Drakes Bay Fundraising
A Next Generation Fundraising Company

Archive for January, 2013

Make Room for Charity Facilitators

Posted by Christopher Dann
Wednesday January 30, 2013
Categories: Charity Facilitators, Fundraising

In a paper we are circulating today, Mananging Disruptive and Transformative Changes in the Media of Fundraising, we describe the new, internet-spawned charity facilitator as having both disruptive and transformative impact on the nonprofit sector.

A charity facilitator is an entity whose purpose is to connect donors to organizations, projects, and people doing good work. For the most part, these new web-based enterprises are facilitating connections to the developing world. www.globalgving.org and www.givingwhatyoucan.org are good examples. But some – most prominently www.guidestar.org and www.greatnonprofits.org  – focus domestically.

Whether an organization regards charity facilitators as threat or opportunity at present, the fact is they are bound to grow in influence over future giving. To the extent they undermine middleman organizations or employ questionable criteria for selecting candidate beneficiaries, they pose a threat. To the extent they bring internet traffic to organizations that don’t have the means to do that themselves and welcome the help of facilitation, they offer opportunity.

In either case, we must also pay attention to two ways in which charity facilities could cause great mischief. One is adopting a crowd-source Yelp or Zagat approach to grading charities. It’s hard to foresee any real good coming of that. The other is promoting direct funding of projects in the developing world simply on the basis of maintaining that donors can achieve more good with their charity.

Charity facilitators and the disruptive and mischievous effects they can have underscore once again the need for organizations to better account for themselves to their donors and to market themselves better to the donors they would like to have.  It’s a given that no one can tell an organization’s story better.

Trends in Public Support

Posted by Christopher Dann
Thursday January 3, 2013
Categories: Fundraising, Statistics, Trends, Uncategorized

In a November posting Fiscal Chasm we reported and commented on data from the Urban Institute Press Nonprofit Almanac 2012 showing, across a selection of sub-sectors, the disparities between increases in the numbers of organizations from 2000 to 2010 and increases in income.

We referenced total income in that posting. That is useful for CEOs. For CDOs it’s more useful to look just at income that comes from fundraising. The Urban Institute combines private contributions and government grants into data labeled public support. If we look at the disparity between sub-sector growth and percentage change in public support, we see a different picture. Then, if we add reference to each sub-sectors share of overall public support, we get an assessment of the fundraising competition for each sub-sector.

Changes in numbers of orgs Jan 3 2013

That is what is shown in the table for a selection of sub-sectors. The data pertain to those 366,086 organizations in 2010 classified as reporting public charities. These are nonprofit organizations with charitable purpose that had $50,000 or more in gross receipts in 2010, were required to and did file 990s. While we can’t ignore the 613,815 additional public charities that were registered with the IRS in 2010, focusing on reporting public charities gives us more solid analytical standing.

Figures here showing shares of public support are different than what one regularly sees in GivingUSA annual reports. The data here are based strictly on IRS filings of reporting organizations while GivingUSA data are based on tabulations of tax data as well as econometric analyses of data and information from a variety of sources. Urban Institute data reflect only reporting religion-related nonprofits, substantially understating religious giving, which GivingUSA addresses through special (unpublished) methods.

There are only three sub-sectors where change in public support between 2000 and 2010 exceeded growth in the number of reporting organizations.

  • The extraordinary 190.2% increase in public support in the Human Services/Public Safety & Disaster sub-sector reflects the Haiti earthquake in 2010 and the lack of a major, high-profile disaster in 2000.  It’s an anomaly.
  • The 101.7% increase in International & Foreign Affairs is likely also reflecting response to Haiti channeled through organizations not classified as public safety and disaster responders. But we should also be mindful of the growing emphasis on impact investing and other forms of human health and welfare giving in the developing world, particularly by online charity facilitators such as GiveWell and GlobalGiving.
  • And in the Education sub-sector, it’s worth a contemplative pause to think about what’s happened in elementary and secondary education where public support increased 84.1%. Undoubtedly we are seeing evidence of both increasing numbers of charter schools as well as public schools’ increasing dependence on charity to supplement tax-based funding.

In all other cases, expansion of the sub-sector over the decade exceeded expansion of its public support. More organizations are competing for fewer dollars in grants and the contributions of individual donors. One or more of three things is likely happening to organizations as a consequence of these trends: they are reducing their program expenditures; they are financing deficits from endowments or reserves; or they are building sources of non-charitable funding.

The best course for building sources of non-charitable funding is in fees for services that are program related. Developing program-related service revenue not only avoids unrelated business income tax but takes advantage of skills and resources organizations already employ. It also often opens opportunities for beginning relationships with customers (or subscribers or patrons) that can later be expanded to charitable donor relationships. As smart as this course is it needs to be pursued with very careful attention to integrating strategies between the two areas of income development and between the marketing efforts for each of them. Because, as this blog often reiterates, all giving is voluntary, the downside of uncoordinated strategy is far greater for charitable support than it is for program service income.

Next Generation Fundraising and Drakes Bay Fundraising merged in the fall of 2013, bringing the longstanding professional acquaintances of their four principals – Tim Oleary, Carol Leister, Cindy Germain, and Christopher Dann – into a single company and combining the special resources and experiences of each to provide clients greater breadth and depth of service.

For more information about Next Generation Fundraising, click here.