Archive for January, 2010
Non-Profit Fundraising Pyramids are Not Built from the Top Down – Part II
Customer Service Debacles
How one non-profit lost a donor, or, the next time I drive 300 miles to visit your museum, and I bring my family, give me my damn hat!
In Part I, I used the example of how a farmer when planting an apple orchard doesn’t know in advance which ones are going to be great producers, consistent supporters, or just wither and die. This is the story of our summer vacation and how the actions of one well meaning, but rigid, staff person killed off any desire by me to ever give this non-profit any money again.
Okay, maybe not a debacle, but let me share with you my experience with poor customer service from a non-profit organization that was one of the places my family and I visited this summer. I am going to identify them by name, not to pick a fight but rather because as soon as I would say “living history museum dealing with 19th century sailing ships” everyone would know that I was talking about Mystic Seaport in Connecticut.
I do think that many times the non-profit world puts blinders on about the reality of the different types of fundraising that they are going to be able to attract. I’m still working on a system that identifies these but as a working effort, let’s just say that there’s some combination of degree of interest and geography. Despite Seth Godin’s statement that “Geography Doesn’t Matter” in some cases it actually does. I do agree that depending upon the issue, it is less important than it used to be, and in some cases, it truly does not matter, but not in this case.
I live in Virginia, but have some good connections to New England and this summer my family and I visited Mystic Seaport in Mystic, Connecticut which is about 40 minutes away from my cousin’s home. Yes, we did have dinner at Mystic Pizza. Our exact logistics were decided at the very last minute because of work considerations, so as I checked the Mystic Seaport website I saw that by becoming a member, I would get a baseball cap as a premium and it was about the same as buying 4 tickets (slightly more expensive) than just buying the tickets.
My sons are in fourth and fifth grade and my intent was to get one “free” hat and then buy another one at the gift store so that each boy would have a hat as souvenir, etc. Mystic Seaport’s procedure is that they mail you a “token” that you have to turn into the visitor center to get the hat. Well, I become a member about the day before we left so I certainly did not have a token with me when we visited the visitor center. I did have the e-mails confirming my membership number, etc. When I asked if I get the hat that was included as part of becoming a member and explained the travel situation, I was told no, I had to have the token that was the only possible way I could get the hat.
Well, I didn’t make a big deal about, it wasn’t worth arguing or trying to find someone higher up because it was nice, sunny summer day and we had activities that we wanted to do. And in this case, geography does matter. If I lived a 30 minutes away, I would have probably been back sometime in the fall and could have gotten the hat then. This however is where geography does matter, I live 300 miles away and I’m not going to be a casual visitor. I also will never be a donor and I’m sure their development office is saying, “Gee, why aren’t our member retention numbers better?”
I like history, I like maritime history, but it’s not a “cause/issue” that I am absolutely passionate about. There are other ocean research and maritime museums closer to me on the Chesapeake Bay or in Virginia Beach, if I visit one of those I may choose to become a member.
The point about this post is from both a customer service (and lack there of) perspective, as well as a fundraising one. I would have probably never become a major donor, but I might have supported them for a few years, but not now.
Do you know what’s actually going in the front lines of your non-profit (by all staff, volunteer and paid that has customer/donor interactions)?
If you don’t have some friends of yours call and let your know what their experience was. It can’t be you; with caller ID you won’t get the same treatment and reaction as a stranger.
P.S. Go to http://www.cfcfundraising.com to request your 2010 Special Report about the CFC.Read Full Post | Make a Comment ( None so far )
One of the 7 Keys to Success for CFC Nonprofits is to “Say Thank You Early and Often”
One of the mistakes that many CFC charities make is to think that there is only one type of person who should be thanked, specifically the identified donor, and that thank yous should be only be given after the contact information has been received.
There are multiple problems with these practices and assumptions.
The first that there is a definite time delay between the Federal donor making the pledge and when the charity recieves the information. The donor pledges in the fall, the charities receive the information in the spring. This is actually the minor problem.
