Funding …. The eternal dilemma
This 20 slide PowerPoint, from Cathy Man & Associates, focuses on Collective Impact and how to determine whether your organization is ready to fundraise.
This session began with a presentation by Cathy Mann [biography], a fundraising consultant. Barbara Spencer then added examples from her experience as Chief Executive Director of Edmonton’s Zebra Child Protection Centre, which has been very successful at fundraising. Questions and answers flowed throughout the session.
Mann began by establishing the experience and needs of the people in the room. Most are:
- executive directors of existing CACs, or groups that are tasked with developing a new CAC or CYAC;
- many are well experienced at grant-writing;
- fundraising is only one of several roles in their job description;
- $1 million per year is the most common fundraising goal; all need to raise over $100,000 a year
How to define successful fundraising?
Delegates answered that “successful” fundraising means:
- finding long-term, sustainable funding;
- good investment on time spent on application to funding received — i.e. should not have to spend a full day to get $ 1,000
- don’t have to “sacrifice your soul” – i.e. compromise your mandate — to get funding from a particular donor;
- getting infra-structure funding, as opposed to just operational funding. (Mann commented that this last goal was a tough one.)
Collective Impact and Backbone Organization
Mann introduced the group to the concepts of Collective Impact (where many organizations with common goal work together to raise funds), and Backbone Organization (where one organization is recognized as the lead on a multi-partner project). See pages 6 & 7 in her presentation. She described her work with the East Scarborough Storefront Association in Toronto. Collective Impact is based on the questions: “Are we stronger individually… or together? How much sharing makes sense — for this cause?” Collective Impact is an emerging fundraising model, that is being studied by leading business and social enterprise organizations such as the Stanford Social Innovation Review.
A key challenge with Collective Impact fundraising is that traditional funders fear that this approach includes “overhead” – a negative word for funders. “You need to learn how to talk about your work not as overhead, but about how you make a difference in the lives of the kids you are serving.” (Mann)
Collective Impact seeks to achieve large-scale change through five key elements:
- common agenda
- shared measurement (this is challenging at the beginning of collaborations)
- mutually reinforcing activities
- continuous communication
- backbone support (this is the one organization in the group who is recognized as the Backbone Organization…. for the delegates in the room, that would be their CAC)
QUESTION: Collective Impact is a double-edged sword for our organization, because of the different mandates of our member groups.
ANSWER: (Mann): Then you need to work on learning how to articulate the value-added that your CAC will bring to the exercise — by way of collaboration and coordination.
QUESTION: What about fundraising through the local United Way? (Delegates expressed doubts about the value of participating in such large community campaigns.)
ANSWER: (Mann) – A major problem with United Way is that they pitch the idea that fundraising administrative costs should not exceed $0.12 on the dollar. She believes that overhead percentage is unrealistically low, and that it sets a tough bar that other groups can’t meet.
QUESTION: If my CAC is already doing well raising money, why would I need a collective approach?
ANSWER: (Mann) – There is some value in the dynamic that comes from a broader voice. Building collective profile for the cause will save time. It will save you from explaining the purpose of CACs over and over. Both a collective and individual organization approach will be useful.
Audit – before fundraising
Mann distributed a checklist ( see pages 12 & 13 in presentation ), that she described as a “quick and dirty” audit, to help each organization:
- assess whether you are READY to fundraise;
- how much resources you are willing to allocate to fundraising;
- what financial controls are already in place;
- how clear is your message / identity to potential donors;
- do you know exactly what you will do with the funds that are raised;
- do you know which fundraising methods are appropriate for your organization;
- how detailed is your fundraising plan?
“A pre-fundraising audit points out to an organization what you don’t know – and you cannot move forward when you don’t know…. what you don’t know.” (Mann)
After working through the checklist, delegates made these comments:
- This kind of planning is the furthest thing from our minds….but our CAC should be thinking about these things.
- We need to be more clear to the outside world why we are raising money.
- Sometimes it isn’t so clear internally — within our own organization — why we need to raise money.
- We have no resources allocated to hire a fundraiser. We have used fundraising consultants who will take a percentage of what they raise. But we have not found this to be successful. That approach does not attract the best fundraising pros.
Whether / how to hire a professional fundraiser
Mann pointed out that CFRE [ http://www.cfre.org ], the international organization that certifies professional fundraisers, will not certify consultants who engage in percentage-based fundraising. She will not work on that basis, and has seen many failed fundraising campaigns that used that approach. She pointed out that many different skill-sets are involved in fundraising:
- direct mail
- social media
- multi-channel marketing
- running special events
- understanding the corporate word, in order to liaise with them
- ever-changing regulations about donations from CRA (Canada Revenue Agency)
It can be practical to out-source some of these components to specialized fundraisers; or to find a donor who wants to support one kind of fundraising.
