Telling the greatest story

On Easter Sunday I had the privilege of hearing my brother giving a sermon at the Cathedral* where he is Dean. He told us all a story (in this case, a story from the Chronicles of Narnia).

In fact, he began his sermon provocatively with a statement that he could not prove the resurrection of Christ. 

He could however point to the stories told by disciples and believers. No scientific evidence exists. However, the story has been told many times and by many voices over the centuries. The story has inspired hundreds of millions of believers. It has shaped history and civilisations. It inspires passion and belief.

As it happens, my brother chose not to retell that story. Instead, he made a powerful point by telling another story written by a master storyteller, CS Lewis. The point he was making is that our beliefs and our values are shaped by stories more often and more profoundly than by facts and figures. The Bible and  the scriptures of all the world's major religions are collections of stories. Rich, colourful moving spicy stories which tell us more than the recitation of dates and facts ever could.

That is why, I believe that our role as fundraisers is to tell stories. When you make a case for support you will make it far more effectively when you can tell the story of what you and your donors will do to make a difference. If you engage with people's imagination, if you can enable them to see, hear and feel the world of difference they can be a part of then you will inspire them to join you.

Some of you will argue the importance of metrics in philanthropy. Some of you will say that it is important to set goals and important to track and measure the achievement of those goals. However, I firmly believe that telling stories about the misery and devastation caused to people's lives by, say, malaria is more compelling than reciting statistics about the disease's incidence.

Which is more compelling? Telling stories and painting pictures about the changes achieved with the elimination of malaria - or percentages? Stories about children able to enjoy education, about local economies beginning to thrive, about eco-systems and indigenous cultures being revitalised - or the dollars and cents generated?

Let me know your thoughts.

*Cathedral of St John the Evangelist, Napier, New Zealand.  And St John's gospel begins, "In the beginning was the word..." You can see this inscribed in the stained glass above.

Misunderstanding corporate partnerships

The furore leading to the withdrawal of corporate partner, Transfield Holdings from the  Sydney Biennale was unfortunate to say the least. However a better understanding of the range and nature of corporate partnerships could have made a difference.

A big part of the misunderstanding related to the nature of the partnership. The second part related to the nature of the partner, Transfield Holdings. The two are interrelated and one can often be a predictor of the other. Fundraisers generally understand this. However non-fundraisers often don't.

Firstly, you should look at the nature of the partnership between a business and  a nonprofit.  To confuse matters there is a whole plethora of different descriptions of business partnerships with acronyms like CP, CSR, CSI, CI and CRM*. Most widely used of all and usually misused as a catchall phrase is "sponsorship". In my view this misuse seems to have also been perpetrated by the Australian Minister for the Arts.

When I'm training fundraisers, I usually talk of a spectrum of types of business partnership ranging from the soft and subtle to the hard and highly visible. At the soft and subtle end of the spectrum are partnerships that are purely philanthropic. This is where the partner is supporting the organisation without expectation of any tangible benefit. This is usually because of some type of shared value or belief. This is what I would argue was in fact the case in respect of Transfield Holdings and the Biennale.  The owners of Transfield Holdings, the Belgiorno-Nettis family,  have been closely associated with the art show since its inception.  Franco Belgiorno-Nettis was the Biennale's first major donor and he until his death, then his son  have been on the board of the organisation ever since.

In the middle of  the spectrum from soft to hard are partnerships with companies wanting to put something back into the community. Usually they want this for business reasons such as wanting good relations with government, a particular community, or the public generally. This is very often the reason why banks, mining companies and oil explorers form partnerships with nonprofits.

At the hard and highly visible end are  partnerships that are marketing driven. These usually involve businesses that have something to sell to the public.  They hope that their association with a non-profit will enhance their brand and  directly increase their sales. Often there are some direct promotional activities associated. For example, a competition or product sampling at the sponsored event. It is this hard and highly visible type of partnership that can accurately be described as a 'sponsorship'. The obvious sign that it is 'sponsorship' are highly visible company, brand or product logos.

This is where the nature of the partner can be a predictor. A FMCG (fast moving consumer goods) company such as a soft drink or an ice cream manufacturer is most likely to be interested in the type of partnership that will have a direct effect on sales and market share.

