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WHY NONPROFIT MERGERS CONTINUE TO LAG

December 19th, 2014 | No Comments | Posted in Fundraising

Despite growing support for nonprofit mergers, promising combinations often stumble over three emotionally charged issues: getting the boards aligned, finding roles for senior staff, and blending the brands. Creating a due diligence process that overcomes these hurdles can increase the likelihood that a merger will succeed.

The recent economic recession triggered consolidation in a raft of for-profit service industries, from airlines to financial institutions, as companies sought to create more cost-efficient operations and broaden their customer reach. Not so in the nonprofit sector. Despite a downturn in giving by private donors and dramatic cuts in government spending, according to our research the rate of mergers in the nonprofit sector remained flat.1 (See “Nonprofit Mergers by the Numbers” below.) Meanwhile, the number of US nonprofits actually grew 7 percent between 2007 and 2011 to 1.58 million, an average of nearly 40 nonprofits per US zip code.2

The reason that nonprofit mergers continue to languish isn’t that they don’t make sense. Quite the contrary. Nonprofit mergers and acquisitions are often an effective way to deliver more and better services at lower cost. Take Arizona’s Children Association (AzCA), a child and family services agency. This nonprofit has seven acquisitions under its belt, each cutting costs up to 40 percent and increasing the number of beneficiaries as much as 100 percent.3 In the process, AzCA grew revenue threefold, from $12 million in 1998, before it began its acquisitions, to $36 million in 2012.

(Illustration by Tang Yau Hoong)

Or consider Crittenton Women’s Union, which helps women and their families move from poverty to economic independence. The organization is the result of a 2006 merger of two large and long-established Boston nonprofits serving disadvantaged women. Says Elisabeth Babcock, president and CEO of Crittenton Women’s Union, “We took these two platforms and bone structure and put them together in a way that allowed us to drive ahead new work and a new agenda. We would have never had the organizational or financial capacity to do this [without merging].”

Even though the nonprofit merger rate is static, we see evidence that the sector is taking mergers more seriously than before. Funders are improving the support they provide for mergers, and more nonprofit executive teams are considering mergers as a regular step in strategic planning. Nevertheless, creating a successful merger remains difficult, even for organizations that have done it before.


NONPROFIT MERGERS BY THE NUMBERS

Despite evidence of increased funder awareness of and support for the strategic value of nonprofit mergers and acquisitions, our analysis of legal merger activity in Arizona, Florida, Massachusetts, and North Carolina between 2007 and 2012 does not hint at a rise in overall nonprofit mergers. The Bridgespan Group performed an analysis on legal merger filings from 1996 to 2006 and then compared the later five years, 2001 to 2006, to merger filings from 2007 to 2012 in the same four states. We found little change in merger rates.

In Arizona, Massachusetts, and North Carolina the number of merger filings over the same time period had increased. But when divided by the average number of organizations for each five-year period, cumulative merger rates in those three states remained unchanged compared to the previous five years. That’s because the rate at which new nonprofits were formed kept pace with the increase in merger activity.

Florida was the only state that experienced a falloff in the number of legal mergers over the period and a significant drop in its merger rate, largely because the number of nonprofits in the state grew significantly—15,000 new 501(c)(3)s were established in the recent fiveyear period. The net result was a 30 percent drop in the cumulative merger rate.

Debra Jacobs and Pam Truitt of the Patterson Foundation—which facilitates conversations among organizations considering working together—hypothesize that the influx of wealthy people and baby boomers who move to Florida and want to start socially driven second careers might be the primary driver of the proliferation of nonprofits in the state. Such philanthropy is highly personal, and combining forces with others can be seen as failure to launch and grow a philanthropic vision.

nonprofit mergers 

We also performed a more detailed analysis to understand how merger activity differed by revenue and field. Judging from Massachusetts data—similar to the findings from our previous article—legal mergers continue to be most pervasive and increased significantly among organizations in the child and family services field. A second significant observation from the Massachusetts data was the emergence of a dominant type of merger—large nonprofits rolling up smaller nonprofits. The number of mergers between large and small nonprofits doubled in the last years; mergers between larger and medium nonprofits also increased 1.5 times.


During our research, we interviewed nonprofit merger veterans, their funders, and intermediaries. We found unanimity around three emotionally charged issues that can surface after merger talks begin and derail the effort: creating alignment within the boards, defining roles for senior staff, and blending the brands. These three traps can sink discussions between otherwise mission-aligned partners. In short, there has been some progress in developing a favorable funder ecosystem, tools, and proactive merger strategy, but nonprofits need to do a better job navigating the three softer traps if they are going to turn their increased skill to merge into a will to merge.

Why Mergers Fail

Five years ago, we argued in a Bridgespan report titled “Nonprofit M&A: More than a Tool for Tough Times” that mergers hold far more potential to create value in the nonprofit sector than most people realize.4 But at least four barriers were preventing that potential from being achieved:

  • A lack of knowledge about when and how to think about mergers and acquisitions.
  • A dearth of funding for due diligence and post-merger integration.
  • A lack of matchmakers to create an efficient “organizational marketplace” through which nonprofits could explore potential merger options.
  • A tendency to look at mergers reactively, as a route out of financial distress or leadership vacuums instead of proactively as an effective growth strategy.

Since then we have seen at least modest progress on all four issues. Important new resources have become available that provide information on the hows and whys of mergers. One of these is the Nonprofit Collaboration Database, an expanding resource housed with the Foundation Center website, which provides detailed information on more than 650 collaborations nominated for the Lodestar Foundation Collaboration Prize and other collaborations self-reported by participants. Organizations like MAP for Nonprofits and Wilder Research have invested in reports such as “Success Factors in Nonprofit Mergers” (2012) and “What Do We Know About Nonprofit Mergers?” (2011), respectively. And nonprofit merger advisor La Piana has grown its online collection of tools and publications on nonprofit M&A.5

Although still relatively small, new sources of funding are flowing for merger due diligence and integration. In the past few years, Boston, New York, Los Angeles, Charlotte, N.C., and other c ities have established philanthropic funds that make grants to cover merger costs or provide technical assistance for potential mergers or other collaborations. Foundation Center records show that grants for mergers have increased on average about 18 percent per year in real terms, to $5.3 million in 2011, up from $1.4 million in 2003.6 The total amount of money dedicated to supporting mergers remains small, but it is growing. And foundations increasingly embrace matchmaking, organizing “meet and greets” among grantees so they can get to know each other and explore synergies.

We’ve also seen evidence that more nonprofits are taking a strategic and forward-looking view toward mergers. From November 2008 to November 2010 we conducted four surveys with a pool of 800 nonprofit executives; we heard back from 100 or more in each survey. Consistently, 20 percent of all organizations reported considering mergers as part of their strategy, and by November 2010, 7 percent had completed acquisitions.7 These acquisitions took place among nonprofits with revenues less than $5 million or more than $25 million, numbers that track somewhat with Massachusetts data from our recent 2007 to 2012 study. Those data showed the largest increases over the prior five years in mergers involving large organizations (more than $10 million) and smaller ones (under $3 million).

If the nonprofit sector is making good headway to overcome each of the four barriers, why aren’t we seeing an increase in merger rates? One important reason, we found in our research, is that deals that might have been strategically and financially advantageous turned sour during negotiations over the highly emotional issues of boards, senior staff, and brand. “It seems to me that individuals (whether board or staff) fail to focus on the overall goal of increasing mission impact and get stuck on safeguarding their own personal or institutional status,” says Lois Savage, president of Lodestar. “Successful collaborations are easier when spearheaded by a visionary leader who ‘gets it’ by understanding that maximizing mission impact often involves going beyond (and perhaps dissolving) organizational boundaries.” How can nonprofit leaders come to grips with these softer, but very real, challenges? Let’s look at each of the three elements in turn.

