Will Percentage-Based Fundraising Be Banned?

Friends,

Last week, the Association of Fundraising Professionals (AFP) called on Congress to ban percentage-based fundraising. This came in the wake of recent revelations that several veterans charities fundraising costs far exceed acceptable standards and that only a pittance of their contributed revenues go to their intended beneficiaries (contained within my blog on December 13). In a December 18th press release, CEO Paulette Maehara says:

If you examine the charities that have extremely high fundraising costs, including several of the groups highlighted during the hearing, you’ll almost always find that these organizations pay their fundraising firms on a percentage basis. The one single reform proposal that would make the most difference in stopping fraud and strengthening public trust in the charitable sector would be for Congress to ban percentage-based fundraising.

The release also states that AFP has developed a position paper on why percentage-based fundraising is unethical, which it summarizes in the release:

• charitable mission becomes secondary to personal gain
• donor trust can be unalterably damaged
• there is incentive for self-dealing to prevail over donors' best interests
• the very philanthropic values on which the voluntary sector is based are undermined.

Within public broadcasting, the topic of commissions periodically rears its head. It's a bit of a paradox because technically, "underwriting," which is the industry's form of advertising, is a contribution rather than promotional consideration. The Federal Communications Commission specifically prohibits advertising for non-commercial stations, so underwriting is technically recognition for contributions. A large number of public broadcasting stations, while conforming scrupulously to the limitations of what is permitted on-air for underwriting announcements, often regard the process of securing underwriting to be "sales." They form sales departments, often staffed by trained salespeople who work on some form of commission or bonus that is based on a percentage of the "contributions" they generate.

A couple of years ago, during one of the periodic discussions about the topic in public broadcasting, a colleague posted on a listserv:

Regarding commissions: I think the reality of the situation is that underwriting isn't really fundraising, and hasn't been for the past 15 years. It is sales of airtime, condoned by the FCC and the IRS with favorable tax consequences, but, well, if it looks like a duck... So, the AFP code should and does apply to membership fundraising, capital campaigns, etc., but to apply it to underwriting puts our salespeople at a real disadvantage in the marketplace.

I didn't agree then, and I don't agree now. One of the worst case scenarios that I have seen arise from this mindset was with a client of ours in a capital campaign. An underwriting salesperson had a solid relationship with the prominent head of a business that underwrote Nova on the public television station. The underwriting rep was asked to open the door for the station's CEO and development director to engage in a conversation about the capital campaign. The rep stonewalled and demanded a commission should the donor make a gift to the campaign. His argument was that the capital campaign gift was likely to erode the donor's underwriting support (the donor did make a gift to the campaign and the station gave the rep a "bonus").

I've shared my thoughts before on percentage-based compensation (see November 6 blog), and I have expressed my concerns over the declining credibility of nonprofits in the eyes of donors. While I'm skeptical that Congress will ever ban commissions in fundraising, I think that state charity boards can provide more oversight, and I think that it's time for the public broadcasting industry as a whole engage in a discussion over the inherent contradiction of calling advertising underwriting and then selling on-air announcements as commissionable contributions.

Talk to you soon!

Bob

The Leader of the Band is Tired

Friends,

Three people who touched a part of my life recently died.

My wife and I met Allan Bérubé, a MacArthur Award-winning independent scholar, in Liberty, New York when we dropped our daughter off at the legendary (and decrepit) Catskills performing arts camp, Stage Door Manor. He was running a lovely B&B with his partner, and we had decided to explore the region and the ghost towns of Borscht Belt resorts. Allan fascinated us with his stories and anecdotes, particularly those that related to his book and subsequent PBS documentary, Coming Out Under Fire, about the difficult and sometimes accommodating relationship between the U.S. military and gays in World War II, published in 1990. His obituary came as a shock to me and is well worth reading. We were in Liberty when Allan and a team of his friends were using a crane to position the recently relocated Munson Diner--a vintage chrome relic about to be demolished--from Hell's Kitchen in NYC. After several years of restoration work, the diner opened in Liberty just one month ago.

