Komen Lessons

The Susan G. Komen Foundation’s recent public relations disaster should sound a cautionary note for anyone in the fundraising and donor relations business. The announcement that Planned Parenthood would be disqualified from further Komen grant funding because it was “under investigation” – a violation of new rules the Foundation had put in place for its grantees – clearly touched a nerve among not only the Foundation's donors, but a substantial number of its own affiliates as well.

Reaction was swift and loud, reverberating across the news spectrum. Social media played a particularly important role in publicizing and challenging Komen’s decision. The Foundation seemed blindsided by both the volume of negative response and its emotional intensity.

However one may feel about the issues at play in the Komen Foundation’s policy decision, and its sudden reversal in the face of criticism, there is little doubt that this episode will have longer-term consequences for Komen’s fundraising efforts. 

The blogosphere has been particularly harsh – “Not another dime of my money will go to Komen, which has now shown its true colors” is a common refrain. And the Foundation’s suggestion that there were “other reasons” for disqualifying Planned Parenthood for further Komen grants in the future didn’t placate anyone.

From a fundraising perspective, there are two critical takeaways: 

1) Fail to understand your donors at your own peril; and

2) Don’t forget that social media can be a double-edged sword. 

Clearly, the Komen Foundation had not anticipated the outcry from people who had been its loyal donors and event participants for years – people for whom the fight against breast cancer is completely outside of politics, but who also see this fight in the context of larger issues related to health equity for women. They care about access to healthcare for poor women, and part of the reason they supported Komen was because it funded Planned Parenthood’s breast cancer screening and referral services for those women.

Ironically, using the same social media tools that Komen has cultivated so effectively for fundraising purposes, these disgruntled donors communicated -- far and wide -- their displeasure with the Foundation’s decision.

And using the identical networking tools, Planned Parenthood had one of its best fundraising weeks ever. Actually, Komen also had a pretty good week, thanks to some counter-backlash giving. But political polarization around an emotionally charged, non-political issue in women’s health may just exacerbate Komen’s fundraising challenges.

The Komen Foundation’s most urgent priority now is restoring the trust of its donors. How it addresses that stewardship challenge could have enormous potential impact on the success of its fundraising and event-marketing in the future.

Rise in Donor Advised Funds: What Does it Mean?

The National Philanthropic Trust study released just before the holidays (and dovetailing with a recent report issued by the U.S. Treasury Department about donor-advised funds) points to the growth of third-party giving. This third party -- for example, a community foundation or a major investment firm, such as Vanguard (Charitable Endowment Program) -- provides donor flexibility (meaning donor choice) and donor comfort (i.e., it's easy for the donor).

Most non-profits haven't regarded organizations like Vanguard or Fidelity Investments as competitors for donor contributions. But perhaps they should be thinking more about what donor-advised funds are offering givers and looking for ways to improve their own donor relations. As competition for philanthropic support increases, so will donor dissatisfaction with organizations that don't demonstrate  commitment to building responsive, personal, communicative relationships with their supporters. 

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?