The major problem is that the majority of gifts to CFC charities are made by Anonymous CFC Donors (probably more than 75%). The anonymous donor option is extremely popular on the Federal side and many non-profits do not realize that the anonymous donor is one of your best supporters.
So what to do: On your website, in public meetings, in documents, such as annual reports and newsletters, go ahead and thank your CFC donors in advance, and make sure you include the anonymous donors as well.
Most CFC charities at least realize those two types of people that should be thanked, even if they don’t have methods in place to thank their anonymous donors.
The third category of people who should be thanked, and yet almost never are, are the Federal public servants who are the CFC volunteers in their agency and helped you raise money for your non-profit. This is Fundraisng 101 – Say thank you and it happens rarely. Don’t do it by individual name, because you’ll never know the names of everyone that helped you, but in the same ways that you thank Anonymous Donors, thank your Anonymous Workplace Giving Volunteers. They helped raise unrestricted funds for your non-profit — Don’t they deserve at least a thank you?
P.S. In 2010 National Volunteer Week is April 18-24, with the theme “Celebrating People in Action.”Read Full Post | Make a Comment ( None so far )
From the Washington Post on Monday, January 25th:
This was one of the headlines in the Metro section:
Man trying to open plane’s doors is subdued by fellow passengers : Heroics end with none hurt on United flight from Dulles; psychiatric exam pending …
Further into the story the first passenger who responded in attempting to restrain the man trying to force entry into the cockpit, was identified as Earl Stafford, who organized the People’s Inaugural celebration in Washington last year, was headed to a convention of television executives to promote a public-service announcement that his charitable foundation produced last week, encouraging voluntarism. Three other passengers aided in restraining the man, Sergei Sandou, Thomas A. Hart, and Barry Eynon, and thanks to all who jumped in and took action.
Author of soon to be released:
Successful CFC Fundraising
Growing Donors that Give for Decades
This is just to let you know that the website with the heading
“Non Profit Jobs, Tell You about Non Profit Jobs” is stealing intellectual property, specifically copyrighted articles, including one of mine.
The actual URL when you go to the site is
My article about non-profit leadership development is one that I posted on ezinearticles.com in late 2009. The article was stolen within a few days and even though I complained to ezinearticles there was apparently no action taken. Even though I was the victim, the “standard policy” is for you to have to prove that what was taken was yours. It’s as if you were robbed and the police said, “Too bad, let us know when you catch the thief, and have processed all the evidence.”
Below is the message I sent to Non Profit Jobs via their contact form:
Message to non-profit jobs.com
January 22, 2010
Non Profit Jobs
Tell You about Non Profit Jobs website
is violating copyright laws.
The article on non-profit leadership development that starts with the question, “Did you learn to swim by reading a book?” is written by me and I own the copyright and all rights. You do not have the right to publish it without my resource box.
I do not know if you are the one that stole it from the ezines article site and deleted the resource box or not, but I request that you either add the resource information or delete the article.
MPA in Non-profit Management
This is from McClatchy News:
Goldman Sachs admits ‘improper’ actions in sales of securities
Goldman Sachs’ secret bets.
By Greg Gordon and Kevin G. Hall | McClatchy Newspapers
WASHINGTON — The chairman and CEO of investment titan Goldman Sachs acknowledged Wednesday that his company had engaged in “improper” behavior when it made financial bets against $40 billion in securities backed by risky U.S. home loans that it was selling to investors as safe products.
Lloyd Blankfein made the shocking acknowledgement before the Financial Crisis Inquiry Commission, a 10-member panel that Congress created to look into the causes of the worst financial crisis since the Great Depression.
In November, McClatchy reported exclusively that in 2006 and 2007, Goldman sold more than $40 billion in bonds backed by over 200,000 in risky home mortgages while secretly betting on a sharp downturn in housing prices that would depress the value of those securities.
During today’s inaugural hearing, the CEOs of the nation’s most prominent banks also acknowledged serious flaws in their models and business practices that helped bring about the nation’s financial crisis.
