Monday, March 30, 2015

Communicating success - If you did it, brag about it!

Who doesn't like the story of the "Little Engine That Could?" The 1930 children's book has stayed a favorite for 75 years because it teaches children that trying hard and often gets you to the top.

It's doubtful that the book would have even survived a week if it ended on a note of failure.

Most people root for the underdog, but what really moves them is when the underdog becomes the top dog.

That's the story your nonprofit should be telling.

When you are trying to raise funds, whether you're a nonprofit or a for-profit, people want to know that they are backing a winner or at least a solid competitor.

Often the difference between getting funding and going broke is your ability to prove you have a lasting impact on whatever problem you are trying to solve.

Nonprofits have a particularly good audience for success stories, because even little successes, if they are cumulative, motivate people to help.

We hear a lot about impact statements, but too many people want to prove their impact with numbers only, leaving out the emotional side.

OK, it's a good thing to be able to say you served 1000 more meals this year than last, but what difference did those meals make in someone's life?

Every nonprofit should make an effort to go beyond the numbers. Follow up with the people you fed or tutored or that you helped to finally get a job. What positive outcomes did they have beyond a meal, their first paycheck  or a passing grade on a test?

Stopping with the immediate end result of a program sells your whole operation short.

Go out and contact some of the people you helped, or the homes where you placed an animal a year or more later. What happened after the initial good deed?

Sometimes the outcomes aren't as rosy as you hoped they would be, but that's part of the story.

One nonprofit that worked with rescuing female domestic abuse victims did just that. What they found was that about 30% of the abused women had gone back to school and another 35% had found steady employment, but most of the others had either gone back to their abusers or entered into another abusive relationship.

That's part of your story too. Use it to show why you still need support.

Put the stories on your website, start a blog or send out newsletters, but get the word out.  

Remember, people want to give you money only because you help someone or something else. They aren't going to donate just because you need to pay the rent. Now go out there and start bragging!

Monday, March 23, 2015

Fundraising – Multi-state registration answers

Lately, my mail has been loaded with questions about nonprofits having to register to solicit funds in various states. These questions reflect a lot of confusion about the requirements. Since this blog reaches so many people, I thought it was worth the time to try to clarify the out-of-state registration issue.

The bare bones explanation

First, these are charitable solicitation laws. They do not require you to create a new corporation  in all 50 states. You simply register the one you already have.

They are intended to control, legitimize, and in most cases account for revenue raised within a state. In many cases the laws are intended to protect the charity from having to pay state taxes on the money raised and they allow would-be donors some protection from fraud as well as the right to deduct donations on their state returns. And, as you might expect, they also allow states to generate some revenue from the registration fees.

Second, there is no all-encompassing Federal law that requires states to have a uniform application process, or that limits states in the amount of registration fees they charge.

Every state has different requirements and fee structures for registration. Some require the IRS determination letter and some do not. Some require an annual renewal and some do not.

It is not a given that you have to register in all the states with such laws. It depends on the specific state guidelines.

Interestingly, many start-ups are of the opinion that if they are only making a general online appeal, such as on their own website or Facebook page, they don't have to register in any state but their own.

Not necessarily true! Depending on your particular situation, you may or may not need to register in a given state.

Where did all these regulations come from?

Back in 2001, a document called the Charleston Principles was approved to provide advisory guidelines by NASCO (National Association of State Charity Officials) to curb fraud in the charitable giving arena, particularly through online campaigns.

If you fundraise in a state other than the one you incorporated in, even via an online donation page, Giving Day or Twitter account, you may need to register as a charitable organization in all the states that require it.

If this all sounds confusing, expensive and cumbersome, it's because it is. However, the penalties for soliciting without registering can be substantial, so ignoring the laws is not an option. As of this posting, several more states have been reported as considering or adopting registration regulations, but currently the list includes 40 states and the District of Columbia.

Laws change, so be sure that your information is current. For instance, as of 2010, California removed the exemption from registration for out-of-state charities. You may also be required to file an annual statement of revenues obtained from state residents.

While many people think that educational institutions and churches are exempt from registration, this is not always the case, particularly if you hire a professional fundraising firm.

Arising from the aforementioned Charleston Principles, and in an apparent attempt to standardize the application process, a form was created known as the Universal Registration Statement (URS).

It is the name of this document that I think creates the idea that there is some over-arching Federal control of the process. Again, it doesn't do that, and it isn't even universally accepted by the states.

