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Fiscal Management

Don’t Fear DAFs (Donor-Advised Funds)

By | Annual Giving, Current Events/News, Donor Cultivation, Fiscal Management, Fundraising, Grants, Insights, Major Gift Solicitation, News You Can Use, Stewardship | No Comments

Katie Lord
Vice President

Over the past several months there has been a lot of negative media attention cast upon the nonprofit sector relating to Donor-Advised Funds (DAFs).  But before I dive deeper into my thoughts about the matter, let’s start with the basics.

I have to say you may have your head buried in the sand if you haven’t read something about a DAF, but here’s a refresher.  A Donor-Advised Fund is a philanthropic vehicle established at a public charity.  It allows donors to make a charitable contribution, receive an immediate tax benefit and then recommend grants from the fund over time. Whew! That was a very scholarly explanation from AFP.  In layman’s terms, a DAF is a way for individuals or families to save money or “funds” for philanthropic purposes which they can give out over time.

I know what you’re thinking: “Why don’t they just give all the money to charity now? And better yet, why not give it to my charity?”  As we all know, donor intent can difficult to pinpoint. This vehicle allows donors to give money with the intention of charitable purpose while still researching and identifying the impact they wish to make. It’s far more likely the gift wouldn’t be made at all (to any organization) if the donor is not crystal clear on desired outcomes. As a fundraiser, we know purpose and discovery of desired impact is one of the most special roles we can play in a donor’s journey. The DAF gives time for that process.

While DAFs have gained in popularity, the concept has been around since 1931 when the first DAF was created by New York Community Trust. Over the past few years, with the rise of Community Foundations and organizations such as Fidelity, Schwab and Vanguard Charitable, DAFs have garnered new attention across the philanthropic and financial industries. It’s fair to say we have come a long way!

According to the most recent data for 2016, it is estimated there were just under 300,0000 DAFs in the United States. Last year alone brought staggering growth.  According to the Giving USA Special Report “The Data on Donor-Advised Funds: New Insights You Need to Know” giving to DAFs made up 8% of annual charitable giving – $23.27 billion 2017.  Of course, this could have been partially due to the new tax legislation, but there has been a consistent rise in DAFs over the last 10 years.

This pales in comparison to foundations, which hold a total of $890,061,214,247 in total assets, according to Foundation Center’s Aggregate Fiscal Data of Foundations in the U.S. 2015 data, which can be viewed here at http://data.foundationcenter.org.

So how do I feel about the DAF and how do I incorporate it into my nonprofit practice?  I’m so glad you asked (well, read this much of my article, anyway…) Due to my love of all things “philanthropy” and my deep belief in donor-centric strategies, I am a strong supporter and advocate for the DAF.  Any vehicle created for the benefit of the nonprofit sector and gives donors and nonprofits alike another funding opportunity is great news for our industry and the overall advancement of philanthropy.  The more options we have and the easier we make it for people to be charitable, the higher the likelihood we move the needle of American philanthropy from 2% of GDP (around which it’s been hovering for close to 40 years) to higher levels.

Let’s also admit the last thing we want our donors or well-meaning individuals to do is start another foundation that only gives out an average 5% each year. DAFs typically grant 24% of their funds annually.

Tools such as a DAF are not inherently good or bad.  Unfortunately, as with everything, I’m afraid, some funds are not created with the best of intentions of the greater good, but rather for the greater tax benefits of the donor.  This does bring up the discussion and conversation about oversight but let’s remember one bad apple doesn’t always have to ruin the bushel.  As we move into the “new era” of DAFs, I do believe there are some tweaks and regulations needed in transparency,  reporting requirements and time limits for fund inactivity – all to ensure DAFs are dispersing gifts for philanthropic support.

On the other side of the coin however, donors who have DAFs should be able to pay pledges and the tax-deductible portion of events out of their funds.  This account was created for a donor’s philanthropic use and as long as no goods, services or other benefit are provided to the donor I don’t see what the point in making a fuss.

