Fundraising fundamentals key in tough times

By Todd Cohen

[Note: This column was written for Blackbaud, which asked me to help interpret and to comment on its charitable giving Indexes.]

Ongoing economic gloom continues to dampen charitable giving, underscoring the core importance of building and maintaining strong connections with donors.

Reinforcing the need for better donor development and retention are new data from Blackbaud

that show a decline in charitable giving overall and only a slight increase in online giving in the three months through September, compared to the same period last year.

With uncertainty about the economy and the fall elections undercutting expectations about how much donors will give, experts say, nonprofits need to do a better job understanding what is making donors anxious, and to stand by them, especially during the crucial year-end fundraising season, even if they are giving less or not making gifts.

“Don’t treat them differently because they reduce their gifts because they’ve had to, or because they stop giving for a year or two,” says Karla Williams, principal of The Williams Group, a national consulting firm based in Charlotte, N.C. “Treat them the same. If you treat them differently, they will not return.”

Lingering recession

Overall giving at 2,931 organizations that raised a total of $8.3 billion over 12 months fell 3.1 percent for the three months through September, compared to the same period last year, according to The Blackbaud Index of Charitable Giving.

In the same period, online giving at 1,926 charities that raised a total of $378.7 million online grew 2.7 percent, says The Blackbaud Index of Online Giving.

Independent schools outperformed fundraising overall and online.

A new specialty index focused on K-12 independent schools launched by Blackbaud, says overall giving grew 3.1 percent for the three-month period at 321 independent schools that raised a total of $499 million over 12 months. Online giving grew 17.6 percent at 132 independent schools that raised a total of $30 million online.

K-12 giving

For the fiscal 2012 school year, annual giving averaged $1,149 per student for the more than 1,400 private, nonprofit schools that are members of the National Association of Independent Schools.

While that average was up from $1,119 in fiscal 2011, it still remained below the $1,573 average in fiscal 2008, before the economy collapsed in the fall of 2008.

The new data from Blackbaud showing independent schools are outperforming nonprofit giving overall and online confirm the upswing for schools and “may be a harbinger of a pretty good year,” says Patrick Bassett, president of the National Association of Independent Schools.

Donor retention

The continuing impact of the recession underscores the need for nonprofits “to cherish the donors we have,” Williams says.

Nonprofits’ top fundraising priority, she says, should be donor retention.

“Retention is all about personalization, relationships, partnerships, and stewardship,” she says. “You may lose their dollars for a year, or get decreased dollars for a year, but they’re still giving, and you have to keep on treating them as a top donor.”

In a recession, nonprofits need to be “a little more sensitive to where our donors are as it relates to either their fears, their job losses, their job changes, their reluctance to give money right now when they’re feeling a little nervous about what’s going on in the greater economic climate, and give them the liberty to make the decision that’s best for them.”

Year-end fundraising

The final three months of the year are a crucial fundraising period for many nonprofits.

And while they typically set fundraising goals based on expectations about how much donors will give, “if those expectations are unrealistic, the fundraisers will be disappointed,” Williams says.

The most effective year-end strategy a nonprofit could pursue would be to give each member of its board of directors 10 names of top donors to call or visit.

“Don’t oversolicit or solicit when you’re anxious,” Williams says, “but solicit properly and personally.”

The key, she says, is to be patient with donors and avoid overreacting from fear that fundraising goals will not be met.

“When we overreact, we really risk putting the relationships in jeopardy,” Williams says.

To see the full report on the Blackbaud Index, click here.

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Leadership changes scramble plans for UNC campaign

By Todd Cohen

CHAPEL HILL, N.C. — Planning for a comprehensive campaign at the University of North Carolina at Chapel Hill to raise $3 billion, an effort that had been expected to begin its quiet phase next summer, likely will be put on hold, for the third time in four years, after UNC’s chancellor announced last month he would step down at the end of the school year and the school’s vice chancellor for university advancement quit the previous week, fundraising experts and people close to UNC say.

“They’re going to need to put it off,” says Karla Williams, a national fundraising consultant based in Charlotte, N.C. “The campaign has to be owned by the chancellor and his or her board. That’s where the ownership for a major initiative rests. If it doesn’t rest there, it’s going to fail.”

On-again, off-again

The latest turn in the on-again, off-again campaign came Sept. 17, when UNC Chancellor Holden Thorp announced he would leave his job at the end of the school year and return to his job as a professor.

