Philanthropy is about people

By Todd Cohen

Nonprofits and philanthropic funders can get so caught up in their causes and strategies that they forget about the actual people they exist to serve, or simply treat them as “metrics” to help gauge their organizational impact.

But several recent reports suggest the demand and supply sides of the charitable marketplace both need to better understand and engage real people in the communities they serve.

Needle-Moving Community Collaboratives, a report by The Bridgespan Group, says fixing tough community problems will require new strategies for how to think and work together.

And The Value of Community Philanthropy, a report from the Aga Khan Foundation and the Charles Stewart Mott Foundation, says social and global progress depends on community giving and participation.

While the first report focuses on global community-building and the second looks at community-building in the U.S., both reports emphasize the fundamental importance of local involvement.

The global report says local participation in community projects can result in greater local ownership and accountability, for example, while the U.S. report says key operating principles for effective community partnerships include the engagement of community members as “substantive partners.”
The global report, in fact, says that “local people helping each other, by sharing resources for the common good” represents a new force in the charitable world that is “driven by ordinary people working form the bottom up of our societies, rather than wealthy people working from the top down.”

Key players in building the “capacity” of communities are nonprofits, which themselves face big challenges in building their own organizational capacity.

The lessons of the two reports on community-building apply to building organizations as well: A nonprofit needs to engage all its constituents in its efforts to work smarter and serve better.

Yet many donors and funders act as if the wealth they control qualifies them as smart charitable investors who know the best way to address tough social and global problems, regardless of the real needs of their clients.

In the emerging social economy, that has to change.

That point was reinforced in an article April 6 in The New York Times Magazine.

In the article, a coffee entrepreneur in Kampala, Uganda, had some sobering criticism of traditional philanthropy.

While he was talking specifically about global aid, his comments have implications for philanthropy in the U.S.

“Every society that has prospered has done it through trade and not aid,” said Andrew Rugasira. “Africa will be no different. Charity doesn’t incentivize. It stifles innovation. It causes chronic dependency.”

To succeed, nonprofits and social entrepreneurs need investments and incentives to develop sustainable business models.

So funders and donors need to find ways to shift their mindset from charity to strategic investment that helps nonprofits and communities build their own capacity to succeed.

And an essential strategy for building the capacity of nonprofits and communities is to engage their clients, partners and other constituents in understanding the social and global problems they face, and shaping strategies to address those problems.

All philanthropy, in short, is local, and its effectiveness is rooted in engaging the people and communities it serves.

Global giving grows

Private giving to the developing world surged in 2010 in the wake of the global recession, a new report says.

Global philanthropy, remittances and private capital investment grew to $575 billion in 2010, up from $455 billion a year earlier, and accounted for 82 percent of the developed world’s economic dealings with developing countries, says The Index of Global Philanthropy and Remittances 2012, a report from the Center for Global Prosperity at the Hudson Institute.

Government aid, which grew to $128 billion, up from $119.8 billion in 2009, represented only 18 percent of total “financial flows” to developing countries.

Private capital investment in development countries grew to $329 billion from $228 billion, while remittances from developed countries to the developing world grew to $190 billion from $174 billion.

Total philanthropy from donor countries to developing countries grew to $56 billion, up $3 billion.

Total U.S. private funding to the developing world grew to $326.4 billion from $226.2 billion in 2009.

That included philanthropy from the U.S., which grew to $39 billion from $37.5 billion; remittances, which grew to an estimated $95.8 billion from $ 90.5 billion; and private capital flows, which grew to $161.2 billion from $69.2 billion and account for nearly half of U.S. total economic engagement with the developing world, the report says.

While government aid grew to $30.4 billion from $28.8 billion in 2009, it represents only 9 percent of U.S. total economic engagement with the developing world.

New forms of giving “are poised to change the face of international philanthropy and global foreign aid as we know it today,” Carol C. Adelman, director of the Center for Global Prosperity, says in the report.