We need to remember as fundraisers, we should seize any and all opportunities to build strong relationships with our donors. We shouldn’t be afraid to discuss giving vehicles other than cash  with our donors.  A DAF is simply another tool in the fundraising toolbox to help donors maximize their impact and giving potential to your organization. It’s our responsibility as fundraisers to understand DAFs and discuss them with our donor prospects.

I leave you with a few points to ponder as you explore and integrate a DAFs into your fundraising plan:

  • Do your major donors have DAFs? Would they like to contribute through one?  If you don’t have those answers, there’s one way to find out:  ASK them.
  • Does your organization’s website or donate page have a function through which donors can easily grant you a contribution from their DAF?
  • Do you have an organizational profile on your Community Foundation website? Do you update it annually?
  • Do you sit down with your Community Foundation or National Fund officers on an annual basis and ask for your grant report?

If you have more questions or thoughts about DAFs, I’d be more than happy to visit with you.  You can reach me at klord@fundraisingJBA.com. Don’t fear the DAF. Just put it to work for your organization.

Fundraising Fitness Test Guru Led a Workout in KC

By | Annual Giving, Capacity Building, Database Management, Donor Cultivation, Fiscal Management, Fundraising, Insights, Major Gift Solicitation, News You Can Use, Stewardship, Uncategorized | No Comments

Jennifer Studebaker
Coordinator of Administration + Consulting

And oh boy, was it a good one! Erik Daubert, MBA, ACFRE and Chair of the Growth in Giving Initiative and the Fundraising Effectiveness Project came to Kansas City for Nonprofit Connect’s 501(c) Success National Speaker Series on September 11. Erik dived right in with the history, purpose, and goals of the Fundraising Fitness Test. This free tool was developed as part of the Fundraising Effectiveness Project in an effort to help nonprofits understand and evaluate the performance of their development efforts. Requiring only three fields from your database (Donor ID, Donation Amount and Donation Date), the pre-programmed Excel document calculates key performance metrics such as your donor retention, gains and losses, and donor dependency with the Pareto principle.

The Fundraising Effectiveness Project does have reports that you can benchmark your organization against. However, Erik advised that the best organization to compare yourself against is your own. The Fundraising Fitness Test allows you to do this by comparing year over year data, showing your growth in giving over time. The 6 year trend tab lets you to step back and see the impact that known events had on your organization’s giving. The arrival of a new CEO may spark an upward swing, while the loss of a Development Officer may have led to a shortfall from the previous year. This is the type of data that you can take to your Board to celebrate wins and highlight opportunities for growth.

Erik warmly welcomed up our guest panelists, the true heroes of the day! Megan Sturges Stanfield of Junior Achievement, Cindy Wissinger of St. Paul’s Episcopal Day School, and Laci Maltbie of Sherwood Autism Center braved the stage to share their own experiences taking the Fundraising Fitness Test. They were all surprised to learn how quickly they could complete the test and impressed at the value of the information they received. Laci did run into some roadblocks in getting the data extracted properly from her database, highlighting one challenge that other CEOs and Presidents may encounter. Cindy Wissinger noted that her first run at the test was skewed by their capital campaign donations, and she is looking forward seeing the results with only her annual fund donations. Megan was wowed by the ease of the test, and she could immediately see impact of development decisions her organization has been making over time. All panelists happily endorsed the Fundraising Fitness Test, and Jeffrey Byrne + Associates does as well!

You Can Change Board Conversations Around Philanthropy By Using the Fundraising Fitness Test

By | All Posts, Annual Giving, Boards + Leadership, Campaign Planning + Management, Capacity Building, Database Management, Donor Cultivation, Education, Fiscal Management, Fundraising, Insights, News You Can Use, Organizational + Personal Development, Stewardship, Technology | No Comments

Erik Daubert, MBA, ACFRE

Chair of the Growth in Giving Initiative and the Fundraising Effectiveness Project, Faculty at Lilly Family School of Philanthropy at Indiana University, LaGrange College, and Saint Mary’s University of Minnesota

Originally posted on Nonprofit Connect

I have worked with hundreds of nonprofit organizations who have used the Fundraising Fitness Test (FFT) and I am often asked, “How should I use the Fundraising Fitness Test with my board?” (Available for FREE at www.afpfep.org)

The answer is, “Effectively!”