Just today I read Dan Fogelberg's obituary. Dying at the young age of 56, Fogelberg was a gentle balladeer, whose album Souvenirs seduced me away from listening almost exclusively to the Grateful Dead (this was over thirty years ago), particularly with its Zen-inspired song Part of the Plan. While most of his music has never been on my top 100 play-list, listening to him has always cheered me up and given me a sense of inner peace. I will miss him.

A couple of weeks ago I saw that the guru of subscriptions, Danny Newman, had died. To most, his life and death may be an overlooked footnote, but for anyone in performing arts management and marketing, he was a legend. His book, Subscribe Now! Building Arts Audiences Through Dynamic Subscription Promotion was a well-thumbed resource on all of our bookshelves. Very practical and simple, his book helped to fuel an explosion in performing arts subscriptions in the seventies and eighties (I once had the opportunity to attend a master class of his). Even today, his advice is followed, though box office sales techniques have evolved significantly since he began his quest. Indefatigable and bursting with enthusiasm, Danny Newman had an almost naive Horatio Alger personality. According to his wife (as quoted in his New York Times obituary), "even during his final illness he was often ready with one of his famous trademark expressions: 'We’ll get out of this mess yet.'"

Talk to you soon!

Bob

Hello It's Me--Linking In and Facing Out

Friends,

The Third Sector, "the UK’s leading publication for everyone who needs to know what’s going on in the voluntary and not-for-profit sector," reports that a new social networking web system for nonprofits will be coming on-line soon. Entitled MyCharityPage, it will provide nonprofits (and maybe donors) with the ability to create their own pages describing their activities, and, like Facebook and MySpace, users will be able to create their own blogs, share videos and photos, etc.

I've signed up for their waiting list, and though it seems to be a UK thing right now, can a US version be far behind? Naturally, there will be plenty of opportunities for retailers to glom onto some of the online action. Already named are Currys, Marks & Spencer and Body Shop. As you may know from my last entry (Point of Purchase Charity Comes Under Fire), I take a dim view of businesses co-opting charitable causes.

I'm fascinated, however, by the phenomenon of social networks as being played out in two of the most popular versions, Facebook and Linkedin, both of which I joined some time back but have only now been exponentially expanding my universe of friends and contacts. It's difficult not to be pulled into the Vegas-like distractions of Facebook. Everywhere you look there's some new action, game, "funwall" posting of a friend, contest, YouTube video with people beckoning you to join in the fun (interestingly, The Third Sector also reports on a health organization in the UK that has chastised Facebook for trivializing mental disorders by allowing a light-hearted "mental health exam" to be offered throughout their network).

Linkedin is far more austere and business-like. But there's little or no action--Facebook plays into our collective ADD with all of its neon-charged commotion, and Linkedin seems pretty boring. I'm still unsure what advantages there are to being connected on these sites(though my kids tell me that it's indispensable to them) , or how much revenue they generate, but its catching on among my friends and colleagues, who seem equally perplexed as I am why we find ourselves being invited to participate in movie trivia contests or download Vampires applications.

Talk to you soon!

Bob

Point of Purchase Charity Comes Under Fire

Friends,

A story in today's New York Times reports that while the trend of building donations into the cost of retail items has escalated, it has led to a host of worries about the accountability of those dollars. With very little transparency and often just the word of the retailers that the funds will find their way to the nonprofits, many observers and analysts feel that the lack of regulation, along with no registration requirements by state charity boards, makes it likely that consumers will be scammed. In some cases, the charities are unaware of products carrying their logos or that money is due them from the sale of items.

I have always been uneasy about retailers co-opting the good will generated by nonprofits. For me, philanthropy is a thoughtful act--as a fundraising professional I believe that we are in the business of helping people to make intelligent decisions on where to direct their charitable dollars. As the article noted, giving at the cash register is somewhat coercive. Worst of all, I fear that this is yet another burgeoning scandal that erodes donor confidence in the management of nonprofits.

