The ‘L3C’: The new double-hybrid entity
Deborah B. Andrews |
On August 3, 2010, North Carolina created a new type of entity when it adopted legislation recognizing the low-profit limited liability company, also known as the "L3C".
The L3C is a hybrid form of a limited liability company that blends the attributes of a for-profit entity with those of a nonprofit entity.
As a for-profit entity, an L3C can have owners who receive profit distributions from the entity. However, like a nonprofit, the L3C's primary purpose must be to promote a charitable purpose.
The intent is to harness the use of profit-seeking capital for socially-beneficial goals - a hopefully win-win scenario.
Overview of limited liability companies
The LLC itself is a hybrid entity that combines the limited-liability aspects of a corporation with the flow-through tax aspects of a partnership.
Like a corporation, an LLC offers limited liability to its owners. Only its members' investment in the LLC is at risk; their personal assets are protected from the reach of the LLC's creditors.
However, an LLC is not subject to tax like a corporation. Like a partnership, income or loss of an LLC flows to its members and is reflected on the members' tax returns.
Unlike the traditional LLC, the L3C must be formed to accomplish a charitable purpose in addition to a business purpose. Although the L3C must have a charitable purpose, donations to an L3C are not deductible as a charitable contribution because the L3C is a for-profit entity.
Why use an L3C? The importance of private foundations
One of the primary reasons for creating an L3C is to attract investments from private foundations.
Under IRS rules, a private foundation must distribute a certain percentage of its assets each year for a charitable purpose or be subject to a penalty.
In addition, a private foundation may be penalized if its assets are invested in a way that jeopardizes the foundation's charitable purpose.
If an investment qualifies as a program-related investment (PRI), the investment will count toward a foundation's mandatory distribution requirement and will not be characterized as a "jeopardizing investment."
The North Carolina L3C and the PRI
To qualify as a PRI, the IRS mandates the investment meet the following three requirements:
The primary purpose of the investment must be to accomplish a charitable or educational purpose;
The production of income or capital appreciation of property cannot be a significant purpose of the investment; and,
The investment cannot be used for political or legislative purposes.
A PRI allows private foundations to make investments in the form of loans, grants and equity purchases in socially-motivated for-profit entities.
Because of the uncertainty of whether an investment will qualify as a PRI, private foundations generally seek a ruling from the IRS that the proposed investment will qualify as a PRI and not constitute a "jeopardizing investment."
However, seeking an IRS ruling is expensive and time consuming. Therefore, private foundations often refrain from investing in for-profit entities because of the potential risk.
If the investment does not qualify as a PRI, the private foundation and its directors or trustees may face significant penalties. In addition, the private foundation could lose its tax-exempt status.
It is unclear how the IRS will treat a North Carolina L3C. Although the IRS has issued favorable rulings on the ability of private foundations to invest in for-profit LLCs with a charitable purpose, the IRS has not ruled that a private foundation's investment in an L3C automatically qualifies as a PRI.
However, North Carolina's L3C legislation was written specifically to mirror the IRS requirements for a PRI in an effort to provide assurance to private foundations that their investment in a North Carolina L3C will qualify as a PRI.
In fact, to qualify as a North Carolina L3C, the three IRS requirements listed above must be included in the L3C's Articles of Organization.
Attracting investors
The perfect scenario for an L3C is for it to attract investments both from private foundations seeking out charitable endeavors while obtaining some return on capital, and from private investors who will be more motivated to seek profits.
A private foundation's investment in an L3C may be critical in attracting private investors.
A major benefit of the L3C is that it can offer layered ownership in which the investment risk and return are distributed unevenly among its members.
Normally, investors with the riskiest investment seek the highest rate of return on their investment.
However, to provide an incentive for private investors to participate, the L3C should be structured so that the private foundation would accept the highest risk while receiving a lower rate of return on its investment.
Conclusion
The L3C may become an important tool in achieving socially-beneficial objectives such as developing affordable housing for the poor and providing low-interest loans to businesses relocating to economically distressed areas.
While the benefits could be substantial, until the IRS rules that a private foundation's investment in a North Carolina L3C automatically qualifies as a PRI, some private foundations may be hesitant to invest in these new entities regardless of the fact that they will have the ability to earn a profit while furthering their charitable goals.
Ward and Smith, P.A. provides a multi-specialty approach to the representation of for-profit and nonprofit organizations and their officers, directors, employees, and investors.
http://www.philanthropyjournal.org/resources/managementleadership/%E2%80%98l3c%E2%80%99-new-double-hybrid-entity
Friday, December 10, 2010
Wednesday, December 8, 2010
Charities Seeing Slight, But Not Enough, Recovery in Giving
Charities Seeing Slight, But Not Enough, Recovery in Giving
November 30th, 2010 |
Nonprofit organizations have seen a slight turnaround in giving so far this year that mirrors the slow economic recovery, a new survey from the Nonprofit Research Collaborative (NRC) finds. But the small rebound hasn’t been enough to help many nonprofits that are grappling with staff and service cuts even as demand for their services has increased.
The national survey showed that 36 percent of charities reported an increase in donations in the first nine months of 2010, compared with only 23 percent in the same period of 2009.
Thirty-seven percent of charities reported a decrease in giving, a dramatic change from 2009′s 51 percent. Among those experiencing a decline in giving, the main reason cited was fewer individual donations and smaller amounts. Lower amounts received from foundations and corporations also contributed to the overall lower giving amounts at these charities. Giving remained unchanged at 26 percent of nonprofits in 2010 vs. 25 percent in 2009.
“We are beginning to see some positive signs, but despite that giving still has a long way to go to return to the levels it was at three or four years ago,” said Patrick M. Rooney, executive director of the Center on Philanthropy at Indiana University, which spearheaded the collaboration. “One-fifth of charities in the survey said their budgets for 2011 will be lower than for 2010, forcing many of them to look at cuts in services, salaries and staff.”
Among the 20 percent of nonprofits anticipating reduced budgets next year, 66 percent say they will have to reduce programs, services or operating hours, 59 percent expect to cut or freeze staff salaries or benefits, and 49 percent are planning layoffs or hiring freezes.
“The Nonprofit Fundraising Survey: November 2010” is the first product of a collaboration involving six organizations that serve the nonprofit sector: the Association of Fundraising Professionals, Blackbaud, the Center on Philanthropy at Indiana University, the Foundation Center, GuideStar USA Inc., and the Urban Institute’s National Center for Charitable Statistics.
“For the first time in two years, there is cause for cautious optimism about the nonprofit sector in this economy,” said Bob Ottenhoff, president and CEO of GuideStar. “Nonetheless, in this latest study, as in all prior years, nonprofits also are reporting increased demand for their services. Even as giving increases, philanthropic dollars fall short of the amounts needed to help people in our country and abroad.”