At the Growth in Giving Initiative and the Fundraising Effectiveness Project, our goal is for fundraising to be more effective, and this is just as true with your board of directors as it is with your overall development program.

So, how can you be most effective at using information from the Fundraising Fitness Test with your board?

The first thing to decide is, “Which data points are right for our organization to share?”  While this answer is not always clear at the onset, you should begin by analyzing your test results.

Once you have run the Fundraising Fitness Test and reviewed your results, you should ask some key questions:

  • What opportunities stand out in our analysis as areas of opportunity?  Some examples of this may be findings related to new donor acquisition, specific donor group retention strategies, Pareto Principle analysis and comprehension, Gain/Loss indicators and more.  Having a good understanding of the information found in the report empowers you to have and lead strategic conversations about how to improve development performance going forward.
  • What does leadership think about how things are going, based on information appropriately shared from the FFT?  One of my favorite quotes in fundraising is, “The best idea is someone else’s!”  By this, I mean, when a board chair or a CEO thinks something such as, “We need more major donors” or “We need to broaden our base of support of donors”, I almost always say, “You are right!” Because these ideas are “theirs”, you don’t have to do the heavy lifting of convincing them to embark on these efforts…that part of the work is already done!  The FFT reveals all kinds of information in the results, and will, perhaps, spark important ideas for your Board on where to spend their energy!  For example, by seeing your organization’s major donor acquisition, upgrades, retention rates, and more, you can have strategic conversations about how to best make more, good results happen in your future fundraising efforts.  You can use your past performance as your “baseline” while also using information available at www.afpfep.org/reports to see what is happening in the broader nonprofit sector.  Nonprofit organizations can compare against themselves (By comparing against previous year’s past performance) and also against other nonprofits in their sector and  region of the country.
  • What is the best use of board member engagement and/or development committee engagement at this time?  If having board members do critical development work like solicitation, recognition, cultivation, stewardship or other activities is the goal, you can use results from the FFT to share why this is a good idea.  By leveraging key data points such as “We are behind the national average for Human Services organizations on repeat donor retention” you can help to shape and guide key conversations around development program improvement.

So, how should you use your FFT with your board?

  • Determine which points you should highlight.  Share some points to celebrate (they are there!) and also points to work on and improve.
  • Share these findings with key leaders such as your CEO, Board Chair, Financial Development Committee Chair, or other key leader as appropriate to your organization.  Have conversations about what is working and what can be improved.  Talk strategically about what you might do to make the results better for next year.
  • Mutually decide which points should be shared with the overall board.  Be transparent both in the celebration of great work, and recognition of the work yet to be accomplished.
  • Remember that while the Fundraising Effectiveness Project has information on how other nonprofits are doing with regard to these metrics, the best comparison of all is against your own organization!  Look at how you did last year, two years ago and beyond, and look at what is working and what is not.  These findings can be used as a basis for well- informed conversations – about personnel, budget, strategy, tactics, focus and more – to create a better future for your nonprofit organization and your financial development efforts.

For more information about how to engage your board with data and the Fundraising Fitness Test, check out the tools and resources available at www.afpfep.org.  There you can find tutorials on how to run the Fundraising Fitness Test in addition to key resources and reports outlining findings by our senior research and data compilation teams.

We hope you will find these resources helpful and thank you for raising more funds to make the world a better place!

