Doing It Right

Fostering clients' charitable impulses is good. Di

The holidays are approaching. Many of your clients will be thinking about end-of-year gifts to various charitable, educational, and artistic institutions. Perhaps high on the list will be those groups that have been active in relieving the suffering of those directly affected by the events of September 11. If you're looking for a way to make those gifts go further, or if you are a trustee for an institution seeking contributions and you need a way to attract those gifts, here are some books that should be helpful.

Making It Count

Corporate Social Investing: The Breakthrough Strategy for Giving and Getting Corporate Contributions, by Curt Weeden (Berrett-Koehler Publishers, Inc., 1998), looks at the benefits of contributions by corporations to various 501(c)3 entities. Aimed at corporations and charitable entities, with an eye toward explaining how contributions of money, time, and goods or services can be maximized for all concerned, this book features forewords by Paul Newman (whose own charitable venture, Newman's Own, has contributed over $100 million to charity since its inception in 1982) and Peter Lynch, who has taken his financial knowhow and applied it to the boards of several nonprofits.

Weeden begins by pointing out the two conflicting viewpoints of corporate philanthropy today. The first is that businesses are cheap; the second is that businesses are socially responsible.

With regard to the first viewpoint, contributions as a percentage of profits have fallen steadily over the last couple of decades, as executives have looked more and more at the bottom line and thought more of profits than of benefits to the community and even to the business itself. Contributions now amount to little more than 1% of a corporation's profits; in the mid-1980s, it was nearly double that: 2.6%

Not only that, but just try getting volunteers from a seriously downsized corporation. Employees in many companies are so squeezed trying to do their jobs and those of former co-workers that even the most strident calls from management for participation in some charitable program may fall on deaf ears. These are no small difficulties for the nonprofit world to face, since corporate gifts and volunteers are of growing importance to their bottom lines as more and more government programs cease.

Corporations have pulled in their purse strings, and the effects are being felt by nonprofits of all descriptions.

Viewpoint number two, that corporations are socially responsible, also has some basis in truth. Some corporations have figured out ways to tie merchandising campaigns to charitable causes and increase business while donating a portion of the proceeds to the cause they've joined with. Think about co-branded credit cards that give a portion of sales to the co-branded charity with each purchase, or marketing campaigns that sell certain types of merchandise with a portion of the sale price going to the linked cause. This often has been good not only for the nonprofit involved, but for the corporations doing the selling.

But the latter type of activity is not philanthropic, is it? It's a marketing campaign tied to a cause--hardly one hundred percent altruistic. Yet that seems to be where some of the greatest promise lies, says the author, in seeking "social investing"--Weeden suggests that we lose the word "philanthropy" as a throwback to times gone by. Corporate social investing, on the other hand, makes use of philanthropic principles, tax laws, public perception, and savvy marketing (on the parts of both the corporation and the nonprofit) to reach maximum benefit for all concerned.

One thing Weeden points out is that while a "profit sharing" venture results in charitable contributions, corporations may be reluctant to consider it because it does not get credited as a charitable contribution. But the costs of such a venture, he points out, can generally be classified as some other allowable business deduction. And since corporations are allowed to deduct up to 10% of pretax profits as charitable contributions in any given year, says Weeden, that opens up a very wide area for helping nonprofits achieve their aims while aiding the community and the corporation (both bottom line and public image) at the same time.

There is the possibility of missteps, of course. Weeden mentions the unfortunate teaming of the AMA and Sunbeam. In 1997, Sunbeam won the right, through monies to be paid through sales, to put the prestigious AMA logo on such "health care products as heating pads, bathroom scales, and so on," the author recalls. Within a couple of weeks of the announcement there was such an uproar among influential members of the association over the AMA "selling" its name that the alliance was ended abruptly. AMA officials conceded that it had been "an error."

There was also the questionable ethics of the Smithsonian Institution accepting a $100,000 donation from the Alyeska Pipeline Services Corporation for the installation of an exhibit depicting the trans-Alaska pipeline. Conservationists were concerned that the Smithsonian had sold out by allowing an exhibition that downplayed the environmental issues associated with the pipeline. The lesson: If the organization or the corporation stands to lose more in public relations than it can possibly gain in financial terms, the idea of an alliance definitely ought to be revisited--and perhaps scrapped.

Weeden lays out a logical 10-step program of corporate social investing that covers everything from what sort of benefits will accrue to the business doing the investing to how much of the company's profits should be committed to causes each year. He offers guidance to corporate executives who seek a way to make companies more responsive to public needs, but who are unsure how to proceed. He also provides tips to members of nonprofit organizations seeking creative new ways to obtain funding from businesses and corporations who in the past gave, but only in small and ineffective ways.

The Trustee's Dilemma

The Board Member's Guide to Fund Raising: What Every Trustee Needs To Know About Raising Money, by Fisher Howe (Jossey-Bass, 1991) is another look at the problem of how to continue the work of nonprofits in a time of scaled-back donations from corporations and governments. For any advisor serving on a board, or for those who have clients having to deal with the problems of raising funds for their favorite causes, this book can lend valuable assistance.