Many of the toughest questions from panel members were put to Blankfein, whose firm is a goliath and a virtual farm team for top government posts in the White House and at the Treasury Department.
Commission Chairman Phil Angelides, a former California state treasurer, warned Blankfein that he’d be “brutally honest” in his questioning. Then he went straight to the question of why Goldman thought it was necessary to take out protection against securities it was selling by purchasing insurance-like credit-default swaps. Angelides likened it to selling a car while knowing that its brakes were bad.
Blankfein acknowledged “that the behavior is improper, and I regret the consequence that people have lost money in it.” However, he went on to defend his company’s role as a market maker, suggesting it’s a middleman that’s exposed to risks both on what it buys and what it sells.
The heads of JPMorgan Chase, Morgan Stanley and Bank of America acknowledged that they’d paid a huge price for failing to build the possibility of declines in home prices into their risk-management models.
That failure had disastrous consequences, since the banks packaged mortgages into pools that were sold to investors worldwide as securities, often with top ratings from credit-rating agencies such as Moody’s Investors Service. When home prices fell, these securities lost money, faith was lost in credit ratings and panic was amplified by the insurance-like bets that were taken out by the very companies that were offering these “safe” securities.
“Given enough time, everything will happen, not can happen,” Blankfein said, noting that in the aftermath of the housing meltdown his firm models for even the most improbable scenarios in all its lines of business.
James Dimon, the CEO of JPMorgan Chase, the bank that’s emerged the least tarnished in the crisis, said that in retrospect it should have been obvious that mortgages given to people with little or no proof of income was a terrible idea that should have sparked concern.
However, Dimon cautioned, “You never saw losses in these products, because home prices were going up.”
The sector’s failure, he added, was the assumption that prices can only go up.
“I would say that was one of the big misses,” Dimon said. “That is now part of the stress test” that JPMorgan conducts.
Bank of America’s new CEO, Brian Moynihan, said that post-crisis, his company modeled for a range of improbable but possible scenarios in all areas where it extended credit.
Another criticism of most of the big banks that packaged mortgages into securities is that they didn’t retain portions of what they were selling. They weren’t exposed themselves to the risk that they were exposing others to. In plain speaking, they weren’t eating their own cooking.
“We did eat our own cooking, and we choked on it,” John Mack, the chairman of Morgan Stanley, said in one of the frankest exchanges of the morning.
Many academics and financial analysts think that one major cause of the crisis was the Federal Reserve keeping its benchmark interest rates low for an unusually long period after the economic shock from the 9/11 terrorist attacks. Former Fed Chairman Alan Greenspan denies that the low lending rates, which amounted to cheap money, sparked an unsustainable rise in home prices.
Bank CEOs said Wednesday that they thought that the era of cheap money was a contributing factor, their own shortcomings notwithstanding.
“The commodity of money got less scarce, and people paid less attention to it,” Blankfein said, adding that this led to a “lack of rigor” in a number of transactions. He said that the global economy had been booming, technology was bringing numerous advances and the good mood clouded judgment.
At a later point in the hearing, JPMorgan’s Dimon agreed that low lending rates helped foster the weakened lending standards.
“I do think it’s part of the problem, taken as a whole,” he said.
Just before releasing the bank CEOs from testimony, Angelides doubled back on Goldman Sachs, criticizing Blankfein for failing to acknowledge publicly that the 2008 bailout of the financial sector saved his firm. Investment banks such as Goldman and Morgan Stanley saw the value of their stocks plunge, and it wasn’t until the Federal Reserve allowed them to become bank holding companies, subject to greater regulation, that the run on bank stocks eased.
Angelides then compared Goldman’s sale of securities it was betting against to the 1920s, when Wall Street firms peddled Latin American debt to investors while knowing that default was probable.
“At what point do you have a responsibility? What is the sense of responsibility?” he asked Blankfein, who answered that his firm sold complex securities to big institutional investors that wanted exposure to risk and were just as much to blame for the lack of due diligence.