Written by Erik J. Daubert, MBA, ACFRE Chair, Growth in Giving Initiative/Fundraising Effectiveness Project Work Group.  Erik serves as Faculty at the Lilly Family School of Philanthropy at Indiana University, LaGrange College, and Saint Mary’s University of Minnesota in their various philanthropy programs, in addition to serving as an Affiliated Scholar with the Center on Nonprofits and Philanthropy at the Urban Institute.  He also works as the Director of Financial Development Education at the YMCA of the USA.  Erik may be reached via email at daubert.erik@gmail.com

The Growth in Giving Initiative’s work to date is often recognized by our work on the Fundraising Effectiveness Project (FEP) which includes tools like the Fundraising Fitness Test.  The FEP was launched in 2006 to help nonprofit organizations measure, compare, and maximize their annual growth in giving.  The FEP is focused on “effectiveness” (maximizing growth in giving) rather than “efficiency” (minimizing costs).   Check out FREE resources at www.afpfep.org

Is Your Nonprofit in Shape? Don’t Miss Erik Daubert and The Fundraising Fitness Test in Kansas City

By | All Posts, Annual Giving, Campaign Planning + Management, Capacity Building, Database Management, Donor Cultivation, Education, Events, Fiscal Management, Fundraising, News You Can Use, Organizational + Personal Development, Prospect Research, Stewardship, Strategic Planning | No Comments

How can you put your data to work?

Utilize the Fundraising Effectiveness Project (FEP).

The Fundraising Effectiveness Project has developed a tool kit for nonprofits to harness their fundraising data. One of the largest philanthropic research projects in the world, the FEP was established in 2006 by the Association of Fundraising Professionals and the Center on Nonprofits and Philanthropy at the Urban Institute. Its aim was to conduct research on fundraising effectiveness and help nonprofits increase their fundraising results at a faster pace. FEP provides free tools like the Fundraising Fitness Test for tracking and evaluating an organization’s annual growth in giving. Explore the FEP and Fundraising Fitness Test here.

For those of you in the Greater Kansas City area, join us on Tuesday, September 11 for the 501(c) Success National Speaker Series with Erik Daubert, MBA, ACFRE, Chair of the Growth in Giving Initiative and the Fundraising Effectiveness Project. Erik will demonstrate how nonprofits can use the Fundraising Fitness Test to understand their own financial development data – and ultimately make better fundraising decisions. To reserve your spot now, register here.

Philanthropy is Business…and That’s OK

By | All Posts, Boards + Leadership, Capacity Building, Commentary, Fiscal Management, News You Can Use, Organizational + Personal Development, Strategic Planning, Uncategorized | No Comments

As we close out another year with the turn of the calendar to January, many of us spend some time reflecting on the lessons learned over the past 12 months while setting organizational goals for the year ahead.  We need to take the time, not only to do this on a personal and organizational basis, but as a profession.  I think it is important that as a sector we take stock of where we have been, where we are and where we need to go in order to stay nimble – while continuing to increase our meaningful societal significance.  We can all agree that the times they are a changing.

As we continue to march our way through the second decade of the new millennium, the nonprofit sector looks much different than it did even two years ago, let alone in 2000.   Technological tools, data analytics, interpersonal communication options, physical work environments and service delivery are just a few of the ways our work world is rapidly changing. Corporations are now focused on social enterprise; the conversations and perceptions of how they make social impact are changing.  Are we as a sector ready for this?

Unfortunately, the nonprofit sector is not always known for its adaptability or quick response to change.  Misguidedly, we often reject the idea of “running a nonprofit like a business” which causes our sector to be perceived as accepting a “status quo” or “this is the way we have always done it” mentality.  This also reinforces the expectations of “minimal overhead ratios,” “outputs vs. outcomes” and the proverbial misperception that we need to be “saved” by the for-profit sector.  Not surprisingly, this continues to cause tension and maintain an undercurrent of lack of respect and frustration felt by us as the practitioners of social good.

“Failure” is still a bad word among our sector and is not celebrated as a learning experience, as it is with our corporate counterparts, due to how funding for such projects is obtained.  With few dollars available for venture philanthropy, the competition is fierce, limiting the ability for innovative solutions to be discovered and rapidly implemented across subsectors.

My hope for 2018 is that we as a sector begin to be as recognized for our specialties, expertise and impact as our for-profit counterparts. I hope we embrace the fact that at the end of the day, we too are in business – the business of doing good for our community, country and world.  Our work is vital to the economic and social success of our county.  We are the second largest employer behind manufacturing. Our products are safe housing options, research to find cures for disease and hot meals for the homeless.  Our services include removing barriers to education and job skills training, mentorship, mental health programs and youth interventions.

