Michele R. Berard, MBA, CFRE lecture for 5/4/11 class - Nonprofits & Philanthropy at Rhode Island College. Contains fundamentals of fundraising, ethics, and establishing your professional brand.

1. Non-Profits & PhilanthropyRIC Certificate Programfor Nonprofit Studies Michele R. Berard, MBA, CFRE Director of Funds Development, Butler Hospital President/CEO, Ascent Advisors, LLC May 4, 2011 Lecture

2. Learning Objectives – May 4, 2011 What Fundraising Funds The Case & Case Statements The Development Process Fundraising Vehicles Establishing Your Professional Brand Ethics in Fundraising Note: Time dependent

3. A couple of points before we dive in… Fundraising or Fund Raising Association of Fundraising Professionals (AFP) changed Fund Raising to Fundraising in 2000 when they changed the organizational name, formerly National Society of Fund Raising Executives (NSFRE)) Philanthropy Healthcare, large institutions Development, Fund Development Smaller non-profits, social service agencies Advancement Education For the purpose of this class, they all mean the same thing…

4. …from 819,008 to 1,238,201 in 10 years Source: Giving USA 2010 The Annual Report on Philanthropy for 2009, Executive Summary

6. HHS ($79b)

7. Education ($46.7 b)

8. Homeland Security ($42.7 b)and the list goes on…

9. Operations = Your Organization’s Purpose Nonprofits exist to fill the gaps in services that public and private sectors do not provide The trend of increasing non-profits provides evidence that unmet needs are increasing Recent attention to reducing the Federal deficit will result in: Less government funding for non-profits More gaps in services; smaller government Opportunities for Private and Nonprofit Sectors Organization’s Purpose = Mission = Operations

10. #1 - What Fundraising Funds The Planning Process will undercover funding needs of the organization In order to design a development plan and implement a program, it is important to work with the finance office (and other departments) in order to prioritize the organization’s funding needs. E.g. if your organization requires $150,000 of operating support each year, a gift of $250,000 for the endowment is not going to add value Organization’s generally raising money to fund: General Operating Expense Capital Needs Endowment

11. #1 - What Fundraising Funds General Operating Expenses Pay for the expenses that carry out the mission of the organization Can be programs, can be salaries, can be services Also referred to “General Fund” or “Unrestricted Donations” Stigmatized Interesting Parody: Organizations mostly need General Operating contributions, but they are the hardest to solicit/acquire due to: Increasing trend of donors wanting ownership Overall negative stigma of “paying for administrator’s salaries” Difficult to marketing/report outcomes Sustainability (will need again next year)

13. #1 - What Fundraising Funds Capital Expenses “Brick and Mortar” New Buildings, wings, major renovations (that result in expanded or enhanced capacity) Large pieces of equipment E.g.: MRI, DaVinci Robot, TMS Chair, Van/Delivery Vehicle Donations to fund capital expenses are recruited through: Grants (foundations/government) Corporate Gifts Individual Major Gifts

14. #1 - What Fundraising Funds Capital Expenses (continued) Contra to General Operating Expenses, it is easier to recruit philanthropy revenue to support Capital Expenses because: The project timeline is finite It can be measured (you build it, order it, install it) Appeals to wider masses (due to: naming opportunities, committee work,...emotion) Its easier to recruit large gifts for capital since the overall project is also large Multi-year pledges The impact to the organization’s financial position – a bona fide revenue stream that can be leveraged! A Capital Campaign is a specific fundraising initiative that occur over a period of years to raise a predetermined goal Both timeframes and monetary goals of Capital Campaigns are both trending upward

15. #1 - What Fundraising Funds Endowment: According to the AFP Dictionary – is a permanently restricted net asset, the principal of which is protected and the income from which may be spent and is controlled by either the donor’s restrictions or the organization’s governing board. Many organizations have an endowment that provides revenue to support operations or a specific program Prominent in Academic Setting with growing popularity in Healthcare settings e.g. Endowed Chair – The revenue earned from the fund is used to pay the salary (or specifics mentioned in the endowment policy associated with that endowment)