Demand for services increased at 78 percent of human service nonprofits and 68 percent of charities overall in 2010. Charities will be hard-pressed in 2011 to secure funding for growing needs, especially as individual and foundation donors are cautious about boosting support and other sources of funding — including government contracts for services — are cut.
“Younger, less well-established nonprofits have been especially hard hit by the recession,” noted Lawrence T. McGill, vice president for research at the Foundation Center. “Many foundations, seeking to maximize more limited resources, have steered their grantmaking toward organizations they believe have the best chance to weather the economic storm.”
Other Key NRC Survey Findings:
■In four of eight subsectors, the share of organizations reporting an increase in contributions was about the same as the share reporting a decrease. The four with nearly equal percentages of organizations with giving up and giving down are: arts, education, environment/animals, and human services.
■International organizations were the most likely to report an increase in contributions, reflecting donations made for disaster relief.
■In three subsectors — health, public-society benefit, and religion — a larger share of the organizations reported declines than reported increases.
■The larger an organization’s annual expenditures, the more likely it reported an increase in charitable receipts in the first nine months of 2010 compared with the same period in 2009.
■Most organizations were guardedly optimistic about 2011. Forty-seven percent plan budget increases, 33 percent expect to maintain their current level of expenditures, and 20 percent anticipate a lower budget for 2011.
The Collaborative and Survey Methodology
By working together, the Nonprofit Research Collaborative can reduce the number of surveys nonprofits are asked to complete, collect information more efficiently, and analyze it in more useful ways to create the benchmarks and trends that nonprofits and grant makers use to guide their work. Each partner has at least a decade of direct experience collecting information from nonprofits on charitable receipts, fundraising practices, and/or grantmaking activities. Survey participants will form a panel over time, allowing for trend comparisons among the same organizations. This approach provides more useful benchmarking information than repeated cross-sectional studies.
The first NRC survey, based on questions that GuideStar used for its annual economic surveys, was fielded between October 19 and November 3, 2010. It received 2,513 responses. More than 2,350 charities completed the questions, as did 163 foundations. The analysis for grant makers includes responses from charities that make grants but that are not foundations. These include United Ways, Jewish federations, congregations, and a number of other types of organizations. There were responses from 386 grant makers.
The respondents form a convenience sample. There is no margin of error or measure of statistical significance using this sampling technique, as it is not a random sample of the population studied. However, given the long-running nature of GuideStar’s economic surveys and the strong relationship between findings in those studies in prior years and actual results once tax data about charitable giving are available, the method employed here is a useful barometer of what charities experience and what total giving will look like. In the future, the NRC surveys are expected to occur in early winter, spring, and fall every year.
“The Nonprofit Fundraising Survey: November 2010” (PDF), which includes responses broken down by types of nonprofits and budget size, can be downloaded at no charge from the Gain Knowledge area of the Foundation Center’s web site.
http://www.pnnonline.org/charities-seeing-slight-but-not-enough-recovery-in-giving
November 30th, 2010 |
Nonprofit organizations have seen a slight turnaround in giving so far this year that mirrors the slow economic recovery, a new survey from the Nonprofit Research Collaborative (NRC) finds. But the small rebound hasn’t been enough to help many nonprofits that are grappling with staff and service cuts even as demand for their services has increased.
The national survey showed that 36 percent of charities reported an increase in donations in the first nine months of 2010, compared with only 23 percent in the same period of 2009.
Thirty-seven percent of charities reported a decrease in giving, a dramatic change from 2009′s 51 percent. Among those experiencing a decline in giving, the main reason cited was fewer individual donations and smaller amounts. Lower amounts received from foundations and corporations also contributed to the overall lower giving amounts at these charities. Giving remained unchanged at 26 percent of nonprofits in 2010 vs. 25 percent in 2009.
“We are beginning to see some positive signs, but despite that giving still has a long way to go to return to the levels it was at three or four years ago,” said Patrick M. Rooney, executive director of the Center on Philanthropy at Indiana University, which spearheaded the collaboration. “One-fifth of charities in the survey said their budgets for 2011 will be lower than for 2010, forcing many of them to look at cuts in services, salaries and staff.”
Among the 20 percent of nonprofits anticipating reduced budgets next year, 66 percent say they will have to reduce programs, services or operating hours, 59 percent expect to cut or freeze staff salaries or benefits, and 49 percent are planning layoffs or hiring freezes.
“The Nonprofit Fundraising Survey: November 2010” is the first product of a collaboration involving six organizations that serve the nonprofit sector: the Association of Fundraising Professionals, Blackbaud, the Center on Philanthropy at Indiana University, the Foundation Center, GuideStar USA Inc., and the Urban Institute’s National Center for Charitable Statistics.
“For the first time in two years, there is cause for cautious optimism about the nonprofit sector in this economy,” said Bob Ottenhoff, president and CEO of GuideStar. “Nonetheless, in this latest study, as in all prior years, nonprofits also are reporting increased demand for their services. Even as giving increases, philanthropic dollars fall short of the amounts needed to help people in our country and abroad.”
Demand for services increased at 78 percent of human service nonprofits and 68 percent of charities overall in 2010. Charities will be hard-pressed in 2011 to secure funding for growing needs, especially as individual and foundation donors are cautious about boosting support and other sources of funding — including government contracts for services — are cut.
“Younger, less well-established nonprofits have been especially hard hit by the recession,” noted Lawrence T. McGill, vice president for research at the Foundation Center. “Many foundations, seeking to maximize more limited resources, have steered their grantmaking toward organizations they believe have the best chance to weather the economic storm.”
Other Key NRC Survey Findings:
■In four of eight subsectors, the share of organizations reporting an increase in contributions was about the same as the share reporting a decrease. The four with nearly equal percentages of organizations with giving up and giving down are: arts, education, environment/animals, and human services.
■International organizations were the most likely to report an increase in contributions, reflecting donations made for disaster relief.
■In three subsectors — health, public-society benefit, and religion — a larger share of the organizations reported declines than reported increases.
■The larger an organization’s annual expenditures, the more likely it reported an increase in charitable receipts in the first nine months of 2010 compared with the same period in 2009.
■Most organizations were guardedly optimistic about 2011. Forty-seven percent plan budget increases, 33 percent expect to maintain their current level of expenditures, and 20 percent anticipate a lower budget for 2011.