For several years, corporations have been enamored of "cause-related marketing." While I have some friends in the nonprofit community who work in this area, here too I have my misgivings and question the motives of companies when they align their public image with high profile charities. I have also found that corporate "philanthropy" (where I gained some of my earliest chops as a fundraiser at the Hartford Stage Company during the era of big giving by United Technologies, Aetna, The Hartford, and The Travelers) carries big strings for the nonprofit. At a time when only 4.3% of all philanthropic dollars come from corporations, declining by nearly 7% from the previous year (Giving USA 2006), I am convinced that nonprofits must redouble their efforts in the growth areas of fundraising--individual gifts, bequests, and foundation support.

While composing this blog, I noticed a new article in the Washington Post about a study by the American Institute of Philanthropy that reveals how eight veterans charities, including some of the nation's largest, have given less than one third of the monies they raised for veterans and the wounded. One "group passed along 1 cent for every dollar raised... Another paid its founder and his wife a combined $540,000 in compensation and benefits last year." I'm sure that we'll be reading a great deal more about scandals in nonprofit land over the next several months

Obviously, we continue to advise our clients to maintain strict policies of transparency.

Talk to you soon!

Bob

Social Capital Redux--Analyzed

Friends,

My good friend and colleague Mark Laskowski posted an absorbing observation on his blog today about Robert D. Putnam's recent article (you SHOULD know Putnam from his important work, Bowling Alone, which revived the theory of social capital and placed it into a latter day context). The most interesting point (for me) of the blog was his report that a wide schism has grown between two different camps over the correctness--political or otherwise--of Putnam's somewhat controversial statements to the point that ethnic diversity temporarily "reduces social solidarity and social capital." Of particular interest is the fact that most of the rank and file have lined up either for or against Putman without having read his article.

Laskowski's blog points out the intellectual sluggishness of people who are all too willing to have avatars of their adopted beliefs (or shared delusional systems) mediate for them the philosophical constructs of their lives. It's far easier to listen to a pundit deride someone's writings than to engage in one's own critical inquiry.

Having just returned from an all-too-brief holiday in Spain, I found myself perplexed about how the EU is going to survive the low birthrate of its indigenous population while weathering the advancing growth of immigrants. Europe is far more grounded in historical values and grudges than the USA (where we're certainly dealing with our own debate over immigration) and each of its countries is struggling to define policy that conforms to EU multi-cultural standards while safeguarding the status quo. In my discussions with Europeans now and over the years, I have found that they are as prone as the rest of us to accept the views of their pundits than to seek their own meaning.

Mark's blog reminds me that my own writings can easily persuade and influence others. Obviously this is both desired and unavoidable. However, I hope that whatever else may come from this blog, readers will understand that my personal ethos is about independent thinking. While Dorothy Parker said "you can lead a whore to culture, but you can't make her think, " I'm less cynical and feel that the current tools of our trade promise more engagement and debate.

Talk to you soon!

Bob

Donors Want Accountability

Friends,

Monday's Chronicle of Philanthropy Daily Update reported that the Financial Times posted an article discussing the fact that donors are now expecting considerably more accountability from the nonprofits they support. The article quotes Stuart Danforth, an investment consultant in Boston:

“Strategic philanthropy is broadening from the corporate realm to the personal realm. It’s about individuals being more strategic in their giving –- they’re not just giving money to a good cause, they’re trying to effect change for a reason.”

There are many reasons why this is happening—some covered by the article, others not. Largely, business professionals are accustomed to seeing tangible, measurable benefits from investments. Also, entrepreneurs want to play a greater advisory (even supervisory) role in how dollars are used strategically. Younger people, too, want to have a greater hands-on role in the nonprofits they support, and far more donors are cognizant of scandals affecting charities (see last week's MajorGiving: The Blog).