That move came a week after Matt Kupec, the school’s long-time vice chancellor for university advancement, resigned in the wake of disclosures he had taken at least 25 personal trips at the university’s expense with Tami Hansbrough, a  fundraiser at the school and the mother of its former star basketball player Tyler Hansbrough.

She and Kupec, who both are divorced, have been in a relationship.

Kupec had pushed for UNC to hire Hansbrough, who quit several days after Kupec, and Thorp knew about her hiring and about Kupec’s role in it, according to published reports.

Challenge, opportunity

Williams said the resignations of Thorp and Kupec represent a big challenge and a big opportunity for UNC.

“Universities, like all public institutions, are held to higher standards of behavior, when it comes to ask [donors] to give their money to the university,” she said. “It won’t take a lot for the board and donors to embrace new leaders, as long as the search is exhaustive. It will be a new kind of leader, no doubt a good thing for the university. New leadership brings new life. It’s inevitable.”

But people at and close to UNC say it has a lot of work to do to prepare its fundraising operation and systems to take on a $3 billion campaign.

Four years ago, UNC was set to launch a multi-billion-dollar campaign when the economy crashed, so the school put the campaign on hold.

Last spring,  Thorp and Kupec asked the board of trustees to approve launching the campaign’s quiet phase this past July, but the board rejected the proposal, concluding “you’re not ready, you don’t have a strategic plan, you don’t have vision, spend another year working on it,” said someone close to UNC who asked not to be identified.

Kupec, who was a star quarterback at UNC and has worked in its advancement operation for 20 years, is known as a hands-on fundraiser who enjoys working with donors but does not like managing.

“He felt managers were a waste of time and all you needed to do was go out and ask for money,” the person close to the school said.

Under Kupec’s watch, the school raised billions of dollars but it also has just begun wealth screening, or collecting publicly available data on the capacity of donors to give, the person close to UNC said.

“If I had been planning to announce in July, that should have been happening a year or two before that,” that person said. “I’m a little shocked they haven’t done that, whether in a campaign or not. It’s like getting an oil change. Every so often you do it.”

And recently, UNC reorganized its unit of regional major gift officers who, instead of cultivating major donors, now will prospect for major donors and then refer them to development officers in schools, departments and other units that focus on issues those donors care about, said Scott Ragland, director of development communications at UNC.

The person close to UNC said the kind of development work those major gift officers have done is critical for a school that plans to launch a multi-billion-dollar campaign in which a the biggest gift or handful of biggest gifts will total hundreds of millions of dollars.

“My gut is they don’t know their prospect pool enough to do a $3 billion campaign,” the person said.

Internal capacity

Carol O’Brien, a consultant in Durham, N.C., who has advised UNC in the past and currently is working with one of its programs, said the school will need an “objective assessment of their internal capacity” to run a campaign, including the entire fundraising infrastructure, budget, personnel and systems, including information technology and prospect research.

And when it comes time to look for a new vice chancellor, she said, the school should hire an executive search firm and work with a high-level committee that includes both university academic leaders and volunteer leaders to develop a job description that reflects the complexity of fundraising at a major university.

“Most campaigns now have large areas that involve interdisciplinary work, and research projects, and it takes someone who is conversant with these academic programs and priorities to be effective in high-level giving,” said O’Brien, a former director of development at Cornell University who has worked as a consultant on multi-billion-dollar campaigns at Duke, Cornell, Harvard and the University of Pennsylvania.

The search firm also should find ways to talk to some of UNC’s top donors “to get a sense of the relationship they would like to have with this person,” she said.

Chief fundraising officers at universities, she said “need to work effectively with many people inside and outside the university, and the search process needs to ensure that the candidates and ultimately the person selected are sufficiently broadly gauged to be able to do that.”

On Sept. 19, UNC announced Thorp had named Julia Sprunt Grumbles, former corporate vice president at Turner Broadcasting, as interim vice chancellor for advancement.

Focus on donors

Williams said the critical job now is for the board of trustees to find a new chancellor who in turn will need to “forge a new agenda and new relationships and do a campaign that has their marks on it.”

And the UNC board will need to reassure donors in the wake of  the recent upheaval that the campaign “will stand on its own merit,” Williams said.

“Donors are the ones that really matter,” she said. “True philanthropy is based on value association. If a university has not upheld and stood up for the kinds of  values that the donors of that institution have shared in the past, such as integrity, if the veil of integrity has been broken, donors will say, ‘I’m no longer in sync because our values apparently not the same.'”

