Unit 2 Exam - Fundraising Principles & Practice

Briefly describe the characteristics associated with individual donors

Religion Gender Age Education Marital Status Income Volunteering Employment Citizenship Inheritance

Software Used In Industry

Sales Force, Raiser's Edge, RegOnline

3 Principle Nonprofit Business Ventures

Services Manufacturing Distribution or Retail Ex: Goodwill Retail Stores, DC Central Kitchen & Catering, First Book (giving books to low-income families to promote literacy)

Donors give more if they see, or are told, that others have given

TRUE

Personal relationships are important in seeking corporate support

TRUE

Theory of magic buttons holds that if we can just identify donors with the right characteristics and send them the right message, giving will automatically result

TRUE

Sponsorship

The for-profit company pays for use of its name or logo in connection with the nonprofit's products, service or events. Ex: For-profit logo on the back of a t-shirt, on a banner at an event, on a scoreboard at a sporting event

Crowd Sourcing

The practice of obtaining needed services, ideas, revenue, or content through contributions from a large group of people (mostly online communities as opposed to traditional employees or suppliers)

Corporate Social Responsibility

a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders

Social Exchange Theory

a social psychological and sociological perspective that explains social change and stability as a process of negotiated exchanges between parties.

Public Charities

- Funding Comes from multiple sources - Pass the IRS 3 Tests: Asset, Political & Organizational

Private Foundations

- Funding comes from multiple sources - Some Foundations are Public Charities because they meet at least ONE of the IRS tests for qualifying as a public charity - Some foundation must pay out a certain percentage of their asset base every year

Types of Private Foundations

- Individual - Family - Corporate - Community - Operating

Evaluate the CONS associated with earned income strategies

- Limits on public access to nonprofit goods & services - Government funding of nonprofit organizations using earned income strategies - Balance between public interests & nonprofit organization's need for revenue - Limits on transparency and disclosure due to contractual agreements - Role of perception & public relations • Eroding confidence in the nonprofit • Creating the impression that it no longer needs other sources of support

Nonprofit & Corporate Collaborations

- Traditional Philanthropy - Gift with no quid pro quo - Strategic Philanthropy - Gift with a specific benefit to the corporation Ex: sponsorship, gift of product) - Commercial - To increase sale of the corporation's product while producing revenue for the nonprofit Ex: cause-related marketing, licensing agreement - Political - To change the political climate or influence opinion

IRS 8 Organizational Categories

1. Charitable 2. Religious 3. Scientific 4. Education 5. Literacy, 6. Testing for Public Safety 7. Preventing Cruelty to Animals or Children 8. Fostering National or International Amateur Sports Competition

Creating a Nonprofit Business Venture

1. Identify Business Opportunities - Marketable Assets / Marketing Opportunities / Organizational capacity for entrepreneurial activity 2. Conduct a Feasibility Analysis - Outward-- size, outlook, competitive factors, ease of entry, profitability - Inward -- fit with mission, skills and expertise, material resources, managing risk 3. Create a Business Plan - Detailed, comprehensive document - Encompasses elements of strategic, marketing, business, operational plans and exit strategy - Internally used as a guide development of the business - Externally used as a sales document for enlisting donors or investors

How much time should you allow for planning a event?

12 months best no less than 6 months

Licensing agreements

A contract that permits a for-profit company to use the nonprofit's name or logo on its products in return for a royalty payment to the organization. (Ex: Walmart sells KSU licensed merchandise)

Altruism

According to social exchange theory, altruistic behaviors benefit the individual who performs them.

What is meant by the "seven faces of philanthropy?"

Adds to our understanding of the motivations of wealthy donors

Crowding Out

An economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending

Social Enterprise

An organization directly involved in the sale of goods and services to a market, but that also has specific social or environmental objectives that serve as its primary purpose. Profits are principally used to fund social or environmental programs and the organization can be registered as for-profit or non-profit.

Cultivation of Donor

Building relationships with donors. Part art and part science, great donor cultivation relies on consistent activity, personalized communications, and an excellent strategy.

Cajoling model/Scolding

Communication Method use to persuade donors into giving/guilt someone into giving. Fundraisers operate under the assumption that donors need to be persuaded to be generous. They present need, arouse a sense of obligation, offer psychological inducements to impress upon wealthy donors their duty to supply charitable gifts.