The report says new data from the World Bank “found a broad reduction in poverty around the world and confirmed that contrary to predications by the World Bank itself, the global recession did not reduce poverty in developing countries.”

The share of individuals in “extreme poverty,” or those living on less than $1.25 a day, the report says, fell in every developing region between 2005 and 2008 and, according to preliminary data from 2010, has not increased, report says.,

And the share of individuals living in extreme poverty fell to 22 percent in 2008 from 52 percent in 1981, it says.

Crosby Scholars’ drive to fund growth

By Todd Cohen

WINSTON-SALEM, N.C. — On a typical Saturday morning from January through March, roughly 400 seventh- and eighth-graders from the Winston-Salem/Forsyth County public schools visit the campus of Forsyth Technical Community College to attend workshops on their personal and academic development.

The workshops, known as the Crosby Scholars Academy, are offered by the Crosby Scholars Community Partnership, a nonprofit formed in 1992 that provides resources to equip students and parents in Forsyth County for education beyond high school.

Operating with an annual budget of $933,000, Crosby Scholars has graduated over 4,555 seniors and awarded $3.35 million in scholarships.

This year, the agency is serving roughly 7,000 students from grades six through 12, expects to graduate 475 seniors and has awarded about $330,000 in scholarships.

And in April, it plans to kick off the public phase of a campaign to raise $3.7 million, funds it will use to address rising demand for services, says Mona Lovett, the agency’s executive director.

Over the past three years, she says, the number of students the agency serves has grown 40 percent.

Fueling that growth, she says, is heightened awareness about the importance of access to higher education and the need for continuing education for economic development and a robust workforce.

With funds from the campaign, Crosby Scholars expects to serve 10,000 students by 2015, graduate over 700 seniors a year, and award nearly $500,000 in scholarships.

Chaired by Michael Rogers, its board chair and senior vice president and loan team manager at Wells Fargo, the campaign already has raised about 35 percent of its goal in a quiet phase that began in October 2010.

Honorary co-chairs of the campaign are Paul Fulton, board chair of Bassett Furniture Industries and former president of Sara Lee Corp., and Rich Noll, chairman and CEO of Hanesbrands.

Crosby Scholars takes its name from the Crosby National Celebrity Golf Tournament, an event that was held in nearby Bermuda Run from 1985 through 2001.

From the agency’s launch through the tournament’s departure from the region, Crosby Scholars was the main beneficiary of the event, which was hosted and coordinated by Sara Lee and raised over $18 million for local and national charities.

A partnership of the Winston-Salem/Forsyth County Schools, the Winston-Salem Foundation, Kate B. Reynolds Charitable Trust, and United Way of Forsyth County, the Crosby Scholars program continues to benefit from a smaller golf event, the Crosby Scholars Invitational, which this year will be held at Bermuda Run on May 22.

Any student in sixth through 12th grade in Forsyth County public schools may participate in the Crosby Scholars program, which offers a year-long series of workshops for students and their families geared to each grade level from middle school through high school

Typically offered evenings and Saturdays, often at Forsyth Tech but sometimes at the Winston-Salem/Forsyth County Schools, sessions range from preparing sixth-graders and their parents for middle school, to understanding requirements for college and how to prepare for SAT tests, complete college applications and apply for scholarships and financial  aid.

A series of four workshops for Hispanic parents, offered in Spanish, aims to help them understand how to help their children navigate the school system and support them high school.

With a staff of four people working full-time and about 10 working part-time, as well as roughly 200 volunteers, the Crosby Scholars program also requires each participating student to perform at least two hours of community service a year and to remain drug-free in high school and participate in random drug testing.

The program does not provide tutoring or help students with homework but it does connect them with tutoring programs and talks to students how to study, take tests, manage their time and set goals.

“In our county,” says Lovett, “we’re a resource that students and parents use to help them prepare for higher education.”

