"How the 2 Types of Nonprofit Founders are Seen in Comparison"

So this situation we've been describing leaves the "individualistic" nonprofit founder with a severe dilemma. If you can't start up a business, you'd better be prepared to give up your individualistic approach and get with the community – both the board community and that of the donors you depend on. If and as you try to thwart this situation, you make a whole lot of trouble for your charity start-up right from the beginning with the first few strategic decisions you make: go for the easy money ("foundations and fun") and stay away from individual donors and getting the groundswell of community support and contributions you're going to have to have for the long haul.

Is it any wonder that these charity founders don't have the fundraising infrastructure and the orientation towards individual and family giving that could get the charity off to a good start?! To me, it looks like the problem begins with the "individualistic" impulse or type of founder who is not oriented towards people and communities.

Let's see what happens with the other type off charity founder/executive, the "people-oriented" type of person.

Here we might have a different scenario. Feeling more comfortable with the community, this founder/executive may well be more naturally oriented towards two types of activities: the first is going into the community to test his/her idea of service and perceived need. This person will, in many ways, ask the community to rally around the idea of service to the poor, education, dogs for pets, starving-artist exhibitions, or whatever. If the groundswell of community perception of need and support of service isn't there to start, this person will more than likely spend the time and effort necessary to educate and motivate the wider community into learning about that need and supporting that service.

The second type of activity the "people-oriented" charity founder is likely to take on more naturally is the motivation, cultivation and solicitation of many individuals within the community, whether these be community and business leaders, or individuals and families found within the wider community. It's kind of like running for office, going door-to-door, church-to-church. This person will be naturally oriented to doing this start-up work in order to ensure long-term community support.

Consequently, the drive towards "service first and fundraising second" may now be reversed so that the initial strategic decisions for "foundations and fun" can give way to a broader base of support for the charity start-up.

More than this, however, this people-oriented charity founder is going to be setting up a board of directors that represents the leadership of the community, not just a board composed of his/her cronies. And that board will most likely be given the power to really manage and control the founder/executive, because of the confidence the people-oriented founder has in the community's leaders from the start.

The result? We're likely to find here a charity start-up that has a wonderful chance for success, and one for which fundraising infrastructure and best practices are of paramount importance. It will succeed because the community will rally; the community rallies because of the nature of the founder/executive.

The lesson? Well, I think we can say, and this is only based on my own limited experience in 27 years as a fundraiser and only 10 years as a private practitioner, that the "people-oriented" founder/executive will be more likely to succeed with a charity start-up, while the "individualistic," breakaway, entrepreneurial type, will have more chance of running into trouble because fundraising will be given a priority lower than that of the personal satisfaction that comes from doing the service work.

If you can understand these terms, we might say that the "priest" gets further than the "prophet" with a charity start-up. The so-called "prophet," or individualist, may well get better results with a business. Why? I think this happens because with a business the community can rally around and support an "individualistic" entrepreneur who gives an excellently crafted product or much-needed service for a fee. That is, the person gives something of value in exchange for value received. And even though we might also speculate that the "people-oriented" business owner might eventually become wealthier faster than the "rugged individualist," in fact the individualist does make a fairly good living without having to rely so much on the community from which he/she wants definition and separation.

Now, we have to deal with this: that there have been a lot of "rugged individualists" throughout American business history who have made millions and billions; but it has often been done at the expense of many others in the community and at the expense of the environment in which that community has to live in the future.

So what are we saying? It seems to come down to something like this: that those of us who like to consider ourselves "rugged individualists" and who seek the ways to survive and thrive without the community – to whatever degree we try to do that – (and I count myself among these fine folks) may well be in for something of a surprise when trying to start up a nonprofit organization.

But you might say, "What about Galileo, Newton, Edison, Barnard, Salk and all those whose individual work through the centuries of human development has so advanced humankind even though, and maybe even particularly because, they were 'individualists?' Have we all not prospered, eventually, as well from the work of the "robber barons" like Andrew Carnegie, Henry Ford and J.P. Morgan?" And I would have to say you're right.

But then, what's this about global warming? Does "individualism" get us in the end?

But, on the other hand, what about Jared Diamond's "Collapse" (or even look at his "Guns, Germs and Steel") in which he details the struggles of "communities" to solve complex environmental problems, and these communities have failed to find the solutions that more "individualistic" entrepreneurs may have been able to ascertain?

Is it not a fact that, in the long run, we need both the types of founder/executives in the nonprofit sector? Don't we need charities founded on strong individual impulses to serve as well as charities that thrive on community support? But how can communities – whether boards or donors -- tolerate, nurture, support and healthily inform their "individualist" founder/executives? how can the "individualists" tolerate, receive nurture and gather support from their communities in such a way as to be able to make sound strategic decisions?

This is where I believe the two threads of this blog over the last 6 weeks come together: the fundraising problems experienced by charity start-ups, and the problems that Boards have doing deliberative thought. The two threads come together as follows:

In case you don't recall, we said, back about November 23, that nonprofit boards, like any gathering of 3 or more human beings, can only do two things well: they can brainstorm and they can tell stories. But they cannot do deliberative thought. Now we're saying that charity start-ups founded by people-oriented persons are not as likely to make the strategic mistakes that more "individualistic" founders typically make that get them into fundraising problems down the road. The two threads have a common theme. Here's how these two threads are connected:

Boards are communities or groups; founder/executives are individuals. Each has a role that is vitally important to the well-being of a nonprofit organization. If the community has the right self-discipline in its work, it will fulfill its role well. If the individual, particularly the founder/executive of the more "individualistic" type, has the self-discipline to keep focusing on doing the deliberative and strategic thought the Board needs to have done, and then letting the Board do its more general brainstorming and story-telling work it does best, then there is harmony. And the founder-executive must also be continually involved with and referring back to the community of donors that support the organization, even though that may not be his/her personal inclination. We can achieve not only harmony but success in nonprofit management and governance.

What needs to happen to keep both founders and boards working well and producing to capacity? I think there are four self-disciplinary functions that must be performed continuously:

1. Boards will give the organization better governance if they refrain from acting like individuals and trying to do deliberative thought, because doing that frequently ends up in micro-management of the organization, confusion over strategic direction of the organization, a lack of resources for the organization to use in its mission accomplishment, and a tendency to focus on internal politics, sometimes even internecine warfare.

2. Boards that have the self-discipline to stick to setting the strategic and policy context for the nonprofit's work, and who do not override the deliberative thought provided form them by the executive and staff, will produce a better "governance product" that is more useful to the organization. On the other hand, the executive and staff need to do the essential work of strategic planning, and find ways to involve the Board in doing what the Board does best: brainstorming alternatives and options, and telling stories. So the Board would not be asked to do the deliberative thought that individuals do best, but would focus on the essential tasks that can be accomplished by brainstorming and story-telling: determining what is good for the future well-being of the organization, setting policy and limits for the executive's work, gathering resources that undergird the organization's mission accomplishment, and managing the executive's conformance with policies set.

3. Individual charity founder/executives will do well to learn, especially when it doesn't already come naturally, to live within, and even thrive on, the boundaries and limitations set for them by the two critically important groups of people in the organization's life: boards and donors. They must have the self-discipline to help the board do its brainstorming and story-telling in creative ways that result in decisions that are truly helpful to the nonprofit. They must also be involved in the sometimes complicated process of preparing and setting up every decision the board must make in such a way as to assist the board to make the very best decision possible on each issue that comes before it.

4. Individualistic nonprofit founder/executives will also find greater success in moving ahead with deliberative thought and the strategic planning necessary to do things like investing in fundraising infrastructure from day one, staying away from too much "foundations and fun" and getting involved and engaged with the individual and family donors whose support is critical to the organization's work throughout its existence.

In the event, self-discipline within each of these two critical roles is the key to success for both boards and founder/executives of nonprofit organizations. Boards whose members are wise and self-disciplined enough to do what groups do best and stay away from trying to act like individuals, accomplish better governance. Founder/executives who learn how to mesh the individual effort of deliberative thought and laying strategies into the lives and process of governors and donors alike will steer clear of strategic and fundraising trouble down the road. It takes two to tangle, and the proper role of each involves a great deal of self-discipline.

And with that thought, dear readers, I hope you have a wonderful holiday and I'll see you in the New Year with more thoughts about "All Things Fundraising."

The "Individualist" vs. "People-oriented" Founders of Nonprofits

Before we start today's blog post, let me take a moment to wish you a wonderful and personally satisfying holiday and a prosperous and really fun-filled New Year ahead. I'm going to take a week off now and won't be back until January 2nd after the post this afternoon.

The issue we're dealing with today was raised in a most interesting conversation I had with my wife, Bonita, the other day. She has very often been able to help sort out some of the deeper issues we've faced together in ten years of helping charities raise more money, and I do so appreciate her ability to analyze what's going on in difficult situations. That's why we're such a good team.

