Transparency In Japanese Corporate Leadership Spill Over?

There are many NGOs in Japan.  Are they operating under the same type of limited governance oversight that many Japanese corporations have experienced i.e. the Olympus debacle?  It would not be surprising.  The western model for NGO leadership is one based on financial success.  Boards are recruited from corporate and philanthropic leadership circles.  And if the rules are that you don't ask questions at the highest levels of Japanese corporations.....it might be a similar, and similarly dangerous, situation at Japanese NGOs.

It's time for a new way of doing things.

Recognition versus Gratitude

It's sometimes easy for fundraisers to focus on recognition of donors -- which can be described on paper and be part of "stewardship systems" -- but can miss the opportunity to express real gratitude to donors.  Gratitude can be simple.  It can be short and to the point.  One of the best thank you letters I ever received was for a small gift I made to a local school. The principal wrote a short note telling me how she would make use of the money and thanking me.  It stood out.

Accounting Board of Standards -- New Demands on Non-Profits

Today the Accounting Board of Standards' Non-Profit Advisory Committee released its finding that non-profits should improve their financial reporting.  Hurrah.

The Committee made recommendations for changes in accounting rules that would:

• Make it easier for donors to compare organizations' financial information.
• Provide analysis similar to what for-profit companies give to their shareholders.
• Reduce complexity in financial reporting.

Strong non-profits -- no matter how large or small -- require strong financial management.  And if an organization is well managed financially, it is not so difficult to tell that story to the public...

To share 990 and audit reports... To provide information about the cost (and real value) of infrastructure... To talk about the return on investment in program accomplishments.

The standards for disclosure, appropriate costs for fundraising and management, dialogue with donors on organizational financial performance are all CHANGING.

We can be dragged into the new world in a way that does everything BUT inspire donor confidence, or we can get ahead of the curve by adopting standards for accountability that build donor trust and support. Seems like an easy choice to me.

Donors Are Getting Smarter....Are We?

A recent article in Businessweek featured the students of Nancy Lahmers’s undergraduate honors seminar at Ohio State University's Fisher School of Business.  Her students learn about nonprofit management through the eyes of donors -- as donors themselves. The class is given $4,500 through the Pay it Forward program. They have a year to research how to give away the money, based on an analysis of charities' federal tax filings and their quality and financial health through ratings by organizations such as the Better Business Bureau.

We are training a new generation of donors -- are we prepared? Are we confident about how our organizations stand the test of evaluation from our federal tax filings?  Do we make those tax filings easy for donors to find because we are confident about what they say about the quality of our financial management?

This kind of intentional sunshine is at the heart of California's new bill to bring light to the records of University-affiliated foundations. People want to know -- How does the money come in, from where, how are decisions made, and what are those decisions? Answers to those questions are the keys to organizational transparency and accountability. They're also the basis for informed giving decisions.

We know that an important basis for philanthropy is a donor's belief in an organization's mission and trust that her/his money will be used wisely. We also know that our world is providing ever more reasons for donors to question whether organizations are really walking their talk. The best way we can address that uncertainty is to ensure that our organizations give donors every reason to trust what we do.

Are You Ready for Scrutiny?

Several recent articles in the Chronicle of Philanthropy describe potential new regulations to direct what charities must disclose -- from costs to raise funds to options for donors to makes gifts restricted to specific projects.  Still, few organizations seem to be taking the initiative to be more transparent BEFORE they are forced to by state and federal lawmakers.

What are people waiting for?  An organization in the private sector would jump at the chance to be ahead of the curve and use a market trend to help differentiate itself from the competition.  Why are we so unimaginative?

Customer Service: Two examples . . . for-profit and not-For-profit

Two examples of customer relations in the last two days.  Each was very impressive.

Apple, Inc.  I was purchasing a laptop computer on line and had difficulty with the process and called the -800 Apple help line.  An incredibly friendly, competent, smart young man walked me through the purchase, accessing records of mine and talking through options.  He made my on-line confusion seem like the most regular thing . . . no sense of operator error or the need for me to apologize. And he followed up the purchase with not just a form receipt from Apple, but a personal email from him at his personal Apple address.  I responded to thank him and he responded.  Wow.  I am incredibly impressed.

