using variable pay, that number faith leaders, foundations, government – is rising. The trend is especially preva- all working together to give boys and lent in health care, trade organizations young men of color the tools they need and social service. to succeed and make sure every young Adkins said an emerging trend is out- person can reach their potential,” he come-oriented annual incentives, with said. the following objective criteria as best A group of some 30 grant makers practices: pledged $200 million over five years to • Financial performance. No money, no the effort and, this summer another mission; nearly $100 million was announced “to • Resource/expense/financial manage- address persistent opportunity gaps ment. Efficiency management is critical faced by boys and young men of color in this era of getting more out of less; and ensure that all young people can • “Stakeholder” satisfaction. Efficiency reach their full potential:” and financial performance must coin- • The National Basketball Association cide with tax-exempt mission; (NBA), its players union and retired • Quality. Outcome, experience; and, players union will partner with Mentor: • Growth (specialty market share, pro- The National Mentoring Parntership, gram participation). Strategic growth, Team Turnaround and the Council of based on core services or emerging Great City Schools to recruit 25,000 new service lines. mentors over the next five years and work with educators in at-risk schools to provide incentive programs that in- crease attendance and improve overall school performance. • AT&T announced an $18-million commitment to support mentoring and other education programs with a men- toring component. • Becoming A Man (B.A.M.) and Match tutoring programs announced $10 mil- $91 MILLION IN COMMITMENTS lion in new funding to expand to three to FOR AT-RISK BOYS AND MEN five new cities over the next three years More than $91 million in commit- and support a large-scale study on the ments was announced during a town programs’ long-term effects. hall on My Brother’s Keeper, a White • The Emerson Collective will collabo- House initiative for at-risk minority boys rate with districts and educators to launch K&K offers liability insurance coverage designed and young men. a competition to find and develop the specifically for walking and running events! The President Barack Obama signed a best designs for next generation high program includes events with fewer than 10,000 presi dential memorandum in February schools, with a combined contribution of participants with a maximum number of 3 or less event establishing the My Brother’s Keeper $50 million for the effort. days and a course under 16 miles. Fast, affordable Task Force, which released a report in • Citi Foundation is making a three- coverage for: May addressing several key issues. The year, $10-milloin commitment to create · Non-competitive charity walks/runs interagency effort chaired by Cabinet ServiceWorks, a national program to · Fundraising walks/runs Secretary Broderick Johnson will help help 25,000 young people in 10 cities · 5k or 10k walks/run determine public and private efforts and across the U.S. develop skills they need · Timed/competitive walks/runs how to expand upon them. to prepare for college and careers. The My Brother’s Keeper initiative fo- • The College Board is investing cuses on six key milestones: more than $1.5 million for “All In,” a na- • Getting a healthy start and entering tional College Board program to ensure school ready to learn; that 100 percent of African-American, • Reading at grade level by third Latino and Native American students grade/age eight; with strong potential enroll in at least • Graduating high school ready for col- one matched Advanced Placement class lege and career; before graduation. • Successfully entering the workforce; • Discovery Communications will in- and, vest more than $1 million to create an • Keeping kids on track and giving them original, independent special program- second chances. ming event to educate the public about is- “What is it that we can do to create sues related to boys and men of color and structures that help them that give them address negative public perceptions. NPT

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GENERAL RAMBLINGS PAUL CLOLERY Checkmate Trying to defend against an endgame

Joshua: Greetings, Professor Falken. ganization receives from watchdog Char- ing down the street wearing shirts that tios. It is his argument that you must pay Stephen Falken: Hello, Joshua. ity Navigator. It’s probably convenient say: “I’m Overhead.” for competent management. He is cor- Joshua: A strange game. The only win- that the Wounded Warrior Project where The organization’s website presents rect. But you don’t want to launch one ning move is not to play. How about a he is chief executive officer gets a three goals, one of which is “to change the missile when there are multiple targets, nice game of chess? out of four-star rating. He urged those in way people think about changing the such as state regulators and watchdogs. the room to not play the game but to be world. To let them know that low over- Some might recognize the above sage ready to explain to donors why they are head is not the way the world gets Stephen Falken: The whole point was advice from the 1983 movie War Games. not garnering the highest rating available. changed. That poor executive compen- to find a way to practice nuclear war It’s the story of a high school computer He argued, correctly, there is a cost to sation is not a strategic plan for ending without destroying ourselves. To get the geek who unwittingly hacks into the U.S. growth and it is impossible to change a hunger or poverty or curing disease.” computers to learn from mistakes we Department of Defense’s computer business plan every time someone de- Pallotta has some powerful backers couldn’t afford to make. Except, I never looking for downloads from what he be- cides to change the way the ratings game on the advisory board, such as Stacey could get Joshua to learn the most im- lieves is a video game firm. The com- is played. With four “watchdog” groups Stewart, U.S. President, United Way portant lesson. puter (Joshua) then attempts to launch tripping over each other to find an avail- Worldwide, Mark Tercek, president and David Lightman: What's that? real missiles from a simulation called able news microphone, trying to appease chief executive officer of The Nature Stephen Falken: Futility. That there’s a Global Thermonuclear War. them all is like playing tic-tac-toe -- you Conservancy, and Jim Gibbons, presi- time when you should just give up. Some nonprofit leaders have declared just can’t win. Finishing tied isn’t an op- dent and chief executive officer of Good- global thermonuclear war on charity rat- tion. You don’t get a participation trophy. will Industries International. There’s Fighting the watchdogs is often an ef- ings agencies and others have decided not Then there is the Charity Defense also some muscular help working be- fort in futility since their whole purpose to play the game of contorting financial Council, headed by fundraising consult- hind the scenes. is to pontificate on the sector and to dif- statements to meet the arbitrary guide- ant and controversy stirrer Dan Pallotta. His challenge is that he runs an agency ferentiate themselves from their compe- lines of the self-appointed watchdogs. In this metaphor, Pallotta is the global called Advertising for Humanity and was tition. Make no mistake: The watchdogs Steven Nardizzi gave a rousing talk thermonuclear war option. He recently a for-profit consultant who organized are competing. during the recent Bridge to Integrated announced a Charity Defense March for charity walks. He complained about how Nonprofits should give up on the non- Marketing conference regarding why he June 26-28, 2015. The hope is to get 1 the money being paid to him and others statutory watchdogs and learn that the doesn’t care what number of stars the or- million nonprofit industry workers walk- skewed the reported event expense ra- only winning move is not to play. NPT