Higher-ed fundraising up, donors down

Higher-education fundraising in 2011 generally improved from 2010, according to key performance metrics, with revenue generally growing but donors declining  in the wake of the recession, a new report says.

Revenue at over 100 public and private colleges and universities posted median growth of 6.1 percent, and overall retention rates grew slightly, says the 2011 Index of Higher Education Fundraising Performance from Blackbaud.

“Most measures were in positive territory compared to 2010 results, and there is evidence that the worst of the economic decline is behind us and programs are beginning to grow again,” it says.

Still, rates for reactivation and participation of donors continued to fall, the report says.

Median rates for reactivation of lapsed donors fell 6 percent, while overall alumni donor counts fell 1 percentage point to 10 percent overall after two years at 11 percent.

“This returns us to the trends that pre-dated the great economic recession with donors down, dollars up,” the report says.

The results suggest that “recapturing these lapsed donors in mass will not occur and they are lost indefinitely,” it says.

“Reactivation continues to be the biggest challenge facing higher-education annual-giving programs,” it says

Revenue

Revenue per retained donor grew to $584 in fiscal 2011 from $549 in fiscal 2009, with public and private schools both posting increases each of the past three years.

Median revenue among all donors grew to $474 per donor in fiscal 2011 from $400 in fiscal 2009, although it fell to $583 in 2011 from $591 in 2010 for private schools after growing from $550 in 2009.

Median revenue per donor grew to $416 in fiscal 2011 for public schools from $356 in 2009.

Overall median revenue per new donor fell slightly in 2011 compared to 2010 and 2009, growing to $136 from $120 for public institutions, while falling to $100 from $117 for private schools.

And median revenue per reactivated donors grew to $387 in fiscal 2011 from $314 in fiscal 2010 at private institutions, while falling to $271 from $274 at public institutions.

Donor retention

Retention rates for first-time donors have stayed flat for the past three years, growing slightly each year for public institutions, to 27 percent in 2011 from 25 percent in 2010 and 24 percent in 2011, while dipping to 27 percent in 2010 from 30 percent in 2010 for private schools and then growing to 30 percent in 2011.

Still, overall first-year retention rates are down from the levels a decade ago, when they typically totaled in the mid-30-percent range, the report says.

“First-time donors are more difficult to retain,” it says, “and as more schools focus on senior-giving programs, these rates have gone down in general, in large part because retaining senior-class donors in their first year as alumni is particularly challenging.”

Median retention rates for multi-year donors were flat at 66 percent in fiscal 2011, compared to 2010, , and up only slightly from 64 percent in 2009.

“Despite the economy, in general, retention rates, particularly among the most loyal donors, have been fairly consistent,” the report says.

Still, it says, private and public institutions had their weakest year in 2009, when each was three percentage points lower than in 2010, when retention rates rebounded.

Overall retention rates for all donors were consistent for the past three years, up slightly each year.

After falling to 59 percent in 2009, the median donor retention rate grew to 61 percent in 2010 and to 62 percent in 2011.

The median donor retention rate grew to 66 percent in 2010 from 65 percent in 2009 at private institutions, and to 67 percent in 2011, while it grew to 58 percent in 2010 and 2011 from 55 percent in 2009 at public institutions

“Looking back to the weakest year in history, 2009, donors were retained at their lowest rate in the three-year timespan, but only modestly lower, which indicates despite the economy, donors were mostly consistent in their behaviors,” the report says.

Alumni

Overall donor counts fell 1 percent in fiscal 2011 from fiscal 2010, when they dipped 0.5 percent.

“Acquiring new alumni donors continues to be difficult,” the report says.

In fiscal 2011, the overall change in the number of new alumni donors fell 2.1 percent, following losses of 1.9 percent in fiscal 2010 and 3.5 percent in 2009.

“Many programs find it more challenging to acquire new alumni donors, but others have shifted away their focus from alumni to other markets, such as parents and friends, for acquisition efforts,” the report says.