I also think that smaller nonprofits are suffering because they lack sophisticated oversight by their grass-roots boards. In my own town of Winchester, Virginia, several groups immediately come to mind—organizations that live hand-to-mouth and would crumble under wide-spread donor scrutiny. I don't claim to have immediate solutions for these small groups—but historically, they often fold and are replaced by something similar. For the groups I do work with, there are some important lessons to be learned:

1. Transparency—if you don't make your financials and activities truly transparent in an easily accessible way (i.e. Your website), donors might suspect you're hiding something.

2. Education—if what your organization does falls out of the pale of understanding of the general public (I think of the cutting edge theater whose board I sit on), then you must demonstrate in more complex ways how your programs provide an otherwise unserved need to your community. Perhaps, too, as is the case of this theater, you must work overtime to show that what you do has an impact on the region's livability and desirability as a destination.

3. Board Development—all too often this is ignored. It's one of the most important roles of the CEO (some say the most important). Boards are there not just to raise money but to provide invaluable expertise in fiduciary matters and to serve as community barometers. I can't tell you how many organizations I've worked with that don't have board orientations, handbooks, or clear succession plans.

These are just a few thoughts that come immediately to mind. This is a very large issue that is going to consume the time of many people like myself who worry about the future of the Nonprofit Enterprise.

Talk to you soon!

Bob

Alms for The Alhambra?

While visiting The Alhambra in Granada this past Friday, I was struck by the lack of any collection boxes. And I found no literature reminding people that the cost of operations far exceeds the revenue they receive from the price of admission (€10); nor were there wall plaques at this world-wonder listing its generous donors. When I joined up with my friend and frequent travel companion Marino on Saturday and shared my observation, he commented that there is plenty of philanthropy in Europe by corporations but individual giving is rather minimal. Of course, like the U.S., corporate giving is likely to decline at the culmination of mergers and consolidations which will be the ultimate outcome of the EU countries' rapid move to American-style capitalism. Ultimately, important places like The Alhambra, because of their world status, will receive the lion's share of corporate support (maybe even naming rights—The BP Alhambra, The Nestle Acropolis), while smaller NGOs might languish as their tax-based funding evaporates.

Political advertising in Spain calls for the lowering of taxes, which is understandable but also likely to impoverish NGOs. While some European countries are slowly moving towards some form of philanthropy, it's slow going. Even the Picasso Museum of Malaga—a splendid new facility in the artist's home town shows no signs of fundraising activity. Nearby, the city's 16^th century cathedral bucks the local trend and requests a “contribution” in the form of admission. Marino tells me that the Church has been forced to resort to this because it no longer receives government subsidies.

Talk to you soon!

Bob

Scandals and Hacker Worries in Fundraising Land

Friends,

Another scandal hit the American Red Cross. According to an article in today's New York Times, "the American Red Cross ousted its president, Mark Everson, on Tuesday after learning that he had engaged in a 'personal relationship' with a subordinate employee." For me, the juicy part was not in the salacious details (pretty cliché, though no info was provided), but that Mr. Everson was most recently Commissioner of the Internal Revenue (naturally, a Bush appointee). As much fun as this is, it's also devastating news for an organization that has ricocheted between scandals and has lost much donor trust.

I have been fascinated by the hubris demonstrated by leaders of large national philanthropies--United Way of America, Smithsonian Institution, and the American Red Cross, just to name a few where it has been customary to recruit CEOs from outside of the nonprofit community. I don't think we are doing enough within the nonprofit sector to convey to our boards that, while leadership and business management skills are essential qualities to look for in a CEO, they are subordinate to scrupulous attention to the institution's mission. Too many board members have read Good to Great without reading Jim Collins's accompanying monograph Good to Great and the Social Sectors, where he draws clear distinctions between what constitute leadership qualities in the public and private sectors. He even goes so far to say that the for-profit world would benefit from recruiting non-profit professionals who have perfected their "legislative leadership."