A company, that doesn't sell direct to the public but is dependent on public or government goodwill for its business is likely to want to be seen 'doing good'.  These companies will talk about 'putting something back into the community'. Sometimes these may be a parent company which owns a large number of brands and products.  For example, Unilever has a strategy quite separate from its brands, such as Dove Soap or Ben & Jerry's Icecream. Whilst the brands and products may be involved in marketing driven sponsorships, the parent company is likely to be involved in a less commercially driven, - a longer term partnership with a community activity. Often that activity is located in a community to which it is geographically linked in some way. For example, where its HQ or biggest factories are, or  its raw materials come from, or from where it hires its workers.

Would the stoush that affected the Biennale have happened if all those involved had a better grasp of corporate partnerships? There are many types and there are many reasons that a nonprofit might be attractive to a corporate partner. This is, of course, the beauty of corporate partnerships for nonprofit organisations.

* Corporate Philanthropy, Corporate Social Responsibility, Corporate Social Investment, Community Investment and Cause Related Marketing. I call the acronyms the 'alphabet soup'!

What does size matter?

Have you ever thought what would your ideal size fundraising office would be? I have been reading a couple of reports recently that appear to suggest that the ideal number of staff is around seven. 

That made me wonder what exactly an ideal fundraising team would look, sound and feel like.

The most recent of the reports came from the Association for Health Care Philanthropy. The report Characteristics for Sustaining High Performance applied statistical analysis to benchmarking data drawn from North American hospitals, health foundations and University medical schools. The results identify a group of 12 organisations raised almost  four and a half times as much funding as the rest. It then discovered that the most significant difference between this group and the others was the size and resourcing of its fundraising teams. Further drilling down in the data revealed these highest performing organisations put their main focus on major gifts.

The second report I have been looking at is the Ross-CASE survey of UK higher education fundraising – Giving to Excellence.  It looks at funds raised and money spent on fundraising. It breaks this data into clusters based on the age of the universities' fundraising activities. Again, the results showed a significant increase in total funds raised correlated to the size of fundraising team and the team budget. The institutions, described in the report as having 'moderate fundraising programs' have 10 fundraising staff compared to only 3 staff in 'emerging fundraising programs'. The former spend slightly more than three times as much on fundraising. But they raised almost 15 times as much funding. Again, the report remarks that "very large gifts" were the source of much of this funding. increased engagement with alumni is a another feature of those organisations with more resources and staff.

So what might be ideal fundraising team be? Being prescriptive is a little foolish, given I don't know your particular circumstances. However I would suggest an effective team would comprise a full-time operations/database manager, a dedicated researcher, a data entry officer, a direct marketing manager (responsible for telephone/digital/mail campaigns), two major gift fundraisers and a director. Here is why think each of these positions are so necessary.

The database is the engine room of the fundraising ship. To keep her sailing requires a dedicated Chief engineer. The last thing anyone wants the middle of a major event, or a mailing from telephone campaign are glitches or data crashes. The operations manager will keep on top of all that is needed to ensure that this doesn't happen or that speedy recovery is possible.

Prospect research is absolutely essential for effective major gift fundraising. That person with the right instinct and interest, who enjoys discovering piecing together the interests and connections of your potential donors will make connecting with them, then developing your relationship with them significantly easier.

The data entry officer is that orderly person to make sure everything is recorded accurately and on time. Addresses, thank yous, reminders etc will go out to the right people at the right time.

The lifeblood of fundraising is the steady, frequent flow of regular donations. Your direct marketing manager is the person ensuring that stream continues to flow. That stream, incidentally, is from where your researcher fishes your major gift prospects(if I'm not mixing metaphors too much).

Then the two major gift specialists. Why two? Because, as both these studies have shown it is from major gifts that most funding will come. Managing the major gift process and, especially, managing relationships with major gift prospects is a demanding (although very exciting and enjoyable) role. A good major gifts manager will probably be capable of managing between 50 and hundred major gift prospects. As they manage these prospects through the major gift cycle they will need to get to know them better and spent more more time on them. The Pareto principle will apply and 80% of a major gift manager's time may need to be spent on only 20 prospects as the ask gets nearer. Of course, this time is not spent face-to-face with the prospect. It involves juggling diaries, preparing briefings, planning and logistics to ensure that the right people make the right ask at the right time.