Well, we got to talking about charity start-ups and the motivations of their founders, and we tripped across this little problem: It seems the founders of new charities that have come to our shop can be divided into two types. There may be more out there, but these are the two we have seen.

One type of founder is very people oriented, and is open to the community's leading, able to freely communicate with others, receive their guidance and nurture, and return the favor with loyalty and gratitude. For these folks, amity and friendship take precedence over, or are able to inform and alter, self-initiative and personal drive. We might say that these folks are very "people-oriented;" they seem to love to congregate together, rely on one another for self-image, and for the clues to life's possibilities, dilemmas and hardships, and set group-determined standards of conduct and performance.

The other type of founder we've seen over the years is more oriented towards being an individualist, may actually be driven to individual effort, is often rebellious against the community and the ways it tends to delimit and impose its will over the individual's drive and impulse. These people could not be typified as "people lovers," and they don't tend to like the ways groups of people or communities act when they are together. It's not that they're "loners" necessarily, but when you hear that one of the reasons they want to form a new charity has to do with the fact that they want to get away from group (read "board") decisions, group pressure, etc. you know you are dealing with a person of this more individualistic type.

For purposes of this discussion, and for want of a better typology at the moment, let's just say that the first set of founders are more "people oriented" while the second group tend to be more "individualistic" in their approach.

Here's the crux of the matter, then: If you find yourself within a community (almost any kind will do: geographic, religious, interest group, political, educational, whatever) and you are of the "individualistic" persuasion, then when you start developing an idea about how you can serve the pressing needs of a specific group of people with your talents and experience, you basically have two options. You can start up a business and charge a fee for service to those who can and want to afford that service. That's the most "individualistic" expression you can have in our society. Or you can start up a charity and give the service for free.

but, if you start up the charity to give away the service, then you are immediately thrust back, again to relying on the community, and you will, like it or not, be governed by the community's needs, wants and values. That includes governance by a group of people (the Board); it also includes the donations you seek and must have for your charity to survive and thrive.

That is not going to sit well with the "individualistic" type of nonprofit founder. It is something they will assiduously try to avoid. But it will happen in many ways, chiefly through the phenomenon of Board governance (where the group manages or supervises and evaluates the performance of the founder/executive), and through having to defer to, relate to, cultivate and solicit the wider community of donors. A further problem complicates the picture: individuals and families have most of the money you will need, and foundations and corporations will have a lot of institutional strings attached that make your life difficult. Out of the frying pan, into the fire!! The more 'individualistic" type of founder is going to rather naturally run into strategic difficulty when setting up a nonprofit organization; it's just "the nature of the beast."

You see where we are? The choice of relying on "foundations and fun (special events)" for support, and the choice to form boards that are going to be naturally subservient to the founder/executive, is a strategic choice that is a natural choice that comes out of an orientation that is essentially antagonistic towards community, one that is essentially more "individualistic" rather than community- or "people-oriented." The problem comes down to this, once again, that running a charity on "foundations and fun" as a support base, and denying the charity true governance by a "community" that is a board of directors, just will not succeed in the long run. Trouble is around the corner and not very far down that street.

Let's deal with the "people-oriented" ftype of ounder this afternoon....

How the Independent, Entrepreneurial Founder of a Nonprofit Depends on the Public for Donations

So, really, why not set the "charity" up as a business, run it yourself the way you want to, and be done with it? Well, of course nobody would or could purchase the service, such as literacy education, training for developmentally disabled kids, finding lost puppies or rabbits a home, etc. So they are left with the option of starting up a new nonprofit to get done what they want to do.

But here's another angle on this: If the answer is that the easiest course is to ask the public for the money to offer the service free, then why not do the strategic planning necessary to get the fundraising process started on the right foot from the very beginning? If you're going to depend on the public's generosity and pocketbook to help you do your service to the poor, hungry or illiterate, why not forgo the satisfaction of mission accomplishment long enough to start take the strategic step of cultivation and solicitation of the donors on which you're going to depend right from the start? Why not build fundraising infrastructure right from the very beginning? It doesn't make sense to start teaching or healing or exhibiting or pet placement first, and then give only hindsight and a few crumbs of resources to your fundraising effort, when, in fact, you're going to need that public, individual, family support in increasing amounts as the years roll on.

Well, the most common response that I've heard to this is that "the foundation I just applied to for a grant is adamant that they want all their dollars to go to mission accomplishment. We only have about 10% we can use for administration, and they do not want any of their dollars to be used for fundraising – that would be anathema to them, and we would lose the grant. Besides that, we want to be able to tell our sponsors for the golf event and the auction that their money goes to serve people, not that it goes for fundraising" So you can see where this dialogue is going to go, can't you?

The situation is set up as an impossible proposition right away. Nobody wants to fund fundraising. And in their haste to find the "low-hanging" fruit (mostly defined as foundations and special events) they have failed to notice that the foundation or the imagined sponsor is seen holding the "sword of Damocles" over their heads and making it impossible for them to move strategically in the ways they need to do before moving ahead with accomplishing their mission with their target audience. It's a catch-22 situation, precipitated because the founder is unwilling or unable to take the time to do the strategic planning necessary to work through this dilemma right from the start.

Ah, but we now need to back up a bit and discuss a really thorny little issue that has to do with the motivations for start-up founders as they come to their work. We'll tackle that tomorrow.

More on "Why Not Start up a Business"

OK, so we've asked that fearful and mostly mis-understood question: "Why not start up a business rather than a nonprofit?"

That's not an idle question; and the answer to it is often very revealing. It gets to the heart of the motive for wanting to start up a charity in the first place. Most people tell me right away that the only way they see the mission they want to accomplish can be supported is by using other peoples' money to do it.

So, number one, right off the bat, they're off to a bad start by placing themselves in a situation where 1) they haven't tested their mission concept within the community to see if there is a groundswell of heightened awareness within the community and the financial resources that people are willing to prioritize to make this mission happen over many years.; and 2) they are nevertheless intent on relying on public support to make this thing go and give it the support it will need to survive and thrive. This is a strategic contradiction, and, very frankly, a mistake.

In trying to push the would-be founders of this new nonprofit, I suggest that setting up and running a business is generally a lot easier than establishing a nonprofit organization. And they are often aghast that anything so crude might be suggested by a fundraising consultant. "how can you suggest that!?" goes the response. "Don't you know that we can't charge the families of these [illiterate kids, or poverty-stricken families, or whoever is the target audience]. They could never afford to pay!" And indeed that's probably so. But which is easier? Setting up a fee-for-service business, or asking the general public for money to help you give the service away free?

Either way, part of the answer is that we must take a serious and strategic look at what this will mean. We're going to have to delve into what the extent of the need is, what services we're going to provide, and how much it will cost over a 10-year period to provide service to whatever percentage of the market we think we can reasonably serve. Then we're going to have to cost out how much financial support the service we provide to each member of the target audience will take. Then we have to go to the marketplace – of either purchasers or donors – and determine what the extent of that population is and how much they might reasonably be expected to pay or give. And we will need a marketing plan that will continually motivate and compel either the buyers or the donors to continue their support for significant periods of time.

Strategically, the issues are the same for setting up a business as for setting up a charity. With one exception: governance. That's the big one. Because in a business the entrepreneur is his/her own governor, but in a public charity, the board of directors is supposed to govern. And one thing I have learned from working with many of these start-up founders is that they do not really want to be "governed" by anybody, especially if they are already coming from serving in a nonprofit situation and have grown "sick and tired," as they often say, of the intrusive way their past boards have nosed into operations and stayed away from true governance and strategic planning. "This time it's got to be different," they say. But, in reality, they are setting themselves up for serious trouble down the road, if not complete failure.

But we have still more to do on this little problem, later this afternoon…

Why Not Open a Business Instead of a Nonprofit?

I received an email from M. McElroy of Brighton, MI, the other day that speaks to this examination of start-up charities that get into fundraising problems early in the game. She related the following story, in which the names have been changed or deleted to protect everybody concerned:

“When I first started my career [in another state], I worked as a clinician with adolescent boys and girls at a place [that] has been in business for over 35 years.... It grew from a halfway house into a major nonprofit which focused on drug and alcohol rehabilitation. The innovation of programs were fantastic ....

“The reason I left... was because the executive director / founder had a severe case of founder-itis. The board of directors were his friends, his entire family worked [there] and there was no oversight. Although his legacy will live on, he almost ran a great organization into the ground... Discussing founder-itis is very key because it can save nonprofits from possible destruction. [I witnessed] a tragic and severe example of founder-itis.”

In my practice, I see this kind of thing on a regular basis. It must be said that some of these nonprofits that develop founder-itis do manage to change, particularly when their boards seek help from a fundraising consultant. But it usually takes some kind of outside influence, working with the board and the founder/executive, to resolve and “fix” the strategic components of the situation that were ineptly put in place early on.

On quite a few occasions, when people contact me about providing them assistance with start-up charities, during the course of the conversation I have asked them, "Why don't you just start up a business in this area and come at the problem from an entrepreneurial stance?"