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12 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:54 PM Page 13

TECHNOLOGY PATRICK SULLIVAN Crowdfunding Dreams Does anyone really know you are out there?

rowdfunding is no Field of Dreams: If you build it, they first year. “This has been a pleasant $17,000 (to raise) because it’s Gale said she learned a number of lessons from her first might not come. “If you build it, you need to push it a quiet stream that’s coming in with minimal effort,” said Truax. crowdfunding campaign: out and tell everyone about it, and then they will “The extent of human resources is me working with (the) commu- • “You will need more time than you think,” she said. Gale had C come,” said Stephanie Truax, director of development nications (team) to make sure the messaging is on point, and re- six weeks but could have used six months to prime her audience for the Partnership for a Healthier America (PHA). purposing photos and videos.” She added that the only expense is and get everyone in the organization on board. If your organization is dipping its toes in crowdfunding, it prob- the platform’s administration fee. • Along with the first lesson, “You will need more staff than you ably has some base of support from traditional fundraising efforts. Another advantage of using crowdfunding for everyday giving think,” Gale said. She spent 100 percent of her time managing the But, what if it doesn’t have that base? Truax found out first-hand is the ease of creating what Truax called mini-campaigns. “We’re project. “It’s not something that could be delegated to one person. what it takes to start a crowdfunding program from scratch. turning moments into mini-campaigns,” she said. “We’re creating • A campaign kick-off event is a great cultivation tool, and Gale The process and results from two organizations were show- opportunities to give, things we’ve done that we might not have found it better than a thank-you event at the end of the campaign. cases recently during a session at the Bridge To Integrated Mar- tied to fundraising we’re now thinking about.” • Social media is crucial for awareness, but email drives dona- keting conference in National Harbor, Md. tions. The yoga exhibit emails had a response rate of 0.07 percent PHA was started in Washington, D.C., with seed money from a and an open rate of 13 percent. Run email and social media cam- few foundations and corporate partners. When organization lead- Lean on your friends. paigns concurrently. ers wanted to start a crowdfunding program, they found them- --Stephanie Truax • “Lean on your friends,” said Gale. Members will give again, selves hampered by having no prior donors. “Our problem was we and major donors can make a big impact. “Give them advance no- never developed a base of support,” said Truax. “People were also Mini-campaigns can work, and so can major campaigns, as tice and make them insiders,” she suggested. concerned about our image: do we want to be seen as a fundrais- managers of the Smithsonian Institution’s Freer Gallery of Art and • Gale said crowdfunding campaigns in general have big ing organization?” Arthur M. Sackler Gallery found out. “Yoga: The Art of Transforma- spikes in the beginning and at the end, but valleys in the middle. Another problem PHA encountered was that the organization tion” was the‘‘ Smithsonian’s first crowdfunding campaign, said Mi- The Smithsonian planned a matching grant in the middle of the would receive small, unsolicited gifts and didn’t know what to do randa Gale, public affairs specialist. campaign to drive donations. after they received them. “The key for us is donor stewardship, The campaign garnered $176,000 from 617 donors, 75 per- Finally, curveballs will happen. The last, strongest email might making sure we don’t lose these donors,” said Truax. cent of whom were new to the organization. “Online engagement not get delivered, said Gale, which happened during her campaign. PHA decided to go with a crowdfunding platform to “(take) the was through the roof and there was incredible media attention,” Other curveballs (that not every campaign might experience) in- place of an everyday online giving function, and it’s working very said Gale. Attendance was more than double that of the last spe- cluded the government shutting down and a celebrity spokesman well for that,” said Truax. The organization raised $17,000 in its cial exhibition. announcing his involvement at an inopportune time. NPT

SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com 13 •September 1 2014 NPT_Layout 1 8/20/14 1:54 PM Page 14

BURNT OFFERINGS HERSCHELL GORDON LEWIS Creative Masterclass Word selection in nonprofit communications can boost response

Hi, there! prospects and existing donors who Are you starting a communication don’t begin to fade even as they begin to with that type of breezy greeting? Please read (if they read). agree that any greeting other than “Yo” or Add another element, please: intelli- “Ugh” might beat the ancient snorer gent human psychology. They’re neither “Dear Friend” in delivering valid re- dear nor friends. sponses. As promised in the past column, How do you say, “Hello?” Skipping some battle-lines will be drawn separat- super-close friends and relatives from Suggesting belated ing the traditionalists from the dynamos. the promotional mix, you might say We all know that in every facet of civi- “Good morning.” OK, test that one in recognition of lized life, tradition carries with it a key your direct mail. If you’ve been using element: safety. “We’ve always done it “Dear Friend” in email, test “Good an old friend also this way” sidesteps the twin 21st century morning” in that medium as well. An ex- dangers -- show-off and flashiness. ample of the breadth that opens to you: adds effectiveness Tradition is a thin competitive base. If Good morning. ‘‘ tradition were an aggressive factor in es- And you’ll have a really good morn- beyond the dispassionate tablishing or maintaining market share, ing if you.... automobiles wouldn’t accelerate beyond Suggesting belated recognition of an “Dear Friend.” 15 miles an hour, frozen foods would be old friend also adds effectiveness be- an impossible dream, and email, if it ex- yond the dispassionate “Dear Friend.” isted at all, would begin its messages Here’s a sample: “I’ve been wondering, totally dependable criterion, transfers prise to discover that shifting personal- with “Dear Friend.” just as you may be wondering....” the name to the end of the greeting: I’ve ization to or from a first-word position Progress includes increasing not just A version of this approach, one that been wondering, Sample....” If you test, can have a profound effect on response. the number of donors but the number of often brings better response but isn’t a you will have a happy or unhappy sur- Continued on following page

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14 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:55 PM Page 15