At a time when nonprofits are facing greater skepticism and doubt, the online fundraising world has been rattled by news that one of its largest service providers, Convio, was the victim of hacking that compromised the security and gained access to the email addresses of thousands of donors to 92 nonprofits. A New York Times article points out that most of the affected charities responded sluggishly to the news, and when they did something, it was in the form of an email notification. The article quotes experts on security who feel that the nonprofits need to do much more to notify donors and alert the public to such breaches including utilizing traditional media. Of course, most nonprofits shy away from such adverse publicity despite the fact that donors care deeply about transparency.

On a personal note, my alma mater, University of Connecticut, notified me on November 6th (one day after the breach) about the issue. The Times article doesn't identify them as one of the four nonprofits that had communicated the breach to their donors by November 16th, but UCONN sent an email (interestingly enough, "powered by Convio") that included a link to their foundation website which goes into great detail about the incident and has a very good FAQ section. I'm proud of UCONN's rapid response and feel that they are doing everything they can to keep donors up to date.

What this bodes for on-line giving remains an interesting question. While I have given online in the past, I generally enjoy the tactile pleasure of writing checks for my charitable donations. I'm probably more gun-shy now about making on-line gifts and suspect that it will take more effort on the part of nonprofits (and Convio) to demonstrate to me and other donors that it's safe.

Talk to you soon!

Bob

Do People in a Parallell Universe Make Charitable Gifts?

Friends,

I read a fascinating little snippet on the DNA Genetics website about astronomers finding a huge void in the universe. Apparently, the hole is a "billion light years across, which is roughly 10,000 times as large as our galaxy or 400 times the distance to Andromeda, the closest 'large' galaxy."

University of North Carolina at Chapel Hill physics Professor Laura Mersini-Houghton says, “standard cosmology cannot explain such a giant cosmic hole” and goes further with the ground-breaking hypothesis that the huge void is “… the unmistakable imprint of another universe beyond the edge of our own“.

I'm a moderate fan of scifi and my favorite stories (dating back to the original Star Trek) are those that relate to parallel universes. Most of them are cheesy little fantasies of meeting alternative versions of the same characters, sometimes very savage.

This led me to wonder whether fundraising is necessary in a parallel world or whether all needs are taken care of and there's no suffering. In this parallel world will the arts and public broadcasting thrive because there are enough public dollars to go around? Or maybe money is unnecessary and never even existed.

Talk to you soon!

Bob

Innovation Redux

Friends,

At the TCG Fall Forum, Peter Gelb, CEO of the Metropolitan Opera, in the event's keynote, demonstrated the extent to which the Met is willing to innovate and cultivate new audiences. In addition to showing us gorgeous footage from recent productions, he talked about how he was hired with the purpose of kicking up a lot of dust, changing old paradigms, and building a strategy of new audience development while maintaining stability with the current audience. Largely he has been successful, and not just because he has found new efficiencies in management, but because he has made opera exciting. He has taken opera to the streets--free large-screen broadcasts in Times Square (opening night of Madame Butterfly), introduced $20 rush orchestra tickets and broadcast live performances to movie screens around the world. He's brought directors from the theater world to stage operas, and he even recruited design celeb Isaac Mizrahi to create the costumes for Orfeo ed Euridice.

What has resulted is a revitalized Met. According to Bloomberg.com,

Sales during the 2006-07 season rose 7.1 percent to 810,225, said Gelb, who succeeded Joseph Volpe in August. In all, the Met sold 83.9 percent of tickets offered for its 3,800- seat opera house at Manhattan's Lincoln Center compared with 76.8 percent last season.

But, more importantly, Gelb has succeeded in ridding the Met of its stuffy image, has brought opera to the masses and, in a stroke of marketing genius designed to draw a more traditional theater crowd, ran a marketing slogan that exlaims "Great Opera is Great Theatre."

My favorite lines of his from the conference:

"The average age of our our audience five years ago was 60. The average age today is 65."

And, when describing the stilted qualities of most of the famous guest stars before his reign, "the perception was that they just came to park and bark"

Talk to you soon!