Involving the Board

When AzCA’s new CEO, Michael Coughlin, approached his board of directors about a possible merger, the organization had already undergone a series of mergers under its long-serving prior CEO Fred Chaffee. But the deal Coughlin was considering in 2012—a potential “merger of equals” with Child and Family Resources (CFR)—was bigger than anything AzCA had yet contemplated.

Ingrid Novodvorsky was on the board at the time and became AzCA’s chair shortly afterward. “We talked as a board about the criteria we’d need for a potential partner statewide,” she recalls. “The one that emerged as the candidate was Child and Family Resources. We’d partnered with them on grants. We weren’t strangers. In May our new CEO brought reasons why this was a fit, and we authorized him to do financial due diligence.” The board hired a merger consultant to advise on process.

Merger talks proceeded, with an initial focus on alignment of mission, values, and culture. But then something happened that broke trust between the board and staff. AzCA and CFR had just begun to share financial data and prepare a pro forma budget for a merged organization when several members of AzCA’s senior management team brought concerns about the viability of the merger to the board. Given the mixed signals—a CEO who supported the merger and dissenters on his team who opposed it—the AzCA board ended the merger talks, and Coughlin subsequently left the agency.

Looking back, Coughlin, now CEO of Tri-County Community Action Program in New Hampshire, says he learned from the experience. He faults himself for taking on a big merger too soon into his AzCA tenure, before he had time to fully earn the trust of his 26-member board and his senior staff (an observation reinforced by findings of a Catalyst Fund report on the average tenure of merger leaders).8 This deficiency was exacerbated by the fact that not all the board members showed up for each meeting. “I should have been in contact with the whole board much more frequently, and I should have been there a lot longer before I suggested this,” says Coughlin.

Novodvorsky says that the board’s critical concern was transparency. Instead of just hearing high-level presentations, the board needed to get familiar with the details: meeting minutes, balance sheets, and financial reports. With data, says Novodvorsky, a board could calibrate concerns from other quarters. “We had a merger committee, but they didn’t have early access to the data.”

Not all mergers flounder at the board level. An example of successfully navigating board thickets is the 2006 merger of Crittenton Inc. and The Women’s Union. Crittenton, founded in 1824 as the Boston Female Moral Reform Society, was a leading service agency for women and families. The Women’s Union, founded in 1877 as the Women’s Educational and Industrial Union, was an advocacy organization conducting programs and research focusing on the social and economic challenges faced by low-income women and their families.

Despite the obvious challenge of bringing together two agencies with strong cultures and more than 300 years of history between them, there were compelling reasons for a merger. The two agencies had complementary strengths: Crittenton was stronger in direct services, whereas The Women’s Union brought expertise in research and advocacy. Crittenton had sizable assets in the form of Boston-area real estate, and The Women’s Union had cash. Moreover, both CEOs were retiring, offering a chance for new leadership of a combined organization. But, says Babcock, who was hired to oversee the merger in 2006 and is president and CEO of what is today called Crittenton Women’s Union (CWU), “the board merger was the hardest part. We had two organizations with different board cultures and different perspectives on what was needed in the new organization.”

Babcock and her chairman aligned the merged board to CWU’s mission through board member turnover and dilution. Each board chose seven members for the combined CWU board. “I was fortunate that board leadership didn’t shy away from confronting the tough issues—for example, individual board members and their roles,” says Babcock. “We created a shared mission and vision, worked hard on how the board role should lead and support that vision, and transitioned off the board members who couldn’t realistically be a part of the new vision and role of the board.” As of January 2014, six of the original 14 members were still on the board, along with 12 new members. “The refreshing of the board is a critical element to creating a board that partners with your evolving organization,” says Babcock.

CWU continues to look for merger opportunities, but prospects have been limited. “Since we merged, we have had discussions with five organizations we would have liked to bring into a partnership, and they have all walked away,” says Babcock. “In every instance they’ve said, ‘I don’t think it’s really what we want.’ And in every instance, their board was the barrier. Someone says, ‘I cannot be the board chair who presides over the elimination of my organization.’” In Babcock’s view, the problem is that boards see themselves as “the keepers of the sacred flame of mission, and the idea of furthering the mission apart from furthering the organization in its existing structure is very hard for them. They cannot separate these two to look strategically at how they might create more mission impact by changing the organization. They have conflated the mission and the organization.”


KEEPING MERGER TALKS ON TRACK

Getting started | John MacIntosh of New York Merger, Acquisition, and Collaboration Fund recommends that “boards could consider implementing a formal and recurring practice of revisiting the opportunities for mergers, partnerships, and other types of formal, long-term collaboration as a means to further their organization’s mission at least once a year. It should be an annual process of a high-functioning board. Some boards also have standing merger committees to make it easier to act quickly if the opportunity arises.”

  • Even when there’s no partner immediately in view, keep mergers and other types of collaboration in mind and review their potential annually as part of your strategy.
  • When a potential combination fits your strategy, get to know each other—not just the executive directors, but other senior staff and crucial board members.
  • After the getting-to-know-you phase, start formalizing things. Create a structured planning process, with explicit roles for senior staff and the board to ensure that your due diligence is actually diligent. This may also mean including your board chair as the CEO’s thought partner and principal conduit to the board.

Getting comfortable | Maya Enista, former CEO of Mobilize.org, a membership organization, says, “For some members, we framed the merger in a very personal way, focusing on benefits to individual students. For others with a finance background, we emphasized potential financial benefits.”

  • Prioritize transparency and ground conversations in cold, hard facts so the board and the staff learn together.
  • Keep a close eye on the financials, asking questions and sharing the good, the bad, and the ugly with the board.
  • Don’t be pushed into hasty action by a big funder or an artificial deadline. It takes time to make a good merger, and time to put the brakes on a bad one before it’s too late.

Getting past emotional traps | Michael Coughlin, former CEO of Arizona’s Children Association, wishes he had pressed his senior staff harder to understand what doubts they might have. “If I were to do anything over again, I would be relentless in going back to people and asking How do you feel? What’s bothering you? If you don’t have your senior management team with you, you are dead in the water.”

  • Identify the toughest issues, including the roles of senior staff and board members, brand identities, and culture. Don’t sweep them under the rug, work through them.
  • Planning should take into account potential structures for staff as well as roles and committees for combined boards.
  • Get outside help, not just on the financial questions, but for softer subjects like organizational structure and branding. Skilled facilitators can add real value. Sometimes funders will help pay for this outside support, even if they don’t have an explicit merger support program.

Remember that mergers aren’t the only form of collaboration—joint ventures to share space, back-office functions, or specialized programmatic functions can also be a way to achieve economies of scale without giving up organizational autonomy or identity.


Integrating Senior Staff

A second emotionally charged hurdle is planning for the future of the organization’s senior staff. Before Coughlin joined AzCA, he was CEO of Goodwill Industries of Northern New England, where he had completed two mergers. One of the reasons that these were successful is that he found room at Goodwill for the important senior staff of the acquired organizations. “We added the other CEO to my senior team, found roles for other members of their team, and lowered cost through attrition over the years,” says Coughlin. Novodvorsky, chair of AzCA’s board and a former board member of one of the organizations AzCA acquired, says that most staff in the acquired organization were given roles at AzCA following the merger.

It’s important to note that these were essentially acquisitions by large organizations of smaller ones that eventually became separate programs or business units within the larger acquirer. The objective was program and revenue growth. The smaller acquisitions brought new expertise, clients, and potential access to funding, fueling the acquirer’s growth. This made it easier to find roles for senior staff. Following the merger of the $40 million Goodwill chapter with Training Resource Center, a $4 million workforce development nonprofit, “We became able to compete for contracts that neither one of us could before, and the combined organization grew to $60 million,” says Coughlin.