Continued from preceding page you’re like I am, Ms. Extralongname....” communicator might intensify the as- the letter on the face of the carrier Who says you need a formal greeting? Or, if you want to propose an even sumed relationship through an immedi- envelope. In an era in which direct mail is under tighter tie, it’s first name to first name: ate imperative built into the greeting, Suppose, for example, your letter be- the gun – naysayers claiming that DM “If you’re like I am, Sample....” such as: “Take a look at this, Sample.” gins: “Right outside your window, right has seen its day and can’t compete with From that point, the message has to Or: “You have my admiration, Sample, now, a bright-colored bird is singing.” more contemporaneous means of com- carry itself, but the non-greeting greet- and here’s why.” On the envelope, at lower left in a type- munication – testing has become a ing has carried the recipient into the Your lettershop might not have the writer font, is the teaser: Right outside major factor. text. The non-greeting greeting has an capability of personalizing the greeting. your window, right now, a bright (con- One logical test avoids the greeting implicit advantage compared to any for- So what? With or without total personal- tinued inside) altogether. Personalization begins with a malized greeting. That advantage is as- ization the technique still is worth test- A quick word to the creative team one-to-one demand for attention: “If sumption of rapport, and the dynamic ing, with the potential of a happy result. spawned after the Internet era took Without the recipient’s name, you might hold: Every nonprofit practitioner find your opening has an even greater knows direct mail is more expensive impact than the same communication than web marketing. That’s a factor to headed by a formal greeting: “Take a consider. And while you’re considering, look at this.” Or... “You have my admira- consider that a custom-tailored garment tion, and here’s why.” will fit better and project a greater aura of affluence than a suit off the rack. SETTING UP THE ATTITUDE Dollars in versus dollars out, matched An envelope “teaser” can improve with lifetime value, can be a more effective response through two separate atten- testing rationale than the ancient Madison tion-grabbers. One device, overlooked Avenue yardstick, cost-per-contact. by creative teams that seal themselves Do you want to find out? That’s easy. in the overcoat of formality, is to begin Replace guesswork with testing. NPT

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SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com 15 •September 1 2014 NPT_Layout 1 8/20/14 1:55 PM Page 16

ON VOLUNTEERS SUSAN J. ELLIS The Organizational Chart Decisions on where volunteer engagement belongs

he question of where to “place” re- and recognizing volunteers. teers are doing substantive things to further the non-paid staff,” and can assure that organization sponsibility for the administration of On the other side of the coin, however, the mission of the organization. policies foster good employee-volunteer rela- volunteer involvement surfaces re- marketing staff is removed from the daily opera- tions, that staff is trained in how to work with vol- T peatedly, with no agreement upon tions of the organization and outside of any deci- OTHER COMMON PLACEMENT OPTIONS unteers, and more. standard practice. While there is no definitely sion making about client services. This poses a One can identify pros and cons for any of the Of course, it has been proven over and over right or wrong department or level in an organi- serious problem for the VRM, who must be in the placement options common for volunteer serv- that when the VRM is placed into human re- zation where volunteers belong, where they ap- loop about what is going on so volunteers can be ices. A popular home for volunteer services is the sources, attention to volunteers is whittled down pear on the organizational chart sends a placed into all units throughout the organization. human resources or personnel department. This over time, as volunteers are given lower priority message as to their importance. This requires ongoing contact with direct service makes a lot of sense, as volunteers are indeed than paid staff. The tendency is to define volun- The key is to make the choice strategically. staff and participation in planning sessions no human and a great resource. On the plus side, teer management as employee management, What roles do volunteers fill and in what units? one else in marketing would ever attend. So how putting volunteer management into human re- without acknowledging the key differences -- What future plans might expand those functions can the head of marketing compe- sources permits merger (or eliminates duplica- nor encouraging or funding these special issues. and therefore affect organizational placement? tently supervise the VRM and tion) of some systems for creating For example, HR responds to employee va- Interestingly, a new trend for larger nonprof- represent the needs of volun- position descriptions, staff hand- cancies within an allocated budget, while a VRM its seems to be to put volunteer services into the teers higher up the chain? books, training, and record- can and should be proactive in developing many marketing or public relations department. In Another negative is the mes- keeping. The VRM is then new roles for volunteers, and doesn’t need to most cases, this means a transfer out of the sage this placement sends positioned to be the human wait for funding. chain of command running the organization’s di- about the role of volunteers. resource “specialist for Another popular option is to place volunteer rect client services, a move that could have un- Rather than clearly integrated resources under the development or fundraising intended consequences. with the service delivery office. From this vantage point, volunteers are On the plus side, this placement acknowl- team, being assigned to the presented internally and externally as part of the edges volunteers as vital to strong relations with marketing department im- department that coordinates outreach to com- the community. It also provides the volunteer re- plies that volunteers are munity groups and businesses, bringing in all sources manager (VRM) with access to re- mainly “for show” or to win community resources (both money and time) to sources in media relations, technology, graphic points with the public. It certainly further the mission of the organization. All fine arts, and other elements important in recruiting does not convey the sense that volun- On Volunteers, page 26 FREE WEBINAR SERIES Turning data into donations: Learn how predictive analytics can help boost fundraising Predictive analytics has emerged as a hot concept in fundraising, along with questions that accompany any new strategic business process: “how can I incorporate this for my organization, and what will the impact be?” Attend this one-hour webinar and learn how any organization can leverage everything from donor history records, payment methods and contact preferences to social media mentions or open-ended survey responses to strategically raise more money and lower their solicitation costs. 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16 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:55 PM Page 17

