Customer Service

PDF – BACK TO THE DRAWING BOARD – Section by Section Analysis of Proposed CFC Regulations

Posted on May 24, 2013. Filed under: Combined Federal Campaign - CFC, Customer Service, Fundraising, Leadership, Non-profits, Office of Personnel Management (OPM) |

Back to the Drawing Board!-CFC ANALYSIS -by Bill Huddleston_Final

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Massive Combined Federal Campaign CFC Changes Proposed For Non-profits

Posted on May 2, 2013. Filed under: Combined Federal Campaign - CFC, Customer Service, Fundraising, Leadership, Non-profits, Volunteer |

Massive Combined Federal Campaign Changes Proposed For Non-profits

Most of the proposed changes are  bad – These measures Throw Out the Baby with the Bathwater, and toss the tub on top for good measure.

Bill Huddleston, The CFC Coach, said that “The proposed changes to the Combined Federal Campaign (CFC) regulations will have the effect of destroying the CFC for small non-profits, whether they are local or national.”

The CFC Regulations as proposed will not help CFC charities, donors, or the people the CFC non-profits serve.  In addition, huge areas of importance are not addressed at all in the proposed regulations, including the value of the CFC to the sponsoring agencies and their employees.

The regulations were published on April 7th in the Federal Register, and there is a 60 day comment period which ends June 7th.  In other posts I will show you how to use the Federal Register commenting software, but if you think the CFC is worth saving, now is the time to act!

Will Cut CFC Revenues in Half

As proposed, these regulations completely eliminate the face to face aspect of the entire CFC campaign. If implemented as proposed these untested changes will have the effect of cutting CFC revenues for thousands of CFC charities in half, which is what has happened when such massive changes have been tried at the in workplace giving campaigns at the city and state level.  To see how much revenue was raised in your state through the CFC, please see this worksheet I created showing the state by state totals.  (see separate post)

After 50 years of being the most successful workplace giving program in the world, and the single largest source of unrestricted funds for non-profits, these proposed changes “throw the baby out with the bathwater, and then toss the tub on top for good measure!”

Massive Changes Proposed Without Adequate Discussion

The changes planned the proposed regulations are gigantic, and the proposed regulations make mistakes along the classic “New Coke” marketing debacle, when after much discussion about how to improve Coke, classic Coke was pulled from the market, and the cry went up, “Wait, you didn’t tell us you planned to destroy Coca-Cola!”

That’s the effect these new regulations will have, they will destroy the CFC, which is the single largest source of unrestricted funds for non-profits in the US.   The proposed regulations contain an odd mish mash of sweeping changes with no specifics on how the changes will actually be accomplished, wipes out organizations that have been in existence for more than 50 years, and especially in time of sequestration, are divorced from reality, because in order to actually implement them, there would need to be ten times increase in the number of Federal employees working on the CFC.

CFC – 50 Commission

A little background is in order, the CFC celebrated its 50th Anniversary in 2011, and at that time the head of the Office of Personnel Management (OPM), John Berry,  formed a commission, called the CFC-50 Commission, to look at ways to improve the CFC and keep it vibrant for the next 50 years.  The Commission was chaired by two former members of Congress, Hon. Tom Davis, (R-VA) and Hon. Beverly Byron, (D-MD), each of whom is well respected in the Federal service, and had served on government operations committees during their Congressional tenure.

CFC -50 Commission Public Meeting Videos (on Youtube)

The CFC-50 Commission met in public meetings four different times, and videos of these meeting are available at (see list of videos at bottom of page).

The videos are difficult to watch because they are not optimized for viewing, there are no captions identifying who is speaking, and the speakers usually don’t identify themselves.  Some of them have 10 minute spans where the sound is inaudible.   There was testimony by invited participants, e.g. representatives from some of the larger charities, etc.

CFC – 50 Commission Report – 24 Recommendations

The Commission then produced their recommendations in a report, “Federal Advisory Commission Report on the Combined Federal Campaign” in July 2012, which contained 24 recommendations.

Click to access 2012-report.pdf

Two Good Recommendations

Some of these 24 recommendations survived intact in the proposed regulations, and some of them are good and make perfect sense, such as the ones dealing with new employees and the one dealing with disaster relief charities.

Many Proposed Regulations Do NOT Follow the Recommendations of the CFC-50 Commission

Many of the proposed regulations simply miss the mark from what the CFC-50 Commission actually recommended, had no or inadequate discussion about how some functions would actually be accomplished, and others are petty, or petty and unconstitutional.