In contrast, when two organizations that are close in size merge, it is often to gain economies of scale. Such mergers inevitably make some roles redundant, and it is harder to find roles for all senior staff. Indeed, one of the most important questions that nonprofit leaders face in planning a merger—especially a merger of equals—is that of their own futures. In the nonprofit sector, executives rarely enjoy golden parachutes, and they have no stock options to cash in for a healthy post-merger profit. Unless senior staff want to retire, plan to move on, or are amenable to a subordinate position in the merged organization, the risk to their own future can kill merger talks.

Consider the 2010 merger of equals of Mobilize.org and Generation Engage, two small national organizations working to mobilize Millennials. Generation Engage had a staff of six and a $700,000 budget; Mobilize.org had three staffers and a $500,000 budget. Generation Engage leader Decker Ngongang and Mobilize.org leader Maya Enista knew each other before they began discussing a merger. “We both went to the same conferences and were always the youngest people there,” says Ngongang. “We ended up working together on a couple of campaigns. The level of engagement increased between our organizations and constituents to where it made sense to stop competing for funders. We started talking, and going out to coffee, and discussing how we could partner even more deeply.”

“Decker and I really liked each other,” says Enista. “Most important, neither of us was a founder. We were able to approach this with distance about what’s best.” Adds Ngongang, “We sat down, mapped it out. We brainstormed on how we would talk to our respective boards and funders, what were the politics that needed to happen, questions the board would ask.”

Though Generation Engage was slightly larger, Mobilize.org ended up as the acquiring organization. Ngongang was amenable to a subordinate position. Enista stayed on as the head of the merged organization and Ngongang became vice president of programs. “It was not even a question about my becoming a co-leader,” says Ngongang. “I thought it was crucial to focus on the work instead of who is the most important.” Three years later, although both have moved to new roles in other organizations, Enista and Ngongang say the merger is a success. “We did a survey of our membership,” says Enista. “No one saw any change or disruption. Our budget doubled, our staff tripled. We were able to extend our reach.”

These two young leaders agreed to work together in the newly merged organization, but for many nonprofits one of the rationales for a merger is that at least one merging organization’s leader is ready to leave. MAP for Nonprofits, in its 2012 study of 41 Minnesota nonprofit mergers, reported, “For 80 percent of the mergers, an executive director had recently left or was soon to retire in at least one of the pre-merger organizations.”9

Whether a merger results in reassigning roles, creating graceful exits, or developing new leadership positions in the merged entity, crafting a plan for senior staff that the staff itself considers fair and in the organization’s best interests is a critical step if the parties are to actually tie the knot.

Stewarding the Brands

A final obstacle that can derail merger deliberations, even when all else is aligned, is brand stewardship. In the case of corporate mergers, especially those that serve consumers, the advantage of preserving a strong brand identity is obvious: strong brands beget customer loyalty. When snack and cereal maker Kellogg acquired biscuit company Keebler, for example, however sweeping the back-office changes, the company hung onto Keebler’s trademark elves. For nonprofits, brand is often important as well. It may count with funders, elicit trust from clients, and attract volunteers, board members, and talented staff. Brand can also be about how an organization sees itself—and integral to a nonprofit’s culture.

Because of this, brand can be a lightning rod during a merger. There are three ways to ground the emotional charge. One is for the acquiring organization to retain the brands of the acquired organization, as PepsiCo did when it acquired Frito-Lay, Pizza Hut, and KFC. The other is to merge the acquired brands into the existing one, as Cisco Systems did with the networking companies it has acquired. A third approach is to merge under a new, often amalgamated, name, like Citigroup, the entity formed from the merger of Citibank and Traveler’s Group.

Take, for example, New York’s Hillside Family of Agencies, which grew the reach of its mission to help at-risk youth through nine strategic mergers. Hillside has taken the PepsiCo route, turning acquisitions into business units that bear the name of the former nonprofit, such as Crestwood Children’s Center, Snell Farm Children’s Center, and Hillside Children’s Center. In Boston, two wellestablished nonprofits chose a similar approach. The Philanthropic Initiative (TPI), founded in 1989, is a nonprofit advisory team that designs, carries out, and evaluates philanthropic programs for individual donors, families, foundations, and corporations. In late 2011, TPI merged with the Boston Foundation, one of the oldest and largest community foundations in the country.

After the merger, which fully combined both assets and income, the two agencies nevertheless remain distinct brands. Though now a unit of the Boston Foundation, TPI has its own logo, website, and distinct array of services. “TPI is a national, philanthropic, consulting firm, and the Boston Foundation is local,” says Kate Guedj, the Boston Foundation vice president who oversaw the merger. “In the local market, we use the two brands together, but nationally TPI is more prominent, with clients all over the country and the world.”

CWU, on the other hand, took the Citigroup route—blending the people and programs from each merging entity under a new corporate name, an amalgam of two merging brands. “It’s a mouthful,” said CEO Babcock, “But when our market researchers tested the original names of each organization with the public, they both had distinct and important followings, so we wanted to preserve them.”

In short, brand matters, and crafting a plan that preserves the equity of any merger candidate’s brand can circumvent a stumbling block to completing the deal. Most often nonprofits preserve brand equity through maintaining both names in some recognizable form, whether as combinations like “Crittenton Women’s” or sub-brands like TRC at Goodwill of Northern New England. In some cases, such as Mobilize.org, it’s possible to consolidate under one brand and bring constituents along, but it takes humility and deep investment in communication before, during, and after absorbing one brand into another.

A Growing Role for Funders

When successful, a merger can help expand a nonprofit’s programs, capabilities, reach, and revenue. It can improve the organization’s cost structure, benefiting the people and communities it serves. That’s why it’s vital that funders continue to invest in supporting mergers and learn to navigate all the obstacles along the way—including the softer traps.

To this end, funders have several critical responsibilities. These continue to include capturing, codifying and sharing know-how on all forms of alliances, connecting grantees that could become more than the sum of their parts, and providing financial support for the due diligence and integration costs that must accompany a merger. But their duties should also include serving as trusted advisors and thought partners to confront the three emotionally charged traps.

At the same time, funders need to be careful to strengthen an ecosystem that enables collaboration that can lead to mergers, rather than forcing deals. “Everybody has learned that if you try to force a shotgun marriage it comes back to haunt you,” says Savage. “A merger has to be developed on trust. The best thing a funder can do is create an environment where organizations can get to know each other and develop this trust.”

Consider Boston’s Catalyst Fund for Nonprofits, a partnership of four major Boston-area funders and the Kresge Foundation, created to support local mergers and collaborations. Over the past two years the Catalyst Fund has given out 25 awards. These allowed organizations to hire consultant experts for feasibility planning, assessment, and implementation for collaborations, including mergers.10 By late 2013, the Catalyst Fund had supported 12 prospective mergers, eight of which have been implemented. Offering a range of support to potential collaborators “allows it to happen more on the nonprofit’s terms, which leads to a higher likelihood of success,” says Peter Kramer, manager of the Catalyst Fund.

In its 2013 Interim Report, the Catalyst Fund notes that much of its early success “can be attributed to its ability to provide a flexible model in which nonprofits can chart their own course with the freedom to choose their own consultants and timetable…. Nonprofit partners have not become overwhelmed with final outcomes from the start but rather challenged to initiate the difficult discussions and work that lead to true partnerships.” The Catalyst Fund intentionally avoids pushing a merger match. “There is a power dynamic you need to be very careful about,” explains Guedj of TBF. “We have seen funders trying to force mergers … and it will work for a couple of years but fall apart.” (See “The Collaboration Alternative,” below.)