She also advised the group to seek fundraisers who are experienced in their topic area. For example, someone who focuses on social service / community topics, rather than performing arts.
Different approaches — to different kinds of donors
Mann asked each table to exchange questions and observations among themselves about the different approaches needed to fundraise from these different types of donors:
- corporations (commercial companies)
The comments about approaches to / experiences with different donors include:
- They put a high emphasis on who is on the Board of your organization. How competent are your Board members about finances?
- Large foundations keep themselves very well “sealed off” from new approaches. It’s very hard to develop a relationship with anyone influential in foundations — where you don’t already have a connection.
- If you want to make contacts at a foundation — go to the events staged by that foundation. That’s how you “get in,” and start building relationships in “well guarded” foundations.
- Foundations expect you to present them with a very well developed strategic fundraising plan.
- There has to be a very tight mandate match between your organization and any foundation you approach.
- Success with a foundation is usually all about having a personal connection with someone in their leadership. (Comment from Mann: “Fundraising 101: It’s always all about relationships – that’s what your Board is for.”)
COMMENT: Tensions can arise when the CAC’s mandate requires that your Board reflect the [ethnic, economical] diversity of your community. But the Board members who can make personal connections to the high-level donors tend to come from a very elite, less diverse sector of the community.
- Companies seem to respond well to a collective voice.
- Companies often have more difficulty than foundations in understanding what CACs do. They think the police and local child protection agencies already take care of victim needs. They expect government funding to cover whatever might be needed.
- When companies donate, it’s a business decision. There has to be a direct connection between your organization’s mandate and their business plan. For example, a baby food company wants to donate to a program that focuses on healthy babies.
- Remember that the marketing people at the donor company are pros. They know how to advance their company’s agenda. They want a lot of value for their donation.
- Banks in particular are very strategic and clear about what they will — and will not — support.
- Banks also want to get a broad national reach for their donation dollar. But they don’t want to deal with reps from every city — they like the collective approach. As one delegate said: “They want to get their 1,000 points of light — to see their goodwill shining across the country. But they only want to deal with one switch.”
- None of the CACs in the room had much experience with individual donors.
- But Mann pointed out that — of the $9 billion that was donated in Canada in 2011 – about 12% came from foundations, another 12% from foundations — and the vast majority – 75% came from private donors.
Asking and Thanking
COMMENT (delegate): Remember that you cannot ever thank your donors enough. But it’s important to find more creative ways to thank your donors.
Mann said that art work by kids has huge impact.
She also warned that putting the donor’s logo on your CACs website or newsletter will not be enough — because corporate donors know the viewership/ readership of those vehicles is tiny. She gave the example of a bank donor that wanted the receiving organization to write to the MPs in every riding to tell those politicians individually what the bank had donated.
COMMENT: (Mann) – Remember to ask for the donation. People don’t give until you make a specific ask.
QUESTION: What do you think about setting up a social enterprise to raise funds for our organization?
ANSWER: (Mann) – I advise caution. Social enterprise is trendy, but it’s being talked about now as a kind of “silver bullet.” The failure rate of social enterprises set up by non-profits is very high — much higher than the failure rates of intentionally for-profit businesses. At the least, make sure the activity of the social enterprise is very close in mandate of your CAC.
The definition of “Social Enterprise” is very fluid. Mann advised delegates to seek more information about social enterprises. A good first stop is the SiG@MaRS program in Toronto. See http://socialfinance.ca/about/partners/sigmars
QUESTION: What should we do when a potential donor asks if EVERY Board member contributes their own money to our organization?
ANSWER: (Mann) – Yes, this is a tough one. Potential external donors do ask about this, and they do expect ALL Board members to donate.
However, Board members often believe that giving of their time and expertise should be enough. It isn’t.
You should try to get every Board member to contribute something, no matter how little. At least then you can say that every Board member does donate. I worked with a literacy group whose Board members included some people with extremely low income. One Board member struggled to contribute $1 per month. That was really very difficult for her. But she did, and it meant a lot.
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Barbara Spencer began by explaining that Zebra in Edmonton tries to avoid relying on government funding for their revenue stream at Zebra. Of last year’s total revenue of $1,078,000, only $322,000 came from grants. Another $615,000 came from donations, and $79,000 from fundraising. They choose Board members who are well known for both their generous giving, and for being “door-openers” in the community. One – a physiotherapist who is active with famous athletes — has helped them raise over $100,000. Another Board member from a prominent local family has raised over $300,000 for Zebra through her personal connections.
“We do not say to our board members ‘Thou Shall Donate.’ We can’t impose that on some of them, due to their jobs. For example – one is the Deputy Chief of Police. But they do donate.”
Her key advice to other CACs about fundraising:
- Be consistent in your messaging.
- Always ensure that your actions align with your words.
