Canadian charity, Part 3: Volunteer leadership key to fundraising

By Todd Cohen

[Note: This article was written for Blackbaud.]

Key to building the capacity of charities is volunteer leadership that can “ensure that the financial resources are there for the organization to deliver their programs,” said Derek Fraser, chair of the AFP (Association of Fundraising Professionals) Canadian Council and president of iDoPhilanthropy in Calgary.

“As at any company, you need sales people out there doing it for you,” he said. “But we don’t take that view in the nonprofit sector, and we expect it to happen as if by magic. There is no magic wand.”

The solution for smaller charities, he said, is to have “realistic expectations for the scope of your organization and continue to be consistent in growing and not be expected to be able to leap to the success of a large organization. Organizations can crash and burn if they try to grow too quickly or not stay true to core values and who they are and the core constituency that supports them.”

Collaboration, impact

“What Canadian Donors Want,” a study released in February by the AFP Foundation for Canada and market research firm Ipsos, found that three in four respondents want charities that address similar issues to look for ways to “work together and share plans and resources,” Fraser said.

And it underscored the fact that “Canadians have high standards for how charities operate,” he said.

A large majority of respondents, for example, believe charities should have a strategic plan, strive for rigorous standards to measure their performance, and invest in tools that show their impact on the community they serve or the cause they support, he said.

Integrated fund development

One effective strategy to address some of the fundraising challenges facing charities is to better connect fund development to programs, said Michael Johnston, founder and president of Hewitt and Johnston Consultants, a fundraising consulting firm in Toronto.

That requires charities taking the time needed to integrate their programmatic work with their fundraising strategies, he said.

An organization that counts on volunteers to mentor kids, for example, traditionally may

not have tied its work with volunteers to its work with donors.

To align those two activities and constituencies, Johnston said, an organization should pair staff who work with volunteers with staff who work with donors and show them the strategic connection between their respective jobs and clients, “because citizens don’t see themselves as a volunteer or donor, they see themselves as both.”

Among Canadian charities, he said, “best practices” in marketing and fund development involve “lifestyle planning for their constituents.” That means working with fundraising and volunteer staff to “plot out, from cradle to grave, how to take care” of donors and volunteers, he said.

“If we don’t do that in a more competitive and demanding environment, we don’t build deeper relationships, and we won’t move people up the donor pyramid from small gifts to ultimately larger gifts because we don’t met their demands,” Johnston said.

“It’s all about being an intimate friend,” he said. “All that gets wrapped up in investing in technology, change management, an integrated shop, and in human beings who know how to do these things.”

Digital fundraising

Canadian charities are on the leading edge of using digital technology in effective and innovative ways, experts say.

“The one place where the Canadian charitable sector punches above its weight is in peer-to-peer fundraising,” Johnston said.

An hjc and Blackbaud study last year, “The Next Generation of Canadian Giving,” found that the number of charity fundraising events, as well as per-capita giving and participation in fundraising events, is higher in Canada than in the U.S. or U.K., he said.

Canadian charities also are recognizing that smartphones offer a “rich multimedia experience,” compared to devices that simply offer a “text-to-give” option, Johnston said.

So charities are investing more in mobile technology (creating videos of client stories, for example) and in applications that let donors quickly give from their phones with a credit card or via PayPal using an application or browser, he said.

Response to postal changes

In the face of changes by Canada Post, the best practice for nonprofit marketing and fundraising is to integrate email in combination with direct mail and phone calls, Johnston said.

Fraser said “a lot of organizations are going to have to look at whether we can afford to do direct mail anymore, or replace it with online strategies.”

The postal changes are “likely to drive a shift to email or online or digital fundraising.”

Ted Garrard, president and CEO of the SickKids Foundation in Toronto, said he does not believe the change will have too significant an impact and that he is more concerned about the rise in postal rates.

“The mail is still getting delivered, just not to somebody’s door,” he said.

The good news, he said, is that the postal changes represent “a very good opportunity for charities to redirect their relationships with direct mail donors to one that is an online relationship.”

Cause marketing and events

Cause marketing is growing as a fundraising strategy, as charities work with corporate partners with “brands that are well known and partnerships that can help each organization,” Fraser said.

Helping to drive that strategy is “fatigue around direct mail,” which “continues to be an expensive methodology to acquire donors,” as well as the changes by Canada Post, he said.

And fundraising events, “even though they take a massive amount of time, are still very effective at getting new people in your door to find out about you,” Fraser said.

Calgary, for example, has been having more charity events than ever, he said.

And once they get people “in the tent” at events, he said, charities can maintain relationships with them through digital strategies.

Next: SickKids Foundation invests in fundraising capacity

The series:

Part 1: State of the sector.

Part 2: Sector faces challenges.

Part 3: Volunteer leadership key to fundraising.

Part 4: SickKids Foundation invests in fundraising capacity.

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Canadian charity, Part 1: State of the sector

By Todd Cohen

[Note: This article was written for Blackbaud.]