THE COLLABORATION ALTERNATIVE

Although our research focused on mergers and acquisitions, it’s clear that the majority of nonprofit organizations are collaborating frequently in ways short of legally blending organizations. Of the 102 nonprofit leaders who responded to the Bridgespan Group’s November 2010 survey on approaches to managing through the recession, 81 percent said they were engaged in some form of collaboration, a jump of 20 percentage points from answers to the same question in 2009. Says David La Piana, founder of La Piana Consulting, which advises mergers and collaborations, “While the energy is always around talking about mergers, the frequency is in every other kind of collaboration.”

Short of an actual merger, nonprofits can use a range of alternatives to align with others and achieve greater impact.

  • Best practice sharing: Advances sector knowledge by promoting innovative approaches and sharing lessons learned (Lodestar Foundation Collaboration Prize).
  • Coalition: Aligns a group of like-minded organizations around a common, agreed upon goal (Green Economy Coalition)
  • Formal partnership: Allows two or more organizations to be committed to shared goals without integrating organizational functions (Hillside affiliates).
  • Joint venture: Integrates partnership of two or more organizations in a new legal entity, owned by the partners (Career Family Opportunity Cambridge, a venture of Crittenton Women’s Union and Cambridge Housing Authority).
  • Sharing services: Enhances economies of scale, generally for cost savings, revenue sharing, or service enhancement (AA RP and Experience Corps, which share office space, member outreach, and cobranding).

Each alternative carries tradeoffs in autonomy, risk, and investment required. For example, coalitions can spend vast amounts of energy just keeping members aligned, and they can be slow to achieve deep, meaningful impact. Partnerships can be strengthened through formal memos of understanding and processes, but without integration, there is no guarantee the relationship will continue. Shared services are likely to require significant legal and operational alignment, meaning cost, revenue, and other benefits may not materialize in the short term.

When planning collaborations, organizations need to consider the pros and cons of each structure. Ultimately, the right approach depends on the goals of the collaboration and the parties involved.


Another model of funder support for mergers and collaborations is the Patterson Foundation. “We rarely ever use the merger word,” says Patterson’s president and CEO Debra Jacobs. “It scares people away. Mergers are often not the answer to the question.” What the foundation does offer is skilled third-party facilitation, when the time is right. “We let relationships bubble up, encourage organizations to sit down with others and talk,” says Jacobs. “They’re not ready for a facilitator if they just met for coffee once. They need to build trust first.”

And when the time comes to talk merger, The Patterson Foundation has clear-cut ground rules for its involvement. Says Jacobs, “It can’t just be two EDs, or two board members. If they’re going to enter into merger exploration, we require that their boards approve a resolution.”

The Catalyst Fund and the Patterson Foundation are part of an increasingly supportive ecosystem for nonprofit mergers and other forms of collaboration. They can play a role in overcoming the hard barriers that limit merger skill. But they can also address the softer traps around will to merge, by serving as trusted advisors on board governance, senior staff role definition, and brand stewardship.

By Katie Smith Milway, Maria Orozco, & Cristina Botero

Spring 2014
Stanford Social Innovation Review

Notes

1 It is tempting to focus on the growth of the denominator, as clearly it is easier to set up a 501(c)3 organization than to merge. But whatever biases the denominator holds were present in our study of merger rates from 2001 through 2006, our comparative set. Likewise, there are biases in the numerator, consistent across data sets. For example, the merger numbers cited in this report do not include joint ventures or partial integration (such as combining back-office operations), nor would they include more complex approaches to combining resources, such as asset/contract purchases.
2 Sarah Pettijohn, “The Nonprofit Sector in Brief: Public Charities, Giving, and Volunteering,” Urban Institute.org, 2013; Thomas Pollak et al., “The Nonprofit Sector in Brief: Public Charities, Giving, and Volunteering,” Urban Institute.org, 2009.
3 Alex Cortez, William Foster, and Katie Smith Milway, “Nonprofit M&A: More than a Tool for Tough Times,” The Bridgespan Group, February 2009. http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Nonprofit-Mergers-and-Acquisitions-More-Than-a-Too.aspx
4 Cortez et al., “Nonprofit M&A.”
5 www.lapiana.org/research-publications/publications
6 Bridgespan analysis on Foundation Center grants supporting mergers
7 William Foster, Gail Perreault, and Sarah Sable, “Managing in Tough Times: May 2009 Nonprofit Leaders Survey Update,” Bridgespan.org, June 29, 2009.
8 A 2013 report by the Catalyst Fund for Nonprofits, a funders’ collaborative that provides grants and technical assistance to Boston-area agencies pursuing M&A and other forms of collaboration, found that almost all the 15 organizations it had supported had CEOs who had been with the organization for at least three years; the majority had more than eight years of experience at the nonprofit.
9Synopsis: Success Factors in Nonprofit Mergers” (MAP for Nonprofits, July 2012).
10 Margaret Leipsitz, “Catalyst Fund for Nonprofits: An Interim Assessment,” January 2013. http://nonprofitfinancefund.org/research-resources/catalyst-fund-nonprofits-interim-assessment

Be Accessible to Your Donors at Year End!

December 19th, 2014 | No Comments | Posted in Annual Giving, Fundraising

The next two weeks will fly by. This is such a busy time of year. Demands all around — work, family, friends and more.

This is also the busiest time of year for giving. People are in a holiday spirit, filled with generosity. People are also procrastinators. But if we are looking at 2014 for gifts to nonprofits, the clock is ticking.

For some of us, that means fulfilling commitments (and if we are doing a good job as fundraisers we have been keeping our donors up to date on progress toward any commitments). For others, it is making gifts that we have been contemplating for a while.

And for the planning donors, it means they now know how they did financially this year and with that information in hand are ready to make some additional charitable gifts.

This time of year is also a time of vacations. There are significant and very meaningful holidays. Some of us have vacation time accrued that we may lose. We have family and friends to visit. And for some in education (especially independent schools), our institutions close for part or most of the holidays — a nice bonus.

But what do our holiday vacation plans — well deserved, indeed — mean to our donors?

If you have a donor with a question on her year-to-date giving or a commitment, who can she talk to this week? Next week? The week of New Year’s day? How does she find that person?

Do you have information on year-end giving on your website home page? Is a direct-line phone number very prominent? Is your mailing address clearly found? And is there an email address or easy-to-complete form? If someone calls your office and it is closed, what does the message indicate? Is someone checking voicemails regularly? How about emails?

If a donor has a gift of stock, how can he find instructions on making the transfer so that he can get credit for the gift in this tax year?

Enjoy the holidays! But be sure that someone is either in your office or easily accessible to donors as they include your worthy cause in their year-end giving!

By Jeff Jowdy | Posted on December 17, 2014
Fundraising Success Magazine

More counsellors needed to deal with mental health issues on campus

December 18th, 2014 | No Comments | Posted in Education

At the Nova Scotia branch of the Canadian Federation of Students, they want a review of mental health services on campuses and point to a common problem. “At Dalhousie University, for example,” says CFS-NS chairperson Anna Dubinski, “it’s quite easy to get a preliminary meeting with a counsellor, but it takes weeks or sometimes months before you get regular counselling. We think that’s not right.”

Many people would agree.

It happened to Abby Andrew, a fourth-year English student at Queen’s University. When she was struggling with depression in first year, all she got from the health centre on campus was a prescription for  antidepressants and a list of off-campus counsellors. She didn’t think she needed a therapist and just waited for the medication to kick in. No one ever followed up. She continued to struggle until her second year, when someone convinced her to see a psychiatrist, who taught her how to work through her problems. Those were “a combination of relationships, the amount of schoolwork, and living with a roommate who I was comparing myself with all the time,” she says. “Just normal things first-years go through—and me not being able to cope as well.”