- Produce professional audited financial reports — from the very beginning of your development phase. Audited financial statements give potential donors a high level of comfort.
- Zebra did not start fundraising until they had been active for 5 years — because we wanted to be able to SHOW that they had done what they said they would do.
- The majority of Zebra’s individual donors have a direct, personal connection to the subject matter of child abuse.
- Find out WHY an individual made a donation. It may be because they have family experience of abuse or trauma. That’s one reason why Zebra does NOT re-solicit from individual donors. They might be triggering trauma memory, and don’t want to do that. Be conservative and cautious, and alert to privacy, when presuming what might have provoked individual donations to a CAC.
- They do “charity-of- choice” with over 50 fundraising events each year. This is a vital source of revenue.
- They never approach a corporation until they can offer a specific potential program, or a physical product the company might want to fund. They design these potential programs and products ahead of time — to be very closely aligned to a potential donor’s business objectives. They offer each potential corporate donor at least three well-thought-out options.
- All potential donors are brought in for a tour of the physical centre — so they can see for themselves what part of the CAC they might want to support.
- After one year, they show donors actual, physical evidence of what their donation paid for. It might be an info book on one topic, or a diorama of a court room to help prepare children for testimony, or a short film about the court experience — with a real judge and lawyers playing the parts. (“The donor wants to connect their donation to something tangible.”)
- Every potential donor gets one of the CAC’s striped stuffed zebra toys. They estimate those little stuffed animals have brought in $250,000 in revenue.
- The majority of their fundraising comes from charity-of-choice events….. and the domino effect that rolls on from those events.
Individual and Corporate donors stay with Zebra — and donate again — because they make sure every donor finds a “home” at Zebra — that they identify with some part of the CAC’s activities that can “belong” to them.
Zebra sends out special ‘thank you’s’ — often using children’s art (but not by a client of Zebra) “We never send a plaque or a letter to a corporation. We always send something a child has created.”
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QUESTION: What about using MBA students to do pro bono work?
ANSWER: (Mann) – It’s very “hit-and-miss” using students. They are operating from a theoretical knowledge base. We have had some phenomenal experiences — especially with an executive MBA type program, where the ‘students’ also happen to have 20 years’ experience in the social justice sector. But with regular, younger MBA students?….no, not so much.
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QUESTION: How does Zebra explain the seriousness of the need – what CACs do — without upsetting people about the cruelty out there?
ANSWER: (Spencer) – Our key messaging is about making some sort of impact — one child at a time. When people donate, they expect to make an impact on the community. That’s the consistency of all our messaging.
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QUESTION: Do some Board members participate at different levels?
ANSWER: (Spencer) – Our board is a governance board. We let them be involved where ever they are comfortable.
The first Board of Directors that they started out with — when they were in the development stages — was made up of very different kinds of people than they need now.
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QUESTION: With so many donors saying they don’t want to contribute to overhead, how do you explain the reality that you have to build in money for administration?
ANSWER: (Spencer) – We explain that our services are delivered in a physical space. We have to keep the lights on. The costs of running that physical space are core to the program.
In the first year that anyone donates – we always tie their donation to a designated product – a book, a video, some toys. We use that specific product to build their relationship to Zebra. In the next year, they will be ready to donate un-designated funds. Every year we have $200,000 in donations remaining that is undesignated.
Cathy Mann commented that this point that Barb Spencer is a magician. Mann then added that special events are a good way to generate un-designated funds. Direct mail can also be good for that — but you need high volumes to make it work.
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QUESTION: What are the advantages — or not — of naming a CAC something soft and comforting like Zebra (Edmonton) or OCRA (Victoria) or SeaStar (Halifax)?
ANSWER: (Mann) – I think a name that includes words like “sexual abuse” and “trauma” is frightening and off-putting. Give some pro bono MBA students the job of researching and suggesting a better name. They know what the corporate donors will like. Social service workers get attached to bureaucratic names. But warm names are totally in line with what you want your child clients — and your donors — to feel. Also some CAC names don’t make it clear that the centres also provide therapy.
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QUESTION: Have you ever had a backlash from a donor — for spending money on stuffed zebras rather than services to children?
ANSWER: (Spencer) – No. They know the stuffed toy is cheap and has a long shelf life.
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QUESTION: How do we make our CAC a “charity of choice” at a multi-charity event?
ANSWER: (Mann) – Be very strategic.
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QUESTION: What advise can you offer for fundraising in smaller, rural communities, without big corporate head offices?
ANSWER: (Mann) -Edmonton is an interesting “sweet spot,” in terms of community size. It’s less competitive than Toronto — but big enough to include some high level donors.
Fundraising is definitely more challenging in smaller centres. You need to get the community behind you. Capital campaigns — especially for broadly wanted facilities like a hospital — tend to work better in smaller places.
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