SPECIAL REPORT: DONOR MANAGEMENT SYSTEMS

Breaching The Walled Garden APIs helping organizations access multiple programs

BY PATRICK SULLIVAN gramming interface (API). development of some features onto a integration with other systems should oundations of Music (formerly “Application programming interface, partner and a community. A client organ- look seamless to development staff. “We Rock for Kids) was missing out what does that mean? It’s just a way for ization can use the API to build special- have many customers that use APIs on money -- a lot of it. The or- systems to talk to each other without a ized features that the vendor’s other today and don’t even realize that an API ganization had no idea that human in the middle,” said Steve Birn- clients might not need and that the ven- is what they’re using because most of F baum, vice president of client services dor would be hesitant to develop. Birn- our solutions use them behind the buried in its donor management soft- ware was a donor with the capacity to for SofTrek, in Amherst, N.Y, vendor of baum said one of SofTrek’s clients, scenes to deliver data, process transac- give $1 million. ClearView CRM. “What makes integra- Lincoln Center for the Performing Arts in tions, and deliver information to our Foundations of Music signed up with tion so difficult is when people have to New York City, used ClearView’s API to customers,” said Jay Odell, vice presi- a wealth screening service and used ap- upload data, download data, massage bridge to its ticketing system. That’s a dent of mass market solutions for Black- plication programming interfaces (API) data. If you get rid of that, it feels like feature few, if any, of SofTrek’s other baud, in Charleston, S.C. to trade data between its donor manage- one system.” clients would need. Most APIs are bidirectional, able to ment system Neon and the wealth While APIs are not new in the space, “There is never an end to feature re- perform what Noone called a push and a screener. “(Foundations of Music) said, more vendors are adding or expanding quests,” said Jon Biedermann, vice pres- pull. A push happens when a donor ‘We have this person giving us a nominal them, especially integrations with wealth ident of fundraising products and management system sends its data to an- amount,’ and we shot that information screening services. A number of compa- services at SofterWare, makers of Donor- other system, and a pull is when a sys- from Neon to (the wealth screener) and nies in this year’s donor management soft- Perfect. “We get literally thousands. We tem sends its data to the donor found the donor had the potential to ware report have added API integration. need to focus on those that affect the management system. give $1 million,” said Brendan Noone, “APIs enable your software to connect most people. Inventory product man- While in its purest form, an API al- chief operations officer for the Chicago- to other products so that all of your sys- agement is a great example. It affects a lows as many calls as the organization based software firm Z2 Systems, vendor tems can work in concert,” said Grant small number of clients, but with an API wants, but that’s not always feasible. of NeonCRM. Howe, senior vice president of research we can enable third-party developers to “Let’s say you have a million transac- Kyle Curry, associate director at the and development at Abila, in Austin, integrate with legacy systems.” tions,” said Biedermann. “Instead of ask- Chicago-based Foundations of Music, Texas. “APIs empower the customer to “It’s about flexibility and customiza- Special Report, page 18 said the organization is exploring a rela- integrate best of breed solutions across tion,” said Allyson Bliss, senior relation- tionship with the donor. He hopes to their organization and cut down on ship manager at TechSoup Global in San find more buried treasure. Neon’s re- manual import/export work.” Francisco. “It’s about customization of cent strategic partnerships with wealth Ultimately, with successful APIs web forms that allows you to do it in a screening companies “will make it even “you’ll be able to unify all the interac- way that integrates better with an orga- easier to drill down into our list, and tions and data into a single system. The nization’s branding. For example, for a we’re really excited about all of the po- only way to gain a true 360 view of a peer-to-peer campaign, you can plug in tential,” Curry said. constituent and measure their engage- the numbers (from the p2p platform to Donor management software integra- ment with your organization is to have your website) and show how the cam- tion with wealth screening services data from separate systems integrated paign is progressing in a way that’s visu- made the identification possible. And, into a consolidated and actionable for- ally appealing.” end users can’t tell where one program mat,” said Howe. The magic of APIs happens behind ends and the other begins. It’s all han- An API can help a vendor unload the the scenes. Donor management systems’ dled under the hood, with code. “Neon doesn’t necessarily know (a donor’s) giving pattern and wealth, but Application programming interface, wealth screeners do,” said Noone. “They don’t know how Nonprofit A uses that what does that mean? It’s just data or how much they’ve given.” Not long ago it would have taken re- a way for systems to talk to ports, spreadsheets and analysis to tease each other without a human this information out. Now, all it takes is a few lines of code: an application pro- in the middle. --Steve Birnbaum

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SPECIAL REPORT: DONOR MANAGEMENT SYSTEMS

Continued from page 17 ing, ‘Give me this gift for this donor for It’s about customization of web forms this date,’ you accidentally ask for all that allows you to do it in a way that transactions for all donors.” That would quickly bog down the integrates better with an organization’s vendor’s system and impact other cus- branding. --Allyson Bliss tomers. The answer is a governor, a tech- nologic monitoring agent that limits the systems have different data.” their profile” in the database. transactions. DonorPerfect has a 5,000- Almost all of Blackbaud’s donor man- APIs offer nonprofits the freedom to call limit, but exceptions can be re- agement products incorporate APIs, and use whatever platforms they see fit and quested. Without a governor, “you’ll ‘‘thousands of customers use them, ac- still have an integrated whole. But there quickly find that a customer can overrun cording to Odell. “Customers have built are pitfalls to this approach, said Leigh the system,” said Biedermann. custom solutions which leverage an API Kessler, vice president of communica- Organizations can benefit from a soft- to push names, addresses and gift data tions for McLean, Va.-based BIS Global, ware vendor’s partnerships when the into (The Raiser’s Edge),” Odell said. makers of CharityEngine. vendor uses its API to tap into another “Other customers have used our APIs to “With APIs you can use a database of system, such as a wealth screening serv- build customized donation forms spe- record like (Blackbaud’s) The Raiser’s ice or email delivery service. With the cific to their unique design needs. Being Edge, add Constant Contact, Donor proper technical expertise, organiza- able to call an API to make a transaction Drive, Square and Eventbrite,” he said. tions can create their own bridges using happen securely while having a lot more “But that leaves you with five different the vendor’s API, as Lincoln Center did. On the other side is a push, where design and presentation freedom is a products, supported by five different An API’s strength lies in not reinvent- the donor management software re- very powerful capability.” teams, creating four different databases, ing the wheel. Why build your own map ceives information from another system. Odell cited customers who integrate all of which now need to send their data when Google Maps is free, powerful and This direction is often used when there with bank software and with social back and forth to each other. We believe widely adapted? “If a client has a need is a primary database but the organiza- media. “One of our customers uses bank that will have a profoundly negative ef- for a customized version of say, present- tion also uses others. “There might be data and an internal imaging system to fect on how efficiently you are capturing ing a member directory or map of where another repository that might reside in process gifts and associated check im- and using your data. If your data is dirty members’ businesses are, they have to another program and that would say, ages into Blackbaud CRM through the or inaccurate, you create a far worse ob- program the connection into Neon to every night I want (the software) to up- API,” he said. “One of our partners has stacle to growth than something which pull the types of data out and display on date constituent name, address, any built an application that identifies when feels like it has all the best features.” their website,” said Noone. This is both changes,” he said. “We want to make an alumna from a university changes her That’s not to say CharityEngine does- challenging and time-consuming. In- sure the other database has the most LinkedIn profile with a job change or n’t use APIs; it does. Kessler and CEO stead, an API allows Google Maps to pull current information and the (client) or- city change, and the application auto- Philip Schmitz concede it’s impossible for information directly from the system. ganization doesn’t have to worry that matically pushes the information into Special Report, page 20