I can hear a not-for-profit response; actually, an excuse: "But Apple has a lot of money to do things well.". . . Right! And that's why Apple has a lot of money . . . they do things well.

My not-for-profit story is about LIFT, an organization founded by a young Yale graduate, which "combats poverty and expands opportunity."  I made an on-line gift in honor of a friend and at the suggestion of one of their major donors. I didn't get either an on-line or paper acknowledgment or receipt. But I did receive a fiscal year-end solicitation. So I wrote to them, copied the CEO, and said I thought they were missing the boat in basic solicitation and stewardship. I received an immediate response from the communication team, a follow up from the LIFT development office, and a personal email from the CEO. All within a couple of hours, all sincere, well-written, and focused on discovering the source of the problem and solving it.

I left the experience impressed and more than willing to give again.  

In each of these examples, personal attention was the key to what was a great experience with Apple and what turned out, in the end, to be a positive experience with LIFT. Both increased my willingness -- even enthusiasm -- to purchase/give again.

Transparency -- Cumbersome? Maybe Coming? YES

Today's Chronicle of Higher Education featured a story on higher education's opposition to HR 2146 (full article requires subscription to the Chronicle sorry ) which requires greater public reporting on federal spending.  Even if the requirements are cumbersome, no doubt they are --when are federal reporting requirements not cumbersom? -- they are coming to a grant or gift near you. 

And higher education, of all entities, has the human brain power to be ahead of the game.  So let's find ways to be proactive and not reactive on providing transparency. 

Choices - Do Donors Want Them?

The Chronicle of Higher Education recently featured an article by Thomas Barlett, partially entitled..."Save Us From Our Own Decisions."  He summarized a recent presentation by Dan Ariely, Eldar Shafir, and Sheena Iyengar (Ariely and Iyengar are featured on End|Start's resources link).  Two obvious take-aways for nonprofits are:  too many choices can overwhelm, deter, distract, a donor; people respond better to more concrete choices -- save one particular life than "end poverty for one million people."

Many organizations give donors a menu of possibilities -- sometimes under the guise of donor choice, sometimes because the internal politics of choosing one program over others is too overwhelming, sometimes because the organization is so large and complex.

But choice is, I believe, the future.  Giving will, in fact, be more and more directed.  With increasingly sophisticated consumers who are used to having more and more choice in how they spend their dollars, the change is coming.  Get with it, get ahead of it, or get caught in it by not being ready, open, and creative. 

Choice is key to engagement; engagement is key to support. 

Return on Engagement

The social networking community refers to "return on engagement" as an alternative to "return on investment"in measuring impact.

I think it works equally well for assessing how and when and why to invest in working with donors.  It relates directly to the classic fundraising strategy "If you advice, ask for money.  If you want money, ask for advice."

Engage someone -- in what is going right and what is going wrong (remember admittingfailure.com?) -- and you will build loyalty, establish trust, increase brand recognition, maintain attention, and get their investment.

You could just as well delete the "R and E" and say Turn on Engagement.  One of the hard realities that we have yet to truly face as fundraisers is that engagement is not static and that donors are more and more "not the marrying kind" i.e. they are more likely to lapse and have higher dissatisfaction and expectations when they make their first gift.

Donors Want Data -- Great Option for Design

Donors do want data but not if it is mind-numbing.  It should be clear, honest, and relevant.  It should tell a story. It can tell a story.  Check out Nicholas Felton, data design guru, and his personal annual reports.   MUCH MORE INTERESTING than corporate or non-profit annual reports. 

Storytelling -- non-fiction -- is what generates the emotions that inspire giving.

Ariana Huffington and the 20+ generation

Yesterday at the annual Council of Foundation's meeting being held in Philadelphia this year, Arianna Huffington spoke -- quite early indeed -- about the the critical need people have to be involved -- to take action.  Even with technology providing ways to communicate in faster, better more constant ways, people want to engage.  Actually they want both -- technology but not replacing human interaction.