So while loyal donors may still make a “token gift to validate their relationship to the university,” she said, “if their pride has been affected they’re going to withhold a true investment, a large gift. They’re in a wait-and-see mode.”

Richard Krasno, executive director of the William R. Kenan Jr. Charitable Trust, which has given over $100 million to  UNC, said donors “need to consider the larger picture and be proud of the excellence that this fine university has achieved over a long period of time, and continue to be supportive.”

Paul Fulton, a member of the board of governors for the 17-campus UNC system and former co-chair of a campaign at UNC that ended in 2008 and raised $3.3 billion, said the UNC’s fundraising and its development office are in “really good shape with a good organization.”

In the fiscal year that ended June 30, UNC received $287.4 million in gifts, its second-best year ever.

“Matt was good and we’ll miss him,” said Fulton, a former president of Sara Lee Corp.,  “But what he did was just bad judgment.”

A key question now, he said, is whether Thorp should hire a new vice chancellor or leave that decision to his own successor.

O’Brien said the likely course would be to conduct the chancellor search first.

“That will give them the best opportunity,” she said, “to move ahead with the leadership transition and campaign planning.”

Fundraising mess a chance for true change at UNC

By Todd Cohen

The University of North Carolina at Chapel Hill has an unprecedented opportunity to heal itself.

Wounded by a fundraising scandal that in a single week claimed the jobs of its chancellor and its vice chancellor for university advancement, UNC also has a rare chance bring to heel an over-indulged athletics program that for generations has held hostage the university’s culture of academic excellence.

The huge task facing the school’s board of trustees is to show, finally and decisively, the leadership it has for far too long lacked the vision and backbone to exercise.

It needs to hire a chancellor who understands that teaching, research and service to the state are the school’s core mission, not the fanatical and sometimes destructive pursuit of winning at all costs on the basketball court and football field.

And it needs to craft a vision for an institution geared to delivering education programs and services that increasingly will be needed to survive and thrive in a digital, networked and fiercely competitive global marketplace.

Then, and only then, can UNC resume its long-delayed plans for a campaign, which at last estimate was expected to try to raise $3 billion.

The scandal was triggered by disclosures that Matt Kupec, a  former star quarterback at UNC who last week resigned as vice chancellor for university advancement, had taken at least 25 private trips at university expense with Tami Hansbrough, a fundraiser at the school and the mother of former star basketball player Tyler Hansbrough.

She and  Kupec, both divorced, have been in a relationship, according to published reports.

Kupec had pushed for UNC to hire Hansbrough, who also quit last week.

And Holden Thorp, who reportedly knew about her hiring, Kupec’s role in it, and their relationship, and who accompanied the couple on some of those trips, announced Monday he would step down at chancellor at the end of the academic year and return to his job as a professor.

The institutional meltdown also has put on hold, yet again, plans for the fundraising campaign.

That campaign was set to begin its quiet phase four years ago, but the collapse of the capital markets sidelined those plans.

Thorp and Kupec last spring asked the trustees to okay plans to begin the quiet phase this summer, but the board reportedly told them they were not ready and needed to spend the year planning the campaign.

As Charlotte-based fundraising consultant Karla Williams told me, a campaign of that size is not about raising money, it is about transforming an institution.

Working to identify the needs of faculty, students, alumni, donors and other constituents, and engaging them in the process of setting a vision for the future, has the end result of raising money to make that vision a reality.

Because it is the board and the chancellor who must lead the effort to set that vision and raise that money, the board’s first job is to find a new chancellor who understands the increasingly more vital and complex role a public university must play in the 21st century.

The new chancellor, in turn, will need to find a new vice chancellor for university advancement.

As Durham-based consultant Carol O’Brien told me, the chief fundraising officer at a 21st century university must straddle a range of diverse and sometimes competing communities.

That fundraising executive must be skilled at engaging donors, academics and other constituents and addressing their diverse and subtle needs, while also managing the complex and myriad moving parts and systems, and supporting  the staff and volunteers, that together constitute a big fundraising operation.

The board of trustees at UNC-Chapel Hill has a chance to advance the school’s mission of providing education programs and services needed to help our state become a better place to live and work.

To do that, it needs to lead the institution, rather than enabling and groveling to its athletics boosters in return for posh seats and the chance to schmooze with celebrities and big shots in the Dean Dome or at Kenan Stadium.

The board must set its own vision, find the chancellor it wants, and work with that chancellor and with donors to build the university the state needs and deserves.