And then there is the director. The metaphor I prefer to use for the director is that he or she is the film or stage  director,  or orchestra conductor managing all the forces. Backstage, onstage, singers, stars or support artists. He or she is seldom the star but always there ensuring optimum performance and making sure the audience and the players alike get exactly what they want to achieve from their respective involvement in the great fundraising and philanthropy performance.

Anyway, those are my thoughts.  What are yours?  There's a couple of other positions you might want to throw in. An events manager? Social media manager? What if you are too small an organisation ever to aspire to this many positions - what roles could you double up?

I'd love to see and hear your thoughts.

What is a charity regulator for?

What's a charity regulator for? And should we have one? Is a charity regulator the same as a charity evaluator? And if not what is a charity evaluator for?  Some thoughts have been rattling around my head and I am curious about what others think.
Australia and New Zealand are relatively newcomers to charity regulation. Canada and USA don't have any.  The grandfather of them all is the Charity Commission of England and Wales founded in 1853. It has been a lot in the press these days. It seems almost nothing it can do will keep everybody happy. Is it a policeman? It is a champion for charity? Should ask questions, be provocative, or simply, quietly and effectively 'regulate' the sector?

Meantime what are charity evaluators such as Guide Star, Charity Navigator and Give Well supposed to do? How do you in fact evaluate a charity? Do you look at its overheads? The proportion of donations that reach beneficiaries? Should its reserves be under the microscope? The Chief Executive's salary?

There are a handful of academic papers on charity regulation that are worth a read. One such has the nice title 'Light-handed charity regulation'. Wouldn't that be a nice idea some of you might say. However, for me it was useful in obtaining an overview to answer my opening question.

Regulation, in essence, is required to provide transparency and confidence in the charity sector to the public. The obvious analogy is a corporate regulator which ensures that investors in publicly listed companies can make appropriate decisions before risking their money. However, in a sense everyone's money is at risk with charities. Charities enjoy a privileged position with regard to not paying some taxes. Likewise donations to charities are privileged by the tax system. So it is in the public interest to ensure that charity is bona fide and the public's trust and money is not misplaced.

However the question of proportionality and the burden of regulation frequently arises in discussions. My bias on this question is reflected in my liking for the title of the academic paper above. That is because I believe that 90+ percent of those who devote part of their life to volunteering or working for charities nonprofits do so with noble intentions. Yes of course there are aberrations and rip-offs. But I wonder if we put these against the aberrations and rip-offs in the private sector which would be the more numerous and the greater in the value gouged?

Let's turn to charity evaluators. My understanding is that they are for enabling potential donors to get a look at certain key criteria regarding the charity's performance in order to help them make choices. The challenge here is what criteria and how to evaluate them?

It was with some relief that the sector recently read that three largest US evaluators now recognise that overhead is a poor measurement of a charities performance.

But what is a good measurement of a charities performance? And can you apply that measurement to each and every charity? Such is the diversity of the charity world, I struggle to think of a single measurement which could have universal application. Then there's the wider argument of whether quantitative measures provided effective evaluation? Or whether quantitative stories from beneficiaries and others on the ground are best?

I'd be delighted to hear and read what you feel because I think this is too important an issue to be left without debate.

Charity vs philanthropy

This month you will have been in a world where people in the Phillipines are crying out for basic necessities while million dollar gifts are on the rise to universities. Is this a dilemma for you as a fundraiser?

I believe not. But the dichotomy is illustrative of a wider principal – the distinction between charity and philanthropy.  The distinction is practical not semantic.  The roots of both words (one Greek one Latin) are comparable.  “Love” is in the etymology of both.  Both have been used interchangeably in the English and other languages for centuries.  Yet in practice there is I believe a distinction.

I have friends in the Philippines who are volunteering to help provide the essentials of life to their fellow citizens in some of the more remote regions of Cebu.  They point out that 150 pesos (about $3.50) = 3 packets of noodles, 2 canned goods, 1.25liter of drinking water , 2kilos of rice.  A modest contribution can make a big difference to one or more person’s individual condition.

Contrast this with gifts to Australia universities by Andrew and Nicola Forrest  or Graeme and Louise Tuckwell.  These multi million dollar gifts will fund research and scholarship.  What will be done through enhanced research and scholarship?  Or rather, a better question is what has been achieved throughout history by researchers and scholars?  We may not live in a perfect world but the achievements and progress we enjoy has to a large degree been the fruit of  education and inquiry.