16. #1 - What Fundraising Funds Endowment (continued) Endowment Policies provide the details of the administration (and often the investment) of the endowment 4% of interest earned from the ABC endowment goes to support the salary of the Chief of ABC. Any additional earnings above 4% will be reinvested into the ABC endowment The endowment will be invested in portfolio comprised of 40% stocks 60% bonds ADVANCED: policies should consider the mission of the organization Are recruited through Planned Gifts (mainly bequests) Major Gifts (primarily from Individuals) Special Campaigns (major, regular individual giving, events) Endowment funding is generally never recruited from Foundations or Corporations

17. #1 - What Fundraising Funds

18. #2 – The Case & Case Statements The Case for Support Case for the Institution - The case is the statement of the cause Mission and strategic plan drive the case Explains why donors might want to contribute to the advancement of the mission Describes the organization’s goals and objectives Explains the role of philanthropy in achieving organizational goals One large case for the organization, from which smaller individual case statements are developed for various constituencies and programs Align organizational funding needs to donor’s wishes Also known as “The Case” or “The Boilerplate” (internally) Purpose – Show the organization’s impact on the community economically, socially, artistically, spiritually and/or historically for today and tomorrow

19. #2 – The Case & Case Statements Who Creates The Case? Development Staff – they act as interpreters between external constituencies and external constituencies Review, comments, approval, support by internal and external constituencies CDO begins the process back to the CDO for edits Hands off the CEO for review Goes to the constituency for testing The Development Committee to review, endorse The Board to endorse

20. #2 – The Case & Case Statements The Case Contents: (Hank Rosso refers to this as case resources) Mission Statement Goals Objectives Programs and services Finances Staffing Facilities and services delivery Planning and evaluation History These are the parts that create your organizational whole. When put together, the case may also be referred to as the “boiler plate” or “template” for foundation grant requests.

21. #2 – The Case & Case Statements Case Statements - what are they:? Written version of The Case for a specific constituency or campaign and should state: The institution’s services, programs, and objectives How the goals of the fundraising program support the institution Ways in which the institution will remain significantly productive in the next decade The difference it would make if a donor supported the cause What the institution must do to improve or change its activities and aims, and why the institution is valuable to society The Case Statement must align donor wishes and funding needs of the organization

22. #2 – The Case & Case Statements Internal vs. external cases (Hank Rosso) The completed case or template = the internal case The external case tells the story to the constituency E.g. “…brochures, foundation (and corporation) grant proposals, direct mail letters, web site development, campaign prospectuses, news releases, newsletters, speeches, and face to face solicitations…” (Rosso, 2003) To maintain alignment with organizational needs and donors’ desires, the following questions should be answered: What is the problem or social need that is central to our concern? What special services or programs do we offer to respond this need? Why are the problems and services important? What constitutes the market for our services? Continued on next slide…

23. #2 – The Case & Case Statements Alignment questions (continued): Are others doing what we are doing to serve our market – and perhaps doing it better? Do we have a written plan with a statement of philosophy, objectives, and a program? What are the are the specific financial needs against which private gift support will be sought? Is the organization competent enough to carry out the defined program? Who are the people associated with the organization: staff, key volunteers, trustees, directors? Who should support the organization? Preparation of a case statement is first step in any aspect of the organization’s total development program (including: annual giving, capital giving, planned giving) Case Statements are just for Capital Campaigns any more! SWOT Analysis is helpful here…

24. #2 – The Case & Case Statements The Case Statement is an internal document and the basis for and external “sales” publication with many uses: To secure feedback and create ownership To recruit volunteer leadership To test the market To form a basis for case (marketing) materials To tell a story

25. #2 – The Case & Case Statements Applying/Adapting to Your Market Segments The final step before writing the case statement(s) is to determine your most critical constituencies Which Constituencies: Are the strongest supporters? Give on a regular basis? Have the greatest ability and interest to give? Are the most interested in specific components of a campaign? The most effective tactic is to develop an individualized case for each constituent group as you are getting the greatest alignment (however, this is not practical) Individualized attachments Individualized cover letters

