Planned Giving

Helping Your Donors During A Life Transition
Woman looking at her photo

             Making a Gift During a Life Transition   

Sometimes potential donors may want to be engaged and donate to your organization when experiencing a life transition.  When there is a major change within a person’s life such as illness, death of a loved one, or even sending their last child off to college, this life changing event may become an impetus to make a planned gift as a means to feel whole again.  They may welcome the opportunity to sit down with a professional gift advisor to plan out the best way in which they can provide financial support.  It is up to you and your gift development team to help people accomplish their charitable goals during moments of life transition.

You can be instrumental in the gift planning process by sharing with the potential donor the joy of making a difference through a planned sustainable gift. Be ready to illustrate for the potential donor how his/her financial support and involvement will be especially impactful. One way to accomplish this is by providing examples of donor impact at various giving levels.  Likewise, be sure to explore different gift options with your potential donor such as your endowment fund, which can be a good choice for those who want to create a memorial.

Provide a general overview of your planned gift options during your first meeting with the prospective donor. He or she should walk away with a firm awareness of the many rewarding opportunities for making a planned gift to your charity.  Right before the conclusion of your meeting, request that the prospective donor fill out a data card that requests information to help you analyze the donor’s charitable interests and giving readiness. Be certain to request and schedule a follow-up personal visit where you can discuss more concretely charitable proposals. Upon returning to your office, combine and analyze information gathered from your conversation with the prospective donor with the data collected from your data card.  If you collected good information during your first discussion, use it to create a proposal that matches the charitable motivations of your prospective donor.  Meet with your donor and his/her advisor and share how your planned gift proposal is a good fit and ask for a gift commitment.

Maximizing Use of Technology in Major Gift Fundraising
Workplace

Customize Your CRM To Meet Strategic Fundraising Objectives

The need to develop deeper personal connections with donors and potential donors is vital to any long-term giving strategy.  When people feel strongly connected to an organization, they absorb the organization as part of their personal unit, making it a locus of much of their social activity. In turn, they attend and promote events, recruit friends to volunteer, influence and engage others on social media, and provide increasing levels of financial support. This type of kinship network (cultivated by what we term the “absorption” process) is assisted through the development and use of data management, modeling and analytics.  Many nonprofits have complex social relationships. As such, there is an imperative need for nonprofits to customize their database infrastructure so that it is providing the analytical information needed to more easily comprehend and predict donor behavior. We cannot underscore this enough – to obtain useful analytical donor information, you have to know more about the people who support your nonprofit. This also enables the organization to better segment communications and gift proposals in order to maximize fundraising efficiency and achieve campaign effectiveness. Nonprofits should do more than just have a relationship management system – it is vital to customize the system to meet specific needs.

A big question you need to ask is whether you are getting your money’s worth from your present technology.  An effective CRM allows you to customize data fields, collect and track details with precision, and integrates with other data sources such as social media.  Most importantly, your CRM should make it easy to analyze data in order to visualize the bigger picture with respect to your donor base.  If your CRM has these functionalities, the next question is whether you are maximizing its use effectively.  Are you uncovering the right prospects most promising to your major gift or annual campaign? Are you using your data to discern which solicitation appeals best resonate with any given donor? Are you generating and analyzing reports that help you develop better fundraising strategies?  Again, making certain that you customize your technology infrastructure so that it is saving you time and strengthening your relationships is essential.

Finally, if you purchased a CRM, you also need to invest appropriate time customizing fields that effectively segment constituency. Again, the goal here is to build personal connections. Your data, when customized, will help you quickly provide more personal appreciation and recognition to supportive constituents.  In segmenting data, there is certain demographic data you obviously wish to maintain such as age, gender, income level, level of involvement, and generational designation (i.e. millennial, baby boomer). But, you also want to collect and store data that is customized to your strategic fundraising efforts. For instance, if you desire to build an effective legacy program, two key elements are donor trust and donor perception.  Legacy donors need to trust and have a good perception of your financial stability and stewardship.  Thus, you may find it beneficial to track constituent perceptions over time.  In this example, you may want to particularly track the effect sharing financial reporting communications has on donor perception.  In this case, you may need to integrate your CRM with a dashboard to measure and track this key performance indicator. The last take away is that you need to make sure that your technology is working hard for you, and to make that happen requires customizing your technology to your individualized needs.  For assistance with database customization and donor modeling techniques, contact us at info@scottpractice.com.