The Collaborative and Survey Methodology
By working together, the Nonprofit Research Collaborative can reduce the number of surveys nonprofits are asked to complete, collect information more efficiently, and analyze it in more useful ways to create the benchmarks and trends that nonprofits and grant makers use to guide their work. Each partner has at least a decade of direct experience collecting information from nonprofits on charitable receipts, fundraising practices, and/or grantmaking activities. Survey participants will form a panel over time, allowing for trend comparisons among the same organizations. This approach provides more useful benchmarking information than repeated cross-sectional studies.
The first NRC survey, based on questions that GuideStar used for its annual economic surveys, was fielded between October 19 and November 3, 2010. It received 2,513 responses. More than 2,350 charities completed the questions, as did 163 foundations. The analysis for grant makers includes responses from charities that make grants but that are not foundations. These include United Ways, Jewish federations, congregations, and a number of other types of organizations. There were responses from 386 grant makers.
The respondents form a convenience sample. There is no margin of error or measure of statistical significance using this sampling technique, as it is not a random sample of the population studied. However, given the long-running nature of GuideStar’s economic surveys and the strong relationship between findings in those studies in prior years and actual results once tax data about charitable giving are available, the method employed here is a useful barometer of what charities experience and what total giving will look like. In the future, the NRC surveys are expected to occur in early winter, spring, and fall every year.
“The Nonprofit Fundraising Survey: November 2010” (PDF), which includes responses broken down by types of nonprofits and budget size, can be downloaded at no charge from the Gain Knowledge area of the Foundation Center’s web site.
http://www.pnnonline.org/charities-seeing-slight-but-not-enough-recovery-in-giving
Wednesday, December 1, 2010
Tuesday, November 23, 2010
Starting Off on the Right Foot: How to Establish a Good ED-Board Relationship
Starting Off on the Right Foot: How to Establish a Good ED-Board Relationship
The relationship between a new nonprofit executive director (ED) or chief executive officer (CEO) and his or her board can often be challenging. Every interaction and decision seems to carry extra weight, as the directors scrutinize the new leader’s decisions and actions, and the new leader tries to find the right wavelength on which to communicate most effectively with the board. Even a small misstep—a poorly phrased or timed communication, for example—can have great implications because it is setting the tone for what’s to come.
Both parties know that it is critically important to get the ED/CEO-board relationship started off on the right foot, so it can grow into a strong, successful partnership that helps fulfill an organization’s goals and weathers any challenges ahead. But there is no blueprint for success. What can be useful, however, is considering the experience of senior leaders who have successfully managed this critical transition.
To that end, we spoke with three CEOs and two board chairs about the preliminary steps they took to ensure that their organization’s CEO-board relationships worked from the day the new CEO stepped into his or her role. Their varied approaches cannot serve as precise guides for others to follow. Rather, their insights are meant to help others craft their own plans to lay the groundwork for a strong ED/CEO-board relationship.
Start before the job begins
Scholarship America, a Minneapolis, MN-based national education service organization that mobilizes support for students getting into and graduating from college, is a complex organization, comprising both the all-volunteer Dollars for Scholars program and a business unit, Scholarship Management Services, which administers student loans. Because of the complexity of the organization, Scholarship America Board Chair Mim Schreck made it her priority to really get to know the two CEO finalists during the hiring process and to make sure they understood the organization’s strengths, weaknesses, and hopes for the future. “A nonprofit is mission-driven and if the CEO is going off in a direction that the board is not in agreement with, they’re never going to be in sync, and it’s going to be a contentious relationship,” Schreck said. “They have to see eye-to-eye and support each other in the goal of supporting the mission.”
Schreck, who was then Scholarship America’s acting CEO, met individually with the two finalists to talk about her aspirations for the organization, as did Scholarship America’s acting board chair, Richard J. Schwab. The two CEO finalists also talked with a number of other board members at a dinner before the final interview. All board members were invited to attend—and participate in—the candidates’ final interviews. “We tried to expose them to as many of us as possible,” Schreck said.
That approach was valuable. Lauren Segal, who was hired as Scholarship America’s CEO and president in March 2010, said that listening to and learning from the board before she was even offered the job allowed her to be far more effective right when she walked in the door as CEO.
During the hiring process Segal learned that the board was united in its desire to take the organization in a new direction. She also learned the priority needs of the organization. As a result, in her first few months on the job she was able to work with the board to, among other things: launch a technology initiative; refocus the fundraising and marketing direction for the organization; move from an activity orientation of “getting in” to college to one that will focus on impact, i.e., “getting through” one’s education beyond high school; and kicking off a new strategic planning process with full understanding and buy-in as to what the desired end state will be.
“I always asked people’s opinions and perspectives on things, but I didn’t come in like a neophyte,” Segal said. “I had a good understanding. We could start our work together from ‘How do we move forward faster?’ rather than, ‘What’s the lay of the land?’”
Good communication is the cornerstone of a good ED/CEO-board relationship. And in fact, each of the senior leaders we interviewed said building communication channels ideally should begin before the new ED/CEO is hired. Domingo Barrios, for example, also was given the opportunity to meet with each of the Heifer Foundation’s board members when he became a finalist in the organization’s search for a president and CEO. Barrios made an effort to meet face-to-face with each board member, and despite the fact that the Little Rock, AR-based nonprofit’s board members are spread across the country, he succeeded in having in-person meetings with all but one board member. His approach to these meetings was simple: He asked board members about their goals and aspirations for the organization, and then carefully listened to their answers.
Make a personal connection
Hired as the Heifer Foundation’s CEO in July 2010, Barrios continues to favor personal meetings and phone calls with his board chair over email. He has approached the board about increasing the number of board meetings each year, currently two, by either adding more in-person meetings or by using teleconferencing.
“I really want to hear the voices of our trustees—literally hear their voices,” he told us. “Listening is a great building block of communication. I started building a relationship with my board from my interviews, and I took those interviews as an opportunity to begin the process of gaining trust and understanding some of the nuances of the board collectively.”
At Scholarship America, Schreck and Segal also noted that getting to know each other outside of work can make a good ED/CEO-board chair relationship even better. Although they are based in different cities, they have made it a point to learn about each other’s lives by having dinners together before meetings and meeting each other’s spouses. “I think [a more personal relationship] helps to build a stronger partnership and an understanding of where each other is coming from," said Segal. "Then, you understand each other’s styles better, including strengths and weaknesses.”
Don’t dwell on the past
It can be valuable for a new ED/CEO to learn about their predecessor’s tenure and why the person left the job, so s/he can address any concerns the board may have. “Clearly, coming in you want to have an understanding of what happened to the prior CEO if they left under duress,” Barrios said. But he and the other senior leaders stressed that it is important that neither the new ED/CEO nor the board members dwell on the past, whether the prior leader left under a cloud or as a superstar.