Her story shows why the CFS-NS campaign could make a real difference, but also why it risks being ignored. While its goal is laudable, its explanation will cause many to roll their eyes. It suggests debt is one of the main causes of the student mental health crisis, a point Dubinski reiterated over the phone. “As tuition continues to increase and funding continues to be taken away from our post-secondary education system, students are simultaneously being asked to take on more [debt],” she says, “and they have increased levels of stress as a result.”

But financial stress isn’t a mental illness so much as a fact of life. If students buy into the idea that normal life stressors equal mental illness, they’re going to be in for a rude awakening when they finish school and have to deal with the even bigger stress of the work world. University administrators, who decide whether to hire counsellors or cut them to save money, know this. If the CFS-NS wants to be taken seriously, they’re shouldn’t be equating normal stress to mental illness.

It’s easy to see why the CFS-NS is confused. Financial stress can trigger mental illness, but only in those people who are already susceptible, explains Gordon Flett, a York University psychologist and Canada Research Chair in personality and health. People who suffer from anxiety and depression are prone to it because of a negative self-image, which is likely caused by genes, adverse experiences early in life, or a combination of both. Mental illness can be exacerbated by all kinds of things—$30,000 student loans included—but that doesn’t make it a cause.

Flett explains that there are essentially three personality styles visible in children, and that they are carried into adulthood unless there’s some intervention along the way: “the resilients,” who bounce back from stress, “the under-controlled,” who seem to act out a lot, and the “over-controlled,” who are more cautious—and more prone to anxiety and depression.

But, like Abby Andrew, they can learn how to cope. This is something Flett will attempt at 14 high schools in York Region, just north of Toronto, this year. Among the things “over-controlled” personality types need to grasp if they’re to avoid mental illness is that they are not “fixed” that way, but are a work in progress. They need to understand that not everyone is an overachiever and they shouldn’t measure themselves by another person’s standards. And they need to recognize how to confront stress with strategies like time management and healthy living (exercise, sleeping on a schedule, not drinking too much, for example).

All of these things can be learned in university, preferably earlier. Suggesting mental health problems are caused by student debt is only going to distract from the bigger issue: Not enough counsellors teaching students how to cope.

September 30, 2014
By Josh Dehaas
MacClean’s

Super Short is Super Sweet: Storytelling that Hooks Digital Donors

December 17th, 2014 | No Comments | Posted in Fundraising, Social Media

The heart of effective fundraising is telling a story that a donor can emotionally connect with. These days, one of the easiest ways to reach a donor with a story is through social media. When it comes to social media, visual marketing is a primary driver for connecting with audiences. This is why videos — and super short videos in particular — are attracting millions of users.

Why Really Short Matters

In my Nonprofit Technology News Celebrity Forecasts for 2014, one of the most cited themes among charity leaders was the importance of multi-channel fundraising. In a multi-channel approach, fundraisers go beyond just email and direct mail to incorporate other channels, including social media.

To be successful on social media, you need to give potential donors what they want the most: stories that are told visually.

Here’s why: Videos engage multiple senses with images, sound, and captioning. Stories told visually tend to naturally engage both sides of our brain. They speak directly to our emotions much more than text alone can. Even short videos can be emotionally charged. Facebook posts that include photos or videos tend to get many more comments than posts without them.

There are two newer social channels that have attracted the younger donors that many fundraisers are eager to reach: Instagram and Vine apps. Both are heavily used by people under 35 and have massive audiences, Instagram with 200 million monthly users and Vine with 100 million. If your organization wants to connect with younger donors and you’re looking for low- or no-cost approaches, these apps are a great place to start.

What Are Super Short Stories Anyway?

Instagram and Vine social media services are the key to super short videos, and are the easiest way to experiment with video making.

The Instagram and Vine mobile apps are free micro-video blogging services. The catch is that Instagram and Vine videos are short – really short. Instagram’s maximum is 15 seconds and Vine’s even less at 6 seconds. The apps make it very easy to create videos since they provide everything you need to shoot and edit your footage, and require no video experience. It only takes a few minutes to download the apps to your phone and try them out.

Once you’ve made your video, both apps allow you to share your videos on other sites such as Twitter and Facebook, or add them to your organization’s website by copy and pasting a bit of code.

What I find most astonishing about super short video is how much can be conveyed in just seconds, and still be effective storytelling tools for fundraising.

3 Types of Short Stories Your Organization Can Tell

According to nonprofit video expert, Aaron Bramley of Lights. Camera. Help, there are three basic types of super short videos that charities tend to use for fundraising.

1. Fundraising Videos

2. Thank You Videos 

3. Mission Execution Videos

How To Use Super Short Videos For Fundraising

In polling charities who attended our recent TechSoup webinar on super-short videos, we found that most of them haven’t yet tried doing short videos. And most of them had no budget for doing any kind of video.

Like all social media marketing, it’s wise to begin by reaching out to the audiences you already have, probably on Facebook and Twitter. Try posting and tweeting about your new super short video there and ask what people think.

Engage with your audience in an active conversation — retweeting and commenting on their what they share. And, of course, don’t forget to ask your community members to share your video with their networks — ask them via social media and also your organization’s website, phone, email, or even face-to-face.

It will take some time to develop an audience on Instagram or Vine, so be patient. If resources are tight, choose one app and concentrate on building an audience there.

The preceding is a cross-post of Jim Lynch of TechSoup’s September 17th 2014 guest post on Kivi’s Nonprofit Communications Blog.  To read the original article, click here. 

True Stories of Telefundraising Success

December 16th, 2014 | No Comments | Posted in Fundraising

So let’s jump right in. What have we learned about telefundraising through our respective programs [Special Olympics and PETA]?

Let’s tackle PETA first. We have a strong and constant focus on growing the monthly sustainer program, and the file has been steadily increasing in the past two years. Since May 2013, we’ve seen a 13 percent jump in our file size. One of our most effective campaigns is our rolling telefundraising sustainer invite.

On a quarterly basis, we invite new (donor who just gave in the past zero-three months) and renewed donors to become monthly supporters of our Investigations & Rescue Fund. We also pull lapsed sustainers into the call, trying to capture anyone who might have fallen off “by accident” simply due to outdated payment information.

What is the Investigations & Rescue Fund, and why is it such a compelling ask for us? The I&R Fund supports all PETA’s efforts to investigate and expose animal cruelty and push for prosecution of abusers. It’s a tangible item that makes donors feel like they are taking a direct part in helping animals — which they are! To make sure they know this, we send sustainers monthly updates online or offline where we talk about the most recent rescues and victories that we have achieved. So they know exactly what their money is going to.

Grabbing new and renewed donors quickly after their recent gifts is important. They are in tune with PETA right now and were just compelled to give to our organization. We jump in while they are still feeling this passion and motivation and ask them for a monthly commitment. Timing is everything.

Our script starts out with a question: “What’s the main reason you support PETA?” This allows the donor to have a voice and feel connected with the caller (i.e., with us). After two sustainer asks, we go into a single gift as the third and final ask.

What kind of results are we seeing? Our last two campaigns brought in a 9.2 percent and 8.5 percent sustainer pledge rate respectively, with average gifts hovering around $14.50 for both. After fulfillment for our November campaign, we are seeing an annualized income just above $50,000, with 195 new sustainers and 342 single gifts. And remember … they just gave a previous gift in the last three months, so these additional single gifts from the folks that chose not to become sustainers still show engagement and an indication of strong lifetime value — because we all know getting the second gift can be a challenge.

PETA is also testing extensively in the sustainer invite telefundraising program — everything from first asks to credit card asks and the fulfillment outer envelope.