How to Brand Your Nonprofit to Receive Major Gifts

Build Personal Trust

With over 1.5 million nonprofits in the US and growing, one can say that without a strong, well-executed relationship strategy, the opportunity for your nonprofit to receive major gifts is limited, if not improbable. It is our desire for our readers to have successful major gift programs and not fall into the improbable category. Thus, we provide you with three steps to help you start branding yourself to receive major gifts.

Step 1  Build Personal Trust

Many high net worth donors are inundated with a myriad of charitable solicitations, some of which align perfectly with the donor’s philosophical and philanthropic interests.  When this happens, the donor intuitively will seek to reduce information overflow by taking mental shortcuts.  Trust is the dominate and most effective mental shortcut a donor will use to intuitively block out most charitable solicitations and reduce information overflow.

A strong brand builds trust, and strategically fosters donor loyalty and allegiance to your organization. Trust is vital to the receipt of major gifts.  Before a prospective donor will commit to a major gift, they must feel resolved that the nonprofit will deliver on its promises. Major gift donors also want transparency, strong management practices and stewardship of funds contributed.  Hence, everything you do must instill trust within your relationship, along with a strong sense that you will provide transparency, strong management and great stewardship.  Instilling these core elements is the first step to branding your nonprofit for major gifts.

Step 2   Tell Great Stories

Your story has the power to unlock a deep passion reserved within us, drawing us closer to your organization like a magnetic force.  Only you have the key to open our hearts to the countless success stories your organization brings forth year after year.  Thus, the second step to brand yourself for a major gift is to repeatedly tell compelling success stories. Your success stories engender trust, a seal affirming that you remain true to your cause and your mission.  Donors and volunteers alike want to know the impact you are making.  Tell them constantly using different channels of communication: a video, newsletter, blog, press release or interview. Just remember everyone in your organization needs to tell your story with genuine passion and power.  Over time, your stories will become part of your brand, and donors who share your core objectives will remember and embrace the success stories you share.  One last important thing to remember is to also be visual. Use visual stories to capture every moment, no matter how simplistic the event. Even a photo shot taken on your cell phone of a routine occurrence has the potential to spark an incredibly memorable message. A picture says a thousand words.

Step 3   Send the Right Message

We cannot stress the importance of perception enough. How a person perceives your organization can make the difference between a major gift or a goodwill gesture. When people acknowledge your brand you want them to perceive positive thoughts and feelings about your cause and mission. You control these perceived thoughts through coordinated messaging originating from your events, newsletters, website and other public communications.  As such, you need to make certain that your public communications coordinate with your overall branding strategy.  In addition, your branding strategy should coordinate with your strategic plan, and your strategic plan should embrace your mission.  Hence, everything works uniformly and is harmonized to achieve the controlled perception and end result you want – major gifts. Remember, you generally control perception.  Therefore, step three is to determine the type of perception you want donors to receive and begin to work toward that end through development of a coordinated messaging strategy.   For more information or further assistance branding yourself for major gifts, please contact our Nonprofit Brand Specialist, Ashley Thomas, at info@scottpractice.com.

Our Recent Event Activities

What has SP ConsLogo+Without+Symbolulting been up to lately, quite a bit.  Debra Scott, JD, MPH recently discussed Fundraising Analytics at the Georgia Professional Grant Association meeting during this month of October. Debra will also speak at the Georgia Association of Independent Schools November 2nd on Creating a Culture of Giving.  Debra will speak again on Fundraising Analytics at the 32nd Annual Small Museum Association Conference this February.   Debra also recently attended the National Conference on Philanthropic Planning in Florida and brought back new legacy gift strategies for nonprofits of all sizes.  Lonnell and Ashley exhibited this month during Georgia Gives Day and spoke to many nonprofits interested in receiving major gift solicitation training for their volunteers and board members.  Our team is also working on our first end-of-year volunteer event, a nice way for us to close out the year. Can you believe we are approaching year-end?