For Ed Munster, becoming CEO of the YMCA of Metropolitan Atlanta in January 2009 meant stepping into a role that he had trained for his entire life. He had grown up in the Y organization as a child in New Orleans and had spent his professional career working his way up through the organization. But complicating his new job was the fact that he had spent 23 years as the Atlanta Y’s chief operating officer (COO) in the shadow of a longtime, beloved CEO. So, while Munster had a relationship with the Y’s board, it was as the organization’s operations expert and second-in-command. Munster’s challenge in the months before and after his selection as CEO was to change the way he related to board members and the rest of the Y’s stakeholders in the Atlanta community and to recast himself as the CEO.
During the search process, the board’s search committee clearly saw Munster as a top-notch candidate, but some search committee members felt they had a duty to expand the search beyond the Y movement and perhaps even outside the nonprofit sector. They changed their minds in part because of data from the national Y showing that a strong fit with the Y’s culture is critically important for new CEOs in the organization. As they went through the search process, the committee recognized that Munster’s lifelong familiarity with the Y’s culture and his financial savvy would be critical assets as the organization faced the economic downturn.
Board Chair Charlie Yates, who served on the search committee (when he was the incoming board chair), said, “In some ways, being an insider can work to your disadvantage because people know you too well. We all knew Ed was a strong operator but didn’t know that he could be the strong face of the organization, particularly given our critical fundraising requirements. I don’t think anybody knew what he was capable of independent from former CEO Fred Bradley. In the end, we realized that he was the only responsible hire.”
After Munster was named CEO and Yates became board chair, the two men worked together on a transition, as well as getting to know each other better and learning about each other’s priorities for the organization. The Atlanta Y had just started a 10-year strategic planning process, identifying both fundraising and program goals. Yates made a point to introduce Munster to both donors who could help with fundraising goals and partners who could work with the organization on programs to advance its mission in areas such as childhood obesity and early childhood education. To give Munster as many opportunities as possible to explain his vision for the organization to board members, the board began scheduling time for Munster to talk at every board meeting—a policy that continues today.
Munster said Yates’ support during his transition from internal operations expert to the new face of the Atlanta Y was invaluable. “Charlie really helped build access to the community,” Munster said. “It is so important to have a great relationship with your board chair right from the start. Without that, you really can’t succeed.”
Be frank about challenges
Scholarship America’s Schreck said her approach throughout the hiring process was to stay out of “sell mode.” While she was forthright about the many opportunities, she was equally honest about the challenges. “Be as true to the organization as you possibly can; let the candidate know as clearly as possible what it is you’re looking for and where you see the organization going,” Schreck said. “Show the good with the bad. In every adversity there is always great opportunity.”
The result of Schreck’s candor was that when Segal took over as president and CEO of Scholarship America, she understood the details of the organization’s budget and the strategy behind every number. In fact, she was so well-versed on the budget that she encountered no unpleasant surprises in her first few months on the job. This was particularly important given her mandate to bring change to the organization.
“Even if you were in a maintenance-stage organization, no surprises would be good,” Segal said. “But when you’re trying to make substantive change in an organization and take it to a different place, the no surprises rule is very important. You have to make quick assessments about what is and what isn’t possible, and if you’re constantly finding out things that you didn’t know, then not only does that stop the momentum, but it can set you back in terms of strategy and opportunity.”
Base the relationship on trust and respect
Barrios said new EDs/CEOs who approach a relationship with their board with a sense of fear are missing a great opportunity. “When you work from the fear side, you’re much more cautious on how to proceed,” Barrios said. “If the relationship is built on trust, you’re able to bring the experience that individual board members have to bear on all sorts of decisions.”
By establishing a collegial relationship with his board, Barrios said he is able to accomplish more toward the organization’s mission. In fact, he thinks of his board members as futurists, the people who decide where the organization should be in the future, and his role is to actualize that vision in real time. For example, Barrios learned during his early discussions with the board that two of the members’ top priorities were reducing spending and aligning the organization more closely with its sister organization, Heifer International. Because he had a good understanding of the board members’ expectations coming into the job, he was able to write a report to the board after just 30 days as CEO, giving his impression of the organization and outlining the mechanics of how he planned to address the board’s concerns.
“I want to create strategies that allow trustees to bring their voices to the table—that’s why they’re here,” Barrios said. “We spend a lot of time at nonprofits bringing the best people from our communities to our boards. You want to make sure you hear them.”
http://www.bridgestar.org/Library/EDBoardRelationship.aspx
The relationship between a new nonprofit executive director (ED) or chief executive officer (CEO) and his or her board can often be challenging. Every interaction and decision seems to carry extra weight, as the directors scrutinize the new leader’s decisions and actions, and the new leader tries to find the right wavelength on which to communicate most effectively with the board. Even a small misstep—a poorly phrased or timed communication, for example—can have great implications because it is setting the tone for what’s to come.
Both parties know that it is critically important to get the ED/CEO-board relationship started off on the right foot, so it can grow into a strong, successful partnership that helps fulfill an organization’s goals and weathers any challenges ahead. But there is no blueprint for success. What can be useful, however, is considering the experience of senior leaders who have successfully managed this critical transition.
To that end, we spoke with three CEOs and two board chairs about the preliminary steps they took to ensure that their organization’s CEO-board relationships worked from the day the new CEO stepped into his or her role. Their varied approaches cannot serve as precise guides for others to follow. Rather, their insights are meant to help others craft their own plans to lay the groundwork for a strong ED/CEO-board relationship.
Start before the job begins
Scholarship America, a Minneapolis, MN-based national education service organization that mobilizes support for students getting into and graduating from college, is a complex organization, comprising both the all-volunteer Dollars for Scholars program and a business unit, Scholarship Management Services, which administers student loans. Because of the complexity of the organization, Scholarship America Board Chair Mim Schreck made it her priority to really get to know the two CEO finalists during the hiring process and to make sure they understood the organization’s strengths, weaknesses, and hopes for the future. “A nonprofit is mission-driven and if the CEO is going off in a direction that the board is not in agreement with, they’re never going to be in sync, and it’s going to be a contentious relationship,” Schreck said. “They have to see eye-to-eye and support each other in the goal of supporting the mission.”
Schreck, who was then Scholarship America’s acting CEO, met individually with the two finalists to talk about her aspirations for the organization, as did Scholarship America’s acting board chair, Richard J. Schwab. The two CEO finalists also talked with a number of other board members at a dinner before the final interview. All board members were invited to attend—and participate in—the candidates’ final interviews. “We tried to expose them to as many of us as possible,” Schreck said.
That approach was valuable. Lauren Segal, who was hired as Scholarship America’s CEO and president in March 2010, said that listening to and learning from the board before she was even offered the job allowed her to be far more effective right when she walked in the door as CEO.