Bob

Philanthropy is Voluntary

Friends,

Just yesterday a discussion ensued on a public radio listserv about whether or not stations should require employees to contribute to the organization. Overwhelmingly the response was negative, though I noticed that many of the people posting said that their station encouraged employee contributions and even provided for payroll deduction.

I agree that employee giving is a good thing, but I'm a bit unsettled by the notion of making it compulsory or coercive. I have seen a lot of push back from employees of nonprofits, many of whom feel that the lower salaries they generally earn constitute some form of "involuntary" philanthropy. While I think that's a fallacious argument--after all, no one is forcing them to work there for less money--I also disagree with the classic nonprofit mindset that says "if we can demonstrate 100% employee contributions, it will speak volumes to our prospective major donors." I have never had a donor conversation where one of the key talking points was that every employee was a contributor. I don't think donors really care about this or that it's an especially compelling point to make. Sure, it's nice, but what major donors and foundations want to see is how generously the board supports the organization.

Sadly, in public broadcasting many boards evolved where the ethos of giving was never enculturated. We should be striving for full board giving first. If you have ever applied for a Kresge grant, you'll remember that they place primary emphasis on your board and want documentation showing that each member has stepped forward.

Talk to you soon!

Bob

Cultivating Innovation

Friends,

Are we doing enough to fund innovation in the arts?

Last weekend I attended a conference in New York City held by the Theatre Communications Group (TCG), which is the nation's service organization for nonprofit professional theater. Called the TCG Fall Forum, this annual event brings together board members, artistic directors, managers and senior staff from theaters around the country. As a trustee of a fabulous professional theater, Contemporary American Theater Festival (CATF) in Shepherdstown, West Virginia, I find it essential to attend these meetings, both to learn what other theaters and their trustees are doing to stimulate ticket and contributed income, and to gain inspiration from artists. Last year's Fall Forum fulfilled the latter, and we were privileged to hear from the Public Theatre's Oskar Eustis, dancer and choreographer Liz Lerman, and from Ed Waterstreet (in a beautifully interpreted sign language presentation) of Deaf West Theatre. This year was more cut and dry, as the main discussion was about how to fund innovation.

While the presentations were somewhat rudimentary, what I gained from them was an awareness of how most theaters are risk averse and nervous about aging audiences and how the traditional subscription model may no longer be the most effective marketing strategy. One manager suggested that we consider eliminating subscriptions and marketing departments altogether and sell individual tickets for $20.

CATF is a very daring theater, but we are facing the same challenges of filling seats and generating contributed income. Innovation and cutting-edge theater is risky, but I cannot imagine serving as a trustee of a theater that plays it safe. The other night we approved the budget. As a member of the finance committee, I can say that we asked the staff to make some very tough decisions to ensure that the spreadsheet balanced. I'm concerned that we aren't investing enough in artistic growth. Because we are in a capital campaign for a new performance space, we cannot project unrestricted contributions the way we would like. On the positive side, once our campaign is complete, our fundraising efforts for unrestricted gifts can be redoubled and we should be able to invest in artistic growth and innovation.

I'll have more to say soon about innovation, as I am concerned that public broadcasting is not investing enough in this area.

Talk to you soon!

Bob

Cover Bands?

Friends,

There's an amusing story in the Sydney Morning Herald about how cover bands are necessary but much reviled in the music scene. Artists performing original works are extended a much higher status than those who play tried and true favorites. The punchline of the article is that symphony orchestras and opera companies are just that--cover bands. And, in Australia at least, they consume a disproportionate amount of state arts funding. According to the author, it's a rare new work that ever gets produced, as classical music audiences seem to prefer the safe and the familiar.

In the U.S., where federal spending of $124 million (down from a high of $175 million in 1992) represents less than 1% of total arts philanthropy, the National Endowment for the Arts distributes most of its money to safe choices, largely due to the backlash against their funding more controversial work in the 1980s.