The analogy, it seems to me is with curing symptoms and finding causes.  Both are essential. Charity and philanthropy are both essential.  We need to develop expertise at both.

Another paradox was in the philanthropy news this month.  Bill Gates - channelling Peter Singer - asked “why anyone would donate money to build a new wing for a museum rather than spend it on preventing illnesses that can lead to blindness?”

The essence of that dilemma was encapsulated by this remark in the Wall  Street Journal.  “Somerset Maugham said in his novel Cakes and Ale: ‘Beauty is an ecstasy; it is as simple as hunger’." Philanthropy has a role in contributing to both.

What do you think?

 

 

 

Is US Philanthropy exceptional?

Is US philanthropy exceptional and is it unfair to judge Australia against US standards for wealth and philanthropy? Those were two questions posed in media I read last week.

"We overdo this thing about philanthropy because we don't compare with the Americans. There is no one with money in Australia if you compare us to the wealth in the US," said Harvey Norman chief, Gerry Harvey in TheAustralian. 

My friend, Sabith Khan posed the question, "Is US philanthropy exceptional?" in his blog The Clockwork Muse.   My response? US philanthropy is not exceptional and we do ourselves a disservice by thinking so.  Yes, it involves institutions which are native to the USA - such as the US tax treatment of donations.  But the US concept of philanthropy was inherited and remains consistent with other, much older cultures including the Islamic culture of giving which in turn spread to Europe around the 13th century.  Many of the institutions of philanthropy in the US were adopted from Britain. Among the institutions inherited from Britain was the legal concept of 'charity' which is based on the Elizabethan statute of 1601. 

British philanthropy was well developed in the nineteenth century at the time that it was only beginning to take root in the US. Its development from Tudor times to the early nineteenth century is described by the two great histories of British charity written by WK Jordan and D Owen. Reduced to its essence it is a tale of the emerging haves recognising a responsibility for - even a self-interest in - alleviating poverty and providing better education and health.  Many of the ways in which 18th and 19th century British philanthropists met these challenges were equal in their innovation to today's so called, "new philanthropy".

The newly wealthy US industrialists, moved by similar concerns about the welfare of the communities from which their fortunes had been created, looked across the Atlantic for ideas.  Some such as Andrew Carnegie and George Peabody were active in both Britain and the USA.

Some of the significant differences, especially the significantly higher levels of donations by US taxpayers stem from the era of World War I and its aftermath. By that time the British state had begun to take more responsibility for welfare and the relief of poverty.  For example, the old age pension was created for Britons in 1908.  After the War, under the influence of the Fabian movement, the British government took further responsibility for education, culture, health, welfare and religion. The influence of the Fabians was significant in the development of these social institutions in Australia and New Zealand too.

Conversely, in the USA much of this responsibility for welfare and poverty was taken up by philanthropy - supported, nonetheless, indirectly by the state through the generous tax treatment of philanthropy.  Tax rebates on philanthropy were created in 1913 when income tax was first introduced in the US. Olivier Zunz describes US philanthropy as "self-taxing for the common good" and cites Tocqueville who talked of it in his descriptions of Jeffersonian (early 19th century) America, as "self interest properly understood". (Zunz O, 2012, Philanthropy in America: a History, Princeton University Press, Princeton).

Britain has no such direct tax relief on charitable donations though relief is available to a donor who "covenants" a regular payment to a charity. Instead through Gift Aid, the charity receiving a donation also can claim an additional amount equivalent to the tax payable by the donor on her donations.

In contrast, however, Australia actually preceded the US by introducing tax deductibility for gifts to charity as early as 1907 in Victoria.  Tax deductibility was enacted federally in 1915. So in that regard, Australia cannot claim to be different from the USA.*

What about wealth, as suggested by Gerry Harvey?  The following data from Wealth-X Ultra High Net Worth Report ought to give pause for reflection. The USA has 60,280 UHNWIs (i.e. with over $30 million financial assets) with an average worth of $133 million.  Australia has 3,350 worth on average $122 million.**   As percentages of their respective populations, UNHWIs represent 0.019% of the USA total population, 0.015% of Australia.*** Oceania saw the greatest growth in UHNW population, with an increase of 5.9%, largely driven by the continued growth of Australia. That excuse is disappearing as fast as the wealth gap is narrowing!