Corporate Foundation

Created by a corporation. are philanthropic organizations that are created and financially supported by a corporation. • Corporate foundations tend to make grants in fields related to their corporate activities or in communities o EX: UPS, Ford Foundation

Identify and briefly describe the motivations of Foundations donor giving

Created for philanthropy, required to give, strategic philanthropy (donor works side by side potential organization) LOI Letter of Inquiry

Operating Foundation

Does not have to pay the 5% out per year. It is funding the operating side of the organization Ex: Hogan Family Foundation,

Donor-Centered Approach

Donor-centered approach is a strategy in which the needs of donors are preeminent

Giving Circles

Groups of people who pool their funds and select beneficiaries together

7 faces of philanthropy

ID CARDS Investor - interest in tax benefits & impact of gifts Devout - an obligation of their faith Communitarian - makes sense & helps create a prosperous community to do business in Altruist - give for moral reasons Repayer - to pay back society for benefits they or their family have received Dynast - to continue family tradition Socialite - enjoy the social life of fundraising events

It is best not to tell donors what others have given because they will not give if they think the organization's needs already have been met

FALSE

Most corporate foundations make gifts that directly benefit the interest of the corporation

FALSE

Some research suggests that cause marketing may cause some donors to be less likely to give in response to more traditional, and emotionally-based, methods

FALSE

The term "donor-centered" means that fundraisers should review their lists of prospects every day.

FALSE

Privately-held business firms are generally not good prospects for charitable gifts

FALSE - a. Corporations are good partners for nonprofits. They can offer a variety of resources through partnerships, grants (monetary and in-kind), and earned income strategies.

Most companies are moving away from commercial partnerships toward philanthropy because the former have proven to be too complicated

FALSE - Corporate support of nonprofit organizations includes giving i.e., philanthropy and a variety of other relationships. These relationships form the organization's corporate social responsibility plan.

The idea of "shared value" means that companies should give most of their profits to nonprofit organizations

FALSE - Shared value occurs when both businesses and nonprofits measure success from the perspective of both social benefit and profit

Family Foundation

Family members create the foundation. are usually funded by an endowment from a family. With family foundations, the family members of the donor(s) have a substantial role in the foundation's governance. EX: Goizueta Foundation, Bill & Melinda Gates Foundation

Nonprofit Revenue Sources

Fees for Service

Cause-related marketing

In the simplest and most common form, the company contributes either a fixed amount for each sale of a product or a specified percentage of its sales of a product to the nonprofit, usually in connection with a short-term promotion. (Ex: Yoplait sold their yogurt with pink lids, people sent the lids in to Yoplait and the nonprofit got .10 per lid)

Describe the types of contributions that corporations provide

In-Kind Grants Defining Giving Program/Matching Gifts Request for Proposal Volunteer Support Programs LOI

EARNED INCOME

Income from payment for goods or services that the nonprofit has provided (in contrast to contributed income) Most revenue in the nonprofit sector is earned income, especially in the education and health care subsectors Most government funds received by nonprofit organization are earned income ϖ Medicare and Medicaid ϖ Scholarship funds

Individual Foundation

Individual or group of individuals create the foundation

Cause-Related Marketing

Is a mutually beneficial collaboration between a corporation and a nonprofit designed to promote the former's sales and the latter's cause. Ex: American Express first coined the term in 1983 to describe its campaign to raise money for the Statue of Liberty's restoration.

Self-Dealing

Is the conduct of a trustee, an attorney, a corporate officer, or other fiduciary that consists of taking advantage of his position in a transaction and acting for his own interests rather than for the interests of the beneficiaries of the trust, corporate shareholders, or his clients.

Describe common types of partnerships between Nonprofits & Corporate Partnerships

Licensing agreements Sponsorships Cause-related marketing Operational Relationships/Joint Ventures

Why would a foundation utilize a "spend down principal

Many base their decision to spend down on the issues they are working to solve. EX: Bill and Melinda Gate Foundation

Funding Intermediaries

Nonprofit organizations that distribute funding they receive from other sources, as well as providing technical assistance to support services offered by nonprofits.

Two prominent examples of earned income strategies

Partnerships with business corporations Business ventures started by nonprofits themselves (Ex: Goodwill, Thrift Stores, Hospital Gift Shop, Museum Gift Shop, Fox Theater Gift Shop)

PRO of Corporate Partnership

Privately-held business firms are generally good prospects for charitable gifts. Corporations are good partners for nonprofits. They can offer a variety of resources through partnerships, grants (monetary and in-kind), and earned income strategies.

Evaluate the PROS associated with earned income strategies

Push factors: - Decline in government funding for social programs - Shift toward a voucher approach in government funding - Use of competitive contracts in government outsourcing - Increase in the number and needs of nonprofit organizations Pull factors: - Diversifying sources of revenue, thereby gaining protecting from changes in funding environment (a nonprofit that pulls its income from multiple sources is more successful (3-legged stool). - Using earned income strategies to help advance specific missions (not all nonprofits benefit from earned income strategies) - Increasing focus and sharpening goals and management skills throughout the organization - Increasing visibility via partnerships and promotion

Community Foundations

Raise funds from the public and only award grants to nonprofits located within their specified area. Some of the purposes of their grants are for building & renovations, emergency funds, land acquisition, annual funds, endowments, research, scholarships EX: United Way, Cobb Community Foundation o Managed Funds o Use a 20% pay out guideline o Manage the funds of donors and distribute as a vehicle for donors

Identify and briefly describe the motivations of corporate donors

Usually it is related to a corporation's bottom line/ and business strategy Ex: UPS give to sustainability / they utilize lots of fuel & transportation (creating pollution)

Hyperagency

Wealthy donors give their money in effort to control or influence their community. Ex: Create a Private or Charter School in an effort to control education.

