Cancer Charities Fraud Fallout – Will it affect you?

Current news is bad news for online and small scale charitable giving programs.

When four cancer charities were charged with fraud, one of the disturbing facts published was that most of the actual money that was donated came from small donors, $20 or $30 at a time.

The total amount, as charged in the settlement was reported at more than $187 million. The published terms of repayment apportion repayments between the main defendants, but give no specific date for final payment. Consumers will likely not receive more than pennies on the dollar, since the proceeds of the scam have been spent.

Another disturbing fact was that although these charities (all tied to one family) had been under scrutiny for several years, their websites and fundraising activities were not shut down

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Charity related fraud is one of the FTC's most often reported offenses. That puts all charities in a bad light.

There were indications that these charities weren't on the up and up, and donors who regularly decline telemarketing calls until they have vetted the charity in question through sites like Charity Navigator soon saw that something was amiss.

It's apparent from the amount of money in question that most people didn't bother to check them out at all.

   

The problem is that going forward, most people still aren't going to do that. They are simply going to say no to any and all fundraising calls.

There were red flags for those who did the research, particularly the amount of in-kind donations and fundraising costs, but most people aren't going to do that. It just isn't worth their time for a measly $20 or so.

Smaller nonprofits seeking to expand are going to bear the brunt of that public distrust. Larger organizations can withstand temporary revenue downturns but the little guys and startups can't. Given that very new charities depend mostly on individual donations, they may well be the real losers.

How can you counteract the bad press?

It goes without saying, or should, that you need to establish as much publicly available legitimacy information as you can.

•          Have a well done and informative website in addition to social media accounts.
•          Make your contact information easy to access, including a phone number.
•          Have an IRS determination letter and corporate documents.
•          Have good board and executive staff bios online
•          Have unrelated board members with online profiles on the board of directors.
•          Have audited financials on hand to back up your 990 filings.
•          File long form 990's even if you qualify to use the e-postcard
•          Keep detailed and accurate records of your donors.
•          Limit your large-scale fundraising costs. Frankly, if you are only getting 15 cents on the dollar, they aren't worth your time anyway. That's only viable when you are talking about millions of dollars in donations.
•          If you are truly new, have a business and strategic plan, complete with financial projections.
•          Track your results and impact and be prepared to provide that documentation when asked. 
•         Where possible, provide names of people or agencies that you partner with or who have received assistance from your charity.
•         Register your charity with one of the ratings sites, like Charity Navigator or GuideStar. (Although they may not actually rate you, since rating criteria are often based on minimum revenue amounts, often over $1 million, just the fact that you proactively offered up your information helps interested donors make decisions.)

Eventually, the bad PR will fade, but it's going to remain important to avoid even the appearance of impropriety or mismanagement. You can do that by being as business-like and professional as possible. 

Are you over-connected and under-noticed?

There comes a point in every business where you simply hit a development wall. Nonprofits are no different.

In many ways, the internet connectivity we all prize (or maybe despise!) contributes to that sudden stop.

The internet of today is a cacophony of digitized noise. Try following a few Twitter feeds and see how much real thought goes into them and measure how much value you are getting from them.

   

In the rush to have the most likes, followers, retweets or comments it's easy to lose sight of the real purpose of all those connections.

In a business sense, connections are supposed to be about interactive communications that provide value for both sides.

Take a look at your own favorite sites. What keeps you clicking on them?

Is it just to kill time?  To keep score to see how many of your own comments are being commented on?  To have some sort of social life?  Because everyone else is doing it?

If your connectivity isn't producing value, why are you still doing it?

Case in point. I recently reconnected with a person I had known fairly well at one time; not a BFF exactly but we had a pretty close acquaintanceship until she moved away. This was a while ago…before Twitter even existed.

I ran into her at the grocery store, and while we were trying to do the whole catching up thing, she never took her eyes completely off her phone. Twitter was scrolling the whole time. At one point she did mention she was looking for work, but when I asked for particulars, she was busy re-tweeting something and didn't answer.

It didn't take very long for me to see that our face-to-face meeting was only occupying about 10% of her attention, and I did the "well, it was nice to see you…call me sometime" thing.

That's sort of what happens when you focus on just one outreach strategy. You get so busy trying to build a broad audience, you forget that you need to develop real focused relationships.

For instance, let's say one of your grantor targets or a major donor prospect doesn't accept LOI's and you have no contacts in common. Think about something you have or can create, like a white paper or case study that has value to them. Drop them an email and offer it to them, no strings attached.

 Your email might read like this:

I noticed that you are seeking information on X.  I (we) have a case study on X that may help you.  I (we) would be happy to forward it if you are interested."

All of a sudden you are connected. Will that always result in an invitation to apply for that $100K grant or a $1 million endowment? Maybe, maybe not. The purpose is to get on their radar, but by offering something of value, there is an upside for them to notice and contact you.

It gives you a chance to present your organization, prove that you have value to add to their mission, and gives you an excuse to connect again to get feedback on the offering.

This works. One nonprofit that tried this strategy received program funding for three years as a result of this kind of outreach.

     

If you don't have any material that you can offer, it could be time and money well spent to develop a case study, white paper, manual or other outreach material that goes beyond the typical brochure, tweet or Facebook posting.

If you or someone you know would like more information on implementing this strategy, give me a shout at rightwords@ida.net.