26. #2 – The Case & Case Statements Grouping Constituencies Source: CFRE Review Course (faculty manual) 2004 Edition

27. #3 - The Development Process

28. #3 - The Development Process Donor Estate Planning Income, Assets Current Income Source: Assets Buildings, Equipment, Endowment Special Programs & Projects Ongoing Programs & Services Benefit: Endowment, Capital Annual Fund Major Gifts Program Capital Campaign Planned Giving

29. #3 - The Development Process No organization is similar; therefore needs different strategies and tactics to build and sustain a successful development program. The Development Officer’s Job… to “Right Size” it for your organization’s needs Answer the following questions for direction: What are the needs of your organization? What are the resources available to you? What champions to you have?

30. #3 - The Development Process Stages of Development - Getting in moving up the Donor Pyramid Identify potential prospects Compile and develop lists of predisposed individuals Similar organization’s annual reports, book of lists, professional organizations, natural constituencies,etc. Convert potential prospects into qualified prospects Test the list effectiveness by identifying linkages Engage volunteers, staff (e.g. rating session) May be combined with step 1 Convert qualified prospects into initial donors Build on linkages, test interest by asking for gift Solicit by personal contact (telephone, direct mail, special event) Acknowledge gift (opportunity to validate the linkage; negate buyers remorse)

31. #3 - The Development Process Stages of Development - Getting in moving up the Donor Pyramid Convert initial giver into donor of record Build on interests and linkages Report to the donor how the organization used their gift Invite to renew, Acknowledge Increase the gift Research, building on linkages and interests Inform (report on use), involve in organization Invite to renew at a higher level (use gift club concept) Acknowledge Secure Special Gift (e.g. $1,000) Continue research through linkages, involve, build on interests Align interests with a special need of organization Personally solicit (face-to-face) , invite to gift club membership

32. #3 - The Development Process Stages of Development - Getting in moving up the Donor Pyramid Secure Special Gift (e.g. $1,000) (continued) Acknowledge Secure Major Gift (e.g. $10,000+) Validate donor as a major gift prospect via linkages and donor research (i.e. capacity) Involve the donor in the institution via planning, case evaluation (“testing the case statement”) As a loyal donor, ask him/her to participate in cultivation events or help in identifying new prospects; join board committee Share needs of the organization; align solicitation to donor’s desires, face-to-face solicitation by CEO/Board Chair, acknowledge Reward/Recognize

33. #3 - The Development Process Stages of Development - Getting in moving up the Donor Pyramid Secure Big Gift Continue to involve and engage through linkages and interests Employ donor as an important advocate; invite to serve as volunteer leader (board member); Foster a desire to give and ask by involving in cultivation events and engaging his/her personal contacts Ask, Acknowledge, Reward/Recognize Secure Planned Gift Continue involvement with the purpose to strengthen bond between the donor and the organization Create feelings of belonging to and identifying with the organization Foster mutuality of interests Giving in perpetuity (endowment) or legacy

34. #3 - The Development Process Stages of Development - Getting in moving up the Donor Pyramid HOWEVER: Evolves over a very long time horizon (e.g. 10 - 20 years) Through many Development Professionals Very time consuming As donor progresses up the pyramid, the tactics become more personal (hence dedicated MGO) Greater access; involving the time/energy of organizational leadership outside of the Development Office 80/20 rule: 20% of your donors will provide 80% of the funding Most of your donors will only progress so far in up the donor pyramid

35. 2009 Contributions: $303.75 billion by givingsource of contributions Different funding streams contribute (or invest) for different reasons Hint: start with funding needs of the organization, then work to align those needs to your constituencies Source: Giving USA 2010 The Annual Report on Philanthropy for 2009, Executive Summary

36. #4 – Fundraising Vehicles The Donor Pyramid illustrates the process of a development program and is a common element in fundraising education (note: google “donor pyramid” for other examples). Donors enter at the base (the widest part of the pyramid) and are “stewarded” up the pyramid to more significant giving.