Generally the response is shock and disbelief that a fundraising consultant would ask that question. Shock, because they desperately want a charity, not a business; disbelief because they come to me for help in fundraising and here I'm implying by my question that they should be in a business where they sell a product or service rather than give it free to those who need it. Most of the people who come to see me cannot understand why such a question is relevant. Their immediate answer is: "We want to set this up as a nonprofit so that people can give to us and get a tax deduction for their gift. Why in the world would we ever want to go into business with this idea?"

Well, there's a perfectly logical reason why you might consider doing that. More on this tomorrow. We're getting down into the heart of the issue here.

"Strategic Planning? What is That!?"

I remember very well the first interview I had with one particular board that was calling in a consultant because they were in fundraising trouble. The members of the board all agreed that while they knew what they should have been doing, they hadn't done it. What did they want the consultant to do? Tell them what they already knew; and presumably infuse some kind of new motivation into them that would compel them to take the steps they knew very well had to be done; and hold their feet to the fire while they took those steps.

So what do we have here? Three strategic mistakes. First is the fact that the founder/executive did not test to see if there was a significant groundswell of community support that would provide many years of continuing support from individuals, corporations and foundations. The second mistake was that the board of directors was hastily put together by the founder/executive from a relatively small pool of friends and acquaintances and people he/she could control. The third mistake was that there was no early investment in fundraising infrastructure that would support and lead directly to a multi-faceted fundraising program headed by a solid major gifts effort among individual donors.

In previous posts we have dealt with the matter of how the board should be recruited and structured, given a written job description and performance standards, and allowed to really be the governors of the organization. Now let's deal with lack of financial support – the way these start-ups get into financial trouble within approximately 5 years of their having been founded..

The root of the problem as I see it lies in the fact that when the nonprofit was just starting up, it was the idea of the founder, but not a pressing and urgent need felt by the community at large; there was no groundswell of community perception and desire for this need to be addressed. Consequently, here we have a service being performed, but few people to support it.

This has resulted, in my view, in a lot of "boutique" or "niche" charities coming into being to address specific needs that are generally unsupported by the communities in which they exist. This means that the funding available to each of them is relatively limited and, most likely, will not last for years to come. What are these founders thinking of? Obviously they're not thinking of the long-term practicality of running a fully functioning nonprofit.

The problem is exacerbated by the tendency of the founder/executive to eschew investment in fundraising infrastructure, however elementary, and further developed with the decision to forego solicitation of individuals on a regular, persistent and consistent basis early in the game. But you may ask, "Why are you being so hard on the founder? What do individual donors have to do with a start-up charity?" Well, individuals give over 75% of the money gathered by nonprofits in this country every year. Corporations give about 5%, foundations give about 8 to 11%. So the "easy" money, if indeed that's what people think it is, goes quickly. The mainstay of a nonprofit is going to be its individual donors.

So my question to start-up founders is "Why don't you go spend time and resources where the money really is?" And a second question: "Why don't you start with strategic planning, and make that activity a regular involvement throughout the life of the nonprofit, right from the start?"

We'll continue on this thread in a bit. But now we have to deal with an email response on this topic. We'll do that this afternoon.

"Fundraising? – We'll Get Around to That"

Apologies to readers for having missed yesterday afternoon's post.

One of the first fundraising mistakes that a founder/executive of a nonprofit is likely to make is to start out using a spreadsheet to enter donor contributions and report these gifts to the board. Sure, it's cheap, easy and doesn't take much time to work with a spreadsheet.

With a little thought, the founder/executive could see ahead a couple of years to the time when there would be a need for a real donor database,. These contributions could just as easily be entered in an Access database, so that at some point they can be massaged correctly, and later could be transferred rather easily to some form of donor management software. But spreadsheets are easy and quick, and that's just what most any founder/executive needs to lighten the daily burden.

Right along with this is a tendency I've seen in my practice for these founder/executives to spend much more time with the nuts and bolts of running the operation than to be out with the community building the base of individual donors and soliciting friends, family, colleagues and acquaintances for significant, multiple-year gifts. Most of the founders/executives who end up getting in trouble neglect this work because they are not, essentially, oriented to being with and nurturing people as donors and supporters. So it's easy to avoid this responsibility and stay with the grants and special events, hoping, each successive year, that these sources will hold out just a little while longer. Meanwhile the task of running a growing organization multiplies, stress builds and, eventually, the founder/executive simply has neither the time nor the inclination to cultivate and solicit major individual gifts. "Fundraising? That would be nice, but we'll get around to that later, when we can afford more staff."

But the fledgling organization will never get to the point where it can handle more staff if it can't raise money! The problem is that foundations fall away after a while. They're interested at first, but most don't see themselves in a continuing relationship with any charity. They want to spread their money around, get the most bang for the buck, get involved with a lot of charities, give a little help here and there and everywhere. The result is that the foundation pool dries up within a few years. The community foundation and a few individual foundations around town, maybe several larger ones, too, in the larger cities, run their course with the start-up, and then the money dries up.

Looking at special events, these fundraisers tend to take on two characteristics rather rapidly: first, they get old and have to be freshened up, and, secondly, they involve increasing amounts of time and money to keep them new and fresh. Consequently, the founder/executive and whatever staff there are find they are beating a horse that only returns about thirty-five cents on every dollar invested, and that's not counting the hundreds or thousands of volunteer hours involved in putting on these events. The cost of fundraising is escalating. The return on investment is decreasing. The ability of the young nonprofit to invest in fundraising is practically non-existant. Trouble is brewing.

Couple this with the fact that direct mail donors, especially in this day, expect a lot more information and nurturing than ever before. But the founder/executive just doesn't have the time or staff to do that, while board members generally eschew such tasks; after all they're friends of the founder, so they should be treated in this special way that lets them off the hook.

So the contributions from direct mail tend to decrease as the years roll along, not to mention the fact that the list of people isn't being increased from year to year with new prospects. The fundraising infrastructure doesn't exist that will keep a continuing stream of prospects coming into the non-existent donor and prospect database. So, as gifts go down, and the number of people mailed decreases, the "take" from this method of fundraising dwindles and the cost of mailing may well exceed the revenue coming in. More trouble.

That's when they call in the fundraising consultant. We like that, but it's hard on everyone at the new nonprofit.

More tomorrow..

"We Need a Team… to Do It My Way"

Picking up from last week, what we're doing here is examining the phenomenon of "Founder-itis" as found mostly in new, and therefore smaller, nonprofits. This is the phenomenon where the founder has become the executive director, has stayed on too long, and has led the charity to a greater or lesser quality of dysfunctionality by paralyzing its growth and its capability to change with the times. We're taking a look at the factors that can, early on, indicate trouble for such founder-dominated nonprofits, and how these are related to the early decisions and actions of the founder.

Last week we dealt with two critical factors, the first of which was the haste with which these founders sometimes rush to mission accomplishment without thinking through the questions about whether another nonprofit is really needed in the specific field, or whether it would be best for the would-be founder to simply go to work for one of the existing charities. Thorough strategic planning is critical to a charity start-up, and any founder needs to take the time to involve a whole community of people in assessing, first, whether another charity is needed, and then where it will go and what it will do.

Then we took on the problem of how the initial board of directors is formed by the founder; we examined what happens when the board is put together of friends and associates of the founder, is not given true governance capability, and is done simply to satisfy the IRS regulations, but is kept under the close supervision of the founder/executive. Boards need clear job description and performance standards. They also need to be allowed to be true governors, and they need to the real supervisors of the founder, as distasteful as that is to many founders.

This week we are delving into a new realm: fundraising, and the kinds of subsequent effects that early fundraising decisions have on a nonprofit. Such decisions set the tone and pace for fundraising for years to come; the newly-formed nonprofit has just as good a chance of becoming dysfunctional in its fundraising as it has in its governance and strategic planning.

Most often the charity suffering from founder-itis doesn't get to my door until the start-up nonprofit is about three to five years old, and they're in serious trouble. The reason they're in trouble is because of their inability to raise contributions from the public. Early problems with fundraising are masked by the founder's haste as he/she sets up a nonprofit that is initially dependent on foundation grants and special events, with a couple of direct mail letters to friends and acquaintances. That configuration is good for a few years as a way to get started serving the target population immediately; it brings in the relatively easy money. And, as we saw last week, this makes the founder and the board feel good early on that something is being done in the field with the target population. But it ultimately leads to trouble.

What happens is that in the haste to feel good and get something done, the founder does not test to see if there is a significant groundswell of public support in the community for the work he/she wants to do. That means the early dollars are going to come from friendly local foundations who want to help a start-up, and from special events. The idea is: "Everybody likes a party, and networking is a key to advancement of just about any kind in our society. So if we bring people together, charge them a donation to get in, they'll support us just to get to the party." The founder can then spice things up a bit a t year's end by sending out a direct mail appeal, and that brings in a few dollars too, even though if one were to look closely at the statistics of such a mailing trouble is forecast from the beginning. So, the early dollars are easy.