Federated Funding Agencies

is cooperatively owned and managed by its members, who develop a fund's criteria for giving and then make grants or other donations to nonprofits whose missions fulfill that criteria

Identify and briefly describe the motivations of individual donor giving

o Altruism, social, exchange, mixed motives o Individual needs and social influences o Continuum of motivation o Influence of tax deductions o Influenced by charity ratings o Gender & cultural differences o Generational differences

Create Master Event Plan

o Venue, logistics & catering management (contracts, permits, insurance, etc.) o Speakers/presenters (identifying, confirming, logistics & management) o Activities/entertainment o Publicity/promotion (online & off-line, e.g.,: web page & online promotion; events calendars; printed programs; media relations; signage; social media, etc.) o Insurance (Day Rider to cover Event), Licenses, Contracts o Roles and Responsibilities o Timeline o Registration (online sign-up, payment and tracking; on-site sign-in, etc.) o Sponsor/partner management

Culture of Giving

refers to your organization's attitude toward philanthropy and fund development (fundraising)

Bequest

to leave personal or real property in a will as a gift to an organization

Value Proposition

why customers pick one company over another, what makes that company special

How do the various generations (i.e., traditionalists, baby boomers, Generation X and Generation Y/Millennials) of donors' impact nonprofit giving?

¬ Younger donors (Gen X & Millennials) give less than older donors & are less likely to give to religious organizations. - Motivated to make the world a better place, - Want to see what is happening with their money, - Technology influenced ¬ Older donors Traditionalists & Baby Boomers) are motivated by a desire to meet the basic needs of the poor. - Give more and in higher concentrations, - Not influenced by technology ¬ Traditionalists - Direct Mail ¬ Baby boomers - TV Commercials ¬ Generation X - Internet / Via email & electronic newsletter ¬ Generation Y/Millennials - Social media

Process for Planning an Event

ϖ Research & Create a Strategy ϖ Develop Event (SMART) Goal & Objectives ϖ Create a planning calendar ϖ Organize a Team/Identify Board and Staff Commitment & Responsibilities ϖ Set A Date ϖ Brand Your Event ϖ Marketing & Publicity

Examples of Nonprofit Special Events

ϖ Sporting Tournaments (Golf, Tennis, Basketball, 5K) ϖ Walks or Runs ϖ Auctions ϖ Bake Sale, Car Wash ϖ Gala, Luncheon, Dinner or Breakfast ϖ Entertainment

Earned Income Strategies

ϖ Two opposing perspectives • Nonprofits should consider only ventures that are aligned with their missions • Nonprofits should look almost exclusively at whether a business venture is financially profitable ϖ Framework evaluating opportunities based on profitability and relationship with mission

Reasons for Special Events

• Fundraising • Generating awareness of the organization • Relationship Building

Traditional Funding Sources Nonprofits Can and Will Utilize

• Government - Grants, Tax Break IRS, Contract for Service (fee for service) • Funding Intermediaries - Ex: United Way • Foundations & Corporate o Grants o RFPs for service o LOI - Letter of Inquiry • Individual Donor • Deferred Giving Strategy - Bequests / Wills / Trusts -Explain how the gift will impact the organization & how you are going to utilize the gift (ex: building) • Fundraising Events

What are the elements of a strong case statement?

• State a cause that is larger than the organization itself • Establishes the organization's credibility & differentiates it from others • Describes achievable program goals • It justifies financial needs in terms of program goals & organizational strategy • It appeals to emotion as well

What are 3 examples of a special event that can cultivate a donor

• Point of Entry Conversion Event - designed for the first-time donors, and allows for multiple scales to be created. Fee based events. EX: Walk-a-thon, annual dinner, holiday party, Gala, Auction • A Free Feel-Good Cultivation Event (Points of Re-entry) - "Reward" events for your multiple-year giving donors that reconnects them to the emotional hook & reinforces their investment in you. EX: Dinner, Expert Lecture or a special "Environmental" Day • A Free One-Hour Ask Event - Event provides Facts, Emotional Hook, Compelling Ask EX: Breakfast or Lunch Event

Event Logistics

• Venue • Lighting • Audio Visual • Food/Refreshments • Door Prizes, Gifts etc. • Event Sponsorship Package • Invitation list (Donors) • Marketing (e.g., invitations, tickets, flyers etc). • Decorations • The Program and Entertainment (e.g., Speakers, Musicians, Presenters) • Event Insurance (Risk Management) • Security • Set up and Take Down • System for Payment • Tax Deduction Calculation • Donor Cultivation (Invite and Thank You) /Sponsorship Gift bags or Incentives • Advertising and Publicity • Photography and Video to capture the event • Printing

Obstacles to Successful Partnerships with Corporate Partnerships

♣ Different language & communication ♣ Different cultures ♣ Different status ♣ Different world views ♣ Different bottom lines