Overall giving in Canada grew 2.7 percent in the three months ending February 2014, compared to the same period a year earlier, while online giving for the period grew 7.2 percent, according to The Blackbaud Index – Canada.

The new Index draws from actual data from about 250 organizations that raise a total of $600 million to $700 million a year – or roughly 6 percent to 7 percent of the Canadian market.

Canadian charities with effective fundraising programs benefited from growing investment in fundraising staff and capacity, greater attention to major donors and donor loyalty, and increasing sophistication in fundraising technology and best practices, experts said.

But they said many Canadian charities face big challenges in securing the investment they need in their fundraising capacity, particularly in developing board leadership and staff expertise.

Strong finish in 2013

After experiencing relatively flat growth during the first half of 2013, overall fundraising revenue among 276 Canadian nonprofits that together raise $692.5 million a year grew 6 percent during the second half of 2013, compared to the same period a year earlier, according to the new Blackbaud Index – Canada.

Online fundraising revenue for 219 Canadian nonprofits that together raise $154.3 million a year online grew 8.9 percent, 13.6 percent, and 10.1 percent, respectively, in each of the three-month periods ending in October, November, and December, compared to the same three-month periods a year earlier.

That surge in overall giving represented a strong finish for a year in which Canadian nonprofits generally posted lower overall results for much of the year, compared to the previous year, said Chuck Longfield, chief scientist at Blackbaud.

“It does look like things are looking up in the Canadian market,” he said.

Growth at year-end is especially good news, he said, because roughly a third of all charitable giving takes place in the final three months of the year, and roughly 25 percent of all giving takes place in December.

Overall giving for the three months ending in January and February grew 1 percent and 2.7 percent, respectively, compared to the same periods in 2013, while online giving grew 6.8 percent and 7.2 percent, compared to the same periods in 2013.

Sector snapshot

Canada’s charitable and nonprofit sector is the second largest in the world after the U.S. and consists of roughly 170,000 organizations, split almost evenly between registered charities and nonprofits, according to Imagine Canada, an umbrella organization for Canada’s charities and nonprofits.

The charitable sector employs two million Canadians and contributes an average of 7.8 percent to total gross domestic product.

Revenues from the “core” nonprofit sector – charities and nonprofits other than hospitals and universities – account for about 2.4 percent of Canada’s GDP, or more than triple that of the motor vehicle industry, Imagine Canada said.

Sales of goods and services account for 45.6 percent of total income for that core nonprofit sector. In comparison, the larger nonprofit sector – including hospitals, universities, and colleges – counts on government funds for nearly 75 percent of its funding, with 72 percent of its overall funding provided by provincial governments, Imagine Canada said.

Hospitals, universities, and colleges represent only 1 percent of organizations but account for 66 percent of total revenues for the entire sector.

Sector ‘mature,’ ‘conservative’

“Canada’s charitable sector is the second-most mature in its professionalism, use of investment in technology, and best practices” after the U.S. nonprofit sector, said Michael Johnston, founder and president of Hewitt and Johnston Consultants, a fundraising consulting firm in Toronto.

From small shelters to big national charities, he said, nonprofits are “becoming more professional and leveraging technology and best practices,” he said. “The sector is trying to do a more professional job, and I think it means charities are raising a bit more money.”

Fundraising stability

Unlike the economies and charitable sectors in the U.S. and U.K., which slumped after the capital markets collapsed in 2008 and only recently have begun to rebound, the economy and charitable sector in Canada have held relatively steady, Johnston said.

That’s because, unlike the economies in the U.S. and U.K., the economy in Canada is based on commodities such as oil, gas, and diamonds that limited the damage of the recession, and because its banks are highly conservative, he said.

“That translates to the charitable sector,” he said. “It’s a very kind of stand-pat, very conservative, cautious sector, so we don’t see the kind of growth or rebound because everything is ticking along at a slow, conservative rate.”

Government cuts

With government in Canada getting smaller, Johnston said, nonprofits are looking to private support for a growing share of their funding.

“Canadian charities, a lot of them historically, have received large proportions of revenue from state sources, and that’s shrinking,” he said. “It means a competitive fundraising environment will become more intense with less government support as individuals become more and more important.”

What donors want

A study released in February by the AFP Foundation for Canada and market research firm Ipsos entitled “What Canadian Donors Want” finds a “high degree of confidence in charities.”

But it also said charities would be “well served” to make it clear they are “well managed and have the resources, competence and capacity to carry out their mission and plans.”

The study said arts groups may have “the longest road to travel to improve presence of mind and share of wallet;” that people increasingly give to fewer charities, with a plurality – the biggest single group – giving to two to three charities; and that charities should ask for bigger gifts and take a hard look at how frequently they ask for donations.

Next: Sector faces challenges

The series:

Part 1: State of the sector.

Part 2: Sector faces challenges.

Part 3: Volunteer leadership key to fundraising.

Part 4: SickKids Foundation invests in fundraising capacity.