How can this mentality be implemented in our nonprofit organizations this year? Let’s walk before we run.  Invest in team training on business skills, contribute to cross sector conversations, attend networking events, read traditional “best business practices books” and implement key ideas, have a Board focus group to discuss and update strategic plans.  Set one, three- and five-year program and fundraising goals. Seemingly small steps can make big results for our stakeholders and those we serve. Let’s seize the opportunity to do business in 2018, but not as business as usual!

Jeffrey D. Byrne Appointed Treasurer of MoHEFA

By | All Posts, Current Events/News, Fiscal Management, News You Can Use | One Comment

jdb_governor-nixonJeffrey D. Byrne, President + CEO of Jeffrey Byrne + Associates, Inc., has been selected treasurer of the Missouri Health and Educational Facilities Authority (MoHEFA) by Governor Jay Nixon (right). Jeffrey was first appointed as a member of the State Authority by Governor Nixon in February 2016 and is delighted to take on the additional role of treasurer less than a year after his initial appointment and senate confirmation.

MoHEFA is a seven-member appointed Authority that assists health and educational facilities across Missouri in their financing efforts.  The Authority provides access to capital markets in an effort to lower the cost of health and educational services in Missouri by providing high-quality, readily available, low-cost financing alternatives for Missouri public and private, nonprofit health and educational institutions.

Comprised of experts in the fields of healthcare, higher education, investment banking and finance, the Authority advises and assists borrowing institutions in qualifying for, structuring and completing quality transactions, overseeing the financing process. In this role, this bipartisan Authority has succeeded in obtaining more than $23 billion in financing for 500 projects across the state since 1979.

As a member of MoHEFA, Jeffrey brings a wealth of experience in the nonprofit and financial business sector. For more than 25 years, he has worked with healthcare and educational institutions across the country on capital and development efforts. As treasurer, he will oversee all aspects of MoHEFA’s financial management working closely with the Chair and Vice-Chair to ensure responsibilities are met.

“This has been an incredible year for MoHEFA and the organizations we serve, having approved $1.7 billion in bonds,” says Jeffrey. “It is a great honor and responsibility to not only be appointed as a member, but now treasurer. As I prepare for a more robust role with MoHEFA, I look forward to making 2017 our most successful year yet in our quest to improve the health and educational landscape of our great state.”

Jeffrey’s term as a member of the Authority ends on July 30, 2019.

Great Capital Campaigns Have Great Business Plans

By | All Posts, Campaign Planning + Management, Fiscal Management, News You Can Use | No Comments

Dan Cosgrove headshot webDan Cosgrove, Director of Operations + Senior Consultant

You’ve made your donor call lists, put together a sleek brochure with a spot-on narrative and pretty graphs, organized the Steering Committee and pulled together the Gantt chart clearly stating how the capital campaign will progress. Are you truly ready to launch the campaign?

Maybe.

You might want to pause for a bit to consider the end game.  What happens after the capital campaign concludes? Or, more importantly, what do you have to show when a donor asks “What are your plans for long-range sustainability?” Or, perhaps “I will only contribute once. Are you sufficiently prepared to cover costs during the ramp up period?”

This is where a strong business plan for the new project is crucial.  Have you really thought through what new and sustainable opportunities will be created?  This plan identifies the organization’s models, missions and objectives. It clearly delineates the staffing, location, marketing and financing requirements that are needed to meet those objectives.

Excitement for a project is always high during the run up to a capital campaign launch. Often the feeling is that the business planning can wait until the capital campaign is nearing completion.  However, a strong plan with vision beyond the campaign will give you extra credibility with high net worth and business-savvy donors.  Planning also allows you to gain momentum in securing repeat donors as your confidence and thorough preparation will be evident.