Since the states still require a varying amount of additional independent documentation, the form is becoming somewhat obsolete, although a few states do still require it. For more info see:

How do you do it?

Private firms such as mine, or your attorney or accountant offer fee-based registration assistance, or you can do it yourself.

A source citing a synopsis of the various state regulations as of 2013 and the governing state agency can be found at: The URS form is included at the end of the state listings and is worth looking at, including the additional forms required.

What about costs? Fees vary from state to state, with some states having a flat fee and others tying the cost to the nonprofit's revenue, even going as low as zero for many small charities. Some states require registration no matter how little you raise, while others may not require registration until in-state donations reach a set amount.

In some cases, the registration of an aggregating or sponsorship agency (such as the United Way for instance) may provide sufficient legal protection, since these organizations usually require proof of legitimacy as a condition of use.
Also, many of the documents that start-ups typically may not have (such as the IRS determination letter and a financial statement or 990) are often required to file with the states, so before you spend a lot of time and money, be sure that you have everything on hand.

Given that fraud in the charity world remains an ongoing problem, it is unlikely that these requirements are going to go away. Some organizations are seeking to update the Charleston Principles to reflect the realities of a world where everyone carries a tiny computer cleverly disguised as a phone, but to date that hasn't happened.

If you are saying "all of this sounds time-consuming and a good way to eat up scarce start-up revenues", you are right.

Nevertheless, if you are contemplating starting a charity, this is information you can't afford to ignore. The costs in both time and money need to be a part of your advance planning.

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Monday, March 16, 2015

The politics of funding – Is your program relevant to grantors?

The reality of nonprofit funding is that sometimes your mission isn't trendy enough to attract support.

Take the current interest of increasing participation in post-secondary education, and contrast it with the goal of helping low-income people get jobs.

One the one side you have millions being poured into missions supporting STEM education, such as instruction in how to access financial aid for college.

On the other hand you have more local nonprofits struggling to get enough funding to do things like improving access to the workplace for people who just need a steady paycheck.

One group with the latter mission focuses on providing decent clothes for interviewees and training to improve interviewing skills and focuses primarily on workers aged 40 and up, displaced from the job market during the recession. Typically they purchased clothing from local retailers and made it available to interviewees. The program budget was in the low five-figure range annually.

This group is starting to find that even jobs which shouldn't require any sort of post-secondary degree are suddenly being restricted or at least are preferential to college grads only.

An example of this is seen in an advertisement for seasonal employees for a major home improvement supplies retailer. The specific opening was for a seasonal week-end position assisting customers in the lumber department.

The ad reads as follows:
"Preferred Qualifications:  Associate's Degree in Business, Retail Management, Specialty related to department (e.g., design, appliances) or related field OR Certification in trade related occupation required."

Most potential applicant's never get past that sentence, although much further on in the ad it does say a minimum of one years experience is also acceptable.

The low-income-focused nonprofit had several people available who had actually done the job for other employers, or who have experience in other types of sales, but they don't have any of the paperwork required. No degrees, no certifications, just decades in the building material or building trades. Several of their people applied, but none were even interviewed.

That matters, because it lowers the impact, i.e. the provable results of their program, making their program appear less effective.

The aforementioned NPO working with the older jobseekers stated that most of their previous funding sources had switched over to what the frustrated ED called "more media-attractive" support. Their funding has dropped by over 50% since 2010, due to grantor mission realignment.

I suggested that perhaps they needed to incorporate programs that were more, shall we say, "funding-friendly" such as programs to get their people into some type of educational setting or training to make a complete career change.

His answer was that maybe funders need to start looking at the world his people lived in today.

He said "These are people with an excellent work ethic and fully marketable and useful skills, who have from another 15 to 25 years left in the labor force. They have families to support NOW. They have household expenses NOW. They haven't done a thing wrong except to become politically and socially irrelevant. Maybe by the time they can retire or die, we will all be replaced by robots, but that time isn't NOW"

Unfortunately that conundrum is the reality of funding. Sometimes, no matter how worthy or timely the cause, it doesn't resonate with grantors.

That reality will eventually impact your results, so getting a handle on a solution will definitely affect your future.

The answer is to either pursue a shift in your own focus or seek out new funding streams and new supporters, and continue to educate the public on the value and relevance of your mission.

In the end, we designed a campaign to appeal directly to individual donors, utilizing both direct clothing donations and a crowdfunding appeal that ultimately raised enough money to meet goal. Longer term, the NPO is seeking to develop relationships with new grantors.