Covering a myriad of issues that face board members, from whether the board member should indeed solicit funds to how to go about it, Howe offers expertise on each stage of the fundraising process. He explains everything from what sort of materials an organization should have (not too showy and expensive, lest potential donors think that money is being wasted on such materials) to what sorts of appeals elicit results and what sorts of donors respond to the various types of appeals. Whether a nonprofit seeks government or non-government grants, corporate sponsorship, or donations from individuals, there are sections here to assist the board member in seeking funds in those areas.

Board members will learn also about such weighty areas as capital campaigns and endowments, dealing with planned giving and bequests, and how to deal with various types of life insurance contributions. You may know, for example, that when a gift of life insurance is solicited for a nonprofit, there is a substantial difference between a paid-up policy given as part of a planned giving program and a new policy purchased to create an asset to be given. But will your client/board member know that, or the arcane ins and outs of which is better under which circumstances? There's a sizable discussion of those issues, along with tips on how to research prospective donors, how to determine proper strategy, and how to ask for a donation in a way that will connect with the prospective donor's own goals.

Nuts-and-bolts information about volunteers, training, development staff, fundraising expenses, and evaluating programs will also be of great help, particularly to board members who perhaps have not taken a particularly active role in the organization to which they have lent their name. Discussions of ethics and responsibilities of board members will also be useful, setting boundaries and performance standards for those who may not be aware of what is expected of them.

Although the section on office technology is obsolete and should be updated, the rest of the information in this 10-year-old book is still extremely useful. In fact, this book should be required reading for anyone involved with fundraising for a nonprofit organization.

Making a Difference

High Impact Philanthropy: How Donors, Boards, and Nonprofit Organizations Can Transform Commun- ities, by Kay Sprinkel Grace and Alan Wendroff (Wiley, 2001) is another look at the complex picture of how nonprofits, corporations, and communities can work together for maximum benefit.

This book will be of particular interest for anyone who works with high-net-worth clients with a serious interest in philanthropy. It goes into great detail about the differences between traditional givers and those spawned by the technology boom. There may be fewer of the latter these days, but there are still plenty who want to share their good fortunes, and share now.

Traditional givers, say the authors, had to be courted, at least in the minds of traditional older nonprofits, in a predetermined, almost ritualistic fashion--letters, telephone calls, personal visits, a function or two--and most nonprofits still rely on that earlier approach. Today's givers tend to be in a hurry, and feel an urgency about giving and accomplishing something with their wealth--they want to see results for their investment (note "investment," not "donation"). They also may feel that many conventional philanthropic organizations are too ponderous to achieve these goals satisfactorily. Thus, if the new givers are not courted in a nontraditional fashion--say, by e-mail, instant messaging, and phone rather than by letters, lunches, and dinners--they may be lost to other organizations.

Another important difference between older givers and today's givers is that today's givers want more direct interaction with their chosen cause. They choose a charity because of its cause, not because of the organization that works for that cause. They demand to see results, whether through reporting or through some other means of showing effectively how their money has been used. "Checkbook philanthropy" has been replaced with "stewardship," and new givers want to watch their money create change in the world. To that end, say the authors, not only must givers be asked in a different way, but they ought to be asked to do more. They are willing to invest large sums of money (transformational giving) in order to achieve their goals for the nonprofit, and are often willing as well to lend expertise, time, and other intangibles. Many conventional nonprofits are not prepared for this level of involvement on the part of their donors, and do not know how to handle it--often losing such donors in the process.

The authors offer advice on how to change organizational structure and processes to best take advantage of today's high-impact giver. They also point out that the most effective way to approach such people is not through the organization's need, but through its accomplishments. In other words, not "We must raise $100,000 during the month of November or our program for the homeless in the winter months will be seriously compromised," but "With the funds of $100,000 we intend to raise in the month of November, in the coming winter months we will feed, clothe, and house x homeless people." This is an important distinction, and one that many charities would do well to heed.

The book contains examples of charities that have successfully used these new strategies, and cites cases where other nonprofits have ignored such signals of change to their detriment. It also discusses partnering with corporations, although with far more caveats than Corporate Social Investing reviewed above, and a number of other creative strategies for raising funds. In addition, there are chapters on more efficient organization and running of fundraising drives, office functions, and other pertinent matters. The section on marketing the nonprofit's values to the community is particularly good, calling into question as it does the tendency of nonprofits to try to appear "corporate" and therefore efficient when corporations shamelessly tie ad campaigns to values that are often totally unrelated to the products that they sell. If a car company can market a vehicle by insinuating that an SUV that allows one to go offroad supports one's love of the wilderness (despite the fact that said SUV does more harm to the environment than an ordinary car), why should a nonprofit that sponsors a recycling program that benefits the whole community and the environment not trumpet that fact in its fundraising literature? Nonprofits must put their hearts back into their marketing, say the authors, since they do have values to "sell," both to their communities and to their potential donors.

As William Norris, founder of Control Data Corp. and director of a number of corporate actions aimed at the betterment of the community and the corporation, famously said, "You can't do business in a society that's burning." In the wake of September 11, creativity with regard to philanthropy is more timely than ever.

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