Traveling this fall, when I have come across public radio stations offering classical music, it's usually been from the canon of our favorite seventeenth, eighteenth and nineteenth century dead white composers, with a rare twentieth century piece (Copland, Bartok, Mahler, Gershwin), and an occasional piece by a living composer (Philip Glass). For many of those stations, it's cheaper and more efficient to carry American Public Media's excellent syndicated service Classical 24, which offers a good mix of classical music that mainly plays it safe.

In the U.S. we are rarely exposed to the leading edge of orchestral music (after all, symphony orchestras around the country are "swimming in debt and hemorrhaging audiences," to paraphrase an article in Crosscut Seattle), but I find that public radio pledge drives are the least convincing when they talk about classical music. Maybe livening up the format and playing more than "cover bands" won't bring in larger fundraising revenues, but it might validate the fact that the small amount of federal funding public radio receives is for "community service." And I believe that communities are better served through greater artistic risk.

Talk to you soon!

Bob

Aloha Oy!--More on Percentage-Based Compensation

Friends,

I'm in Honolulu visiting our client Hawaii Public Radio. It's a whirlwind trip--Sunday-Tuesday, and an all-day journey back on Wednesday. At best I had part of a rainy day to see a little bit of the place (my first visit to the state). The balance of the time is all work.

More rain! I'm touched by the concern everyone here has for me. People take it personally that it has been raining since I arrived. I have assured them that I'm fine with it. After all, as a major giving consultant, I'm something of a rainmaker.

Last night I spoke to the Hawaii Public Radio board about capital campaigns. Interestingly, as my brother Rick said in his comment on my last post, it's not unusual for board members to raise the question of percentage-based compensation. This was the case last night. After explaining the AFP line to the group, I also asked, "how would you feel about HPR if your gift of $100,000 was 'discounted' thirty or forty percent and your gift ended up being $60,000? What would that say to you the donor? What would that say to HPR's donor constituency?" There was a brief pause, and another board member said, "I never thought about it that way, but it makes perfect sense."

HPR, is a well-managed organization that strives for transparency. Donors today have increasing resources available to them (like Guidestar and Charity Navigator) to investigate the charities they support. Any nonprofit seeking major gifts or foundation funding needs to understand that donors are more savvy than ever in assessing an institution's efficiency and performance, and a big red flag is an excessively high percentage of the budget dedicated to fundraising expenses.

Talk to you soon!

Bob

AFP Ethics Code Expanded to Include Businesses

"AFPs Code of Ethical Principles and Standards of Professional Practice has been amended and expanded to apply to for-profit businesses involved with or supporting fundraising. (follow this link)"

"The changes, which include the addition of seven new standards and the alteration of one standard, now allows for-profit businesses to join AFP as members and actively promote ethical and efficient fundraising."

This announcement from AFP is most welcome. As a long-time CFRE, I have annually signed a statement that affirms my commitment to the AFP Code of Ethics. It's great to see that they are now placing pressure on businesses serving the nonprofit sector.

I am especially happy with the following amendment to the standard regarding percentage-based compensation:

"Standard 21 now reads (new language in italics): Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees. Business members must refrain from receiving compensation from third parties derived from products or services for a client without disclosing that third-party compensation to the client (for example, volume rebates from vendors to business members)."

I have a great deal more to say about the matter of commissions and percentage-based compensation as it especially relates to public broadcasting, but I'll save it for another post.

Talk to you soon!

Bob

Welcome!

Friends,

This is a new mode of communication for me. For many years I and members of my consulting group, MajorGiving.com, have posted articles in the "free resources" section of our website and shared our ideas about fundraising and nonprofit management through our listserv MGTalk.

This blog presents an opportunity for me to share my thoughts in a less formal way. I plan to discuss my views of the nonprofit and fundraising worlds, but also a myriad of other topics based on what I read and observe, and on my experiences.

If you find yourself reading this blog, I encourage you to add your comments and let me know what you think.

Talk to you soon!

Bob