If I can help you with funding solutions, drop me a line at

Monday, March 9, 2015

Keep your grantors happy.

What do you think of this email?

"We recently got approved (from an LOI) to submit a grant to (a very well-known foundation).  When we got the application, it had all sorts of conditions. Like, we had to keep our cost per service day under $10.00 per person, we had to serve at least 300 people per year, we had to submit a monthly report and we couldn't use any of the money to advertise the service.
We can't begin to match those conditions, and we don't feel that $10.00 cost per service day is anything close to reasonable. But we desperately need the grant.  What would happen if we tried but didn't meet the conditions after we got the money?"

The answer to the person's question was right in the requirements…the money would have to be returned if the grantee failed to meet at least 90% of the requirements.

One of the hardest things for some nonprofits to understand is that the grantor wants to have control of how their money is spent.

Most NPO's understand that they will have to submit some sort of report when the grant ends, detailing what was done with the money. What they seem less prepared for are interim reporting requirements.

Admittedly, this foundation had some pretty stringent requirements, but the amount of money was substantial.

In many grantor/grantee relationships, the nonprofit is basically acting as a subcontractor for the grantor.
Remember, foundation grantors are nonprofits too.  They have a mission and a vision just like you do, and they want assurances that you can and will help them achieve that mission. The larger the grant, the more control the grantor may want to retain.

Not all grants are structured so tightly, but be sure that you are fully aware of the grantors' expectations before you submit the application.

Even if your grant doesn't require interim reporting, grantors may appreciate receiving some sort of communication letting them know how your program or project is going. And by all means, and even if it isn't requested send them a summary report and a thank-you message when the grant is done. It's human nature to want to be appreciated, and your courtesy could very well mean the chance to form an ongoing partnership with the grantor.  

Wednesday, March 4, 2015

Board development webinar

GuideStar is offering a free webinar on March 11 addressing board recruitment and formation. Since this is one of the questions I get on a regular basis, this might be for you.

Check it out at:

Monday, March 2, 2015

Need donors? Think like a salesman.

One of the hardest concepts for me to get across to new nonprofits that want me to get grants for them  is the concept of producing what you might call a sales pitch when approaching donors. Nine times out of ten, when I produce a grant narrative for them I get it back with the words "we need" added multiple times.

For-profit companies have no problem understanding that while their motive is to make money, they have to create a product or service with market potential and then design a sales pitch to sell it.

Nonprofits, particularly new nonprofits, don't readily make that connection between the mission and the sales pitch needed to fund it.

What makes you decide to spend money on something?  You either need it, want it or both.

If you both need it AND want it, you are far more likely to haul out the credit card or wallet and actually cough up the cash. The trick is in determining which motive is driving your potential donors, and then appealing to that motivation.

That's the somewhat over-simplified reasoning behind approaching donors for money. They have a need, specifically a need to help someone or something, and you have the product (program) that will fill that need.
Impulse buyers initially react on the spur of the moment.  They are the ones that hear or see something that strikes a chord and pick up the product (program) and head to the check-out line. For them you need an emotional component to your appeal to get their interest in the first place. I call them Heart, Head, Hand donors, because that's the way they give.
Your job at that point is to convert the impulse to a sale. If they recognize your nonprofit's name and associate it with a record of good works, your can be fairly assured they will actually write the check. If not, you need to have resources available to them that prove your legitimacy.

Investor-type donors on the other hand have their own goals, and they expect a return on their money.  In the nonprofit world, that means actually improving a condition that corresponds to the donors mission objectives. You already have a common interest, so you don't need to sell them on the mission. I call them Head to Hand donors, because their hearts are already engaged.

For them, you need to produce a package that shows that you understand their mission, that your program is compatible with that mission, and  most of all that you are in a position to produce results for that mission. It isn't enough to make general statements like "we want to help low-income children" or "give goats to every woman in Africa".

Notice that at no point have I said this is about your needs. That's not to say that you shouldn't have goals for any money you raise, but the appeal can't be about you.

People give to benefit the end users of the money. They already know that you will receive the money, but they aren't primarily interested in supporting your organization unless they are specifically interested in organizational development.

Here's the difference.

When you say "WE need money to help feed children", you break their line of sight to the end result. They want to visualize a happy well-fed child, not your new office furniture.

When you say "YOU can feed little Johnny lunch this month for just $30.00" you are making the donor responsible for little Johnny.

See the difference?

Need help with your appeal?  Drop me a line at