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SPECIAL REPORT: DONOR MANAGEMENT SYSTEMS

Continued from page 18 work with APIs.” MicahTek provides APIs would need to work with one. “It’s prob- The good news for nonprofits is that one piece of software to be all things to for call center and e-commerce integra- ably good to get really clear and specific most donor management software ven- all users. CharityEngine mainly uses APIs tion, but also can customize the APIs on what the nonprofit wants to get out of dors are security-minded to the point of to link between other BIS programs, such based on client need. Conners said the the experience,” she said. “I can see non- paranoia. “The world was a very scary as those for mobile payment processing, customized APIs usually convert data profits becoming oversold on things they place before Heartbleed, and it contin- event registration and major gifts. from a format that NetView doesn’t use don’t really need. This is a new area and ues to be after Heartbleed,” said Birn- “There needs to be a strategic collabo- to a format that it does. it’s not proven yet in terms of actual ROI, baum. “The fact a lot of organizations ration within any organization,” said if it’s going to lead to more supporters, not deeply committed to security got Schmitz. “If you have things completely more engagement, more fundraising.” blindsided is an indication that these or- decentralized, you’re going to inevitably ganizations were not terribly worried end up with a solution that’s cobbled to- CHANGE OF VENUE about security. We’ve been terribly wor- gether. You need a cohesive approach, and Along with the proliferation of APIs in ried about security for a very long time.” that takes a specific, top-down approach the donor management space, the con- Birnbaum said SofTrek was down for making cultural decisions about data.” tinued migration to the cloud and the about six minutes to add a patch to This approach to a certain extent is sunsetting of some on-premise solutions block Heartbleed. what Birnbaum calls a walled garden. “If continues. Blackbaud, Heritage Designs Fink said jumping into an online en- you have a system that doesn’t talk to and SofterWare are all removing one or vironment under the shadow of Heart- anything else, you’re in a walled gar- more on-premise options, and nearly all bleed wasn’t an issue, mainly because den,” he said. “The vendors say, ‘We’re vendors are promoting a software-as-a- people are more comfortable with the going to give you just enough for what service option. cloud. “We’ve found within the past five you need.’ You have to go back to the “That’s a trend that’s not limited to years, people have become more com- vendor for everything.” If you have donor management,” said Bliss. “For fortable with cloud integrations,” he Salesforce, based in San Francisco and vendors it’s more attractive to have re- said. “(Security) does not seem to be the considered by many to be the grand- things completely curring subscription revenue, and it’s biggest concern, and clients’ concerns daddy of APIs, has a new donor manage- decentralized, more cost effective to roll out updates are more about is the product right for ment system called Salesforce1, which continuously rather than develop one us, is there a good value.” was “built API-first,” said Salesforce Foun- you’re going to big update. From the nonprofit perspec- Other vendors weren’t affected by dation COO Rob Acker. The new platform inevitably end up tive, it’s often more affordable to out- Heartbleed, including Z2, according to has 10 times as many APIs available as its source aspects of their infrastructure.” Noone. “It wasn’t a factor for us because previous offering, Salesforce.com Foun- with a solution Telosa Software, makers of Exceed!, we’d already taken the baseline steps for dation Nonprofit Starter Pack, he said. ‘‘that’s cobbled released its first cloud product this year, security best practices at our founding,” “When Salesforce.com was launched Exceed! Beyond. Chris Fink, COO of the he said. “We’re paranoid when it comes 15 years ago, not only did Salesforce.com together. --Philip Schmitz Palo Alto, Calif.-based firm, said moving to security and we go above and beyond launch a new subscription-based busi- to the cloud benefited both the company any standard protocol.” ness model, but we also launched a new MicahTek has had APIs since the early and its clients. “I’ve seen the vendors be very forth- technology model with cloud computing. 1990s. “We have a data management “We were somewhat limited by the de- coming about their lack of exposure,” Central to that new technology model team that does a ton of donor data entry velopment platform on the desktop, but added Bliss. “I don’t think (questions was open APIs and we launched with a for our clients, and we have to be able to now we’re infinitely scalable,” he said. about Heartbleed are) donor manage- public API,” Acker said of Salesforce’s his- integrate into other platforms,” said “The infrastructure is elastic and we can ment specific, it’s more about the non- tory with APIs. “The birth of the Internet Conners. “We’ve had to evolve and con- accommodate as many clients as we profits themselves paying closer was based on a set of standards: SMTP for stantly update to remain current or pro- need.” Fink said clients can “interact with attention to things they may have over- email and HTTP for browsers. Salesforce vide solutions into mainstream apps.” their constituents in a way that wasn’t looked before. I think it’s more about se- took these standards to the next level and What started as data conversion, said curity in general, not specifically tied to introduced the concept of open APIs for Conners, has morphed into designing donor management but a nonprofit’s business applications.” APIs to plug into e-commerce platforms overall IT infrastructure.” Acker pointed to Polaris Project in and call centers. Open source is free, and for that rea- Washington, D.C., which fights human Bliss suggested scouring local listservs son it’s used by a number of large web- trafficking, as one client that uses Sales- for developers with experience working sites such as Facebook, Google and force APIs effectively. “Polaris needed to with APIs. Your vendor also might have a Instagram. When websites become that communicate with people who might not stable of developers who are knowledge- large, it can become expensive to scale be able to make a phone call,” said Acker. able of the vendor’s platform. “Most non- the security software. Free use, however, “They use APIs from Salesforce.com and profits (TechSoup works with) don’t comes with a lack of support. “Open Twilio to allow victims to send and re- have that in-house (API development) ex- source is interesting. You have all the ceive text messages to connect them with pertise and probably would need to turn source code, but only a few people can Polaris Hotline staffers.” to a third party,” she said. read and understand it,” Birnbaum said. While using an API is simpler than Odell said most of Blackbaud’s “The issue with open source technol- building the functionality from scratch, clients either find outside developers or The infrastructure ogy is less around what’s right or wrong it is not easy. Most nonprofits rely on the seek help from the software firm itself. is elastic and we and more about misunderstandings vendor API for integration, due to tech- “Building integrations takes technical about technology costs,” said Schmitz. nical limitations. “This is not for the faint talent,” he said. “Generally speaking, the can accommodate “Open source is free, but certain things of heart, not for someone who maybe larger the nonprofit the greater the like- as many clients as come along with that. The biggest one is once designed a brochure,” said Noone. lihood our customers will possess the you’re taking responsibility. The commu- “This is for programmers.” talent to leverage one of our APIs.” we need. --Chris Fink nity is great with coming up with innova- Birnbaum agreed with him. “To say Salesforce.com has the AppExchange, tive solutions, but nobody’s on the hook you have an API and actually make it use- its version of Apple’s iTunes Store, or possible with our desktop software.” financially when something goes wrong.” able are different things,” he said. Google Play for Android devices. “Non-‘‘With the cloud comes questions about Contrast Heartbleed with a “zero-day” “You’re probably going to need some profits don’t need to be deeply technical data security, and never were those ques- exploit within Microsoft’s Internet Ex- technical expertise. To get a true enter- to leverage APIs,” said Acker. “They can get tions louder or more urgent than this plorer web browser, patched in October prise-level integration between two integrated applications from the AppEx- past spring when the Heartbleed bug hit 2013, that let malware take control of a complex systems, people need to know change without writing code.” SofterWare the headlines. Heartbleed was a coding user’s computer. Microsoft was responsi- what they’re doing.” will have a marketplace for DonorPerfect, error in commonly used open source se- ble for patching the bug and getting the Mike Conners, director of sales and called DonorPerfect Connect, by the end curity architecture called OpenSSL. The fix out to its customers. “With Heartbleed, marketing for NetView maker MicahTek, of the year, according to Biedermann. exploit allowed hackers to return mem- there’s nobody to step up and say, ‘We got said it is “very rare when dealing with a While Bliss admits APIs can be power- ory possibly containing loginIDs, pass- this, this is our responsibility,’” said customer to have the technical ability to ful tools, she said not every nonprofit words and credit card information. Kessler. “Free is not always free.” NPT