So the negative trend “is being influenced by a shift in strategy for some institutions, but also marks the continued challenge with acquiring new alumni donors, especially true among younger alumni,” it says.

It also says the impact of the younger generation of alumni “less inclined to support higher education continues to erode overall participation rates.”

Participation rates fell 33 percent in fiscal 2011 in the wake of declines of 2.9 percent in fiscal 2010 and 6 percent in fiscal 2009.

“The opportunity to bolster participation rates has all but disappeared in an era where younger alumni are not inclined to support higher education as the same rates as their parents and grandparents,” the report says. “This trend, for most programs, is likely not reversible and we’ll continue to see participation rates decline.”

Greensboro College steps up fundraising

By Todd Cohen

GREENSBORO, N.C. — Every other Monday at 3 p.m., development officers at Greensboro College who work with major donors meet to talk about prospects and strategies.

At a recent meeting, for example, Carolyn DeFrancesco, vice president for institutional advancement, talked about a prospective donor she was pursuing through a connection with a student for a possible gift to upgrade computer lab for students with learning differences.

DeFrancseco was looking for ideas about how to customize printed materials she could give to the donor to demonstrate student needs and the impact a gift from the donor would have.

Developing better relationships with major donors, or those who make gifts of $100,000 or more, will be essential to the school’s efforts to double annual support over the next two years and set the stage for a big capital campaign that could begin its quiet phase in two to three years, DeFrancesco says.

Greensboro College, which expects to raise $2 million in private giving in the fiscal year that ends June 30, including $350,000 through its annual fund, aims to double annual private giving to $4 million by the 2013-14 fiscal year, when it will celebrate its 175th anniversary.

Funds from that “mini-campaign,” which began its quiet phase in 2010, will be used for boosting scholarships and the school’s $12 million endowment; improving facilities for learning and for student activities; and expanding opportunities for civic leadership, community service and internships for students.

The fundraising effort also represents an opportunity to introduce the school’s president, Lawrence D. Czarda, to supporters and prospective donors who have may not have had a chance to meet or get to know him since he became president nearly two years ago, DeFrancesco says.

It also provides an opportunity to increase the school’s visibility, “ignite the interest of donors,” strengthen its “capacity” for securing larger gifts, and gear itself for a longer-term capital campaign, she says.

As part of the mini-campaign, for example, the school has organized two dinners at the homes of supporters in Greensboro and Charlotte, with roughly 20 prospective donors invited to each dinner.

“It’s meant to be a time when donors and friends can actually converse with the president,” DeFrancesco says.

Czarda also is working to strengthen ties with the community and local businesses in the wake of the recession and difficult economy that led the school to reduce its annual budget to $20 million from $28 million.

Czarda, for example, has been an active member of Opportunity Greensboro, a consortium of local education, business and civic leaders.

The strategy is starting to yield results, DeFrancesco says.

The annual fund is expected to grow to $350,000 in the current fiscal year from $305,000 last year.

And the school recently announced a $1 million unrestricted gift from alumnus Roy E. Carroll II, founder, chairman and CEO of The Carroll Companies, a local real-estate development firm with operations in Georgia, Tennessee and the Carolinas.

Now, as Greensboro College gears up for a possible long-term capital campaign, it has been studying its database of donors to identify those who can make major gifts, and working at the biweekly meetings of its major-gifts team to develop strategies for cultivating those donors.

The underlying approach is to understand the causes donors care about, and help them understand the school’s needs and the impact they can have on those needs by making a gift, DeFrancesco says.

“We’re looking for what people are interested in,” she says. “We try to match people’s interests with our need.”

While a goal for the longer-term campaign has not been set, it could be in the range of previous campaigns at the school, although the health of the the economy will be a big factor in setting that goal, DeFrancesco says.

Greensboro College raised $40 million in a capital campaign that ended in 1993.

Funds from the longer-term campaign would be used to address the goals of a strategic plan the school is developing, and priorities likely will be increasing the endowment, particularly for scholarships, and supporting capital projects.