But the next decision compounds the problem that's starting to happen: those early dollars are spent solely to program – meeting the needs of the target population. The founder is in a hurry to get results, puts on staff, undertakes the essentials of rent, utilities, materials and the like. This sets up the operating budget, but there's nothing invested in fundraising infrastructure. The executive writes the grant proposals, the executive plans and holds the events, the executive writes and sends the direct mail appeals – with the board members being called in to participate in the events and stuff and lick the envelopes. Through all this, the founder/executive wants to show all donors that the costs of administration are low and spending on "fundraising" is practically non-existent. No better way to do that than to actually not spend anything on fundraising, right? Double trouble is ahead.

We'll get into the first mistakes here in fundraising this afternoon.

Picking up from yesterday, we were enumerating the steps that one would ideally use to set up a new board of directors for a nascent nonprofit in a way that would lead to solid governance and steer clear of any elements of dyscfunctionality. Just to summarize where we were at the end of the last post:

Step 1 was understanding the problems and successes of other similar charities that already exist.

Step 2 was taking at least a year to find and recruit the board members in advance of starting the charity up.

Step 3 was writing the board job descriptioon, plus individual job descriptions for each of the board members.

4. My next step would be to lay out a plan for the recruitment and installation of my new board members. This plan would have nine elements:
1. Generate a list of good prospects according to a list of needs for skills, money and governance experience. This is the result of the board's brainstorming a list from their personal and business acquaintances, and represents the extent of the organization's ability to tap into community leadership. This list will hopefully grow longer over the years.

2. Personally recruit the best of those prospects first, making sure they understand the job description, have had nonprofit governance experience, and know the organization. Board members take on specific personal recruitment assignments from among the best prospects. Those who accept the invitation to consider board membership are given an orientation and a tour, plus attend 1 or 2 board meetings in order to inform themselves about the organization and this should factor into their decision ultimately whether or not to join the board.

3. Install them with public ceremony in front of their peers and family; let everyone know how valuable these people are to the organization and how much is expected from them. The press should be involved. The event could be an annual meeting, with dinner, or maybe done as part of an awards ceremony or public charity auction event.

4. Train them in what they are to do – both collectively as a board, and individually in terms of where they will be serving as volunteers to the organization's fundraising or program efforts. This means both group training and individual coaching and mentoring for the new board members. Incumbent board members should be assigned to do this mentoring and the executive director will assist with coaching.

5. Evaluate them annually on their performance according to a process that the board devises together, commits to paper and enforces with its action. New board members should be apprised not only of the job descriptions (collective and individual) but of the performance standards as well. An evaluation process should be set up whereby annually each board member's performance is evaluated and the performance of the board as a whole is judged.

6. Give them more training when individuals shift their personal volunteer contributions from one area of the work to another. Board members need fairly constant training, either in various aspects of fundraising, or in the areas of governance, finance, program development. A steady stream of training opportunities should be devised for the board's ongoing training.

7. Set term limits for board members so they can see "the light at the end of the tunnel" and don't come to feel as if there's never going to be an end to this commitment.

8. De-brief them before they leave the Board – finding out what they have learned about our methods and practices, about our community image, about our support in the community and what we can do to continually enhance that support.

9. Have a formal "Letting go" ceremony to thank them and praise them in front of their family and peers for their excellent service to the organization. A formal way to say thanks for a job well done is afforded by such a ceremony. It's also a way to bring closure on each board member's term.

That's how I would set out the plan for board recruitment. Not a three-stage process (ask them, put them on, never let them go) but a 9-step process that does a good job of stewardship of the time, talents and experience of each board member as well as of the board as a whole.

See you on Monday. There will be no afternoon post today.

Preparing to Have a Board

Here's the way I'd like to see nonprofit boards set up right from the beginning. I think this way would virtually eliminate dysfunctional nonprofits, it would nip founder-itis in the bud; it would result in a much more efficient and effective nonprofit serving the community; and it would broaden and deepen the community support for mission accomplishment. Here's the way I would do it:

1. At the very beginning, when thinking through the concept of the charity's role and mission in the community, I would become seriously involved in volunteering for several charities who are serving my target population or serving people in some way like the people I want to serve with my charity. I would get into their problems and see, both from the program side and the fundraising view, what those problems are and how they are caused.

2. Next, I would take a year to find board leadership for my charity. I would go to community leaders and those who support other charities and ask them their opinions about a new start-up in the arena in which I want my charity to serve. I would ask them what they see the needs are; would ask them what governance qualities are needed; I would ask whether they would financially support such a start-up.

3. Then I would write a board job description so that my incoming board members would know right up front what was expected from them. I would also draft a set of performance standards and a process of board member evaluation, and put that before prospective board members. That job description would contain at least the following elements:
1. Give active and visible support for the nonprofit throughout the life of the community
2. Significant personal annual giving to the nonprofit
3. Strategic planning as a regular board agenda item
4. Attendance at board meetings, special events
5. Take on ommittee assignments and attendance at those committee meetings
6. Satisfaction of other evaluation measurements

Now, here, I'll just bet you're saying, "Yeah, and you'll have no board members, too!" And you might be right. But many times I have seen a nonprofit board adopt this kind of job description and with a year or two everybody in town wants to be on that board. Why? Because when the job description is rigorous, the board gets a lot done and the nonprofit starts to move in healthy directions. People in the community can see this; they hear about it from the grapevine. And leaders will tend to go where leadership is needed and appreciated.

Now, if it does happen that leaders identified by a nonprofit board as potential board members do balk at a more rigorous approach to their job description, there's significance in that, too. Either we're asking the wrong folks, or the community's leadership isn't appropriate for board membership. Either way, it's a sign we need to pay attention to, and deal with. Not by cutting down on the charity's governance, but by finding leadership that will really lead and govern. It's tough, yes. But if we did it that way, we wouldn't have so many little mom and pop charities springing up all over the place. And a lot of would-be founders with great ideas would be satisfied with volunteering for and working within existing organizations, making them better and more effective instead of going off and founding their own charity and expecting it to grow into something useful to society.

Ah, but we must return to the steps of building a governing board. More tomorrow…

10-Year Crisis Starts in the Board Room

I knew an executive director and founder of a charity once who was a voting member of the board, made up the agenda, brought it to the board meeting, ran the board meeting (even when the chairman was there) and wrote up the minutes a few days later and mailed them out. Nothing was going to get by this lady, and she would brook no interference with or viewpoints other than the perspective she brought to the boardroom table.

But the board members were also complicit in this behavior. Everyone on the board was a personal and social friend of the founder/executive. So no one was really inclined to do much that would mar the surface of that continuing friendship.

But more than that, there was an implicit trade-off in the relationship. The founder let the board members off the hook, so far as giving to the organization was concerned, in exchange for nobody pressing on any governance issues. And, in fact, all the board members were busy with their own problems and affairs, so none gave the time to finding out what charitable boards should be all about. No one delved into the operations of the organization, beyond approving the annual budget as presented by the founder herself. So they pretty much allowed her to do as she pleased, giving bits and pieces of advice along the way, helping out where possible and necessary. But the whole board process consisted of letting the founder run things as she saw fit. They also let the founder carry all the burden and do all the work.

Dysfunctionality doesn't exist in a vacuum. It takes "two to tango" so to speak, and it is necessary for the board of a dysfunctional nonprofit to be complicit in the dysfunctionality.

Now, here, I want to take a bit of a digression to say that over the years I've seen many small nonprofits who aren't really dysfunctional, but go about the process of recruiting and installing board members in such a way as to subvert the real power that good governance can bring to a nonprofit. These are the nonprofits whose executives use a process of recruitment that I would call "If it moves, put it on the board." If someone gives a $500 check a couple of times, "put her on the board." If someone volunteers frequently, or turns out to be a major help with the annual fundraiser event, "put him on the board." If someone makes a suggestion that turns out well for either fundraising or program, "put her on the board." If the founder/executive is looking around the community for donors with capacity, and she finds Mr. and Mrs. Successful, then "let's get them on the board, maybe they'll give to us." If he can fog a mirror, "put him on the board."

That's the way to develop a board that a. has no idea of its function; b. knows nothing about governance, and c. has a very good chance of dissolving into fractious disputes over time that detract from any true governance that might have been possible. So by the very nature of this type of board member recruitment process, the executive sets up the board for failure at is primary task.

I'm in real hot water here, right? Goose is cooking. More this afternoon.

Six Steps to Fundraising Dysfunctionality

What's going on here is that our founder, now called the Executive Director (he/she is actually in charge of something now, and that feels good) is going to go right for the jugular of the perceived problem or lack in the social order and begin work with the target population. That's where the payoff is going to be: feeling all that warmth and goodness when we've serve the hungry their meal, educated the mentally disabled children, trained the dogs, taught the kids to read, or whatever it is that we're doing. I've heard this from so many: "This is what I'm really good at; this is what I enjoy; all the rest of it [fundraising, governance, marketing, planning] is stuff I don't like to do; let's get on with giving the service."