PETA also runs an annual sustainer upgrade program, which we are about to kick off at the end of February. Without going into too much detail, I will just say that our 2013 campaign saw a 44.9 percent upgrade pledge rate and a $3.41 average upgrade amount. Needless to say, you should ask your sustainers to upgrade.

Your takeaways from what PETA is doing with sustainers in telefundraising:

  • Invite — make it easy and painless to become a sustainer by inviting in all channels, and offer different payment options.
  • Retain — telefundraising is a perfect opportunity to connect with your supporters and give them a voice in your relationship.
  • Cultivate inform donors regularly of what your programs have accomplished.
  • Upgrade — do ask your sustainers to upgrade their monthly amount, and don’t be afraid to ask and ask again.

But wait — we are not done yet. There’s more.

I had the privilege of presenting with Special Olympics’ Shira Mitchell and hearing about how Special Olympics approaches lapsed reinstatements and new-donor conversion through telefundraising.

Twice a year the folks at Special Olympics call lapsed donors to get them back into the active donor fold. They do this with the goal of keeping the cost per dollar raised (CPDR) within $1.30, and their target audience is 49+ month donors.

The messaging is mission-based while using language that makes donors feel like they are “active” givers. And this approach has proved to work well. Results have been strong, and currently the CDPR is sitting at $1.11 with an average gift of $24.05. And they are breaking even already at six months.

Mitchell also talked about the multichannel impact of the reactivation program. A donor who receives both direct-mail and telemarketing appeals has an 8.89 percent reactivation rate vs. just above 5 percent for telemarketing or direct mail alone.

With those kinds of numbers, investing in telefundraising reactivation certainly makes sense! And Mitchell recommends launching your campaign early in the fiscal year to minimize impact on net revenue.

Moving on to the next topic — new-donor conversion through telefundraising. Special Olympics set out to improve retention and get the second gift. It does that by calling new-to-file and just reactivated donors five times a year. The objective is to break even just after three months.

The script is relatively less aggressive and focuses on making sure the donor hangs up feeling appreciated, even if he or she doesn’t give a second gift. Speaking of gifts, there is an ask in the script. The first ask is monthly, and the second ask tries to get a single gift.

Results show that it’s all worth it, with a 19.22 percent pledge rate, a $0.77 CPDR and breaking even at three months. This call has also proved to improve first-year retention, boasting a 42 percent higher retention rate for the folks included in the campaigns.

If you are not already using telefundraising in your direct-response program, now is a good time to get started. If you are, but have yet to utilize the untapped potential of sustainer invite calling and lapsed reactivation campaigns, dive in right away. Add a test campaign into the next budget. It’s well worth the investment.

February 17, 2014
By Katinka Partridge

Katinka Partridge is response fundraising manager at the PETA FoundationOpens in a new window.

Rebranding Alumni Relations to Focus on Careers

December 15th, 2014 | No Comments | Posted in Education

I was on a long flight back from visiting my in-laws in Florida and had a lot of time to think. Donning headsets with noise canceling capabilities, I was able to mask the noise of the baby wailing a few rows back and reflect on discussions I’ve had with alumni professionals on the future of alumni relations.

I got thinking about what role alumni relations was playing in the lives of alumni in this rapidly changing economy. Is the alumni association in business to support the needs of alumni or the needs of the college?

If you asked your alumni, a good number would say the alumni association is in business to build support for the college annual giving, major giving, estate planning, and capital campaigns.

There in lies an opportunity!

In 2006, I wrote a report called Your NEXT-NET Thing, Reinventing Your Alumni Association for the Internet Era, where I identified three ways alumni associations could use the Internet to rebrand and realign services to be more relevant for and better serve alumni.

These included:

  1. Using Internet technology for career development, networking, amplifying nostalgia, providing learning opportunities, and helping alumni transition to different phases of their lives.
  2. Integrating Internet technology into each department within the alumni association.
  3. Partnering with social/business networking communities and relevant websites.

Nearly all colleges are using technology to cut costs, speed up communications, and better inform alumni. Nearly all colleges have leveraged social media sites like Facebook and LinkedIn to engage alumni, but only small minority are actively using the Internet to help alumni build successful career strategies, provide learning opportunities and help them transition through phases in their lives.

The one area that has the most potential to not only help the alumni association increase engagement and alumni satisfaction, and at the same time increase enrollment, retention, and the graduation rate, along with grads with jobs, and finally, giving - is by using the Internet to help students, grads and alumni lead successful careers.

Studies show grads and alumni want career help

In the early 1970’s when Freshmen were asked “Why are you going to college?”about 60 percent indicated they were going to college to better their chances of getting jobs. When the freshman class of 2013 was asked the same question, more than 88% indicated they were going to college to better their chances of getting jobs.

This sentiment is not being voiced by just freshman.

  • The Alumni Attitude Study has been completed by over a million alumni from various colleges over the past two decades. Overall alumni provide glowing accounts of their time on campus and the quality of their educations, however, EVERY institution that utilizes the AAS has found alumni rated them poorly when it comes to providing career-related help.
  • Another study, this one conducted by the Olson Zaltman Associates, used a patented technique to get inside the minds of alumni to learn what they really wanted from their undergraduate alma maters. The overwhelming response?

Alumni showed they wanted help in the transitions of their lives.

The Olson Zaltman Associates study found that alumni looked at their alma maters as paternal organizations, ones that educated them and provided the skills and knowledge that helped them launch their careers. They indicated they would have preferred to keep those kinds of relationships with their colleges. Alumni showed a great interest in relying on their alma maters to provide them information and access to career-related knowledge, health, finances, family and eventually retirement information.

The study found that there was a disconnect in the current relationship between alma maters and alumni.

The college defined the relationship as one built around nostalgia, tradition, and the sense of guilt that they owed the college for their education, and hence supported the steady assault of letters, phone calls and emails asking for contributions. Alumni, on the other hand, felt they had paid a handsome sum for their educations and were not necessarily obligated any further.

Rebrand your alumni association and focus on careers!

So today, so much more than nearly a decade ago, alumni relations professionals have an opportunity to rebrand their roles and functions by focusing events and programming around careers.

What if you rebranded your alumni association around careers? What if you decided that your number one reason for being– the number one reason your alumni association existed– is to help grads and alumni launch and lead successful careers? A complete refocus might require you to drop events and activities, and adding new ones might focus on helping alumni launch and lead successful careers, as well as enjoy changes in job descriptions and even titles!

Rebranding to focus on careers might look a little bit like this:

  • Your association gets more involved with incoming freshman and you pair each and every freshman with alumni mentors as well as hold events with the career center to increase career ownership and reinforce the alumni associations focus on careers.
  • Your annual giving team starts making calls in the spring to ask for, and get, alumni commitments to help graduating seniors get internships or jobs. You could start a program where alumni help your grads get short term internships after they graduate. This will help them get something on their resume and increase the likelihood they will find rewarding employment.
  • Every event and activity includes a career component to it. This includes networking, helping alumni do business with each other and providing coaching and mentoring.

An easy way to start rebranding your alumni association is by adoptingTalentMarks’ CareerCommunity and CareerWebinar series. This series provides an online community environment that delivers monthly webinars featuring the nation’s top career authors as well as career discussions, news and tools. The branded career community delivers anytime, anywhere access to career curriculum and content.

The nice thing about rebranding your alumni association to focus on careers is you can take it at any pace you want– but don’t delay!

Next steps

  1. Ask your board and your president’s council to help you define what your brand should be in the coming decade. Remind them of the need to focus on the customer, not the institution.
  2. Create a brand statement that reflects a commitment to helping students, grads and alumni launch successful careers.
  3. Partner with your career center to help them encourage students to take ownership of their career the minute they arrive on campus.
  4. Create events and activities that support career exploration, career management, career success.

Traditional business strategies show that the more you focus on customer needs, the more loyal and engaged customers will be, and the more they will spend with your business.