20 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:57 PM Page 21

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STREETSMART NONPROFIT MANAGER THOMAS A. MCLAUGHLIN

THE ORIGIN OF THE PROBLEM This is a common problem. Often it oc- curs when an organization begins with a successful major program that over time for whatever reason begins losing money. As it turns out, Medicaid is a frequent cause of this scenario. Because Medicaid is an entitlement, the federal government can’t control its spending on the pro- gram’s beneficiaries. It can control its re- imbursement to providers, which is what it has been doing for a long time now. The Affordable Care Act might worsen this sit- uation so there could be additional insol- vencies like the one described above. Of course, structural money-losing programs are not limited to Medicaid- funded nonprofits. It happened at a mu- seum when its major exhibit began to seem old and tired to a new generation of visitors. Their turnaround began when the organization started to pay more at- tention to the content of the main exhibit than just the fiscal results it generated.

SOLUTIONS The obvious solution with a money- Solving Insolvency losing program is to increase revenue, reduce expenses, or both. This is obvi- ous, of course, but it is not always possi- Managing your money-losing programs ble. In fact, the Medicaid situation described above is becoming a pattern here was a recent early summer was the financial black cloud hanging grams turned at least a small profit. This for some nonprofits founded in the morning meeting in the offices over the management team’s heads. The worked for a while but eventually the cu- 1970s and 1980s where management of a medium-sized nonprofit nonprofit was insolvent, meaning it was mulative amount of those profitable pro- has been accustomed to the security of a T behavioral health organization effectively bankrupt but no bankruptcy grams was not enough to cancel out the large, adequately funded main program. in an economically depressed former in- court had been asked to give it that Medicaid program’s loss. The impact of deteriorating economics dustrial city. The top three executives label. The result was that in each of the past for that main program is amplified when were smart, committed, and energetic. The organization’s public cost report several years the behavioral health organ- a decades-old program model changes. The offices were well-situated in a re- described the problem. Medicaid ization had seen its net assets dwindle When that happens, the smaller pro- bounding part of the city, and the organi- funded the largest of its several pro- until the last few years when they began grams get squeezed. zation enjoyed a good reputation locally. grams. It had been bleeding money for to have “negative net assets,” and the or- Another solution is simply to accept The only thing to mar the occasion many years. Every one of the other pro- ganization was therefore insolvent. Continued on following page