37. #4 – Fundraising Vehicles Direct Mail Direct Mail is used to acquire new donors and to renew current donors (note: Individual Donors) Via a Direct Mail Appeal CLARIFICATION: “Appeal” is the call to action that motivated the donor to respond with a gift. Often in fundraising, we use “Appeal” to describe a direct mail solicitation – e.g. Fall Appeal Direct Mail Appeals come in all shapes and sizes and should be right-sized/right-toned to your organization (i.e. mission and culture)

38. #4 – Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): The letter… evoke emotion (Anger, Exclusivity, Fear, Flattery, Greed, Guilt, Salvation) write to get the attention of “scanners” and “readers” (use readability statistics on Microsoft Word) clearly state the purpose of the letter clearly state the goal; how success will be measured; what results a gift will produce… use a “P.S.” signature Via a Direct Mail Appeal CLARIFICATION: “Appeal” is the call to action that motivated the donor to respond with a gift. Often in fundraising, we use “Appeal” to describe a direct mail solicitation – e.g. Fall Appeal Direct Mail Appeals come in all shapes and sizes and should be right-sized/right-toned to your organization (i.e. mission and culture)

39. #4 – Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): The reply device… Draft first – before the letter Test Include credit card options, “in memory of”, specific programs, check boxes for additional information (E.g. planned giving) Revise and test, etc. Use as another communication device (for the scanners) Include on-line giving instructions if applicable

40. #4 – Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): The remittance envelope… Self Addressed and Postage Paid The internet is giving the USPS major competition. Don’t make it harder for your donors (or prospective donors) to have to buy a stamp, look up your address, write it down, and deliver it to the post-office! Note: You’ll need a BRE Permit from your local post-office to use self-addressed, post-paid envelopes.

41. #4 – Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): The outside envelope… #10 window or plain (research has shown that this is the most effective/efficient) Teaser Copy – If you appeal doesn’t get opened, it doesn’t matter how long you spent on your reply device, or how well written your letter is, or even how compelling your call to action is! “From the Office of the President” “Learn how your can help others access healthcare” “See inside for details on a great investment offer “

42. #4 – Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): Premiums and gifts… Premiums are Give-A-Ways included in the direct mail package to entice (guilt) a prospective donor Premiums are most effective for donor acquisitions; less effective for renewals Gifts are given only to donors; more control on the organization side, but also more time consuming

43. #4 – Fundraising Vehicles Direct Mail (continued) Other forms of Direct Mail (used more for stewardship): Newsletter Invitations Announcements Surveys Annual Report Mailings Event Calendars… Basically, any time you mass mail to your constituency or a segment of your constituency

44. #4 – Fundraising Vehicles Direct Mail (continued) Is the tactic most used to recruit donors because it can be mass produced at somewhat of a low cost. However…it is impersonal, which explains why first time donors don’t necessarily renew their support. Long-Time Donor = Strong Relationship Personal Attention = Strong Relationship Personal Attention = Expensive, Time Consuming and not replicable

45. #4 – Fundraising Vehicles Special Events/Fundraising Events An opportunity to capture new donors (“Donor Acquisition Vehicle” Good for organizations that: need to build a donor base have a dedicated volunteer group to recruit corporate sponsorships A mission that resonates with the community at large (to recruit new supporters) -or- Have a large beneficiary base (Alumni, Patients, Staff, Members, etc) to support the event (note: not a donor acquisition vehicle)

46. #4 – Fundraising Vehicles Special Events/Fundraising Events (continued) Usually funds General Operating, however could be appropriated to a specific fund or project (this should be discuss with you organization’s CFO ahead of time) A huge variety, for example: Golf Tournaments Gala (Dinner & Dancing) Silent/Live Auction (stand along or an add-on) Fashion Show Food & Wine Tasting Celebrity Luncheon The only limit is imagination!