Example of a Regulation Missing the Mark with wide negative consequences:

“Shifting the Campaign” is NOT the same as “Extending”

In the CFC-50 Commission meetings there were many people and organizations that spoke to the benefit of extending the campaign to January 15th from the current December 15th end.  There are many reasons for this, including both year-end charitable giving and federal personnel schedules.

In watching all eight hours of video testimony, reading all the recommendations and appendices in the CFC-50 report, not a single person said “Shift the Campaign” from September to December to October to January.    “Shifting” is not the same as “extending” and there are many negative consequences to shifting, which I will describe in detail in later posts, but since there was no mention of this at all in 4 public meetings over many months, the idea was not addressed.

The Proposed Regulations can be found here:

In later posts, I will have information on how to use the Federal Register rule making portal to make comments.


Bill Huddleston

The CFC Coach


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CFC Fundraising Secrets – Thank you to all volunteers – National Volunteer Week

Posted on April 15, 2011. Filed under: Combined Federal Campaign - CFC, Customer Service, Leadership, Nationa Volunteer Week, Volunteer |

April 10-16th, 2011 National Volunteer Week

Please make sure to thank all the volunteers that make your community a better place to live!

Wwhat are some of the critical ingredients to developing stronger and better relationships with your CFC supporters? I’m going to focus on some practical keys for generating awareness about your non-profit in the CFC community, including your anonymous donors. There are Seven Keys to CFC Success, but I’m highlighting two as a lead-in to the April CFC Secret:

• CFC Success Key #3: Use all 12 months of the year! It’s true that the solicitation period is only in the fall, but there are many actions and activities that you need to be doing during the rest of the year as well, including in April. One important element is to keep communicating about the CFC, in part to combat misinformation about it. Following the “Law of the Harvest,” planting some seeds of success now, in the spring, will help you reap more in the fall.

• CFC Success Key #7: “Say Thank You Early and Often!” This is probably the most important key, yet it is frequently the most violated by many non-profits.

The April CFC “Secret”
Every year, National Volunteer Week is celebrated during the third week of April. This is a huge event, with a Presidential proclamation and a lot of media attention. It is one of the signature events of the Points of Light Institute, and has been a nationally recognized week since 1974. Since as non-profits you don’t have millions of dollars to spend on advertising and marketing, it’s critical to leverage onto events that have significant and widespread coverage, and provide an easy “hook” for traditional media to base a story on.
As part of National Volunteer Week, many non-profits have recognition events, days of service, open houses, and, at minimum, news releases thanking all their supporters and volunteers for helping the non-profit work on achieving its mission during the past year.

This is where you get to combine CFC Success Keys #3 and #7, and add a few “Thank yous” to both your known and unknown CFC supporters. Whatever your non-profit is doing to celebrate National Volunteer Week, make sure that you include a paragraph or two in written materials, or a sentence or two at live events that thanks both your known CFC donors and supporters, and your anonymous CFC supporters, including the CFC workplace giving volunteers. As I already said, if they are CFC donors to your non-profit, they will see the story that gets picked up in a local paper, or may be in attendance at “Volunteer Recognition” event. Saying “Thank You” in the non-profit world is analogous to advertising in the business world, it doesn’t have to wait for a transaction to be meaningful and appreciated. The CFC workplace giving volunteers on the other hand, may not know anything about your specific non-profit, but since they helped raise money for the CFC charities, they deserve a “Thank You” from your non-profit. I call this “planting seeds of awareness,” some will bear fruit, some won’t, but regardless, the CFC volunteers deserve a thank you.

In addition to press releases and speaking opportunities, don’t forget that you have much more control over internal information, including your website, annual reports, newsletters, podcasts, etc. Do you thank your workplace giving donors and volunteers on your website and in your publications?
If no, why not?

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Organizational Assessment Tools – ARNOVA Discussion

Posted on February 4, 2011. Filed under: Customer Service, Fundraising, Leadership, Non-profits, Volunteer |

This is an interesting discussion about Organizational Assessment Tools from the ARNOVA (non-profit researchers) listserv.

The first commenter is Jeff Jackson from the Packard Foundation:

Thanks Beth for you question on organizational assessments, Hildy for raising the issue on assessment effectiveness and Gregrie for raising the related issue on leadership engagement with assessments. I’d like to add to the mix my curiosity about whether there is a difference in effectiveness and/or engagement between self-assessments vs consultant-facilitated assessments (referenced by Hildy). I know there are pros/cons to both approaches and there are hybrid approaches (such as a self-assessment followed by a consultant intervention). I’m also curious about the difference in effectiveness/engagement with one time assessments vs regular (annual) assessments.