ON VOLUNTEERS

Continued from page 16 The VRM can be placed within the executive not engage themselves in the functioning of have a community presence in order to recruit a and good, but as with the marketing department offices, reporting directly to the executive direc- other departments and so may wonder why the wide diversity of volunteers. already discussed, fundraising staff has little di- tor. This demonstrates the value placed on vol- director of volunteer resources shows up in their Volunteers can be assigned to any unit or su- rect involvement with the service delivery staff, unteer engagement and gives the VRM work area, speaks to their employees, and pervisor, and some work directly under the su- so again the VRM is at a disadvantage in placing continuous overview of the whole organization, works with staff at all levels. Yet, this is precisely pervision of the VRM. Human resources also volunteers strategically. as well as access to top decision makers. But what is required to identify positions for volun- deploys its hires throughout the organization, but Because most organizations value raising the proximity also means that the executive can teers and place them effectively. only maintains an administrative connection to funds more than raising time and talent, the VRM divert the VRM to other areas and activities unre- them once placed. The VRM, however, continues is rarely viewed as a partner in resource devel- lated to volunteer engagement. More critically, A MULTIFACETED HYBRID as an intermediary, offering third-party support opment, but rather as an assistant to the staff lower level staff might feel constrained from The reason it is so difficult to determine the to both the volunteers and the staff who partner bringing in money. Even more serious is that vol- sharing concerns or needs with the VRM. best placement for volunteer resources is that with them – as well as training in how to be suc- unteers may get the message that they are Finally there is the creation of an independ- the function is closely tied to many departments cessful in supporting volunteers. wanted only for their financial value. ent volunteer resources department, sending the in an organization, yet is unique in many ways. Where the volunteer resources appears on When volunteer resources is placed within a message that volunteers are recognized as vital Volunteer resources looks like human re- the organization chart is a decision deserving specific client service, program, or unit, that par- enough to warrant focused attention. The VRM is sources in many of its staffing functions, but has careful assessment. Recognize that the place- ticular unit benefits from a strong volunteer com- seen and treated as a department head, serves the ability to be creative in recruiting limitless skills ment can enable or disable the VRM in develop- ponent, but the VRM can end up buried in that on the senior management team, submits a and talents, from people of all ages and back- ing the potential of volunteer engagement for one unit with little opportunity for widespread en- budget to be allocated to support volunteers, and grounds, for work done on a regular schedule, ongoing success. NPT gagement throughout the organization. is held accountable for running a successful vol- episodically, as single day projects, even virtually. unteer involvement initiative. Just as with development, volunteer re- Susan J. Ellis is president of Energize, a Philadel- PLACEMENTS WITH STATUS Even this option has its downside, particu- sources expands the assets of the organization phia-based training, publishing and consulting All of the options above put the VRM and vol- larly that employees can view volunteers as “be- with donations of time and skills, yet it is more firm specializing in volunteerism and Everyone unteers “under” another department. That sends longing” to the volunteer resources department complex to put volunteers to work effectively Ready® online volunteer management training a message. If the organization wants to promote when, in fact, everyone is responsible for sup- than to cash checks. program www.everyoneready.info. Her email volunteer involvement as important and essen- porting volunteers wherever their assignment The VRM has in-house responsibilities di- is [email protected]. Her Web site is tial, there are two more choices. places them. Also, most department heads do rectly tied to client service delivery, yet also must www.energizeinc.com

26 SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com •September 1 2014 NPT_Layout 1 8/20/14 1:59 PM Page 27

Continued from preceding page A money-losing program occasionally COLLABORATIONS zation that has one or more profitable declining economics. In the YMCA will have a public identity of its own and What has been described here is a programs equal to or larger than its movement, for example, there is a tacit be much beloved in the community. For problem of economics, not finance. Fi- own. This would offset their weaknesses understanding that certain clubs located example, there’s a program within a nancial systems produce what is thought without requiring unrealistic expense in difficult-to-serve areas will often lose much larger nonprofit whose director of as profitable or unprofitable pro- reductions in their existing program- money. These programs are called “mis- was a natural politician. He courted grams. Economics almost always are be- ming. (It is often easier to generate prof- sion Ys,” meaning that they are sus- local politicians and eventually was hind those financial results. When the its in a larger organization since there tained because they fit the mission of the elected to office himself. It was easy to largest program an organization runs can be more opportunities for boosting Y movement so fully. In a best-case situa- forget that he reported to upper man- loses substantial money, the economic revenue or avoiding expenses). Alterna- tion, a mission Y is offset by the success agement just like everyone else, because effect on the rest of the nonprofit is vir- tively, the group might be able to join a of other Ys in the same system with he had so successfully built an external tually unavoidable. The solution is usu- much larger entity to reduce administra- more favorable economics. reputation for himself and his program ally not financial (spend less) but tive expenses sufficiently to offset the that the identity of the larger corpora- economics (change the underlying eco- operating deficit. OTHER SOURCES OF VALUE tion in some cases was eclipsed. nomic drivers). It could be helpful to think of one’s It might seem ironic, but money-los- Another obvious solution is to in- This is one of the situations that collection of programs and services as a ing programs can be accepted because crease -- or begin -- fundraising. Older prompt nonprofits to collaborate with portfolio. In any portfolio, there will be they carry out a function that would oth- programs are often the biggest money one or more compatible organizations, stars and there will be slugs. Take that as erwise not exist, or that might be carried losers. They should have a strong enough usually in a way that changes the corpo- a given. Streetsmart managers must fig- out poorly by any another program. One brand name to begin at least a minimal rate structures of each. There is a wide- ure out ahead of time the services that of these common functions is what we fundraising effort. The trouble is that the spread assumption that the key variable will fall in which category, and then call the Front Door Strategy. Programs programs most likely to be money losers in any corporate collaboration is finan- need to stay on top of those services that operate as a front door to other pro- are often inextricably attached to low-in- cial management choices, but the real throughout the fiscal year. Remember grams of the organization can provide a come communities, which makes fund- driver in many of these situations is the that financial results are like scorecards. great deal of intangible value even while raising particularly challenging. economics of one or both entities. They tell a story, but only partially. they lose cash. For instance, the insolvent entity Drive your economics. Don’t let them Marketing is usually the way organi- GROW MORE PROGRAMS might seek as a partner a similar organi- drive you. NPT zations get new consumers, and market- Adding profitable programs is an- ing costs money. A successful Front Door other obvious offset to money-losing Strategy by a money-losing program programs. For a variety of reasons most Thomas A. McLaughlin is the founder of the nonprofit-oriented consulting firm might be better than stand-alone mar- parts of the nonprofit sector today are McLaughlin & Associates and a faculty member at the Heller School for Social Policy keting because at least the program is either not growing or are growing only and Management at Brandeis University. He is the author of “Streetsmart ‘Financial bringing in some revenue. in limited ways. Basics,” published by Wiley. His email address is [email protected]

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Contact one of our Integrated Marketing 14 NCDC Conference ncdcconference.org Specialists to learn how you can increase your 14 Nonprofit Risk Summit nonprofitrisk.org/summit online presence and keep your future bright. 8 NPT Fundraising Webinar bit.ly/1nTbQZZ 18 Softrek 855-378-2960 softrek.com/devotion 32 StratusLIVE 757-273-8219 stratuslive.com 19 & 22 Telosa -- Exceed Beyond telosa.com 800.858.9154 25 Unit4 Software 877-704-5974 unit4software.com CrescendoInteractive.com 4 UST 888-249-4788 ChooseUST.org/HR-Resources