47. #4 – Fundraising Vehicles Special Events/Fundraising Events (continued) A downward trend Expensive (% of net vs. gross) Ethical considerations (misleading donors) Time consuming Sponsorships correlated to economic times A purpose beyond raising money Communicating your mission Recruiting new volunteers Recognizing community leaders Bonding experience for organizational staff Opportunity for your Board Members to participate

48. #4 – Fundraising Vehicles Corporate Gifts/Sponsorships First, some background Charitable contributions to non-profit organizations reduces a corporation’s tax-liability A contribution to your organization helps the corporation pay less in taxes Good Economy = Sponsorships Two “pots” to pull from: A charitable division of the corporation (usually larger with giving guidelines) The marketing department (usually smaller with less restrictions)

49. #4 – Fundraising Vehicles Corporate Gifts/Sponsorships The marketing department: Contacts are usually public; reach out to them Personal/Professional relationships are helpful (engage Board Members and Volunteers) note: we will discuss in greater detail in future modules Do your research – What organizations has the corporation sponsored in the past and for what project? (usually located on the organization’s website under “Community Relations” or a similar heading) Tailor your ask to what the corporation has done in the past Make sure it contains a marketing benefit Examples

50. #4 – Fundraising Vehicles Corporate Gifts/Sponsorships The Charitable Division: Contacts are also public; reach out to them But first, do your research as there is usually a distinct mission of this function (see Foundation Center – www.foundationcenter.org) or call them directly for their “Giving Guidelines”) Review the funding needs of your organization – do they fit within the giving guidelines? If yes, begin proposal process A word on square peg round hole approached Proceed with caution on exploiting Personal/Professional relationships Examples

51. #4 – Fundraising Vehicles Foundation Grants Similar to Charitable Division gifts from Corporations Usually fund specific components of your mission: A program A building project Vary in size, scope, geographic area, mission requiring a substantial amount of research before the solicitation process www.foundationcenter.org (free resource) Foundation Directory Online - http://fconline.foundationcenter.org/ - annual membership based on level of service/access Guidestar – 990s

52. #4 – Fundraising Vehicles Foundation Grants Researching Foundation Grants (note: will be discussed in future module) The 990 – All non-profit/501(c)3 IRS Status file thee 990 as their annual tax return (foundations are non-profit/501(c)3 IRS Status) The 990 contains valuable information, such as: The value of the endowment Application instructions (note: “…gives to only preselected organizations…” is the default on the 990) Board of Directors Listing Grants Awarded Listing – with amounts to each organization and often an explanation of the purpose Website

53. #4 – Fundraising Vehicles Major Individual Giving Individuals who give major gifts (the amount that qualifies one as “major” is determined by the organization) have a strong connection to the organization or the cause (e.g. your board members) They are usually not first time donors, nor do the gifts come out of the blue (i.e. unsolicited) These gifts are in the upper-tiers of the donor pyramid Donors are engaged and want to see their gifts make a difference (measurable, innovative)

54. #4 – Fundraising Vehicles Major Individual Giving (continued) The focus on MG programs is increasing: Less expensive; High ROI (return-on-investment) Less dependent on the economy like Corporate Sponsorships (however, not isolated from it either) Major Givers are usually great stewards of your organization (if they are going to give multi-figure gifts to your organization you can bet they will say great things about you!) Due to the proven success of MG Programs, good MGOs (Major Gift Officers) are often the highest paid in the Development Office

55. #4 – Fundraising Vehicles Major Individual Giving (continued) However (the downside): High pressure to meet metrics Lack of organizational strategic Generally does not support General Operating Expenses The donors are very knowledgeable about non-profit operations (they are using the same research tools you are using!) The cultivation period is long (two-years) The investment in a MG Program is hard “to sell” to Executive Leadership when return is in future fiscal years Ethical considerations

56. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) According to the AFP Dictionary - “a systematic effort to identify and cultivate a person for the purpose of generating a major gift that is structured and that integrates sound personal, financial, and estate-planning concepts with the prospect’s plans for lifetime or testamentary giving. A planned gift has tax implications and is often transmitted through a legal instrument, such as a will or a trust.” For the purpose of this course, Planning Giving will be presented as an overview to the average Development Officer

57. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) - Two kinds: (1) outright or current gifts (2) deferred (realized in the future)* A donor who is considering, or has already made, a planned gift is at the top of your donor pyramid: They know, believe and trust in your organization They’ve donated (money and/or time) for several years, if not decades) They tend to be savy; appreciate the tax benefit and creativity involved in establishing a planned gift to a non-profit organization They want to be involved up until their passing (if deferred)

58. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) Types of Deferred Planned Gifts Bequest The most popular type of deferred planned gift and the least daunting Once made, less than 10% change, those that do increase the amount to charity Easiest to publicize; verbiage should be on your organizational website (See http://www.butler.org/body.cfm?id=245); on reply devices, in newsletters, etc. Discuss with the donor the intent of the gift Gift Acceptance Policies should reflect every situation imaginable

59. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) Types of Deferred Planned Gifts (continued) Charitable Gift Annuity – A legal contract between the donor and the charitable organization, through which the donor exchanges cash, stocks, or other assets for an agreed-upon income for life Charitable Remainder Trust – The Donor transfers assets to a Trust, which then goes to the charitable organization after the death of the beneficiary. The donor retains a fixed or variable income for life Life Estate Contract – The Donor transfers the deed of real property to a charitable organization while reserving the right to live on the property for life.

60. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) Types of Deferred Planned Gifts (continued) Charitable Lead Trust – Donor transfers assets to a trust; the trust provides income to the charitable organization for a period of X years. After the said period, the assets revert back to donor (grantor) or someone else (non-grantor) Life Insurance Policy – Two types (a) transfer ownership of an existing policy to the organization or (b) purchase a new policy/contract that names the charitable organization as the beneficiary (note: can also add charity to existing policy as another beneficiary) Pooled Income Fund – A common trust with many donors; pro rata shares; as each beneficiary dies, the value of their portion transfers to the organization

61. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) Advantages to the Organization: Long-term relationships with donors Provides future funds Promotes alternative thinking: “assets as gifts” Benefits to the Donor Opportunity to give (via assets as gifts) Income tax deductions Fixed or variable income Retirement income Reduction of capital gains Asset management

62. #4 – Fundraising Vehicles Planned Giving (or Gift Planning) What the experts won’t tell you - “You don’t need to know it all; the details are done by estate attorneys and financial planning experts!” Resources: RI Foundation – Videos on Options for Giving http://www.rifoundation.org/ProfessionalAdvisors/VideosOptionsforGiving/tabid/530/Default.aspx Partnership for Philanthropic Planning (PPP) – formerly the National Committee on Planned Giving (NCPG) National website: www.PPPNET.org RI website: www.PPPRI.org (for RI meeting schedule/info) Invitation to attend a PPP-RI Meeting:contact me if you would like to attend a meeting as my guest at no charge.

63. #4 – Fundraising Vehicles Other Tactics – Telephone & Internet Both are in a state of transition but each has a role in recruiting first time donors and renewing donors Phone-a-thons are a good way to follow-up on a direct mail appeal Provides a higher level of personalization and acts as a reminder A great way to engage volunteers in the process (especially in phone-thank-a-thons) The prominence of cell phones/cancellation of land-lines makes it difficult to reach a “live person” “Do not call” list myths

64. #4 – Fundraising Vehicles Other Tactics – Telephone & Internet (continued) Internet Giving depends on the scope, target audience, and mission of the organization Walks, Bike Rides, etc. have sophisticated web programs that are very successful as they empower the grassroots based fundraising team Most organizations don’t have such a force and should regard internet fundraising as a add-on Have an on-line giving option and include that link on all direct mail pieces Incorporation a scope of programs to support on your on-line portal Increase the number of credit cards accepted on your on-line portal Great way to get more information about your donor, e.g. email address, mailing information, preferred phone number; can also include one or two survey questions on your online portal

65. #5 – Creating your Professional Brand “Industry Champion” AFP/PPP …and other professional associations “Industry Expert” Ascent Advisors …and clients “Organizational Expert” Butler Hospital …and other employers “Teacher/ Mentor” RIC/Bryant …alumni relationships, teaching positions “Community Volunteer” American Red Cross …and other volunteer opportunities Linked In My Profile