What Your Form 990 and Financial Statements Tell Major Gift Donors?

Nonprofit Major Gift Funding

We spent our last two articles focusing on Form 990 requirements.  Now we turn our attention to Form 990 and Financial Statements as it relates to potential funding.  We are in a new era of giving where nonprofits are being judged and evaluated on multiple levels.  One way nonprofits are evaluated is based on ratio analysis.  Hence, in this article we will walk you through certain financial ratios that your funders may use to analyze the financial health of your organization.  Keep in mind that financial ratio analysis is not the only useful means to analyze financial health. Moreover, a single ratio does not say much about your organization’s financial standing.  However, some funders and charity evaluators use financial ratios as part of their due diligence review of nonprofit organizations. With that said, let’s discuss how financial ratios are used and calculated.

Financial ratios are used to obtain a more accurate interpretation of an organization’s financial health over time, especially when compared to similarly situated organizations or industry benchmarks.  Financial ratios can be used to measure a nonprofit’s efficiency, growth rates, liquidity, cash reserves among other things.  Financial ratios are also very powerful measurements for analyzing trends (how an organization changes from year to year).   Significant shifts in a key area may cause concern for a potential funder that requires additional explanation or inquiry into the nonprofit’s financial operations. Also, most ratios are best used in two ways: 1) in comparing similar organizations and 2) in analyzing an organization over time.  Ideally, you should track internally certain ratios so that your organization zeros in on areas ripe for improvement.

Ratios are calculated based on financial data generated from financial statements or your Form 990 report. Audited financial statements provide the most comprehensive data about your organization, which is one reason funders request this information.  However, because many nonprofit organizations are not required to be audited some funders request Form 990.  Form 990 also provides relevant financial data that can be used to perform a reasonable analysis of an organization’s financial history.  To calculate a ratio, you take one total and divided it by another total.  For instance, a Quick Ratio equals current assets minus inventory all over current liabilities (Quick Ratio= Current Assets – Inventory/Current Liabilities).

Here are a few ratios and how they can be used:

Dependency Ratio

Largest Type of Income/Total Income

A potential funder who is interested in knowing the depth of your support base may use this ratio.  In this instance, the potential funder is analyzing whether your organization is dependent on a few major sources of income.  Overreliance on a few sources of income causes higher risks for your organization.  Diversification of funding sources reduces overall risks for an organization, and makes an organization more attractive to potential funders.

Self-Sufficiency Ratio

Income Source/Total Expenses

This ratio examines the organization’s ability to sustain itself without certain funding sources such as government funding or grant assistance.  For instance, a funder may examine an organization’s ability to be self-reliant by including on the top line only unrestricted donations, program services fees, and investment income.  By analyzing the trend line, a funder can determine whether you are broadening your donor base and public appeal.

Program Expense Ratio

Program Service Expenses/Total Expenses

This ratio is used by various watch dog organizations to determine how much of a donor’s contribution is being used to support programs versus administrative or fundraising expense.  This ratio is probably one of the most widely debated ratios of those listed here.

Current Ratio

Current Assets/Current Liabilities

This ratio gives insight on an organization’s ability to satisfy its obligations.

Fundraising Efficiency

Contributed Income/Fundraising Expense

This ratio measures how efficient your organization is in raising funds per dollar spent.  Funders may be interested in knowing whether their contributions will be spent efficiently if they decide to fund your organization.

Personnel Expense Ratio   

Personnel Expense/Total Expense

A potential funder who wants to know how labor-intensive your organization is compared to other similar organizations may use this ratio.

There are dozens of other ratios.  Listed here are only a few.  You are encouraged to give us a call at 1-888-206-0066 if you would like to speak to one of our consultants about the needs of your nonprofit organization.  SP Consulting is a division of The Scott Practice, LLC, an Atlanta based law practice. This is not legal or any other type of professional advice and may not be relied upon as substitute. Readers seeking professional advice should contact a professional advisor.