But this is just the beginning of a path that develops and has the potential of taking the founder ever further from public accountability. Here are the steps I see on that path to fundraising dysfunctionality:

1. In the start-up phase these individuals who are founders of nonprofits are in a hurry to start service, and are very much not in a hurry to find or demonstrate significant public support for what they are doing.

2. They gather a group of like-minded (or even just supportive) people around them as a board of directors. No job description; no governance direction; no performance standards, no public accountability. We only need to satisfy the IRS regulations. Not important, right?

3. Then the next step is to be "all things to all people" – a broader and deeper reach into the problem. This results because "nobody can do it as good as I can" and the new founder is at pains to make sure all volunteers and the few staff that are needed to help with the work are fully indoctrinated with the "founder is right" mentality.

4. Next comes the turf-building "We're the best; people should support us" mentality. This is helped along by the fact that the founder sits alone late at night or early in the morning writing grant proposals to foundations – not out in the hustings meeting and greeting and talking with lots of donors and prospects. So the viewpoint can become a bit jaded.

5. And as we descend further into dysfunctionality, we see that a plethora of daily tasks cannot be delegated because "nobody thinks like I think on this issue." So the executive/founder does more and more, getting busier and busier. This occasions lots of "fires" and minor/major crises that need to be put out and resolved.

6. This leads to a perfectly valid excuse for not getting very involved in good fundraising practice: "I don't have the time" when it comes to contacting and personally cultivating donors and prospects. Fundraising is limited to what the founder can handle: events and grants; maybe a mailing once a year to friends. But doing point-of-entry events for multiple prospects, marshalling volunteers in support of a serious fundraising program, and personally cultivating prospects is now almost completely out of the question.

7. And as we slide even further, "I don't need a team on this; I know what I'm doing. And if we must have a team, then let it be a board I can control. I'll nominate my friends; but I definitely don't want to have someone 'governing' me." This is one of the strongest signals of dysfunctionality in the organization. When the founder/executive gets to the point where it is of critical importance that the board NOT bring good governance principles to bear, then we really have another dysfunctional nonprofit on our hands.

So, speaking of governance, let's move from the "doing good" arena into the Board room and see what's happening there. Here's another area where a different strategy in the start-up phase could make a big difference in keeping nonprofits from becoming dysfunctiona in their fundraisingl See you tomorrow!

Is there an Alternative to Proliferating Small Charities?

At this point, let's take a wider view, and we can see why so many of the foundations are carrying on a dialogue (have you followed this in "Foundation News and Commentary" magazine?) about cooperation, consolidation and coordination of charitable efforts within discreet fields of charitable interests.

Why is it that we have "248" (whatever the number is) human services groups in a city of less than a million people? Why is it that arts institutions duplicate services and vie for the limited money that is available to them? How can foundations, or any donor for that matter, make grants/gifts that use resources wisely and efficiently as well as effectively? In short, how can we rid ourselves of all these little "mom and pop" charities that are sprouting up all over the place demanding financial resources that are already scarce?

I remember that (back in the 1980s) it used to take a couple of years and you had to jump through a hundred hoops before you could get a 501-c-3 status letter from the IRS. Now they give 'em out like candy and figure that if you mis-behave, they'll get you sooner or later, and beyond that taxable interest they really don't mind what happens out there in charityland. So now anybody can be a nonprofit organization.

But what's the alternative? Well, how about changing the way we proceed to the initial concept in the first place, and having those individual founders refrain from the temptation to set up another nonprofit organization just because they have an idea for service? Why not set in motion a series of steps that help such nonprofit founders stop and think seriously about seconding themselves to some already-established charity?

Why not, for example, have them defend, in a public forum, their plan of service, their plan of fundraising, their tests of the marketplace, the commitment of their initial boards of directors? Why not require an initial capitalization that would take the charity through the first three years of service? Why not require a start-up to have a minimum amount of fundraising infrastructure in place and, again, a public demonstration that they have the necessary pool of donors/prospects, who not only agree with them, but will financially support them in the future? There's a concept for a charity start-up that might work a little better, and avoid fundraising spinout and dysfunctionality due to founder-itis. A little public oversight might go a long way to help this over-saturation of the economy with nonprofits.

But to ask, or even demand, this more reflective and collaborative approach of the literally thousands of founders of new nonprofits would, most likely, violate three primary factors:

a. it would violate the individual founder's belief that their perception, their plan, their way of doing things is the right way (This is the "I have a better mouse facilitation method than anybody else" routine);

b. it would in many instances publicly demonstrate the individual founder's inability to deal with, or determination to cut through and cut out, all the politics and problems found in existing charitable organizations when it comes to correcting their problems and making them more effective and efficient servants of the public interest (This is the "I don't have the time, skills or inclination to deal with these peoples' problems in existing charities" stance);

c. and it would stymie the ability of the individual to get more immediate personal satisfaction in meeting a problem head-on with action today rather than having to deal with the much slower process of researching and thinking things through carefully and then perhaps deciding that the best approach might be to second oneself to others and to process (This is the "I want my jollies now, thank you very much, and don't get in the way" point).

But let's move on to the next phase – getting to work as a newly minted nonprofit. What's going on there?

"On This House I will build…"

Founder-itis starts with the initial concept: "I can serve this need, I ought to serve this need, so therefore I will serve this need." Why is this wrong? Isn't that the way all great things start? Isn't that the way "better mousetraps" get invented? Well, in the past, yes, but founder-itis is older than the hills, too, and if we want to prevent that from happening, there is a better way to proceed, or at least I think so.

The reason a public charity in the U.S. works (back to Lawrence Lindsey's quote a few posts ago) is because a whole bunch of people come together to meet a community need. They all work on it; they volunteer for it; they give to it, they sustain it, they manage and govern it. It's a community effort; a team effort. People coming together, particularly in times of crisis, to meet a need; the community rallying around those of its members in need and helping ease pain or hardship or strife. That's the essence of the public charity: people coming together, forming a multi-faceted team, pooling resources of time, talent, skill and money.

What happens in a world where every Tom, Dick or Margaret is free to start up a "public charity" is that the founding person's individual idea (and ideal) forms the core of the new nonprofit. It isn't a community response at all; it's the response of one, single individual, or one small group of like-minded souls who think they see a need, feel compelled to meet that need, and then want to try to get others involved in doing what the founder wants done the way the founder says it should be done. In my view, that's not a valid public charity. It may be so legally, but it is not so in terms of functionality. Because what so often results is dysfunctionality.

So what we have here is a two-pronged problem: First, what is ideally should be a community response to a crisis or need is now manifested as a single person's idea of what should be taking place in the community, regardless of what the wider community perceives or feels. I supposed some would say that in the era of "bowling alone" we should expect that. But I see it as a problem, because it results in the formation of a whole host of little fledgling organizations that purport to be "public trusts" that are, in fact, mostly based sonly on putting the individual's values, perception of need and drive for action ahead of any publicly held values, publicly perceived need and publicly supported action.

The true public charity is an efficient way to deliver services. The individual's charity is a relatively inefficient way to deliver services because it ends up in so much duplication of time, effort and use of financial resources. But I have not once seen individuals wanting to start up local nonprofits stop to realize the importance of the fact that nobody but a few friends and well-wishers are behind them; that they don't have the community's support and encouragement, that they aren't leading a charge of public energy. ANd then they wonder why they get into trouble trying to raise funds from the public; they wonder why nobody supports the really good work they're doing.

Second, this results in a plethora of little charitable fiefdoms across the fabric of society, each one out there trying to serve the needs they perceive, arrest our attention and grab our cash to do what they want to do with it. So it becomes a kind of turf battle, with many smaller charities being set up in a community, each of which may be serving similar and overlapping populations.

Actually, this can result in a sort of "bum's paradise," if you're, for example, in the temporary shelter or prescription drug, or human services business. It means you (the "bum") can go to multiple charities and receive multiple benefits and instances of personal assistance. So now we have computerized systems set up across the county that track Joe and Sal and Mary as they go from one agency or charity to the next, and we electronically keep them from "double-dipping."

But that doesn't really solve the problem, it just polices the tendency of some to mis-use an already problematic situation where multiple charities and agencies are doing the same thing for the same people for the same three reasons: turf, turf, and turf.

I just know am going to get into further hot water tomorrow. My goose will be thoroughly cooked by the time this bit is finished! But we've got to deal with this. I think it's an important issue.

Case Study: "I don't have the time for this"

So let's examine this case study a little more closely and see if we can identify some elements of founder-itis that might be avoidable with patience, thought and planning. Before we do this, however, it must be said that this case is not that unusual. I can think of four other organizations with whom I have worked on similar problems where the essential ingredients were almost exactly the same.

Here are some of the key ingredients from this case study:
1. The charity is a one-person show: governed, managed, staffed and programmed by one person. Certainly there were volunteers, but they were recruited and trained by the founder to do her method of teaching her way. There were two staff persons who, again, were under the total control of the founder.