During the hiring process Segal learned that the board was united in its desire to take the organization in a new direction. She also learned the priority needs of the organization. As a result, in her first few months on the job she was able to work with the board to, among other things: launch a technology initiative; refocus the fundraising and marketing direction for the organization; move from an activity orientation of “getting in” to college to one that will focus on impact, i.e., “getting through” one’s education beyond high school; and kicking off a new strategic planning process with full understanding and buy-in as to what the desired end state will be.
“I always asked people’s opinions and perspectives on things, but I didn’t come in like a neophyte,” Segal said. “I had a good understanding. We could start our work together from ‘How do we move forward faster?’ rather than, ‘What’s the lay of the land?’”
Good communication is the cornerstone of a good ED/CEO-board relationship. And in fact, each of the senior leaders we interviewed said building communication channels ideally should begin before the new ED/CEO is hired. Domingo Barrios, for example, also was given the opportunity to meet with each of the Heifer Foundation’s board members when he became a finalist in the organization’s search for a president and CEO. Barrios made an effort to meet face-to-face with each board member, and despite the fact that the Little Rock, AR-based nonprofit’s board members are spread across the country, he succeeded in having in-person meetings with all but one board member. His approach to these meetings was simple: He asked board members about their goals and aspirations for the organization, and then carefully listened to their answers.
Make a personal connection
Hired as the Heifer Foundation’s CEO in July 2010, Barrios continues to favor personal meetings and phone calls with his board chair over email. He has approached the board about increasing the number of board meetings each year, currently two, by either adding more in-person meetings or by using teleconferencing.
“I really want to hear the voices of our trustees—literally hear their voices,” he told us. “Listening is a great building block of communication. I started building a relationship with my board from my interviews, and I took those interviews as an opportunity to begin the process of gaining trust and understanding some of the nuances of the board collectively.”
At Scholarship America, Schreck and Segal also noted that getting to know each other outside of work can make a good ED/CEO-board chair relationship even better. Although they are based in different cities, they have made it a point to learn about each other’s lives by having dinners together before meetings and meeting each other’s spouses. “I think [a more personal relationship] helps to build a stronger partnership and an understanding of where each other is coming from," said Segal. "Then, you understand each other’s styles better, including strengths and weaknesses.”
Don’t dwell on the past
It can be valuable for a new ED/CEO to learn about their predecessor’s tenure and why the person left the job, so s/he can address any concerns the board may have. “Clearly, coming in you want to have an understanding of what happened to the prior CEO if they left under duress,” Barrios said. But he and the other senior leaders stressed that it is important that neither the new ED/CEO nor the board members dwell on the past, whether the prior leader left under a cloud or as a superstar.
For Ed Munster, becoming CEO of the YMCA of Metropolitan Atlanta in January 2009 meant stepping into a role that he had trained for his entire life. He had grown up in the Y organization as a child in New Orleans and had spent his professional career working his way up through the organization. But complicating his new job was the fact that he had spent 23 years as the Atlanta Y’s chief operating officer (COO) in the shadow of a longtime, beloved CEO. So, while Munster had a relationship with the Y’s board, it was as the organization’s operations expert and second-in-command. Munster’s challenge in the months before and after his selection as CEO was to change the way he related to board members and the rest of the Y’s stakeholders in the Atlanta community and to recast himself as the CEO.
During the search process, the board’s search committee clearly saw Munster as a top-notch candidate, but some search committee members felt they had a duty to expand the search beyond the Y movement and perhaps even outside the nonprofit sector. They changed their minds in part because of data from the national Y showing that a strong fit with the Y’s culture is critically important for new CEOs in the organization. As they went through the search process, the committee recognized that Munster’s lifelong familiarity with the Y’s culture and his financial savvy would be critical assets as the organization faced the economic downturn.
Board Chair Charlie Yates, who served on the search committee (when he was the incoming board chair), said, “In some ways, being an insider can work to your disadvantage because people know you too well. We all knew Ed was a strong operator but didn’t know that he could be the strong face of the organization, particularly given our critical fundraising requirements. I don’t think anybody knew what he was capable of independent from former CEO Fred Bradley. In the end, we realized that he was the only responsible hire.”
After Munster was named CEO and Yates became board chair, the two men worked together on a transition, as well as getting to know each other better and learning about each other’s priorities for the organization. The Atlanta Y had just started a 10-year strategic planning process, identifying both fundraising and program goals. Yates made a point to introduce Munster to both donors who could help with fundraising goals and partners who could work with the organization on programs to advance its mission in areas such as childhood obesity and early childhood education. To give Munster as many opportunities as possible to explain his vision for the organization to board members, the board began scheduling time for Munster to talk at every board meeting—a policy that continues today.
Munster said Yates’ support during his transition from internal operations expert to the new face of the Atlanta Y was invaluable. “Charlie really helped build access to the community,” Munster said. “It is so important to have a great relationship with your board chair right from the start. Without that, you really can’t succeed.”
Be frank about challenges
Scholarship America’s Schreck said her approach throughout the hiring process was to stay out of “sell mode.” While she was forthright about the many opportunities, she was equally honest about the challenges. “Be as true to the organization as you possibly can; let the candidate know as clearly as possible what it is you’re looking for and where you see the organization going,” Schreck said. “Show the good with the bad. In every adversity there is always great opportunity.”
The result of Schreck’s candor was that when Segal took over as president and CEO of Scholarship America, she understood the details of the organization’s budget and the strategy behind every number. In fact, she was so well-versed on the budget that she encountered no unpleasant surprises in her first few months on the job. This was particularly important given her mandate to bring change to the organization.
“Even if you were in a maintenance-stage organization, no surprises would be good,” Segal said. “But when you’re trying to make substantive change in an organization and take it to a different place, the no surprises rule is very important. You have to make quick assessments about what is and what isn’t possible, and if you’re constantly finding out things that you didn’t know, then not only does that stop the momentum, but it can set you back in terms of strategy and opportunity.”
Base the relationship on trust and respect
Barrios said new EDs/CEOs who approach a relationship with their board with a sense of fear are missing a great opportunity. “When you work from the fear side, you’re much more cautious on how to proceed,” Barrios said. “If the relationship is built on trust, you’re able to bring the experience that individual board members have to bear on all sorts of decisions.”
By establishing a collegial relationship with his board, Barrios said he is able to accomplish more toward the organization’s mission. In fact, he thinks of his board members as futurists, the people who decide where the organization should be in the future, and his role is to actualize that vision in real time. For example, Barrios learned during his early discussions with the board that two of the members’ top priorities were reducing spending and aligning the organization more closely with its sister organization, Heifer International. Because he had a good understanding of the board members’ expectations coming into the job, he was able to write a report to the board after just 30 days as CEO, giving his impression of the organization and outlining the mechanics of how he planned to address the board’s concerns.