This was a theme of the Millenium Donors Report 2011 that was released by Achieve and JGA.  It was their second such report and they found that Millenials prefer to give online or using online tools but that they also volunteer in person and their giving follows links to their volunteering.

One of the other findings was that organizations have to prioritize gaining and maintaining the trust of their donors.  Some of  their suggestions to do that?  endorsement by family or friends; report financial condition, opportunities to meet leadership.

Forces for Good - Donor Engagement a Critical Practice for High Impact Nonprofits

Leslie Crutchfield and Heather McLeod Grant outline six critical components that are common to great social sector organizations in their book Forces for Good.  One of the six focuses on donors and volunteers.  "Create meaningful experiences for individual supporters and convert them into evangelists for the cause, "they write. 

Just what is a meaningful experience?  Their examples include special events that engage volunteers and donors in the work of the organization, as with Habit for Humanity and Teach for America, and VIP events such as Environmental Defense Fund's exclusive rafting trips or the Heritage Foundation's invitation-only VIP gatherings.

Each of the experiences described are highly focused on the work of the organization and the social needs they are working hard to meet.  When organizations forget the mission in creating and executing their special events, volunteers and donors begin to forget which charity event they are attending.  It's just another party.

Every event hosted by a non-profit offers the opportunity to provide new insight into the organization's work, and even more importantly, the reason behind their existence -- why is everyone building a house, or rafting a river, or eating another chicken dinner.

There is not enough hard data that shows the net benefit of investing in building strong donor relationships.  But Forces for Good is an excellent invitation to explore why some nonprofits are so successful in maximizing social change. 

The Audit You Didn't Write That Everyone's Reading

Today's e-Jewish Philanthropy Online had a nice piece on how organizations must understand that the internet is more than a place to publish a newsletter or put out standard PR.

"Online, the authenticity of an organization’s impact and relationships is king. We have entered what I like to think of as the ultimate audit – of individuals, businesses and institutions. We are no longer simply what we say we are. Rather, we are the sum of our searchable reputation; ratings, followers and reviews that tell others the truth about what we have to offer. This is both powerful and frightening."

Indeed, it's easy to think we control what information there is about our organizations, clients' experiences, donors' experiences, employees' experiences but, in fact, those days are over.  

Donors Say One Thing But Do Another

The NonProfit Times recently conducted some interesting research which Paul Clolery writes about in the March 1 issue. More than half of philanthropic contributions in the United States are to religious organizations.  That's a longtime standard.  However, when the Times surveyed donors about what they thought needed funding, the largest group (35%) answered "education." Religion was fourth, after health and civic and community organizations.

What should fundraisers make of this? Look to the for-profit market. It is well established that people say one thing and do another. We are far more complicated beings than fundraisers have ever given us credit for being. We should be doing a lot more research on people's giving behaviors. It might help organizations waste less money, leaving more to spend on actually accomplishing their missions. 

Tin Cup or Tin Ear?

The other day I received a piece of direct mail from Oxfam, the international famine relief organization. I have supported Oxfam as a pledge partner for at least 10 years, and I assumed that the mailing was an invitation -- which I receive at least annually -- to increase the amount of my monthly support.

As someone who makes my living advising organizations on how to build donor trust and increased giving through best practices in stewardship and donor relations, I was impressed that a message on the outer envelope noted that Oxfam meets Better Business Bureau's Wise Giving Alliance "...standards of operation, spending, truthfulness, and disclosure" and that it is "rated highly by leading charitable watchdog organizations, including the American Institute of Philanthropy." These are important reasons why I have been a longtime Oxfam supporter.

So imagine my surprise and chagrin when I opened the envelope and read the beginning lines:  "Here's what you won't find accompanying this letter:  address labels that "guilt trip" you into giving; an expensive calendar that you don't need (and we can't afford)...." Actually, what I did find as I read a generic "first-ask" letter was an organization that, for all its wonderful work, hit a very sour note in donor relations.