2. The Board of Directors was formed of persons loyal to and personal friends of the founder; they had little motivation other than the relationship, no training, experience or skills for nonprofit governance; they were willing to let the founder do whatever she needed to do. The Board was set up to satisfy the IRS rules and regulations that call for public charities to have a board of directors in order to be granted the 501(c)(3) designation.

3. Fundraising was limited to activities the founder approved and was able to carry out on her own. Her daily schedule was a whirl of crises and putting out fires. She had little or no time to spend on planning or careful, methodical execution. There were no resources that could be appropriated to enhance fundraising infrastructure. Grants, special events and one or two dear loyal friends plus the founder's own bank account were the key sources of revenue.

4. The founder's personal and management style was one that reminded of an autistic child with attention deficit disorder, and this became the style of doing business reflected both at the staff level on a day-to-day basis and in the work of the board of directors. Consequently, there was little planning, few instances of deliberative thought, no consistent follow up on matters of business, and an inability to set even a meeting agenda without constant interruption.

5. The founder's word, preferences, style and scope of options became those of the organization, and everyone associated with that charity publicly avowed that essential posture.

So this was the set-up in our case study of founder-it s: a dysfunctional organization badly needing to have a productive fundraising effort, but unable to get a a process going. Tomorrow we'll deal with some of these elements in more detail, looking for ways to advise new start-up clients and keep them from falling prey down the road to founder-itis.

Case Study: "I wanted to get started and show what could be done"

I am approached regularly by would-be start-up nonprofits. People come looking for whatever advice they need. Sometimes people seek fundraising advice, sometimes governance alternatives. Other times they want to know how to set up the new charity with the IRS. But rarely, if ever, does someone come and say "I'm thinking about doing this kind of work. What are some of the blocks and barriers going to be, and do I stand a chance of surviving long term?" Mostly people seem to want self-affirmation; they want to know that their ideas about something are, generally, in the right direction. They are rarely prepared to accept criticism or negative comments; they don't seem to like a cautious approach and they seem to have little tolerance for much analysis, particularly if it cuts across their grain of an idea about how things should be.

One case I worked with is typical enough that I'll lift it up as a case study. The charity's request for assistance in fundraising involved a long-time school teacher who had developed over the years a marvelously effective method of teaching youngsters to read. This woman has some of the highest scores available today in teaching kids to read, write and think. The results this nonprofit gets each year are unbeatable, and they do improve over time. Gives a great case for support.

I was enlisted by the founder's board to assist them in fundraising, with the first step in the process being a development audit to determine past and current fundraising practices and results. In the process of the development audit, it quickly became apparent that the organization had a serious case of founder-itis. The founder was the executive director, as well as an officer and voting member of the board. The board members were all long-time personal friends of the founder, pretty much ready to approve whatever she wanted to do. The organization's management pattern tended to follow the founder's personal pattern of disjointed, unfocused thinking and planning. No idea was acceptable unless it fit the founder's personal preferences. Fundraising had come virtually to a halt after the first six years of operation. The board was allowed not to give; personal friends couldn't be solicited for major gifts, simply because of the "embarrassment" that would accrue to the personal relationship.

As I explored further into the organization's history, it was revealed that the founder had early on became embroiled in local school politics around the issue of the knowledge gap between white and African American students, advocating that the school system should be responsible for bringing minority students back into the literate mainstream.

At some point the frustration of dealing with the political and bureaucratic process became too much, and this woman made a precipitous decision to start a literacy charity on her own, letting the schools stew in their own juices, but moving ahead to solve the problem on her own, at least for a few youngsters. Direct service to a few was preferred over an institutional solution. Whether because of impatience, lack of political skill, lack of supporters or whatever, this charity was created to get action, now. And the resulting situation gives us a good case study in which to see the ingredients that eventually can lead to Founder-itis.

Everyone Wants to Start a Charity

We've gotten to the point where we now have more than 1 million 501-c-3's in our country. In fact, Giving USA reports that in 2005 we had 1,045,979 organizations registered under section 501(c)(3) of the Internal Revenue Code. That reflected an increase of 35,584 organizations from just the previous year! Think of it: 35,000 new, fresh ideas of how to serve humankind; 35,000 individuals who have the courage and the fortitude and the personal resources to found a new charitable organization; 35,000 boards that must be formed; 35,000 new funderaising mailings per year (if we're lucky they only mail once a year!); and 35,000 more auctions, golf outings and awards dinners for us to go to! What an opportunity!

It seems good ideas abound everywhere! Well, need abounds just about everywhere, too, doesn't it? It's part of the human condition. Especially if a person finds they are close to or involved in some personal tragedy. A good friend has children who can't read; the family member died of a rare illness; the people in the next section of town don't have enough for Christmas; the artist is not properly supported and recognized; the driver was drinking and killed someone. And there are always the hungry, the homeless, and the ever-present poor.

Not that I'm a heartless person. My heartstrings vibrate with human needs, misery and want just as much as those of the next person. But maybe I'm jaded because I've seen too many innocent attempts to put together nonprofits that are designed to bring short-term, band-aid solutions to situations that are by nature systemic and complicated, and causes that have been and remain intractable problems of human existence. If you want to make a significant difference in these kinds of problems, you'd better get prepared to go fight Goliath!

The story I hear most often has to do with the fact that the founder of the organization saw a need, looked around at his/her own experience, training, talents, and resources and said "I can/should/would/could help that situation." That person then decides to act on that impulse and get started alleviating the need: putting together Christmas baskets, advocating for more research to be done, planning the exhibition, teaching people to read or whatever needs to be done.

"I can help the situation," turns into "I can do this and this and that." which turns into "Let's get going and get it done," which leads to "let's go through whatever it takes to set it up so people can give and get a tax deduction," and so forth. There's a kind of reflexive movement from the personal in-touchness with need, right over to taking action on the problem, doing something about it. In the rush, people tend to skip over a lot of thinking and planning steps that will make the charity more effective down the road.

That's the American way, of course, and a lot of charities that exist today wouldn't be here if it weren't for that kind of direct logic train that isn't stopped by the need to think through and plan, but just moves ahead to action and results. This is nothing if not a direct reflection of how we tend to handle a lot of things in our society. American business has been built largely on that kind of model. We have the saying "build it and they will come."

So, if we have a good idea about alleviating human need, we're not going to sit around and "ponder the imponderables," we're going to act on impulse, see what happens, see if we get results, see if we can make a difference in people's lives. And, if we can, then we feel such a tremendous sense of personal self-satisfaction that our next step is to make the effort to institutionalize it We want to feel that sense of achievement and satisfaction more often! It feels good. Let's have more of it!

It's a great start; the echo of many a business, many a charity, that has produced good results from which all of us benefit. No doubt about it. But the problem I want to point to here is what I and others have called "Founder-itis" in nonprofits. These are situations where the founder continues, often as the executive director, long past the point when the time has come to step aside and let others take over. It's a condition that, eventually, brings the effectiveness of these organizations to a standstill, wastes a tremendous amount of good effort and intention, and produces nothing in return but heartache and headache.

Founder-itis doesn't plague every nonprofit by any means. But in my practice I've had numerous opportunities to view firsthand the problems it causes. I certainly will admit that in my work I see and help those whose organizations are in trouble more often than I am in touch with the organizations that deal with their founders successfully. So this is my bias based on experience. But I think there are helpful lessons to be learned here about the growth and governance of nonprofit organizations, thus the new direction of this blog.

More this afternoon…

Slow Economy is time to dust off Case for Support

Well, perhaps it was, in the end, something of a self-fulfilling prophecy. Because of that initial reservation and doubt, there apparently wasn't enough excitement generated for the CEO to feel okay about making the mental and emotional leap from relying on fundraising events (with an average of $50 to $250 or even up to $500 per person) over to the major gifts cultivation and solicitation process (where individuals would give multiple-year commitments of $5000 and over). I guess it was just too tough to make those changes in the daily schedule, and make the mental adjustment to doing prospect management. Too bad. A lot of money has been left on the table.

So what's the upshot of all this? Apparently the viewpoint persists at that nonprofit, then, that the condition of Michigan's economy is adversely affecting this organization's fundraising ability. The conversation reportedly taking place in that board and staff is that since people are in tough economic times not as many signed up as sponsors, not as many came to the events, not as many bought at the auctions, or whatever was going on.

Well, that might be the case, but, frankly, my bet is that it doesn't have anything to do with the economy. It more probably has to do with the charity's own internal motivations, predilections and viewpoints. It has to do with the inability to simply pick up the phone, make the appointment, go see the prospects, and ask the prospect for the contribution. It may have to do with lack of training, too, but it also indicates a lack of commitment to do this kind of work, time after time, day after day. That's what is needed to make significant individual gifts a regular, even dominant, part of this organization's revenue. I've done it, in good times and bad. It works just great! It brings in a ton of money. It's a simple concept; relatively easy to do.