Take the extra time to focus on what the long term sustainability of the project will be worth.  You also might gain some new perspectives on improving existing operations.  And the team could subsequently dust off the old strategic plan and bring it in line with current thinking.

People often ask “What is the difference between a business plan and a strategic plan?” A strategic plan is an evolving document that will keep your organization focused for a 3 to 5-year timeframe.  A business plan coexists and provides the crucial underpinnings of a successful strategic plan.  The strategic plan alone is typically much more broad in scope and does not detail specific plans of action for each individual operating unit within an organization.

A successful capital campaign with careful business planning will clearly communicate to the donor that once the goal is reached, the plan is ready to be executed so that services will be delivered in a timely manner. Business planning forces the organization to think past the general numbers proffered in the case for support or brochure.

Consider these questions when formulating your plan:

  • Is the project true to the mission of the organization?
  • What are revenue projections for one to three years?
  • What are the realistic costs of operations?
  • Who is my customer? Where are they located?
  • How will the newly financed offering provide a return on investment? Are there new revenue streams?
  • Who is going to staff the new operation? What qualifications are critical for success?
  • How are the new offerings going to be marketed?
  • What are the benchmarks for success?

A detailed business plan will more thoroughly prepare your solicitation team to answer the deep dive questions from potential funders and give the organization a head start on implementing the vision once the campaign is completed.

Now you are ready and set.  It’s time to take off and GO raise money.

Does your organization need help in developing its business plan?  JB+A can provide the best practices, guidance and support you need.  Reach out to Dan Cosgrove, Director of Operations and Senior Consultant at DCosgrove@FundraisingJBA.com or at 816.237.1999. 

JB+A Client Partner SAFEHOME Receives its FOURTH Charity Navigator 4-Star Rating in a Row

By | All Posts, Current Events/News, Fiscal Management, Social Services | No Comments

Congratulations to JB+A client partner SAFEHOME for receiving its FOURTH 4-Star Rating in a row from Charity Navigator.  According to Charity Navigator, only 8% of the charities it reviews have received at least four 4-Star ratings in a row.

“I am thrilled that SAFEHOME has received this distinction from Charity Navigator, but I am also not surprised,” says JB+A President + CEO Jeffrey Byrne.  “In all the years I have worked with SAFEHOME, Janee’ Hanzlick (President/CEO) and her entire team have done an amazing job of stewarding SAFEHOME’s precious resources.  I have great respect for their tireless work to break the cycle of domestic violence, as well as the compassionate, yet fiscally prudent manner in which they do so.”

SAFEHOME’s mission is to break the cycle of domestic violence and partner abuse for victims and their children by providing shelter, advocacy, counseling and prevention education in the community.  Through SAFEHOME’s shelter and community services, approximately 7,500 individuals each year receive the support they need to lead healthy, independent lives.

To learn more about SAFEHOME, click here.

To learn more about Charity Navigator and its rating system, click here.

JB+A Client Partner Challenge Aspen Receives Coveted Charity Navigator 4-Star Rating

By | All Posts, Fiscal Management, JB+A Client Fundraising Success | No Comments

JB+A is proud to announce its client partner, Challenge Aspen, has received a 4-Star Rating from Charity Navigator, America’s premier charity evaluator.  Challenge Aspen received this 4-Star Rating for its sound fiscal management and commitment to accountability and transparency.

Congratulations, Challenge Aspen!

Making possibilities for people with disabilities, Challenge Aspen empowers children, adults and families living with cognitive or physical challenges to turn fear and despair into hope and growth.  Since 1995 Challenge Aspen has been a trendsetter in adaptive recreation, offering year-round activities and private group opportunities customized for its participants:  adaptive sports including skiing, snowboarding, whitewater rafting, horseback riding, swimming, hiking and fishing; cultural activities including theater, cooking classes and music therapy and life skills such as team-building through camping and a ropes course. It has also developed programs to specifically serve injured service members through Challenge Aspen Military Opportunities (CAMO) and participants on the autism spectrum through Challenge Autism.

To learn more about Challenge Aspen, click here.

To learn more about Charity Navigator and its rating system, click here.