Although my support for Oxfam is modest -- about $500 per year -- I  was annoyed to receive this letter. It seems reasonable to expect a sophisticated fundraising operation like Oxfam's to be able to manage purchased list data for a mail appeal to exclude existing donors, particularly those who, like me, demonstrate their commitment and loyalty to the organization every month.

Receiving this solicitation made me wonder whether I actually matter to Oxfam as anything other than a check writer. That's the kind of response that no organization raising money today -- large or small -- really can't afford.

Donors Want More

Check out “Wealthy Donors Are Demanding a Bigger Voice in Catholic Schools,” from the February 7, 2011 New York Times.  The story is about wealthy donors who want more accountability and transparency from the schools they help. Fundraisers often use the term “investment” to make a compelling case to business-savvy donors for supporting cultural and social causes. If we follow the term “investor” to its logical outcome it shouldn't be a surprise when donors want to know about return on their philanthropic investments, to have concrete data on which to base their choices and, increasingly, to have a say in how decisions are made in the organizations they support.,  Philanthropic investment may be different from Wall Street, but in a world with increasing demand for transparency, accountability, and purchaser satisfaction, we will need to rethink some of the ways we engage and involve donors.  Much good can come of it.

Is There An Upside to Telling Donors When Things Go Wrong?

An interesting blog for the Chronicle of Philanthropy highlighted a new effort by a Canadian non-profit, Engineers Without Borders Canada,  to be upfront about their own mistakes and "to get a seemingly simple but virtually non-existent practice adopted throughout the development sector.”

They have a website which explains the effort called  admittingfailure.com.

Do donors and prospective donors want us to admit failure?  Sometimes the truth is a powerfully good thing and increases an organization's credibility; sometimes it is the last thing people really want to hear.  Whomever is the first to gain the publicity on telling the truth will certainly receive acclaim.  

It's a bold move to emphasize the power of collective learning over the fear of potentially upsetting a funding source.  A donor I worked with many years ago, who over the course of our working relationship gave several million dollars to the charity that employed me said recently that it was the quality of our relationship that made the organization I worked for stand out among other charities.  It was, I think, our willingness to be optimistic but honest that set us apart. 

New Years, New Resolutions, New Studies to Help You Out

Several studies have been released lately that should be useful to philanthropy professionals.  Three of interest:

The Non Profit Research Collaborative:  November Fundraising Survey  This is a collaboration groups including the AFP, Foundation Center, and National Center for Charitable Statistics (NCCS).  The news was neither terrible nor wonderful.  Here is one piece of news:  larger organizations seem to be fairing the best.  Why is that?  Are they able to afford to maintain a presence in donors' lives? Are they considered a safer investment? 

A second report is the Online Giving Study by Network for Good, True Sense Marketing and sponsored by AOL.  While it clearly serves the company's purposes, it offers some interesting data that they kindly shared with the rest of us.  It's clear that donors give more when they give through an organization's branded site versus via social media or a generic giving page.  The challenge is to engage donors in a more intimate and emotionally coherent way. Unfortunately the report doesn't offer many ideas about how an organization can foster that engagement.

Finally, as the link on the end l start offers, here is a link to the new IRS Report on 2010 and 2011.  Thank you GuideStar for getting that information out to all of us.  More scrutiny is coming along with a fairly dramatic increase in staying in the IRS to pursue non-profits.

Great Resource

A great resource for development professionals is the American Institute of CPAs daily email update.  Here's the link www.aicpa.org  It shoots out a brief email with links to business news related to how business are managed, regulated, and AUDITing.  This has real relevance for fundraising and stewardship.

Several days ago they linked to Fortune Magazine and an article called Do Disclosure Rules Really Work? Why is this interesting?  Look to the private sector for the future of demands on the non-profit world re: regulation.  Issues like disclosing how a company selects its board members or compensation has direct relevance to non-profits. 

This is a wonderful, simple, free tool for you to use to see out onto the horizon.