67. Get feedback from people outside of your organization; objective feedback

68. Affiliation with other networks helps to provide credibility to you as a professional and to your organization (where you are not the paid “mouth-piece”)

69. Provides you with Best Practice information; use in your own organization; use to provide leverage for new idea implementation

71. AFP, CASE, AHP, PPP gatherings – Professional Associations

72. Alumni Groups – Not only for Colleges (e.g. LRI)

73. Chamber of Commerce Events – membership is not required

74. Civic Clubs (Rotary, Lions, etc.)

75. Sports – golf leagues, tennis, etc.

76. The Internet provides other opportunities

78. #6 – Ethics inFundraising Factors that Challenge Ethics in Fundraising Fund raising is not “business as usual” Due to the amount of personal attention, engagement and creativity it impossible to outline every single scenario that can occur can document an ethical response The challenge comes from changes in non-profit organizations, changes in the public’s assumption about nonprofits, and from technological shifts in how fund raising is done Increased education and professionalism helps, but still dependent on the professional Being responsive to changing circumstances and conditions leads non-profit leaders and managers to consider moral issues that pertain to their organizations What is fine for one organization, may be a contradiction to the mission of another organization; no one size fits all approaches (some examples)

79. #6 – Ethics inFundraising Answers to Ethical Dilemmas are not always clear AFP suggests using the following guidelines: If you use this solution, will you be able to look in the mirror and feel proud? Is your solution one for which your organization can stand tall in front of its donors and clients? Given today’s climate, would this solution stand up under the scrutiny of the press? As a Development Officer progresses through their career they achieve higher levels of professionalism…and an ethical sense (they progress from technician to professional). There is no substitute for experience in this field

80. #6 – Ethics inFundraising Ethics and Professionalism The text outlines six criteria that are essential to the fund raising profession; they are: Autonomy Systematic knowledge Self-regulation Commitment and identification Altruism and dedication to service (fund raisers are more generous with their resources and time than other citizens) Ethics and sanctions (AFP has a process in place to sanction unethical behavior by members) “Do we live for philanthropy or do we live off philanthropy” (Robert Payton, Former Executive Director Center on Philanthropy at Indiana University)

81. #6 – Ethics inFundraising Section 501(c)(3) of the Internal Revenue Code Professional Fundraisers must always be cognizant of the non-distribution clause “…no part of the net earnings of which inures to the benefit of any private shareholder or individual,…” Commits nonprofits and those associated to the public good Establishment of trust between donors and organizations Professional Fundraisers must be the protectors; ensure that we, and all others, do not benefit personally from the funds being donated to an organization This do NOT mean that fundraisers should not be paid fairly and equitably; it does mean: Fundraisers do not accept personal gifts from donors Salaries must be commensurate with public expectation Board members should not have competitive advantage in bidding for business with the organization

82. #6 – Ethics inFundraising Issues of Professionalism (Rosso, 2004) What is the role of trust in our development as fund raising professionals? What are the burdens placed on us as fund raising practitioners by the “non-distribution clause” in Section 501(c)(3) of the code? As fund raising practitioners, who is are client: the donor or the organization? In every transaction, what are the intents of the donor and what are the intents of the organization? How can we, as fund raising professionals, protect and maintain our integrity as “boundary spanners” between donors and organizations? How do we manage the tensions that arise as fund raisers working for organizations assist donors expand their philanthropy?

83. #6 – Ethics inFundraising The Josephson Institute surveyed more than 10,000 to define the values that are important to an ethical or virtuous person. Josephson’s 10 ethical values that form the basis for ethical decision making: Honesty Integrity Promise-keeping Loyalty (fidelity) Fairness Source: Achieving Excellence in Fund Raising, Rosso, 2003 Concern for others Respect for others Law-abidingness and civic duty Pursuit of excellence Personal Accountability