“I want to create strategies that allow trustees to bring their voices to the table—that’s why they’re here,” Barrios said. “We spend a lot of time at nonprofits bringing the best people from our communities to our boards. You want to make sure you hear them.”
http://www.bridgestar.org/Library/EDBoardRelationship.aspx
Tuesday, November 16, 2010
Residents' Emotional Attachment to Community May Boost Local Economy, Study Finds
Residents' Emotional Attachment to Community May Boost Local Economy, Study Finds
A three-year Gallup study of twenty-six U.S. cities has found that residents' love and passion for their community may be a leading indicator for local economic growth.
Funded by the John S. and James L. Knight Foundation, the study, Knight Soul of the Community 2010 (36 pages, PDF), assessed the connection between local economic growth and residents' emotional bond to a place in cities where the Knight brothers owned newspapers. Among other things, the study found that cities with the highest levels of resident attachment also had the highest GDP growth rate over time. Indeed, quality-of-life elements — social offerings, openness, and aesthetics — consistently rated higher than perceptions of the economy, job availability, or basic services in creating a lasting emotional bond between people and their community. Moreover, despite a decline in economic indicators since the study began, researchers found that the link between local GDP and residents' emotional bonds to a community remained steady.
With support from the Knight Foundation, three of the cities included in the survey — Miami, Charlotte, and Detroit — will work to transform themselves by implementing projects that build on the findings of the study.
"This survey offers new approaches for communities to organize themselves to attract businesses, keep residents, and holistically improve their local economic vitality," said Gallup World Poll deputy director Jon Clifton. "Our theory is that when a community's residents are highly attached, they will spend more time there, spend more money, they're more productive, and tend to be more entrepreneurial. The study bears out that theory and now provides all community leaders the knowledge they need to make a sustainable impact on their community."
“Got Love For Your Community? It May Create Economic Growth, Gallup Study Says.” John S. and James L. Knight Foundation Press Release 11/15/10.
A three-year Gallup study of twenty-six U.S. cities has found that residents' love and passion for their community may be a leading indicator for local economic growth.
Funded by the John S. and James L. Knight Foundation, the study, Knight Soul of the Community 2010 (36 pages, PDF), assessed the connection between local economic growth and residents' emotional bond to a place in cities where the Knight brothers owned newspapers. Among other things, the study found that cities with the highest levels of resident attachment also had the highest GDP growth rate over time. Indeed, quality-of-life elements — social offerings, openness, and aesthetics — consistently rated higher than perceptions of the economy, job availability, or basic services in creating a lasting emotional bond between people and their community. Moreover, despite a decline in economic indicators since the study began, researchers found that the link between local GDP and residents' emotional bonds to a community remained steady.
With support from the Knight Foundation, three of the cities included in the survey — Miami, Charlotte, and Detroit — will work to transform themselves by implementing projects that build on the findings of the study.
"This survey offers new approaches for communities to organize themselves to attract businesses, keep residents, and holistically improve their local economic vitality," said Gallup World Poll deputy director Jon Clifton. "Our theory is that when a community's residents are highly attached, they will spend more time there, spend more money, they're more productive, and tend to be more entrepreneurial. The study bears out that theory and now provides all community leaders the knowledge they need to make a sustainable impact on their community."
“Got Love For Your Community? It May Create Economic Growth, Gallup Study Says.” John S. and James L. Knight Foundation Press Release 11/15/10.
Monday, November 1, 2010
2010 Global State of the Nonprofit Industry Survey
Blackbaud Releases 2010 Global State of the Nonprofit Industry Survey
October 26th, 2010 |
Blackbaud, Inc. has announced the release of the results from The State of the Nonprofit Industry (SONI) Survey, a global report covering general operations, fundraising, technology and Internet usage, and accountability and stewardship. Responses were received from 2,383 individuals in Australia, Canada, France, Germany, Italy, India, the Netherlands, New Zealand, the United Kingdom, and the United States.
The survey was conducted in partnership with L’Association Française des Fundraisers, the Fundraising Institute of New Zealand (FINZ), the German Fundraising Association, Philanthropy Centro Studi, and the Resource Alliance.
“There is an increasing interest in the nonprofit sector in improving governance, planning, and fundraising, and investing in training and equipment to enhance organizational performance,” said Amy Comer, Blackbaud’s director of market research. “Blackbaud has conducted the State of the Nonprofit Industry Survey for six years to provide an overview of trends that can help nonprofits assess their operations and compare their performance with other organizations.”
Four global trends that emerged from the data include:
1. New fundraising and communication channels, although growing, are not replacing traditional channels.
Most organizations continue to leverage traditional channels, even while they are increasingly using new interactive channels. This use of new channels is placing a tremendous strain on organizations because revenue has not risen significantly in aggregate and yet costs for each communication channel have risen. This situation creates a demand for more integrated communication tools and database platforms.
2. ROI and organizational effectiveness are under scrutiny and more important than ever.
Baby boomers, which have entered their prime giving years in the United States, are not as trusting of government and institutions to solve problems and want to see greater evidence. However, this trend is clearly not just a United States phenomenon. Donors worldwide want to see evidence that their money is being spent well and that nonprofits are being run as efficiently as possible.
3. There is a new focus on the total supporter journey vs. traditional “donor management.”
In light of an increased focus on donor retention coupled with increasing costs for acquisition, constituent relationship management (CRM) is transitioning from transactional fundraising to a relationship-focused supporter journey. To have a constituent-centric focus, nonprofits need to consolidate data on supporters and eliminate silos so everyone in the organization has the same view of the many ways supporters interact with their organization. Technology is essential for helping them track the supporter journey, from service recipient to volunteer to event participant to donor.
4. Fundraising is emerging as a widely-recognized profession around the globe.
The vast majority of nonprofits around the world are expecting to increase their investment in fundraising staff, according to the SONI survey. It is clear that fundraising is no longer someone’s “part-time” responsibility. Techniques and data are becoming more complex, and the rate of change is increasing. What was once mostly art is rapidly becoming science, requiring new tools and techniques, partnerships, and better skilled staff.
You can download the complete report, which includes an in-depth look at general operations, fundraising, technology and Internet usage, and accountability and stewardship around the globe.
http://www.pnnonline.org/blackbaud-releases-2010-global-state-of-the-nonprofit-industry-survey
October 26th, 2010 |
Blackbaud, Inc. has announced the release of the results from The State of the Nonprofit Industry (SONI) Survey, a global report covering general operations, fundraising, technology and Internet usage, and accountability and stewardship. Responses were received from 2,383 individuals in Australia, Canada, France, Germany, Italy, India, the Netherlands, New Zealand, the United Kingdom, and the United States.