By moving to a business that is focused on helping alumni launch and lead successful careers, you will end up increasing enrollment, retention, grads with jobs and contributions!

Nov 2, 2014
By Don Philabaum

 

5 Kinds of Facebook Posts That Work for Nonprofits

December 15th, 2014 | No Comments | Posted in Fundraising, Social Media

Got Mission Moments? Feature Them on Facebook

Love it or hate it, Facebook is still highly used by nonprofits to reach supporters. In 2014, 95% of nonprofits use Facebook for marketing and fundraising.

Despite recent studies showing that most Facebook Pages only reach 5% of their fans, the biggest social network does have value for marketers, namely due to the sheer number of people using the site and the amount of time they spend on it.

If you are determined to stick with Facebook and make it work, here are five types of posts your nonprofit needs to be using:

1 ) Eye-catching, compelling photos.

Yes, I know – you’ve heard this 1000 times. Post more photos. The difference is this – when I implore you to post more photos, I am not talking about throwing up any old picture and hoping that someone will like it.

Most Facebook users do not want to a fuzzy photo of your Board retreat or the floral arrangement at your latest event. Those types of photos certainly have their place, but they are not going to make anyone stop in their tracks – or rather, their Facebook News Feed – and pay attention.

Successful nonprofit photos on Facebook elicit emotion and inspire action. They entice you to learn more, to click on a link, or to share with others because you have been inspired. The St. Baldrick’s Foundation uses eye-catching photos frequently, as does nonprofit social media superstar charity:water.

2) Article links to outside websites.

It used to be the case that Facebook penalized link posts – they made the thumbnails tiny, the links often didn’t pull up a correct preview, and the reach on link posts was abysmal. However, recent announcements and changes to the News Feed algorithm have authentic, high-quality link posts receive priority over text posts that have photos and URLs in the captions.

What makes a great article link post? Content that is relevant and interesting to your audience, and provides your community with news/information they will stop and click on.

Tip: Avoid link-baiting headlines (think Buzzfeed and Upworthy), as Facebook will be giving these posts less weight in the News Feed.

3) Content from other Pages.

At least once per week, share a helpful, interesting or fun post from another Facebook Page with your fans. This has the added benefits of creating great karma and exposing your Page to others who may not have heard of you.

Be sure to keep your audience in mind at all times. Think: What other pages do they like? What else are they passionate about? What are your competitors and partners sharing that is inspiring and engaging their communities?

Only share content that is relevant to your audience and that has been shown to work. If a page posted an update that only received one like and no shares, it is probably not that interesting to their community, and may also fall flat with yours. The key is to curate thriving, engaging posts on other pages and piggyback on their success.

4) Questions/brief polls/fill-in-the-blanks.

Posts encouraging interaction and feedback from your online community work very well on Facebook. Questions, polls or fill-in-the-blank questions should be very brief and very simple, not requiring much thought to answer.

The John Haydon – Digital Marketing page uses this feature very well, frequently posting short questions to his fans. Questions and polls help you determine what your fans are interested in and what they will respond to, but they also elicit engagement on the individual post, which will help it show up in more News Feeds!

5) Impact moments.

I find that impact moments, also called “mission moments,” are the best types of posts on Facebook (and all the other social networks). Impact moments are photos, short videos (think Vine and Instagram) and brief quotes that directly show the impact of your organization.

I assume that one of your goals in using Facebook for your nonprofit is to stay top of mind with supporters. Another goal may be to connect with new, potential donors. Impact moments are shareable, clickable and bite-size glimpses into the world of your organization, your clients and your mission. Why do you do what you do? Why should we care about your work? What is different about your vision? How are you helping people/animals/the environment every single day?

Great examples of impact moments can be found at ASPCA, Stand Up To Cancer and Boston Children’s Hospital.

No More Free Lunch

When used strategically, these 5 types of posts will help you engage more fans and build your reach on Facebook. It is important to note that the “free lunch” on Facebook is effectively over – the only real way to ensure that a majority of your followers see your Facebook content is to purchase ads. But having a solid base of engaging posts is the place to start.

Stick with a strategy and keep your posts interesting, relevant and fun – and you are sure to succeed on Facebook!

25 September 2014
By Julia Campbell

 

6 Ideas for Dealing With ‘Take Me Off Your List’ Requests

December 14th, 2014 | No Comments | Posted in Direct Mail, Email, Fundraising

While nonprofit organizations have many assets, the list of donors to the organization is near or at the top of the list in terms of its value. We jealously guard our donor lists because they’re not just names; they are people who have enough of a personal connection to us to have made donations — once, or over and over.

That’s why we dread the call, letter or email (or, worst of all, the personal confrontation) when a donor says, “Take me off your mailing list!” That hurts, and it can hurt the bottom line if too many donors make an exodus, as can happen if there is a public relations disaster that calls the wrong kind of attention to the cause. But the one-off requests, over time, can be just as insidious.

How do you handle these requests to be removed from the list? This may surprise some of you, but, “Duh! We remove them!” isn’t always the right answer. Given that your donor file is so valuable, a well-thought-out strategy is needed for responding in a way that both honors the donor’s intent and safeguards your asset.

Have a policy — in writing — for handling requests
Depending on the size of your organization, one or many people may be responsible for processing requests to be removed from the mailing list. Everyone needs to know the policy, from the receptionist who answers the call to the CEO who gets buttonholed at a RotaryOpens in a new window meeting. Otherwise, you risk irregular responses that can cost you income — or worse, your reputation as an organization.

Listen
Often, “Take me off your mailing list” does not really mean “take me off completely.” There’s more behind that statement, but the donor doesn’t know your lingo so he or she resorts to a broad demand, knowing that it may be killing a fly with an Uzi but at least the job gets done. Dig a bit to learn the real problem. Does the donor dislike phone calls? Does he find your magazine too expensive or time-consuming to read? Does she dislike appeal letters because they make her feel guilty? Any of these — and many other conditions — can trigger the dreaded “Take me off your mailing list!” demand.

Be ready to offer options, if appropriate
When a person has smoke coming out her ears and flames out her mouth as she shouts, “Take me off your mailing list!” there’s only one thing to do — comply.  But short of that, your listening may uncover an alternative that is less drastic but still will solve the problem. Some possible options you can offer are newsletter-only, no phone calls, quarterly appeals only, year-end appeal only or no newsletters/magazines.

There is no standard list of options; you need to create the system that melds with your fundraising programs, meets the common kinds of issues your donors have and is logistically doable. Don’t create a plan that is so complex that it is impossible to successfully implement.

Be prepared to handle the angriest requests
Sometimes the best way to diffuse an irate person is to let him talk to “someone in authority.” When the receptionist or the donor services staff member feels it would be wise, have that person pass along a donor to talk to you. This not only sends an important message to the donor, but it also assures your staff that the fundraisers really care about the donors (and about them). Over time, that gives them more confidence to talk with donors and convince them that you’re not trying to exploit them, just share with them the full story of the work you do. Your passion can trickle down through your willingness to get in the trenches when the grenades are flying.

‘Turn the other cheek’
It’s not personal. Despite what is said on the phone call or in the letter or email, the person is not angry at you. A particular communication triggered her response — and it may not even have been one from your organization! She may have gotten into a discussion with a family member who said, “All charities are just out to fleece you,” or he read an exposé in the newspaper about other organizations and decided to lump you in with them. I’ve been torn from end to end a few times in my career and it hurts, but it really isn’t about me.

Here’s how I learned to respond to these barn burners: “Mrs. Smith, my name is Pamela, and I am personally removing you from our mailing list. You may get a few more letters from us because of lead time, but after that, you will not get our mail. You have been removed, and if you have any more concerns, you can call me, Pamela, directly and I will help you.” If it’s a phone call, try to smile as you speak. But always, whether it’s in an email reply or on the phone, give the donor assurance that you are doing as requested.