My friend reflected that in other charities where he has worked there was often so much more work and change involved. But here he had the stage all set, the process in motion, but the change of attitude and the change of daily priorities needed was subverted by an internal attitude that "we don't believe you can actually do that." Too bad. But it has nothing at all to do with the economy. So the economy is just an excuse.

Another friend of mine from the sales and marketing arena, Jerry Holcutt, says that to those who think that way, cold-calling prospects absolutely won't work. Yet for those who engage in it with verve and vigor, it works all the time. It's a matter of perspective. Same is true for calling on donors and making major gift donors out of them.

So where does this all bring us? It brings us to the point of saying that, if you look at it from a different point of view, a slow economy is really just the absolutely perfect excuse for a nonprofit to dust off their case for support, making it more creative and compelling. It also brings us to the consideration of the ways a nonprofit needs to deliver its case for support continually, on a persistent and frequent basis, to a wide variety of donors, prospects, constituents of all kinds.

The economy doesn't affect fundraising; attitude, perspective and action do affect fundraising.

Does a slow economy prevent a charity from asking?

I recently had a conversation with a fellow fundraiser who has worked for a nonprofit organization for a couple of years. His experience really points up the reality we're digging at here.

During that time he endeavored to put in place a major gifts emphasis and worked out all the basics, setting up staff and volunteer assignments to pursue the first round of major gift prospects gleaned from their database.

This nonprofit definitely wanted and needed more money; significantly more money. But my friend noted that the management team at that nonprofit apparently had some reservations about how money couold be raised. He tole me the CEO kept saying, "I'm not as enthusiastic as you are about our potential to do this."

But my friend was excited by the possibilities. Apparently their database of donors was a veritable goldmine for a major gifts process. He described their donors as loyal, frequent givers, and said there were lots of them. And this nonprofit had, over the years, taken the pains and trouble to put many of the right codes on donor records, making the work of prospect identification a pretty straightforward task. The stage was set.

The reason my fellow fundraiser mentioned this situation in the first place was the way this rather positive situation quickly collapsed on itself. Having assigned the first round of prospects to staff and volunteers for cultivation and solicitation, and having had a few early successes, one of their early discoveries was that they really needed to do more information sharing and more cultivation with a much more personal touch than they had used previously.

So that called for some changes in the way people viewed the task, and in the time it would take, and in the alteration of daily schedules for key staff. Nothing new there, it happens all the time.

But, in the meantime, it happened that some special event fundraisers this nonprofit put on came up short in terms of the amount of money they raised. That caused something of a financial crisis and the CEO decided they'd had enough of the major gifts emphasis and could do with more energy being spent by the development department on the special events.

My response to this situation was, "It looks like it might have been time for the development department and management staff to simply go out and raise the money you need with the process you already have in motion. You seem to have the prospects, the method, the program in place to do that; and if there were still six months before the end of the year you had plenty of time. Why didn't you just go out and raise the fiscal shortfall and be done with it?"

His reply was that the CEO had said to him, "As I told you at the beginning, I don't think I'm as enthusiastic as you are about the potential for our organization to go do that. I think you need to bear down on the special events."

More this afternoon…

The effects of hard times on giving

Here's another piece of this puzzle. The Chronicle of Philanthropy, in its September 15, 2005 edition, ran a special report on "How Charitable Giving Fared After National Crises." In this article, the report said, "Political turmoil, military confrontations, and economic turbulence can all affect what types of charities Americans support – but they generally do not cause a drop in the total amount donated to charity according to a study by the Center on Philanthropy at Indiana University for the Giving USA Foundation."

In another article some years ago, and I'm still trying to locate my source for this, but I think it was either Robert F. Sharpe Co., in their Give and Take publication, or the National Conference on Planned Giving, that compared all the 20th century recessions and depressions and the giving patterns that followed those economic downturns. In this I distinctly remember the trend in something like 12 of 15 instances was that giving increased significantly. If any of you happen to remember the source for this, I'd appreciate your assistance.

But the main point is that when times get tough the tough have generally increased giving. So, if you’re a director of development or a nonprofit executive director, and you're melancholy about being unable to raise funds in a down economy, it's time to get up and get moving; get those creative juices going, and get back to figuring out how to make that case for support really ZING the hearts and minds of donors and prospects.

More tomorrow.....

Hard times actually can increase donations

One thing we know is that our creator has hard-wired human beings to be able to give. For example, if you want to see someone get a really big "high" or rush, just watch them give a fairly major chunk of money, say $10,000 or so, to a cause they're really involved in and excited about. That donor will be on the ceiling for weeks! Why? I think that's because the internal satisfaction that comes with being a part of doing something good, accomplishing some good for humanity, making someone's life better, easing someone's pain or providing a leap in understanding of some cultural value – these bring a rush and a mental/emotional state of euphoria that is practically unbeatable.

Truth to tell, we need that rush, the high, that euphoria, in good times and in bad. Regardless of what is going on in the economy. Or maybe even BECAUSE of what's going on in the economy, I think we may need it more than ever. But we're hard-wired to need this internal satisfaction and excitement in our lives. We're built in such a way that when we give, and the more we give of ourselves, the better we feel.

That should make it easy for any nonprofit fundraiser to write a dynamite fundraising letter. The stage is set, we know charities work, and work well, we know that charities give us value and we are compelled by our sets of values to give. We know that people have this innate urge to give, and that they get a really powerful emotional high from doing so. So why is it that we keep churning out these really droll fundraising appeal letters time and time again? What's more, why is it that we keep expecting that these sleep-inducing tomes will appeal to donors more this year than they did last year?

If we want different, better results, more money, more donors, higher average gifts, why do we keep doing the same things we have always done? When we need improvement, why do we keep doing the same things that brought the results we want to improve? Who was it that said this is insanity? Einstein, I believe?

The Stage is Set for Nonprofit Success

Did you see the Wall Street Journal article in the Opinion section for Monday, November 27, 2006 entitled "Charitable Explanation"? It's a doozy! It was written by Arthur C. Brooks, professor at Syracuse University's Maxwell School of Public Affairs, and the author of "Who Really Cares: The Surprising Truth About Compassionate Conservatism."

He compares the 85 million American households who give away money each year to nonprofit organizations, to the other 30 million who do not. What's the reason some give and others don't? Brooks says, "The charity gap is driven not by economics but by values. Nowhere is the divide in values more on display than in religion, the frontline of our so-called 'culture war.' And the relationship between religion and charity is nothing short of extraordinary. The Social Capital Community Benchmark Survey indicates that Americans who weekly attend a house of worship are 25 percentage points more likely to give than people who go to church rarely or never. These religious folks also give nearly four times more dollars per year than secularists, on average, and volunteer more than twice as frequently."

There it is, folks! The perfect set-up for any nonprofit to go into the American marketplace and ask for support for mission accomplishment. He summarizes: "Private charity is a choice: a choice to express our values in a private and singularly humane way. This is worth remembering as we hold requests for charitable support in our hands this month – and make the right choice."

So, here we have it: we know that charities do good work and work more effectively and efficiently than government. We know that a huge majority of American households have the kinds of value systems that include giving to others and giving to make the world better as a result of their religious heritage.

Now, the stage having been perfectly set for nonprofit fundraising, in good economies and in bad, what are nonprofits going to do with this? Do poor economic times mean that we just can't think of ways to appeal to those sets of values out there in creative and compelling ways? Does the economy turn off the creative juices? Does the economy prevent us from enticing, romanticizing, motivating donors about what we do to make the world a better place to live in? I don't think so. I don't think the economy has a thing to do with it!

People are ready to give. Now, the decision each individual or household will make about what organizations they support is going to be made on how well any nonprofit states its case for support; on how compellingly and powerfully the donor is drawn into the urgency of the need for their dollars. It's not the economy that's the turn-off; it's charities that keep asking for money without giving us something exciting in return. What I believe any of us who make charitable gifts need and thrive on is that sense of belonging, that feeling of making a difference, that emotional rush of success and achievement that comes from seeing and experiencing the good that we're bringing about in the world. That's what makes giving truly exciting!

Charities use Economy as excuse not to expand fundraising efforts

I well remember Lawrence Lindsey, a Governor of the Federal Reserve Board, who spoke to one of the first assemblies of the National Conference on Planned Giving, which was probably about 1984 or 1985. He said to us that if you give charity $1 as a contribution, you're likely to get something in the neighborhood of $6 worth of service back from that gift. But if you give the IRS $6 in taxes, it is unlikely that you'll get back more than $1 in service. I thought that since he was a governor of the Federal Reserve Board, he probably knew whereof he spoke.

That's a pretty good reason to keep philanthropy alive in one's heart. If you're the kind of person who likes to give, has been brought up with that set of values that reaches out to others in need, or gives back to the community, or simply wants to advance the human plight to new levels of accomplishment, there is the answer: charity does what government cannot, and does it more effectively than government could.

