The NonProfit Times - August 1, 2008 - (Page 14)

GENERAL RAMBLINGS PAUL CLOLERY On Dangerous Ground Here’s to losing donors and customers T here were two troubling news items during the past 30 days. The first was somewhat expected, while managers should have seen the second one coming. Target Analysis Group reported that both the number of donors and revenue declined during the first quarter of 2008. It’s the first time that has occurred since Target started keeping records in the fall of 2001.The fact that the news isn’t startling doesn’t make it less of a concern.The finding was from 72 major nonprofits that use direct response as a major form of fundraising and excludes gifts of more than $5,000. The number of donors has been declining for a couple of years but those still giving picked up the slack. Many executives argue that the soft economy is the culprit. That’s probably true when it comes to revenue. But when it comes to the number of donors, charities have been feeding like piranha on the current school of donors. The economy has been soft but the impact has not truly been felt until the past six to eight months. Donor files began eroding long before that window of time. The U.S. population is expanding, yet most organizations are renting lists for solicitation of people who have already given.The strategy is that they have already been trained to give. That makes some sense but charities are spending too much time trying to take business away from each other. Some will say that’s an unfair characterization and that more giving floats every boat. But when the lake has been fished-out, it’s time to restock. Because the economy is tightening, many charities are pulling back acquisition solicitations.That is the wrong tactic. Super sales people say the way to get out of a tight economy is to sell your way out of it. In the case of charities, it’s expanding the donor universe. The snippet of information provided on the first day of every beginning fundraising course is that when polled, donors said that the primary reason they gave was because they were asked, not because they had an extra $20 they couldn’t put to better use. Charities need to start tapping deeper into the expanding U.S. population. Some executives who live and die by direct mail say that it’s gotten too expensive to try elaborate acquisition campaigns in an untried market. That’s a recipe for disaster. The organizations in the Target study keeping afloat are those mailing like crazy on acquisition. They are finding new donors. No business, for-profit or nonprofit, survives without investment in new markets. The Target study shows that it’s time to find a new fishing hole. The story that is disturbing, but of little surprise, is word of the travel voucher scandal at the Points of Light Institute. I wouldn’t want to be Michelle Nunn right about now. She was running the Hands on Network in Atlanta and doing nicely.Then came the merger with the Points of Light Foundation and the recent renaming of the joined organizations as the Points of Light Institute. They might want to go back to Hands on Network. A private contractor inherited from the Points of Light Foundation was selling vouchers for air travel and hotels on eBay as part of a Points of Light program. Well, people started not getting their certificates and there might be more than 1,000 clients and tickets in the lurch. Needless to say, an investigation is under way and Nunn and staff called in prosecutors to sort through the situation. Thousands of tickets were sold at the eBay store yet, according to Nunn, the premerger audit showed the business unit generating only $100,000 in gross revenue and netting just $15,000. This merger is new enough to dump this mess on the doorstep of the foundation’s former management and board. Assuming there wasn’t fraud, how can a business unit only be generating 15 percent on a pass-through transaction? The board members from the old Points of Light Foundation apparently are writing checks to make everyone whole.This isn’t the first time they have had to bail out bad business decisions of the old organization. They should keep their pens out once the checks are written and sign letters of resignation from the merged board.They need to give Nunn and her staff the room they need to fix the mess they inherited. NPT OPINION JOHN H. GRAHAM IV, CAE Association Management There is always room for honest leadership to speak out uch of the sniping between the presumptive presidential nominees on the campaign trail in recent weeks illustrates a perception problem in America today when it comes to lobbying – that most ignoble of professions, now frequently blamed for all things untoward on Capitol Hill. Both John McCain and Barack Obama take turns discrediting each other for connections to lobbyists and debating who is more likely to change a culture of undue influence that pervades politics in the nation’s capital. Obama has repeatedly touted that he does not accept money from federal lobbyists or special interest political action committees (PACs), though he does count former lobbyists among his advisors. McCain has long railed against special interests in Washington, D.C., as well, and has been purging his staff of lobbyists lately to avoid any appearances of impropriety that could be used against him by the Obama camp. This is of course all residual trickledown from the influence-peddling scandal involving the discredited lobbyist Jack Abramoff and the investigation that revealed ties to numerous administration and Congressional officials. The Abramoff scandal has led to prosecutions and resignations of more than a few individuals in M John Graham Congress and the administration, and rightfully outraged the public when the connections were revealed in the press. The now infamous golf trips to Scotland paid for and arranged by Abramoff called to mind the caricature of the fat-cat lobbyist with deep pockets and shallow morals, out to corrupt the nation’s lawmakers on behalf of a secret list of rich corporate clients. It also meant Congress had to do something to clean up its image. Since the Abramoff trial, Congress has passed the Honest Leadership and Open Government Act of 2007 (HLOGA) that, among other things, bans members of Congress and staffers from accepting any gifts from lobbyists and introduced a number of new disclosures and rules for lobbyists and congressional offices to follow. Prompted by the scandals in Washington, many state legislatures have passed lobbying and ethics reform legislation as well. This era of reform is justifiable, if the end result is a restored public faith in the political process. But the continued treatment of lobbyists as whipping boys and girls is not helping the nation enact better legislation and it will not end the practice of lobbying – which is a constitutionallyprotected right.Aside from the bad actors, lobbying is not an unscrupulous profession. It is a necessary one. In fact, now is the time, more than ever, for association and other tax-exempt leaders to step up their advocacy efforts to the extent that the law allows, for today’s legislative and regulatory environment holds more challenges and scrutiny of nonprofit activities than ever before. The current environment in Washington, D.C., is rife with implications for associations and other types of tax-exempt organizations. There is a persistent concern about the governance of nonprofit groups, an increasing demand for transparency when it comes to executive compensation and other information, and an occasional tendency to pigeonhole associations as merely “special interest” groups that happen to enjoy a favored tax status. Some of this scrutiny is warranted, as is the case when abuse is uncovered. But most associations and nonprofit organizations operate with the highest degree of integrity and make positive economic and social contributions in states across the United States. We need to speak up when the scrutiny of our profession threatens to interrupt the ability of our organizations to carry out their vital missions. The push for more oversight and more authority to take nonprofit groups to task has the industry of associations,collectively, on the defensive, and coping with the increasing administrative burden that comes with more scrutiny and more disclosure. Last year, the Internal Revenue Service (IRS) initiated the first major rewrite in nearly 30 years of the Form 990 return filed by most tax-exempt organizations. And while the American Society of Association Executives (ASAE) and others have been complimentary of the IRS’s efforts to listen to and incorporate feedback from the exempt sector in drafting the new form, practitioners are estimating that significantly more time will be needed to file. The new form, with the input of the filing community, is improved from earlier drafts, but still delves into areas that are not only concerning to many of ASAE memOpinion, page 33 AUGUST 1, 2008 THE NONPROFIT TIMES www.nptimes.com http://www.nptimes.com

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The NonProfit Times - August 1, 2008 Demonstration Permits Frustrate Groups Green Universities Helping To Produce Greener Pastures Mr. Bill Doesn’t Say ‘NOOOO’ To Awareness Campaign Contents Who...When...Where...How...What? On Dangerous Ground Association Management Travel Nightmare The 2008 NPT Power & Influence Top 50 Leaderless Unusual Special Events On The Move Lost: The Donors Consistent Messaging New UK Standards Business Briefs National Movement Calendar NPT Jobs Resource Directory

The NonProfit Times - August 1, 2008

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