Make sure you cover all bases
You’re just asking for another irate phone call if you don’t put that donor name in a file that you use to purge any rented or exchanged lists in the future. While occasionally a once-angry donor will response to an acquisition mailing, too many others will consider the letter a personal betrayal. Personally, I don’t think it’s worth the $35 contribution you may get.

Last Sunday, a day this old dog still considers set aside for family and church, I received a phone call. It was a local community theater; I had attended one show there several months ago. Since then, the theater has called and emailed excessively. I have asked the folks there not to call, and a Sunday afternoon call was that proverbial straw that broke the camel’s back. I didn’t scream and rant (really!), but I did say, “Remove me completely from your list.”

It didn’t have to come to that. If only someone had listened to me earlier …

September 25, 2014
By Pamela Barden
Fundraising Success Magazine

What one word is key to keeping donors over the long term? I’ve got one! You?

December 13th, 2014 | No Comments | Posted in Fundraising

In a recent post about building donor loyalty I promised to reveal my personal #1 SECRET – the one principle that makes the greatest difference to long-term, sustainable fundraising success.

I’m going to share that principle here; then I’m going to turn this principle into a word – actually three variations of the same word – that you can use to transform the way you’ve been doing business.

Are you ready?

Okay. Don’t just shine this on. I promise that if you give this some serious thought it will make some serious difference in your results. At first, it may seem like just a little tweak. But little tweaks can soon become second nature — from whence great changes can arise.  So… get out your tweaking sticks and let’s make some beautiful music together.

DRUMROLL…

The principle that will change your life, should you choose to embrace it, is…

EMPATHY.

Let me explain. Because it’s real usefulness lies in how you apply it on a daily basis. And I’ll explain to you fully how I use it to build lasting donor relationships.

Here is the BIG SECRET:

Feel, Felt, Found

Hugh MacLeod Empathy 300x235 The Big Secret – One Word – to Transform Donor LoyaltyOvercome objections with empathy.

I understand is your greatest friend. Not all prospects immediately agree to commit. Agree with them. Say I understand exactly how you feel, and… I’ve felt that way myself… and what I’ve often found is…”

 

  • Feel:    When you use the word “feel” you show them you heard them. You feel for them. You feel their pain.
  • Felt:    When you use the word “felt” you empathize with them by drawing on a similar experience in your life.
  • Found:When you use the word “found” you show them another path by returning the conversation to the need; to your heart, and theirs. If they feel they can’t commit, find out why. Then, gently reframe the conversation to potentially show them ways they might be able to participate. Ways you’vefound to deal with a similar situation.

Here’s are a few examples:

I have two kids in college/am supporting parents/have medical expenses.

Wow, I really feel for you. It looks like you do have a full plate. We appreciate what you’ve been doing. I understand if the amount I’ve requested for this special effort is not manageable right now. Honestly, I get it. I’ve felt similarly (explain some of your additional expenses right now). Yet, even so, I’ve made an increased gift this year. Why? Because I believe our community really needs an institution like [your organization], especially to help folks with these very types of expenses. I’ve foundI can do this (maybe at a bit lower level than I’d like), and that I feel good about it because our community needs a resource like this one. One we can all rely on, in good times and bad (You are inviting investment by example).

My giving priorities have changed/I gave to the ____ Crisis Appeal.

I understand. ________ is a really worthwhile cause and it’s wonderful that you lent your support. I can see how you feel the way you do. I felt that way too. Then I found out that [your organization] actually has a number of programs of which I was not aware – programs that are also here for people during times of crisis (describe the program or programs). I found that it made a lot of sense to give a thoughtful gift to the crisis appeal, and to also give a passionate gift here, in our own backyard. People need help everywhere, of course. Yet I know you’ve been a long-time supporter here and I hope we can continue to count on your caring and leadership support. It truly means a lot!

I’m not feeling positive about the [your organization] leadership.

I can understand how you feel uncertainty while we go through a leadership transition. I’ve felt that way too in the past. But then I found that what I really cared about is the role this organization plays, which goes well beyond any one person at any one point in time. I would hope you still support the mission and the important work [your organization] achieves in our community. Leadership may come and go, but we all want to assure that our organization will always be here for people who rely on us.

Empathy is Not a Trick.

You must be genuine. You must truly listen and be open. You can’t downplay how your donor is feeling in any given moment. You can’t tell them not to feel that way. What you can do is offer a listening ear, a supportive shoulder and an alternative perspective. Sometimes they’re ready and willing to embrace a new point of view. Sometimes not.

Though you may not always get the response you want today, tomorrow always comes. When it does, your donor will remember you were there for them.

SEPTEMBER 9, 2014
By Claire Axelrad

Year-End Giving…a Mystery and Paradox

December 12th, 2014 | No Comments | Posted in Fundraising
It is a given in the advancement world that year-end is our busiest time of year.  You make or break your annual giving budget by what is given the last six weeks of the year.
I have always found this phenomenon to be a bit of a mystery and paradox.  Let’s examine why there is more giving at year-end.
Tax deduction:  Giving before the end of the year to get tax benefits is probably the most common explanation for year-end giving, but is the least plausible reason.  A gift given on February 2 will be just as deductible as the gift made on December 31st.   This presumes the donor itemizes his/her taxes, which less than 40% of tax payers do. (See state by state breakdown)  Though the higher your tax bracket (and wealth) the more likely you itemize.  It is also well known that studies indicate tax benefits usually rank around 7th in terms of donor giving motivation.
Season of giving / religion: The holiday season has become synonymous with giving gifts to loved ones as well as to the less fortunate; as it has become synonymous with conspicuous retail consumption.  When I was working in the early days of food banking the joke was that the public remembered people were hungry only during the holidays, with money and offers from volunteers poured in. After the new-year it was back to business as usual.
Guilt:  Let’s face it, if you are spending all this money on gifts for relatives and loved ones, the least you can do is help out a charity and the people they serve.
More asking:  Which came first the chick or the egg? Are we asking more at year-end because people give more then, or are people giving more at year-end because we ask more often?  Our efforts are also supported by more television and social media promotion of charitable giving. I have also noticed of late that there are more cause-marketing campaigns supported by corporations that spend millions to promote cause campaigns that will raise fewer millions to support benefiting charities.  And most recently, there is now a proliferation of crowd funding websites that provide vehicles for online giving for charities, the needs of individuals and for entrepreneurs seeking capital.
Giving Tuesday: I single out Giving Tuesday, a growing movement and awareness started by the 92nd Street Y (full disclosure, a client of Rising Tide Direct) that promotes online charitable giving the Tuesday after Thanksgiving.  Giving Tuesday follows Cyber Monday and Black Friday.  There is not yet evidence that this worthy effort actually increases net philanthropic giving, but it does further concentrate giving at year-end.
Habit:  All of the above have helped to create giving habits in millions of donors.  As we all know, charitable giving is a habit we want to encourage and provide opportunities to nurture.
The paradox for me is that the availability of disposable cash in the pocketbooks of individuals, with which to make contributions, is at its lowest in December and when credit card bills arrive in January.  While there are exceptions for those who still get year-end bonuses and have ample disposable income, you would think that people would have more money to contribute in the spring and summer when those tax refunds arrive.
Your takes:
1.   Determine what motivates your donors to give to your organization, and try to work it into the year-end donor mindset.
2.   Does it make sense for your organization, given the nature of its work, to try and build giving habits with your donors to give at times other than year-end?
3.   Reach out to your higher net worth donors and make the case that their year-round giving is important to your organization.
Sunday, November 30, 2014
By Copley Raff