Why is that the case? Lindsey went on in that speech to say that the reason this is so has to do with the effectiveness of volunteer boards. (Yes, those same boards that we just got done saying last week can only do two things: brainstorm and tell stories, I know!) The involvement of volunteers in a nonprofit organizations governance is key to that nonprofit being able to accomplish its mission. Because the board brings planning from a huge diversity of backgrounds, perspectives and skills sets; the board members give generously and get others to give financial resources to the mission to be accomplished; and the volunteer board provides fiscal and programmatic oversight that is far superior to that in government agencies, even under our democratic system.

So that helps set the stage for nonprofit's getting into and staying in the marketplace with a plethora of good, creative, compelling, motivating ideas about why we should give any money to a particular cause. We all know that the results of our giving will be productive.

EMAIL Dialogue: What do I do when the Donor says "Too Much?"

A recent client of mine, R. Hatter, sent me an email last week asking what the appropriate response would be to a key donor who had expressed irritation at the increased number of requests for contributions and the steady flow of information from that charity to his mailbox in recent months. "What can I tell him when he complains that we send him too many appeals and too much information?"

My response was this: "On the guy who says 'too much' -- I suspect the reason he's saying this is because his commitment to your charity is faltering a bit. What I would suggest is that you get him directly back in touch with 'the kids.' Let him touch and feel the urgency that these young lives contain, let him get back in touch with the urgent realities of their situation: that the reason we ask more often and ask more people ask for more money is that the costs of keeping these kids moving towards being fully participating citizens (in a society that otherwise would just dump 'em in the garbage) is getting more expensive each year. Let him see a life 'on the mend,' so to speak. Let him see that while 'God don't make no junk,' it's really generous and self-giving human beings who provide sustenance to life. Let him see that little girl's face or that little boy's smile; let him see the poem or the video or the new invention about to be born in that youngster's mind. He's out of touch. That's all.

"My further suggestion is that you don't answer his more 'obvious' objection, having to do with mailings, and asking too much. That's not where the issue is. And arguing the 'facts of the case,' the number of mailings, etc., in the terms in which he has couched the discussion, won't really get anywhere because he will just continually come back with the same answer. His question sets it up that way. The increased efforts of your staff in fundraising can only encounter objections among those who haven't seen, felt or touched the power of these young lives. Because, for any of the rest of us, there is only one answer -- ask for more money, get more money, use more money, save more kids."
What would your response have been to this question?

Hard Times Give Some Prospects the Excuse Not to Give

I've been thinking about this problem with the economy and charitable giving, and I think we need to take a look at the donor's or prospect's view of this situation. It seems to me that in a down economy it's pretty easy to get into a mode (or maybe it's must a mood) of scarcity. On the home front, for example, there's all the defensive budgeting we have to do – tightening the belt and depriving ourselves of those expenditures we'd really like to make in order to meet a decreased income level. And then there are the cuts we experience in our places of work in both budget and programs, the re-prioritizing of objectives and the re-directing of scarce resources to the "things that count." This looks like it's really the wonderfully perfect excuse to also deal with those nonprofits that bug us for contributions but don't give us anything to be excited about.

For example, for several years now, I've been giving to what in other times as been a favorite charity, my alma mater, in central Pennsylvania. Great place. They dealt with me, didn't they? MUST be a great place. And they continue to take hundreds of central PA's rural and small-town, provincial, unfocused kids and make thinking, discerning, creative adults out of them. With what more laudable program could you ply a vision for our world's betterment?

But in tight financial times, my giving there goes down. Why? Well, frankly, it's an excuse to save a little money for something else. Either that new computer I want, or maybe to get involved with a new charity that has captured my imagination more firmly.

Now, I read the bulletin, I get on the website to see what's happening, and I even talk to fellow alumni occasionally. What I find is that even though there's a whale of a lot happening there in terms of the type and quality of education you can get at this institution, the fact is that the way they describe it in the letters that ask for money makes my eyes glaze over and significantly reduces my motivation to keep giving there. The fundraising letters haven't kept pace with the quality and intensity of the educational experience of the kids that go there. That's too bad. This college, overall, and by comparison, does a creditable job of fundraising. But think how much more they could raise with a littl emore attention to making their fundraising letters compenning and motivating, exciting and alive!

Does the economy affect fundraising? I think it does: it allows donors, people like me, and some of the people we think could be our best prospects, the perfect excuse to use the economy as a reason to give elsewhere or to use resources for things they want when our professional fundraisers can't come up with anything that sparks their continued interest, meets their needs, matches their values. Sure the economy affects fundraising….. or does it!? We take on another example later today.

Is "The Economy" Just an Excuse?

I so well remember Robert F. Sharpe, Sr., who said to us back in about 1984, as we were in training to become major and planned gift officers in our respective nonprofits, that giving follows compelling ideas. Just as in business and industry the money tends to follow the leading edge of ideas that make what we euphemistically refer to as "better mousetraps." If Google comes up with a better search engine, the money to develop that comes their way, then followed by hugely increasing use of that engine when developed, and then followed by the ad dollars as advertisers finally catch on. Better ideas lead to better products, lead to booming economy. Right?

Can we apply that to charities? I think so. But from what I've seen, the boards and staffs of nonprofit organizations don't seem to share that point of view. For example, I've started collecting fundraising letters again this year. It's obvious there are not too many ideas out there in the southeast Michigan philanthropic marketplace. Here we have another gala – "please give to our cause and come to our gala." Over there we have another human service agency that writes a letter two pages long giving a long diatribe on all the aspects of their many-faceted program. Makes my eyes glaze over after the first paragraph! Then we have the hospital campaign – they're short and sweet: never mind what we're doing with your money, just pay up! Your pledge is past due.

During last year's holiday season I racked up 57 fundraising letters that I got in the mail. I can't complain about this. Comparatively, not all that many have my name and address, in light of the fact that there are some 3000 agencies in southeastern Michigan that have the 501-c-3 IRS designation! But of the 57 letters, only 3 of them had any real appeal at all, to my way of thinking. The rest just didn't have the ideas, the program, or the way of describing their efforts or success that appealed to me. So I gave to those three. I could have given to all 57, and would have, IF any of the other 54 had a spark of creativity about them, or presented their case for support in some way that was involving, compelling, motivating.

So my question on this is, does an economy in the tank mean, then, that all the creativity and all the good ideas suddenly vanish from the minds of those in charge of our nonprofits? Is the economy to blame for the fact that dull fundraising letters keep being produced? Does the economy dictate whether or not a given nonprofit thinks up a compelling, tantalizing or creative twist to its case for support?

I kind of don't think so, because this stuff happens – the dull fundraising letters, the lackluster descriptions of program, the failure to talk about exciting results people are having with their program – these all happen in GOOD economic times as well as in bad. Somehow I don't think creativity and compelling cases for support are tied that much to the economy. I'll bet an agency head could come up with a creative and compelling way to capture a donor's heart in any kind of economic circumstance. What do you think?

Bob Sharpe Sr. also said that there was never such a time of economic difficulty that someone couldn't raise a dollar, and there was never such a time of economic well-being and abundance that some nonprofit or other wasn't required to close its doors because of lack of contributions.

We'll explore the donor's response to the economy tomorrow.

The Economy and Fundraising

We have a new topic today. It concerns the flagging economy. In the past year, I have received many inquiries from clients and others about whether the slow economy, particularly slow here in Michigan, hurts fundraising. The most recent of these inquiries came in November from a prominent reporter for a business publication who was doing an article on philanthropy matters locally. The proposition was this: "There are so many capital campaigns going on right now, but will a slow economy hurt these efforts? Shouldn't these nonprofits wait until we have improved economic circumstances? Are there more campaigns going on than there is money to fund them?"

My response to this was that philanthropy is not like a pizza. A pizza is a finite, unexpandable entity. You slice it up. When you eat all the slices, the pie is gone. If there are 8 pieces of pizza and Joe has three, Bill and Mary can't each have 3 pieces. Three people can't divide an 8-piece pizza evenly. That's not what philanthropy is. But many people I've talked to over the years, especially a lot of Board members of nonprofits, seem to assume that if there are "too many charities in town" then there won't be enough money donated by the local populace for all of them to survive and thrive. But that's just not the case.

But I think philanthropy is more like an amoeba. It sort of grows tentacles out toward the food of good ideas and the more good, compelling ideas to give that there are out there in the marketplace, the more the "amoeba" of philanthropy thrives. The more compelling reasons there are to give, and the more great and wonderful things that are getting done to really help people and achieve the ideas we all generally share about the advancement of humankind, the more people are willint to give to those ideas.

Conversely, when there is a paucity of food, the amoeba shrinks, eventually dries up and dies. And, likewise, it seems to me that when there aren't a lot of good, compelling and motivating ideas happening in the area's nonprofits, when all is more or less ho-hum and same-ole-same-ole, the more people find excuses not to give. I don't think they become any less charitably inclined. Philanthropy, the "love of humankind" is alive and well in the hearts of many and is a tradition in our American culture. But people just become disinterested. Or they flock to the nonprofit that has the most compelling case for support and the one that gets the best results.