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CALENDAR

16-17 Grant Management Essentials, a seminar of the 22-25 The Association for Healthcare Philanthropy will Hilton San Francisco Union Square Grantsmanship Center in Los Angeles, will be held hold its annual international conference in Palm in Charleston, W.V., at the Charleston Area Medical Center. Desert, Calif. Info: www.ahp.org Info: www.tgci.com 25-30 The Direct Marketing Association will hold its 20-22 The Council on Foundations will hold the annual annual conference and exposition, DMA2014, at the Fall Conference For Community Foundations in Cleve- San Diego Convention Center, San Diego, Calif. land, Ohio. Info: www.the-dma.org Info: www.cof.org 27-31 The Grantsmanship Training Program, of the 20-24 The Grantsmanship Training Program, of the Grantsmanship Center in Los Angeles, will be held Grantsmanship Center in Los Angeles, will be held in in San Antonio, Texas, at the Alamo Area Council of New York, N.Y. Governments. Info: www.tgci.com Info: www.tgci.com SEPTEMBER 3-6 NTEN (Nonprofit Technology Enterprise Network) To get your event added to the calendar, email it at least eight weeks before the event to: [email protected] will hold its first Leading Change Summit at the Hilton San Fr ancisco Union Square. Info: http://mylcs.nten.org/14lcs/home/

9-10 The Association of Fu ndraising Pr ofessionals and NPTJOBS the Stanford Social Innovation Review will hold the CAREER CENTER thenonprofittimes.com/jobs 9th Nonprofit Management Institute at Stanford University in Stanford, Calif. Info: www.afpnet.org

15-19 The Grantsmanship Tr aining Pr ogram, of the Grantsmanship Center in Los Angeles, will be held in Tu cson, AZ at the Community Food Bank of Southern Arizona. Info: www.tgci.com Executive Director Director 17-19 The Alliance for Nonprofit Management will Third Street Alliance Financial Planning & Analysis hold its national conference, Capacity Building for for Women and Children The Optical Society Collective Action, in Austin, Texas. Info: http://theallianceconference.org Third Street Alliance for Women and Children seeks an Executive The Optical Society (OSA) is recruiting for a Director, Director (ED) to provide overall organizational leadership in sup- Financial Planning & Analysis. The Director, Financial 29 – OCTOBER 3 The Grantsmanship Tr aining Pr ogram, port of its mission and strategic plan. As a nonprofit agency lo- Planning & Analysis is responsible for: Managing de- of the Grantsmanship Center in Los Angeles, will be cated in Easton’s historically registered Simon Mansion, its velopment of the annual operating budget and quar- held in Albuquerque, N.M., at the University of New services include a shelter for homeless women with or without terly estimates, and contribute to the development of Mexico. children, an accredited child care center, an adult day social pro- the multi-year plan and rolling forecasts; Providing Info: www.tgci.com gram for the elderly, and meeting spaces for community activities. management decision support through ad hoc and special projects analyses as well as ongoing analysis of The ED oversees: the development, implementation, market- OCTOBER key performance indicators; & Reviewing and creat- ing, and quality assurance processes of the programs; is re- 5-8 ing monthly financial reporting packages, annotate The National Catholic Development Conference sponsible for the recruitment, training and retention of a budget vs. actual variances for the Executive Team, (NCDC) will hold its annual conference at the Marriott qualified staff and volunteers; promotes community under- Senior Team, and the Senior Director, Finance. Chicago Downtown in Chicago, Ill. standing and engagement; and fosters financial support from Info: www.ncdc.org funding agencies, corporations, and individuals. The ED will The ideal candidate will have Bachelor’s degree in Fi- plan and implement a capital campaign in support of antici- nance or Accounting; MBA and CPA highly preferred. 6 The National Association of Attorneys General pated facility renovations, expansion and historic preservation. Knowledge of accounting is essential for this posi- and National Association of State Charity Officials tion. The candidate will have a minimum 8 years of conference will be held at the Regency Wa shington Requirements: Advanced degree preferred; at least 8 years progressively responsible management experience in Capitol Hill, Wa shington, D.C. progressively responsible experience in health, human serv- financial/operational analysis in a medium to large Info: www.nasconet.org ices, government, or higher education with leadership experi- size society or non-profit; Experience with cost ac- ence in community organization/development, evaluation, counting: unit pricing, incremental cost, breakeven 6-8 Blackbaud will hold bbcon2014, its annual administration, and fiscal oversight. 5 years management ex- analysis, activity based costing, fixed and variable conference for nonprofits, at the Gaylord Opryland perience; at least 3 years at the senior level. Proficiency with costs, overhead allocation, labor job costing, labor Resort and Convention Center in Nashville, Tenn. fundraising in a nonprofit environment required. Experience utilization, etc. ; Excellent business/financial systems Info: http://bbconference.com/ overseeing a residential facility preferred. Familiarity with his- and project management skills; Strong presentation toric preservation helpful. skills; Strong problem-solving and critical thinking 6-10 Competing for Federal Grants seminar will be held The complete job description and information about applying skills; Advanced Excel skills and strong working in Los Angeles, Calif., at The Grantsmanship Center. are available at [email protected] knowledge of PowerPoint and Word; Recent experi- Info: www.tgci.com ence with Microsoft Dynamics SL/Solomon; & Expe- To apply please send cover letter, resume, and rience with BI360 product suite (planning, 14-17 The International Fu ndraising Congress will three references to [email protected] reporting, data warehouse) and Tableau. hold its annual event at The NH Leeuwenhorst Hotel in Noordwijkerhout, The Netherlands. The chair of the search committee and board is OSA offers a competitive salary and Info: www.resource-alliance.org Ms. Jacqueline Matthews generous benefits.

15-18 Grant Pr ofessionals Association will hold its Send cover letter and resume To place an ad in this section call 973-401-0202 x206 annual conference in Po rtland, Ore. with salary requirements to or [email protected] Info: http://grantprofessionals.org [email protected].

SEPTEMBER 1, 2014 THE NONPROFIT TIMES www.thenonprofittimes.com 31 •September 1 2014 NPT_Layout 1 8/20/14 2:01 PM Page 32