The survey was conducted in partnership with L’Association Française des Fundraisers, the Fundraising Institute of New Zealand (FINZ), the German Fundraising Association, Philanthropy Centro Studi, and the Resource Alliance.
“There is an increasing interest in the nonprofit sector in improving governance, planning, and fundraising, and investing in training and equipment to enhance organizational performance,” said Amy Comer, Blackbaud’s director of market research. “Blackbaud has conducted the State of the Nonprofit Industry Survey for six years to provide an overview of trends that can help nonprofits assess their operations and compare their performance with other organizations.”
Four global trends that emerged from the data include:
1. New fundraising and communication channels, although growing, are not replacing traditional channels.
Most organizations continue to leverage traditional channels, even while they are increasingly using new interactive channels. This use of new channels is placing a tremendous strain on organizations because revenue has not risen significantly in aggregate and yet costs for each communication channel have risen. This situation creates a demand for more integrated communication tools and database platforms.
2. ROI and organizational effectiveness are under scrutiny and more important than ever.
Baby boomers, which have entered their prime giving years in the United States, are not as trusting of government and institutions to solve problems and want to see greater evidence. However, this trend is clearly not just a United States phenomenon. Donors worldwide want to see evidence that their money is being spent well and that nonprofits are being run as efficiently as possible.
3. There is a new focus on the total supporter journey vs. traditional “donor management.”
In light of an increased focus on donor retention coupled with increasing costs for acquisition, constituent relationship management (CRM) is transitioning from transactional fundraising to a relationship-focused supporter journey. To have a constituent-centric focus, nonprofits need to consolidate data on supporters and eliminate silos so everyone in the organization has the same view of the many ways supporters interact with their organization. Technology is essential for helping them track the supporter journey, from service recipient to volunteer to event participant to donor.
4. Fundraising is emerging as a widely-recognized profession around the globe.
The vast majority of nonprofits around the world are expecting to increase their investment in fundraising staff, according to the SONI survey. It is clear that fundraising is no longer someone’s “part-time” responsibility. Techniques and data are becoming more complex, and the rate of change is increasing. What was once mostly art is rapidly becoming science, requiring new tools and techniques, partnerships, and better skilled staff.
You can download the complete report, which includes an in-depth look at general operations, fundraising, technology and Internet usage, and accountability and stewardship around the globe.
http://www.pnnonline.org/blackbaud-releases-2010-global-state-of-the-nonprofit-industry-survey
Wednesday, October 27, 2010
Tuesday, September 14, 2010
The Verticalization and Mainstreaming of Social Entrepreneurship
The financial crisis has not, thus far, cast a clear death blow to Milton Friedman's idea that the only responsibility businesses have to society is to maximize profits. That said, the last couple years have seen a steady mainstreaming of "social entrepreneurship," particularly within vertical industry categories such as Fair Trade. I believe both the verticalization and mainstreaming of the field will continue, creating a higher need than ever before to understand just what the broader designation of "social entrepreneurship" has to offer.
Social entrepreneurship tends to refer to the space in which companies and nonprofits use market and business objectives to achieve social aims. While there is some debate about whether the term refers exclusively to one legal business model over another, the core point for most of the people I tend to agree with is that "social ventures" as opposed to regular for-profit entities have an explicit focus on solving some social or environmental problem and maximizing social or environmental good alongside (or sometimes even at the expense of) pure, short-term profit maximization.
In this way, it is different from corporate social responsibility, which at its best is about giving back, improving employee culture and conditions, and reducing environmental impact. The difference is the fact that social entrepreneurship suggests that there is a core social or environmental value created every day by the products or services at the center of the very business. This does not mean that social ventures are "better" than non-social ventures -- there are lots of great companies that simply happen not to focus on solving social problems and which are still wonderful employees, community members, and philanthropists -- but it does mean they are different.
Social entrepreneurship is, however, a slightly weird field, in the sense that it is not an industry, but a term which applies to a number of (sometimes unrelated) industries, and a similar approach to business that places a social or environmental value at the center of the mission. Most people come into contact with the broader field of social entrepreneurship through one of the industries that it touches.
I think there are a few clear examples of these "vertical" fields that connect with the larger banner of social entrepreneurship that have gotten increasingly mainstream over the last few years. Cleantech is perhaps the most obvious, becoming one of the most invested in areas of venture capital ($1.9 billion was invested in Cleantech companies in the first quarter of 2010 alone). Microfinance is another clear example. The awarding of the Nobel Peace Prize to Grameen Bank founder Muhammed Yunus and the explosive popularity of Kiva are two of the more important historical moments for the prominence of social entrepreneurship, and the recent IPO of SKS could be another. Fair Trade, Organic and Local Food movements are all racing to the mainstream, as well.
Being based in Silicon Valley, I'm particularly interested in industry verticals that can attract tech talent to start new companies. I think we're going to see big booms in education startups (see: Udemy, Enzi, Grockit, DonorsChoose, Supercool School) and I hope that many will learn to work within instead of solely outside the current education system. Healthcare seems like an obvious area that mixes social good with the potential for immense profit, but there are still too few web tech companies working on the issue, a problem that programs like Hacking 4 Health are trying to redress. And although they are a little bit different in terms of their potential for financial gain, there also seems to be a mini wave of "government 2.0" startups (see: Code for America, CitySourced, Gov2.0 Summit) that are trying to change the way municipal services are deployed and how governments interact with citizens.
It makes sense that social entrepreneurship would mature into verticals like this: startups need accumulated bodies of knowledge and connections to be successful, and ultimately, what works in Fair Trade may not work in Education. At the same time, I think the common element of trying to maximize a social or environmental good takes as much managerial discipline as deploying a successful revenue model, and for that, the broader field of social entrepreneurship has much to offer.
http://socialentrepreneurship.change.org/blog/view/the_verticalization_and_mainstreaming_of_social_entrepreneurship?me=nl
Social entrepreneurship tends to refer to the space in which companies and nonprofits use market and business objectives to achieve social aims. While there is some debate about whether the term refers exclusively to one legal business model over another, the core point for most of the people I tend to agree with is that "social ventures" as opposed to regular for-profit entities have an explicit focus on solving some social or environmental problem and maximizing social or environmental good alongside (or sometimes even at the expense of) pure, short-term profit maximization.
In this way, it is different from corporate social responsibility, which at its best is about giving back, improving employee culture and conditions, and reducing environmental impact. The difference is the fact that social entrepreneurship suggests that there is a core social or environmental value created every day by the products or services at the center of the very business. This does not mean that social ventures are "better" than non-social ventures -- there are lots of great companies that simply happen not to focus on solving social problems and which are still wonderful employees, community members, and philanthropists -- but it does mean they are different.
