Nonprofit Board: Fundraising Best Practices

2019 Edition

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Nonprofit Board Fundraising:

Best Practices and Ethics

Gregory Nielsen

President and CEO

www.nielsenconsults.com

Email: gregory@nielsenconsults.comTwitter: @gregory_nielsen

INTRODUCTION

MISSION: Nielsen Training & Consulting, LLC

offers custom training and consulting services

that empower nonprofit organizations to translate

vision into reality.

AGENDA

● The Giving Landscape

● Board’s Role in Fundraising

● The Board/Staff Partnership

● Ethics and Fundraising

● Strategies for Board oversight and measuring

fundraising effectiveness

FUNDRAISING

● “Fundraising is the gentle art of teaching the

joy of giving.”○ Henry Rosso, Founder, Center on Philanthropy

GIVING USA 2017 HIGHLIGHTS

● $410 billion

● 5.2%

● $1,165 per capita and $2,271 per household

● All 4 sources of giving increased:○ Individual

○ Foundation

○ Bequest

○ Corporate

CONTRIBUTIONS BY SOURCE

WHAT LAWS GOVERN?

● State nonprofit corporation statute

● IRS requirements for tax-exempt entities

● Grant/funder requirements

● Professional Codes of Ethics

EXISTING ENTITIES

ETHICS AND ACCOUNTABILITY

● Gift acceptance policy

● Who will you take money from?

● Who will you not take money from?

KEY ROLES OF THE BOARD

● Set organizational direction

● Provide oversight

● Ensure adequate resources

BOARD RATINGS

Source: BoardSource.org, 2016

BOARD/CEO/DEVELOPMENT TEAM

Source: BoardSource

Source: BoardSource

DEFINE THE CHALLENGES

STARTING POINT: BOARD GIVING

● Demonstrates personal commitment

● Encourages other funders to give

● Creates board member “ownership”

BOARD RESPONSIBILITIES

● Define or clarify the mission

● Support organizational sustainability

● Identify strong leadership

● Approve adequate budgets

● Plan for the future of the organization

● Understand the fundraising plan

● Participate in the fundraising process

● Be accountable

BOARD RESPONSIBILITIES

● Make personal contributions

● Identify, evaluate, and cultivate prospects

● Attend face-to-face solicitations

● Write appeal letters

● Organize and attend special events

● Thank donors

DEVELOPMENT COMMITTEE ROLE

● Develop policies for gift solicitation,

acceptance, and recognition

● Ensure strong case for support

● Set goals and monitor strategies

● Understand environmental factors

● Motivate and involve all Board members

DEVELOPMENT COMMITTEE ROLE

● Provide information about prospects

● Develop and enforce Board giving

expectations

● Solicit gifts

● Actively participate in fundraising events

● Monitor performance and accountability

CEO ROLE

● Develop long-term fundraising strategy with

Board and development staff

● Organize and execute fundraising programs

● Develop relationships with funders

● Coordinate visits by staff and board

● Plan and oversee donor recognition and

cultivation

● Design promotional materials for fundraising

STAGES OF FUNDRAISING

Cultivation

CULTIVATION

● Provide names

● Make contact

● Give a tour

● Share the history and mission

● Host “friendraisers”

SOLICITATION

● Personal notes

● Invite friends and colleagues

● Focus on results, not needs

● What would the community look like without

_________?

STEWARDSHIP

● Thank you!

● Donor recognition opportunities

● Updates

7 FACES OF PHILANTHROPY

Source: BoardSource

WHY PEOPLE DON’T GIVE

● Solicitation is infrequent or poorly communicated

● They don’t see how their gift would make a difference

● They never feel wanted or needed

● They receive no direct, personalized appeal

● They gave an unacknowledged gift in the past

● They were not asked to give

● The timing wasn’t right

● The organization’s mission was not compelling

ETHICS AND FUNDRAISING

● Practices that demonstrate accountability and

respect for donors include:○ Sending timely gift acknowledgements

○ Respecting restrictions on donors’ gifts

○ Disclosing to the public what the law requires

○ Providing timely reports to foundations, and/or

government funding sources, as applicable

○ Listing donors on a nonprofits’ website in the manner

in which the donor would like to be acknowledged

FUNDRAISING

● IRS Guidance:

○ Accurate, truthful, and candid solicitation materials

○ Reasonable fundraising costs

○ Information about fundraising costs and practices

provided to donors

○ Schedules G and M of 990 require information about

fundraising expenses, revenues, and activities

FUNDRAISING - PUBLIC

DISCLOSURE

● IRS Guidance: Must make available for public inspection:

○ Exemption Application

○ Form 990

○ Business Income Return (if any)

FUNDRAISING - PRIVATE

INFORMATION

● Planning documents

● Executive session minutes

● Donor names (if anonymity requested)

● Personal addresses of Board members

● Personnel files

● Patient and client information

FUNDRAISING

● Common ethical traps in fundraising:

○ Can fundraisers be compensated based on a

percentage of contributions?

○ Can fundraisers accept a finder’s fee based on

bringing new donors to the organization?

○ What information must be disclosed to donors?

○ Can monies from a restricted gift be used for another

charitable purpose of the organization?

○ How to handle contributions with questionable

associations?

RECENT CASE

● VietNow: Veterans Helping Veterans:

○ Raised close to $2 million, largely through

telemarketers

○ Paid more than 88% of that money to

telemarketers

○ Spend less than 4% on programs for

veterans

FUNDRAISING BEST PRACTICES

● Fundraising communications should include clear,

accurate, honest information about the organization, its

activities and the intended use of funds being solicited.

● Written plan and appropriate policies regarding

stewardship of donors

● Balance publicly recognizing charitable contributions and

maintaining donor confidentiality

● Do not share or trade donor names with others unless

given permission by the donor

DONOR BILL OF RIGHTS

*Developed by AFP*

● To be informed of the organization's mission, of the way the

organization intends to use donated resources, and of its capacity to

use donations effectively for their intended purposes.

● To be informed of the identity of those serving on the organization's

governing board, and to expect the board to exercise prudent

judgment in its stewardship responsibilities.

● To have access to the organization's most recent financial

statements.

● To be assured their gifts will be used for the purposes for which they

were given.

● To receive appropriate acknowledgement and recognition.

DONOR BILL OF RIGHTS

*Developed by AFP*

● To be assured that information about their donation is handled with

respect and with confidentiality to the extent provided by law.

● To expect that all relationships with individuals representing

organizations of interest to the donor will be professional in nature.

● To be informed whether those seeking donations are volunteers,

employees of the organization or hired solicitors.

● To have the opportunity for their names to be deleted from mailing

lists that an organization may intend to share.

● To feel free to ask questions when making a donation and to receive

prompt, truthful and forthright answers.

Source: BoardSource

HOT TOPICS

● Tax Cuts and Jobs Act of 2017

● Donor Advised Funds

SECRETS OF SUCCESS

● To succeed in fundraising, you must know five

things:○ The mission of the organization

○ The goals of the organization

○ The dream

○ How to manage fear and rejection

■ Most importantly….

● HOW TO LISTEN

MEANINGFUL MESSAGE

● What it is:○ Your “why”

○ Unique to you

○ What makes you light up

● What it is NOT:○ Elevator pitch

○ Same for everyone

○ Regurgitation of mission and strategic plan

PARTING TIPS

● Like volleyball, we are all in, and everyone has

a role

● Focus on relationships, not soliciting

● Discuss progress at every meeting

● The importance of teams

● Celebrate progress together

QUESTIONS?

THANK YOU!

The information contained in this presentation has been prepared by Gregory Nielsen

and is not intended to constitute legal advice. Gregory Nielsen has used

reasonable efforts in collecting, preparing, and providing this information, but

does not guarantee its accuracy, completeness, adequacy, or currency. The

publication and distribution of this presentation are not intended to create, and

receipt does not constitute, an attorney-client relationship. Reproduction of this presentation is expressly prohibited.

Gregory Nielsen

gregory@nielsenconsults.com

www.nielsenconsults.com

Twitter: @gregory_nielsen

Phone: (502) 472-5367