84. #6 – Ethics inFundraising A Sample Ethical Dilemma: What does the professional fund raiser do (the matter of personal accountability) when the organization (loyalty-fidelity) decides to use funds given for one purpose by a donor (promise-keeping, integrity, honesty) for another purpose? Three step process: All decision must take into account and reflect a concern for the interests and well-being of all shareholders Ethical values and principles always take precedence over non-ethical ones It is ethically proper to violate an ethical principle only when it is clearly necessary to advance another true ethical principle, which according to the decision maker’s conscience, will produce the greatest balance of good in the long run

85. #6 – Ethics inFundraising Payton’s Ethics Cube: Individual (fundraiser) against the Organization surrounded by Competence, Language, Relations and Mission First Ethical Tension – Individual vs. Organization Is the fund raising executive acting in the best interest of the organization? Is the organization treating the professional fairly (compensation, etc.) Who is the client? Competence Competent in ethical and technical standard of the fund raising profession Law abiding Pursuit of excellence Personal accountability

86. #6 – Ethics inFundraising Philanthropy is based on voluntary action for the common good. It is a tradition of giving and sharing that is primary to the quality of life. To ensure that philanthropy merits the respect and trust of the general public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights: (see next slide) Payton’s Ethics Cube (continued): Language The way we talk about our profession The way we discus the process of fund raising E.g. don’t refer to donors as “targets”; or “hit people us” Integrity, honesty, commitment to openness Relationships Who owns the relationship? Promise keeping, loyalty and fidelity, fairness, concern for others Mission Fund raising begins with Mission The Donor Bill of Rights

87. #6 – Ethics inFundraising The Donor Bill of Rights I. 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. II. 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. III. To have access to the organization's most recent financial statements. IV. To be assured their gifts will be used for the purposes for which they were given. V. To receive appropriate acknowledgement and recognition. VI. To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law. VII. To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature. VIII. To be informed whether those seeking donations are volunteers, employees of the organization or hired solicitors. IX. To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share. X. To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.

88. #6 – Ethics inFundraising “Moveable Assets” - You have built an excellent reputation as development officer for a fine arts organization in a small city. You’ve been able to enlist the support of many new donors and have cultivated numerous major gifts. You’ve been offered a higher paying job at the city hospital. A. Suppose you have been cultivating a wealthy philanthropist, Mrs. X, who has no real interest in the arts. Mrs. X has numerous health concerns. She is likely to respond favorably to a request for support of the hospital primarily because she has high personal regard for you. Would it be a violation of the AFP Code of Ethical Principles to ask Mrs. X to make the gift to the hospital instead? Yes No It depends Don’t know B. Suppose you have worked hard to write original text for planned-giving brochures that have been successful for the arts group. Would it be a violation of the Code to copy from them when you create the brochures for the hospital? Yes No It depends Don’t know

89. #6 – Ethics inFundraising “Not-So-Good Form” You are a development officer in a three-person development office. One day while reviewing your organization's government-required federal revenue agency reporting form (such as the Form 990 in the U.S., or the T-3010 in Canada) you discover a sizable difference between the total amount of donations reported on the Form and the amount published in the institution's campaign publicity. When you ask the Chief Financial Officer about the discrepancy, the CFO replies, "Don't worry, the Form is only an informational return. The revenue agency does not audit it.“ A. To be consistent with the AFP Code of Ethical Principles, what should you do? 1. Inform the Chief Development Officer about the discrepancy. 2. Tell the CFO that the Form must be filled out correctly. 3. Inform the CEO that the Form must be filled out correctly. 4. Ignore the matter because the Form is not your responsibility. 5. Other B. Suppose the Form is prepared each year by the organization’s accounting firm. Under the AFP Code of Ethical Principles, would this arrangement absolve you from any duty in connection with the Form? 1. Yes 2. No 3. It depends 4. Don't know

90. CONTACT INFORMATION: Michele R. Berard, MBA, CFRE Butler Hospital (401) 455-6565 mrberard@butler.org Ascent Advisors (401) 263-4902 mberard@ascentadvisors.net

91. EXERCISE SWOT Analysis : Identify general operating expenses that are taboo Conduct a SWOT Analysis for each one Strengths Opportunities Weaknesses Threats