Social entrepreneurship is, however, a slightly weird field, in the sense that it is not an industry, but a term which applies to a number of (sometimes unrelated) industries, and a similar approach to business that places a social or environmental value at the center of the mission. Most people come into contact with the broader field of social entrepreneurship through one of the industries that it touches.
I think there are a few clear examples of these "vertical" fields that connect with the larger banner of social entrepreneurship that have gotten increasingly mainstream over the last few years. Cleantech is perhaps the most obvious, becoming one of the most invested in areas of venture capital ($1.9 billion was invested in Cleantech companies in the first quarter of 2010 alone). Microfinance is another clear example. The awarding of the Nobel Peace Prize to Grameen Bank founder Muhammed Yunus and the explosive popularity of Kiva are two of the more important historical moments for the prominence of social entrepreneurship, and the recent IPO of SKS could be another. Fair Trade, Organic and Local Food movements are all racing to the mainstream, as well.
Being based in Silicon Valley, I'm particularly interested in industry verticals that can attract tech talent to start new companies. I think we're going to see big booms in education startups (see: Udemy, Enzi, Grockit, DonorsChoose, Supercool School) and I hope that many will learn to work within instead of solely outside the current education system. Healthcare seems like an obvious area that mixes social good with the potential for immense profit, but there are still too few web tech companies working on the issue, a problem that programs like Hacking 4 Health are trying to redress. And although they are a little bit different in terms of their potential for financial gain, there also seems to be a mini wave of "government 2.0" startups (see: Code for America, CitySourced, Gov2.0 Summit) that are trying to change the way municipal services are deployed and how governments interact with citizens.
It makes sense that social entrepreneurship would mature into verticals like this: startups need accumulated bodies of knowledge and connections to be successful, and ultimately, what works in Fair Trade may not work in Education. At the same time, I think the common element of trying to maximize a social or environmental good takes as much managerial discipline as deploying a successful revenue model, and for that, the broader field of social entrepreneurship has much to offer.
http://socialentrepreneurship.change.org/blog/view/the_verticalization_and_mainstreaming_of_social_entrepreneurship?me=nl
Wednesday, September 1, 2010
A key to capital campaign success.
A key to capital campaign success.
By Daggett, Melinda
Publication: Fund Raising Management
August 1 1994
With the information gained from a feasibility study, an organization can either begin a campaign confidently or postpone it for a time so it can strengthen weak areas.
One of the keys to a successful capital campaign is thorough planning and preparation. Taking time to research your constituents and their interest in your campaign will pay dividends when deciding the campaign structure and beginning solicitations. A feasibility study or pre-campaign planning study is the first step to campaign success.
The feasibility study is particularly important for an organization that has never had a capital campaign or has not had a campaign for several years. It is also valuable for those who do not have a good feel for who their constituents are or what they think about the organization. Before beginning a study, an organization should be very serious about a campaign. Continuing talk of future plans and conducting studies without resulting action can leave a negative impression.
The study should consist of personal interviews with a representative sample of individuals, corporations and foundations that would be the most likely supporters of the campaign. For many organizations, this sample will average between 40 to 60. However, sample size may vary based on the size of the organization and scope of the proposed campaign. These individuals should have an interest or potential interest in the organization and its services, have given in the past or have the potential to give in the future. The group should be the "cream of the crop," those who are most likely to assume leadership roles in giving and volunteering. All constituent groups among which an organized campaign will be conducted should be represented. The types of constituent groups to be included in the survey will vary depending on the type of non-profit. For example, a study for an educational institution could include alumni, faculty and staff, and parents and grandparents of students. A hospital study might include interviews with doctors, former patients and medical suppliers. Every study, however, should involve the governing board and staff of the organization, and foundations and local corporations whose giving guidelines match the organization's mission and goals.
Often, a feasibility study can be performed by the organization's staff. However, time would have to be invested in training them. Staff would also have to divert time from their other responsibilities to focus on the feasibility study. Many organizations find it is helpful to use a trained outsider who is a specialist. This individual will tend to be more objective than someone on staff, is already knowledgeable in survey techniques, and will be able to devote complete attention to the project. In addition, interview subjects are often more comfortable expressing concerns or complaints to a third party. Cost considerations, staffing needs and available expertise are determining factors in deciding the best approach.
A key to capital campaign success. | Society, Social Assistance & Lifestyle Philanthropy from AllBusiness.com
By Daggett, Melinda
Publication: Fund Raising Management
August 1 1994
With the information gained from a feasibility study, an organization can either begin a campaign confidently or postpone it for a time so it can strengthen weak areas.
One of the keys to a successful capital campaign is thorough planning and preparation. Taking time to research your constituents and their interest in your campaign will pay dividends when deciding the campaign structure and beginning solicitations. A feasibility study or pre-campaign planning study is the first step to campaign success.
The feasibility study is particularly important for an organization that has never had a capital campaign or has not had a campaign for several years. It is also valuable for those who do not have a good feel for who their constituents are or what they think about the organization. Before beginning a study, an organization should be very serious about a campaign. Continuing talk of future plans and conducting studies without resulting action can leave a negative impression.
The study should consist of personal interviews with a representative sample of individuals, corporations and foundations that would be the most likely supporters of the campaign. For many organizations, this sample will average between 40 to 60. However, sample size may vary based on the size of the organization and scope of the proposed campaign. These individuals should have an interest or potential interest in the organization and its services, have given in the past or have the potential to give in the future. The group should be the "cream of the crop," those who are most likely to assume leadership roles in giving and volunteering. All constituent groups among which an organized campaign will be conducted should be represented. The types of constituent groups to be included in the survey will vary depending on the type of non-profit. For example, a study for an educational institution could include alumni, faculty and staff, and parents and grandparents of students. A hospital study might include interviews with doctors, former patients and medical suppliers. Every study, however, should involve the governing board and staff of the organization, and foundations and local corporations whose giving guidelines match the organization's mission and goals.
Often, a feasibility study can be performed by the organization's staff. However, time would have to be invested in training them. Staff would also have to divert time from their other responsibilities to focus on the feasibility study. Many organizations find it is helpful to use a trained outsider who is a specialist. This individual will tend to be more objective than someone on staff, is already knowledgeable in survey techniques, and will be able to devote complete attention to the project. In addition, interview subjects are often more comfortable expressing concerns or complaints to a third party. Cost considerations, staffing needs and available expertise are determining factors in deciding the best approach.
A key to capital campaign success. | Society, Social Assistance & Lifestyle Philanthropy from AllBusiness.com
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