Blankfein did acknowledge that his firm, and others that packaged mortgages for sale as securities, had amplified bad mortgage lending because they provided more funding for lenders who were eroding their own standards, with consequences later borne by every American.
My prediction, this is just the tip of the iceberg. Stay tuned.
Goldman Sachs Looking for Non-profit Patsies
I thought about writing on how reprehensible it was for Goldman Sachs to promote mandatory charitable giving, but given the description by Matt Taibbi of Goldman Sachs as “world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” in the July issue of Rolling Stone, I decided that any appeal to decency by Sachs would be meaningless.
Goldman Sachs is however, not stupid, and they realize they have created a public relations problem for themselves, so their effort to solve it includes forcing their employees to donate a percentage of their bonuses to charity.
Here’s the headline and link to the January 10, 2010 New York Times story:
Goldman Sachs Considers Charity Requirement
By LOUISE STORY
Published: January 10, 2010
As it prepares to pay out big bonuses to employees, Goldman Sachs is considering expanding a program that would require executives and top managers to give a certain percentage of their earnings to charity.
So the question is, how many non-profit leaders will denounce this as a badly disguised effort by Goldman Sachs to generate some positive public relations (I think has failed in that regard) and how many will step up saying “Give it to us, we’re worthy.”
It behooves the board leadership to think long and hard about what it means to accept money for any reason. A variation on this is encapsulated in this very old, and very non-PC joke:
An elderly rich gentleman at a cocktail party asked a young and very beautiful woman if she would sleep with a stranger for a million dollars. She thought for a minute, but then said, “Yes, I would.” “Well, will you sleep with me for a $100 dollars?” he asked. Indignantly, she exclaimed, “What kind of girl do you think I am?” “We’ve already determined that,” he said, “now we’re just haggling about the price.”
If your non-profit is offered a gift from a mandated Goldman Sachs account, what will you do? Choose wisely.
Fundraising Pyramids Are Not Built From the Top Down
By Bill Huddleston,
It is a physical impossibility to build a pyramid, including a fundraising one, from the top down. That fundamental fact seems to have escaped many of the non-profit professionals who emphasize the “80/20” rule—the one that states that 80% of a non-profit’s funds will come from 20 percent of its supporters. While this may be true (and often is) what’s ignored in that formula is the idea that you can determine in advance just who the people are in the twenty percent category, without having to “bother” with the other eighty percent.
It doesn’t work that way.
What happens in the fundraising world is very similar to the steps that a farmer deciding to plant an apple orchard goes through. The farmer acquires a selection of seedlings, (from a nursery or other orchards), and then plants them, weeds them, waters them, prunes them and keeps pests away. Over the course of the first several years, some of those initial plants will die regardless of the best efforts of the farmer, others will grow to be a decent apple trees, and some will end up being a stupendous producers—with more apples, tastier apples, and just lush specimens compared to all the other seedlings that existed at the start.
There’s no way to tell which of the seedlings (donors) will be in that top twenty percent. It doesn’t happen overnight and it’s impossible to predict which seedlings (donors) will be the dead or diseased seedlings (lapsed donors) or the decent seedlings (multiple year donors to the annual fund, with modest increases over time). The fact that some seedlings turn into the stupendous producers (the major gift donors) is tremendous—but it is impossible to predict which seedlings (donors) will turn out to be the major gift donors. And here’s where the 80/20 model breaks down—you have to cultivate, weed and water ALL the seedlings for multiple years before you learn which ones have become the stupendous producers.
On its face, the fundraising pyramid is a pretty good model for what it shows, which is that a smaller percentage of the non-profit’s supporters will provide a larger percentage of its funds. With the emphasis on the 80/20 rule or the 90/10 rule what can be easily glossed over is the fact that in order to have the 20% percent, you also need the 80% base. No pyramid has ever been built from the top down, it’s a physical impossibility. You have to deliver excellent customer (donor) service to all of your supporters, including volunteers, donors and others who just call and ask a question about what you do. Over time, some of these first time contacts will become your major donors, but there’s no way to tell at the beginning of the relationship which ones will develop into your biggest supporters.