On our Packard Foundation OE wiki (see the Organizational and Network Assessment page in the link in my footer), we’ve listed a number of resources and models of assessments (yet leave it to our grantee partners to determine which approach is best for what they need). We include a link to the Funders Guide to Organizational Assessment (Fieldstone Alliance and GEO) that explains when and how to use various tools. We’ve collected pretty powerful stories on results (short and long term) of organizational assessments (albeit a small sample) and very shortly we’ll be posting some related data/stories on our wiki for practitioners/researchers to comment on (see the page on Goldmine Research Project).

Our wiki also has a link to a self-assessmet tool used annually by about 400 community-based grantee partners of the Global Fund for Children and the MTV Staying Alive Foundation (a slightly revised version). The organizations use the tool to self-assess their organization’s strengths and learning curves when it comes to 7 areas of organizational capacity. Use of the tool is still relatively new (three years with GFC and just starting with SAF), but input on usefulness has been generally positive. One of the strongest messages is that self-assessment in itself is building knowledge and capacity about building organizational capacity. The leadership engagement question is addressed since the tool is completed minimally by the ED and ideally with board, staff and client stakeholders. Both GFC and SAF make it clear in the instructions, that the assessment is meant to be an action-learning tool for the grantee partners, more than an evaluative tool for the funders.

I hope this adds some food for thought.


Interested in nonprofit organizational and network effectiveness? Check out:

Jeff Jackson
Organizational Effectiveness Program Consultant The David and Lucile Packard Foundation 300 Second Street, Los Altos, CA 94022 510.628-0800 ________________________________________
From: NonProfit and Voluntary Action Discussion Group [ARNOVA-L@LISTSERV.IUPUI.EDU] On Behalf Of Gregrie Merkel [Gregrie.Merkel@UWCNM.ORG]
Sent: Thursday, February 03, 2011 1:27 PM
Subject: Re: Organizational Assessment tool

Hildy, You are not alone. We could dig deeper to come up with the same result. Every piece of information and all authorities may point to needing immediate change, but unless the CEO is directly motivated, the board will not see it as anything to address. It isn’t a need for money, it’s a need to listen. You know, if it isn’t broken-don’t fix it; if I don’t have to do it I won’t. This occurs with the most passionate defenders of their cause. I hear specifics and generalities every day internally and externally regarding what needs to come into play to succeed. My reference comes from discussions with others in research at many small and national nonprofits. As long as the organization is not bankrupt or void of volunteers, they will not make sweeping change or possibly any change at all. At times the comfort level has to be pushed to make a difference. Gregrie

Gregrie Merkel / Research / United Way of Central New Mexico
505 247 3671 xt 350 /

From: NonProfit and Voluntary Action Discussion Group [mailto:ARNOVA-L@LISTSERV.IUPUI.EDU] On Behalf Of Hildy Gottlieb
Sent: Thursday, February 03, 2011 1:39 PM
Subject: Re: Organizational Assessment tool

On 2/3/2011 10:27 AM, Beth Bagwell wrote:
Dear ARNOVAns,
I am currently looking for information regarding assessment tools for evaluating the overall performance of nonprofits. This will be used as an entry point for providing guidance to the nonprofit sector regarding strategic planning, etc. I’ve found some information on the website, but wanted to know of other tools that were recognized and user friendly.
Thank you,
Beth Bagwell

Beth’s question raises another question for me – one that has tugged at the back of my mind for a while. And that is the effectiveness of organizational assessments.

In my own experience, I have seen countless assessments, done by outside organizations who are well acclaimed for their methodologies. And from those assessments, I have pretty consistently seen several results, in no particular order:
• Nothing changes… and/or
• Plans are made to address issues raised in the assessment, but little is done to address the larger systemic issues at the heart of the symptoms, and symptoms soon re-occur (if any action is taken on the plans at all)… and/or • Organizational leaders feel no ownership of the assessment, finding themselves in the role of interviewees rather than the ones actually assessing the org themselves – or even determining what is important to assess. (Having been told they don’t know what to assess, they believe that and default to, “Well I guess we need an outsider…”) All assessment calculations are done by the outside entity performing the assessment, the final result of which is then presented to organizational leaders. Those leaders then determine which areas they agree with/ disagree with. Virtually none of what they read is surprising to them, but they don’t feel any ownership of the assessment because they neither designed nor executed it… and/or • Even assessments that are fully acted upon do not make a significant difference in the impact the organization has in the community, as assessments tend to measure organizational strength against internally-focused management checklists rather than answering the externally-focused question, “What difference does the organization want to make in the community, and what does it need to accomplish that?” …

Is this just my experience? Is there research into the extent to which (and/or what kind of) organizational assessment actually a) creates meaningful organizational change and b) increases the impact organizations have in their communities (the supposed goal of building strong orgs in the first place)?