Since Czarda became president in April 2010, the school has made recruitment and retention of students its top priority.

Nonprofits need to get it together

By Todd Cohen

A lot of nonprofits, boards and funders are in serious denial.

Many are in a deep financial hole, yet precious few can talk straight to their funders about their problems.

Compounding the communications gap, many boards do not understand their nonprofits’ expenses, and far too few use their connections to help their nonprofits raise money.

Those are some of the findings from a new survey by the Nonprofit Finance Fund that offers a grim view of the way nonprofits are faring in the stricken economy.

Among over 4,600 nonprofits surveyed, for example, 85 percent of saw rising demand for services in 2011, 88 percent expect greater demand this year, and 57 percent have only enough cash on hand to last three months or less.

Among human-services organizations, which represent 38 percent of nonprofits surveyed, 58 percent could not meet demand in 2011, and 60 percent said they would not be able to meet demand in 2012.

The charitable marketplace is consumed with big talk about the need for transparency, yet many nonprofits, along with their boards and their funders, operate with their heads in the sand.

Nonprofits’ survival depends on their ability and willingness to communicate more honestly and openly with their funders, while educating their boards about their finances and enlisting them in the fundamental job of fundraising.

For their part, boards need to take their governance and fundraising responsibilities seriously.

Instead of sleeping through board meetings and rubber-stamping whatever the staff puts in front of them, boards need to ask tough questions about the financial health of the organization.

And they need to step up and do a lot more to use their connections to help raise money for their nonprofits.

Funders also need to do more, both in providing the operating and capacity-building support nonprofits need, and also in establishing the trust that is essential if they expect nonprofits to talk openly and candidly about their financial and operating problems.

If nonprofits, boards and funders do not wake up soon, nonprofits will continue to struggle, leaving as victims the clients who count on them to provide the programs and services they need more than ever in our shattered economy.

Most churches see giving rebound

A bigger share of churches in the U.S. saw giving grow in 2011 after plunging in the wake of the economic collapse in 2008, while a smaller share saw giving decline, with bigger churches more likely to see increases, a new survey says.

Fifty-one percent of over 1,360 congregations responding to an online survey saw giving increases, up from 43 percent in 2010 and 36 percent in 2009, while only 32 percent saw declines, down from 39 percent in 2010 and 38 percent in 2009, says the 4th-annual State of the Plate survey.

Over 70 percent of mega-churches, or those with over 2,000 people in weekend attendance, saw giving grow, compared to only 39 percent of churches with fewer than 100 people in weekend attendance, says the survey, a collaborative research project of Maximum Generosity ministry, Christianity Today, and the Evangelical Council for Financial Accountability, or ECFA.

Among churches that saw increases, 50 percent said it mainly was the result of higher attendance, while 42 percent said it was because people gave more after their church conducted teaching initiatives on finance and generosity.

Nearly 55 percent of churches in the region that includes Missouri, Montana, Iowa, North Dakota, South Dakota, Kansas and Nebraska saw giving grow, while 38 percent of churches in the region that includes California, Oregon, Washington State, Alaska and Hawaii reported declines in giving, marking the third time in four years those states saw decreases.

Still, 45 percent of churches in Pacific Coast states saw giving grow, wiule 17 percent reported giving was flat.

Among churches with more giving, 40.3 percent are using the extra funds for staff pay raises, 36.5 percent are paying for missions, 35.3 percent for church buildings, and 31.1 percent for benevolence.

Churches also are shifting from traditional “envelope packets” to electronic giving, with 41 percent of churches, for example, using online giving and 7 percent using cell-phone giving.

The survey also found a lot of churches using a range of practices and procedures to ensure financial transparency and accountability.

Among churches surveyed, 92 percent make their financial statements available to members on request, and 89 percent provide copies of their annual budget to their congregation or make them available on request, while 86 percent of church boards consist of five or more people, with at least three of them not a pastor or staff member, or related to either.