  

*New Zealand also offers tax relief on donations though until recently it was capped at a very low level.

**New Zealand 485 worth $126 million. UK, 10,515 worth $126 million.

***0.011% of New Zealand and 0.017% of UK population.

Is this any way to fundraise?

You might not go quite as far as Manuela Hoelterhoff's recommendation  in Bloomberg, "City Opera’s Board Should be Pilloried”, but you do have to wonder about the board of New York City Opera.

In early September this year, City Opera, New York’s number two opera company announced that it would be forced to cancel most of its current season and all of its next season if it failed to raise $20 million by year’s end; the first $7 million was needed by end of September. On Oct 3 the company filed for bankruptcy.

Apparently they were persuaded by one of the development team to raise $1 million of this via Kickstarter. The Kickstarter crowd funding closed $700,000 short.  What on earth let the board and CEO to believe that any of this crisis fuelled fundraising was possible, especially in the light of their past performance?  If fundraising is about relationships, trust, good stewardship and knowing your donors and prospects, what follows is a story of how not to fundraise.

Much of the back story is told in the Metropolitan Opera Guild's Opera News. The author describes it as, "… an epic saga of economic hardship, mismanagement and just plain bad luck". Money problems had dogged City Opera throughout its history. Even in its heyday, under the general directorship of Beverley Sills, the company racked up a $3-million deficit. Yet Sills was a consummate fund raiser as well as a terrific artistic leader. She worked her social connections for everything they were worth. "She knew who had money and knew who would give it," according to one person who worked with her. "And she had no problem asking anybody for it."  She was the face of the company — and she knew it," said another former employee. The donors who gave to New York City Opera were giving money to her, someone whom they trusted and respected. Unfortunately none of her successors had the same strengths at fundraising.

But there was an endowment. In 2003, City Opera was sitting on an endowment of $57 million. That seemed like insurance against hard times ahead. But it didn't last for long.  As the New York Times  noted by 2009 City Opera had raided these funds.  They had been reduced to $16 million, to pay off debts and cover operating expenses. The practice is known in the US as endowment invasion - Wikipedia gives some background. Another egregious recent example of endowment raiding was Brooklyn’s Long Island College Hospital.

[For more on the endowment read this story in The New York Times published after this blog was originally written]

The board's penultimate appointment as CEO was Gerard Mortier, a former artistic director of La Monnaie in Brussels, the Salzburg Festival and Paris Opera. In each of his previous roles Mr Mortier had been well insulated from the pressures of box office and fundraising by the very, very generous government subsidies that were the norm in Europe at the time. Mortier resigned in November 2008 at the height of the Wall Street crash on discovering that a promised budget of $60 million was a chimera. According to the New York Times  the board had counted on his name  and help in fundraising to make the larger budgets he was asking for possible:  “The board understood they were going to work closely with Gerard towards the raising of $60 million.”

The present CEO, George Steel, was untried in the complex and demanding role of managing a large arts company. He had been a success at Columbia University's small music theatre space, Miller Theater.  From there he had been briefly, and some say unsuccessfully, at Dallas Opera.  His City Opera programming failed to draw audiences. Ticket sales for the 2010–11 season hovered near a dismal 40 percent of capacity. In 2012 the company announced that it would finally be leaving Lincoln Center, the company's home for more than forty years. 

The final last efforts to raise funds saw acts of desperation such as approaching George Vilar. Vilar has served time for fraud and his name had to be chiseled off the walls of Royal Opera House Covent Garden among other opera companies to whom he had promised donations that were never fulfilled.

The denouement may well have been the final production staged by the company. The work was 'Anna Nicole', a salute to the tragic life and death of blonde model/actress/reality-show-star, Anna Nicole Smith. Anna Nicole had married J. Howard Marshall II, an oil tycoon. The rest of the  Marshall family loathed her, fighting bitterly to keep her from inheriting any of the family estate. Billionaire philanthropist David H. Koch had in the past been a big donor to City Opera. However, Marshall once had been a big investor in Koch Industries. When approached , Koch declined to make the kind of gift that might have saved the New York City Opera - "Out of respect for the wishes of the Marshall family".

Another version of this story by me appeared as a Nonprofit Quarterly Newswire