Thanks for any observations any of you can share.


Hildy Gottlieb
Creating the Future
Making Visionary Community Change Practical
Twitter: @HildyGottlieb
Skype: HildyGottlieb

Complete instructions on managing subscriptions to ARNOVA-L, reviewing the archive of postings, and other useful information can be accessed from the link at the top right of the webpage at Complete instructions on managing subscriptions to ARNOVA-L, reviewing the archive of postings, and other useful information can be accessed from the link at the top right of the webpage at

Complete instructions on managing subscriptions to ARNOVA-L, reviewing the archive of postings, and other useful information can be accessed from the link at the top right of the webpage at

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Non-profit Agency – SBA or SEC model?

Posted on August 5, 2010. Filed under: Customer Service, Fundraising, Leadership, Non-profits |

This essay is in partial response to an article by Rick Cohen on the Blue Avacado about the demise of the Vanguard Foundation.

SBA or SEC model for Non-profit Legislation:

While Congresswoman Betty McCollum’s proposed legislation about creating a “Small Business Administration (SBA) for non-profits has received a fair amount of press in non-profit circles, my question is would a model based on the Securities and Exchange Commission (SEC) organization make more sense? The core principle of the laws about capital formation is “Full Disclosure and Transparency.” That’s way public corporations have to file both annual reports (10-K’s in SEC parlance) and quarterly reports (10-Qs), as well as special reports about any “material change”, e.g. insider trading, change in the corporate structure, etc.
In the context of Rick’s question about where was the IRS or the Attorney General, it’s often very late in the game when criminal actions are discovered. If non-profits above a certain size were required to have periodic filings (since they are also a “public” entity) this could be a better model for creating early warning systems that would let both donors and officials know of potential problems sooner rather than later.
The other appeal of the SEC model is that it is one that has both government and non-government entities as a critical part of the overall structure. The SEC does not have 100% responsibility for monitoring and disclosing issues with corporations, the “Self-Regulatory Organizations (SROs)” actually have the first responsibility for monitoring and making sure corporations and broker-dealers are following the rules. Who are the SROs – they are they exchanges and other key components of the USA’s capital formation system – New York Stock Exchange, NASDAQ, etc.
In the non-profit world, the Independent Sector, the National Council of Nonprofits, the Foundation Center, and others are some of the organizations that with expanded resources and authority could perhaps take on the responsibilities of being a “SRO” for non-profits. SROs have to be willing to discipline their members, that’s one of their key responsibilities. I give kudos to Congresswoman McCollum for paying attention to the non-profit world, which many Representatives and Senators do not. If the proposed legislation has any hearings, perhaps some of these ideas deserve discussion.
Bill Huddleston
The CFC Coach
P.S. I’m not a securities lawyer, and don’t play one on TV.

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Fundraising Pyramids Part II – Customer Service Debacles

Posted on January 28, 2010. Filed under: Customer Service, Fundraising, Leadership, Non-profits, Volunteer |

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.


Bill Huddleston

(Still hatless).

P.S. Go to to request your 2010 Special Report about the CFC.

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Saying “Thank You” to Anonymous Donors and Anonymous Volunteers

Posted on January 25, 2010. Filed under: Combined Federal Campaign - CFC, Customer Service, Fundraising, Leadership, Nationa Volunteer Week, Non-profits, Volunteer |

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?

Bill Huddleston

P.S. In 2010 National Volunteer Week is April 18-24, with the theme “Celebrating People in Action.”

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Non Profit Jobs website is stealing IP, Poor Customer Service from

Posted on January 22, 2010. Filed under: Customer Service, Leadership, Non-profits |

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 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

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.

Bill Huddleston
MPA in Non-profit Management

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Goldman Sachs Pile of Manure is Starting to Stink

Posted on January 13, 2010. Filed under: Customer Service, Leadership |

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.

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Nonprofit Fundraising Pyramids Are Not Built from the Top Down

Posted on January 7, 2010. Filed under: Customer Service, Fundraising, Leadership, Non-profits |

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.

Bill Huddleston

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    Fundraising and Leadership Development through workplace giving, CFC = Combined Federal Campaign


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