Crowd Funding - A New Tool for NPOs...

Crowd funding is the newest tool to encourage like-minded people to support a cause.   Although it relies mostly upon "conventional" methods of establishing a presence on the internet, supporters are encouraged to bring in their own circle of friends to donate.

Some of the names who provide software to get started in crowd funding include Razoo -- http://www.razoo.com/p/overview;  Nandanu (Take Your Giving Anywhere)  --  https://www.nadanu.com/products.php, GoFundMe -- http://www.gofundme.com/crowdfunding/; and CauseVox -- http://www.causevox.com/features. And there are many more to see by simply searching on Crowd funding.

We show the links for some of these sites because they couldn't be more different!  You are encouraged to browse through their demonstrations to actually see the diversity of approaches. Some are not even dedicated to fundraising per se -- if you are interested in raising money for a business product you can do that.  Others offer complete setups of your website ready to start accepting donations.  Several allow you to add a "gadget" to your own website or your Facebook page. On still another site, you can search for your favorite cause or charity by type or region or even zipcode.

Check out this technology -- a lot of research has gone into developing new tools to raise funds!

How To Create A Succesful Event

Every week when we go to the grocery store we are faced with a whole series of mini-events: Bananas or Lettuce is on sale!  When a store is promoting a Two-for-One Sale, there are stickers all over the shelves -- as we move through the store any particular item may not cause us to buy, but sooner or later a product we didn't plan to buy, ends up in our shopping cart!  That store has created an event which succeeded in its objective.  Can you say that about your own event?  Or are you just saying "We Are Open" -- that is what is called a Weak Identity.

What can we learn from the grocery store?  Well, even though we walk through the door every week, the store and their vendors realize that they are in a fight for their very survival.  That is why vendors pay to place in-store displays at the ends of aisle -- you could call them Silent Salesmen.  While other vendors bring in Demonstrators on busy days to give out free samples. And of course there are coupons.  All of these visuals including advertising such as TV, radio, billboards, in-store TV, even shopping cart signage -- all have one objective: to make their item an event in your life!

Sometimes these events are a one-time thing: that is when the product is being promoted for what is probably the first and last time: when that product is going out of business!

If we were to sit in on a meeting at a well-known consumer products company we would be amazed at the detailed information which the product managers bring to the meeting.  What we would consider items not worthy of our attention routinely build brands valued in the billions ... and these are items with dozens of competitors and with really not much new to say over many years.  How do they do it?  Because they understand that the public responds to variety, and to style trends, and to whatever is the latest craze to strike the country (and there is always something).

The newest social networking craze proves once again that we are Social Animals, and that even our highest and most noble impulses can be influenced by the same methods used to promote the most pedestrian of products. 

Consider that stalwart of fund raising -- the raffle.  As we as a volunteer attempt to sell a $20 ticket to say, help our children, the citizen may be nodding his head about your good works, but he is also looking at the ticket you have shown him.  Chances are if the ticket offers a trip to Florida and it is getting cold, you will get a positive response.  But even if the ticket is only $2.00 and it offers a household appliance, your chances drop exponentially.  Time and duration too are important.  If it is September and the drawing is October, then you probably have one chance to sell your ticket.  But if the offer is made months in advance, you could have ten chances to offer him that ticket -- hopefully not in person, but through word of mouth; by viewing a poster, and by regular exposure to your cause.

Is This An Annual Event?  If it is, your chances increase.  What are the other factors which will influence your success over time?  Request our bulletin which includes a Do-It-Yourself Checklist to rate your next event ... for a copy, write support@printbox.com  Subject: Checklist Bulletin.

ALLOCATING YOUR FUNDRAISING COSTS

See what our guest columnist, Mr. Backoffice, has to say about  your relationship with your donors and the IRS ...

 

If you give $1.00 to a charity, how much of it will go to the cause? Typically 15-20 cents go to overhead. Most folks would be okay with knowing that 80 cents of their buck goes to the cause, yes. If you use a professional fundraiser, it's possible that instead of 80/20, it might be 20/80. 

Before you tell the public how much of their donation will be allocated you have to know at least one thing:  How much does your fundraising cost?

Of course the government has something to say about it.  In its “Statement of Position on Accounting for Costs of Activities of Not-for-Profit Organizations…that include Fund-raising”.  For accounting geeks, it’s known as “SOP-98-2” and has been effective since December 15, 1998 and applies to all fundraising activities of NPO's and to state and local government entities.

Although most nonprofit managers haven't heard of it, we've

been subject to this rule for over ten years.

"Accountability" "Misleading the Public" "How much of your donation goes to the cause". 

These topics have received much media play.  If professional fundraisers use full disclosure to the donor they might even be within the confines of the law (this layman’s speculative opinion). But who would want to give 20 cents out of every dollar to a cause?

The answer: maybe your nonprofit! Nonprofits are experts at disguising the real costs of fundraising as "general administrative". The blur between job duties opens that door. In a small nonprofit, everybody might be pulling double-duty.

If we consider the real cost, maybe professional fundraisers are just more honest. Maybe the idea of sitting back, doing no work whatsoever and picking up a check from the professional guys doesn’t sound half bad. No midnight hours blowing up balloons, no silent auction gifts which rarely pull the kind of bids they deserve, no more print "ad books" that may or may not even pay the cost of the printer.

Then there is the self-deception that comes afterwards. How many times have I heard "Our fundraiser is so incredibly successful, we raised $1 million dollars!" only to find out that they were talking gross, not net! How much did you spend on the event? I ask. On hearing the answer, I might glance at the figures and comment ‘Oh, so you really raised $200,000’ … that can be deflating.

How does all this connect to SOP 98-2?  Bottom line, 98-2 is an attempt to clarify how a nonprofit should (must) handle the overlap of fundraising costs with education or administrative costs.

Accountants call this overlap a "Joint Activity". SOP 98-2 requires that allocation methods be rational and systematic; that they result in reasonable allocations and be applied consistently by NPO's given similar facts and circumstances.

When your nonprofit makes a solicitation (for example sends a newsletter out with a return envelope for potential donors) that activity is referred to as a “joint activity”. The criteria: purpose, audience and content. If the activity does not meet all three criteria SOP 98-2 requires the nonprofit to report any costs of a joint activity as fundraising.

Do you do Direct Mailings?  If so, you may be mixing the purposes of fundraising or program info and if you aren’t careful, you might find yourself needing to allocate the entire cost to fundraising.  If you can’t prove your mailing has educational content, you may have to allocate 100% to fundraising. 

Unfortunately SOP 98-2 provides no detailed guidance on how allocations should be calculated or which methods should be used.  In the end, much is left up to us, to interpret; report transparently and allocate -- using reasonable and consistent methods.  At the end of the day, If we want to know (and make public to our donors) how much of their hard-earned money goes to “the cause” we will need more than SOP 98-2, we’ll need to be honest with ourselves.

-- Posted May 21, 2011 by Mr. Backoffice.

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