FEBRUARY 2019 | IMPACTINGOURFUTURE.COM
An Independent Supplement by Mediaplanet to USA Today
Carolyn Miles, CEO of Save the Children, discusses the importance of supporting the women working for nonprofits
DISCOVER the ways new data has changed how nonprofits fundraise and reach new donors
LEARN more about how the California wildfires have impacted local nonprofits
Reinventing the Donor Experience
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Learn how to figure out if your scholarship money is actually considered taxable income. Page 4
in this issue
Discover why a lack of donor retention continues to plague the nonprofit industry. Page 6
Read more about how using technology can attract smaller donors to your nonprofit work. Page 11
How Technology Has Changed the Donor-Charity Relationship New technologies are changing the relationship between donors and charities. With hundreds of organizations to compete with, how can your charity stand out?
ou have an incredible and inspiring mission, but your charity is having a difficult time keeping its donors from year to year. Does this sound familiar? You’re not alone. Data from the Association of Fundraising Professionals’ fundraising study shows less than half of all donors (45 percent) who give to a charity one year contribute to the same charity in the next year. The trend is even worse for new donors to a charity — just 26 percent of new donors give a second time to the same organization.
that donor contributions and gifts have made. Not every communication should include an ask for money. •Thank donors. Too many charities still don’t thank donors enough, and some don’t thank donors at all. Donors give their money freely, and they should be thanked — a lot — for making the choice to contribute their money to your charity. •Use different methods for reaching out to donors. Some donors may still want the traditional letter, while others may want to hear from you via email, text or social media. •Ask your donors what they want. How do they prefer to be contacted? What do they think of what you’re doing? What could you be doing better? Use online surveys and other means to find out what your supporters are thinking.
The challenge for charities
Why is this happening? For most charities, the chief obstacle is the message. The donor-charity relationship has been transformed over the past couple of decades, but very few charities reflect these changes in their communications with donors. Ten years ago, charities led the relationship. They sent a letter to donors, described the programs they were developing and indicated what they needed, and most donors simply sent a check back to the organization. However, technology has changed the donor-charity relationship, and donors now have the power to lead. They have hundreds of different charities to choose from when deciding who to support. They can go to a
charity’s website and get information about its programs or find online reviews about a charity’s work. In addition, newer generations want to use technology more than older donors. They don’t want to just send a check; they are looking to see the impact a charity creates. They want to be part of the story of
your organization and see how you’re working to make the world a better place. Here are a few ways a charity should respond: •Make donors a vital part of your story. What was your organization able to accomplish together in partnership with your donors? •Send out different types of communications, including updates on the impact
There are lots of ways to connect donors more strongly with your mission, and that’s the basic goal of fundraising: to create strong connections — a partnership — with your donor, so they’ll be inspired to give. Treat them like a partner, and you’ll have strong and loyal supporters for years to come. n Mike Geiger, M.B.A., C.P.A., President and CEO, Association of Fundraising Professionals
Publisher Hailey Pedicano Business Developer Stephanie King Managing Director Luciana Olson Designers Chris Espino, Tiffany Pryor Copy Editor Lauren Hogan Director of Sales Shannon Ruggiero Director of Business Development Jourdan Snyder Director of Product Faye Godfrey Lead Editor Mina Fanous Production Manager Josh Rosman Production & Social Media Coordinator Bria Mastroianni Cover Photo Sebastian Meyer/Getty Images for Save the Children All photos are credited to Getty Images unless otherwise credited. This section was created by Mediaplanet and did not involve USA Today.
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The Insurance Risks Facing Nonprofits Today Pamela Davis, founder, president and CEO of the Nonprofits Insurance Alliance, answers questions about how nonprofits can better manage risk. What are the biggest risks facing nonprofits today? Nonprofits are being asked to take on a tremendous number of responsibilities once shouldered by government. They are increasingly being asked to provide care for the most vulnerable, including dependent and fragile children and adults. They do this while government funding for these programs is declining and needs are increasing. Despite heroic efforts made by nonprofit leaders and staff, these pressures make it extremely difficult for them to provide the level of care essential to prevent harm to these vulnerable populations.
In general, nonprofits have always been eager to do whatever they can to operate safely in spite of funding that does not provide sufficiently for training and facilities. What has changed is the growing pressure on nonprofits to take over the care of even more complex and difficult populations from the government, while having access to fewer and fewer resources. What was your goal in creating the Nonprofits Insurance Alliance, and in what ways do you think the alliance impacted the nonprofit insurance industry? My goal in creating Nonprofits Insurance Alliance was to give nonprofits control over an important financial service — insurance. Insurance is a bit like electricity — you don’t notice it until you don’t have it. The commercial insurance industry is inconsistent in the type of nonprofit risks it is willing to insure. Without property/casualty insurance, nonprofits can’t operate. Now with 18,000 members insured and $500 million in assets, we know the risks facing nonprofits, how to value and fairly price those risks and how to help them with free risk management services. Because we exist, commercial insurance companies have had to up their game or lose their business to us. And once nonprofits come to us, they typically don’t go back to the insecurity of the commercial insurance market.
4 Reasons Your Scholarship Might Actually Be Taxable Receiving a scholarship can be one of the most uplifting and exciting experiences a student can have — that is, until you receive a tax bill.
curricula, an enrolled student body and a facility dedicated to teaching.
Generally, most scholarship money is tax-free. However, there are some specific instances where your scholarship would be considered taxable income. Here are the four situations that could put you on the hook for a tax bill:
Allocating your scholarship for room and board, insurance, medical expenses, transportation or any expense that is not required for your course completion will result in your money becoming taxable.
1. You’re not pursuing a degree, or your school of choice isn’t an eligible educational institution
3. Your funds are considered payment for services
The IRS requires you to be pursuing a degree at an institution whose primary purpose is to provide post-secondary education and instruction. It has to have one or more established
2. You’re using your scholarship money to pay for unqualified expenses
Be careful to note if you were awarded a scholarship in exchange for services such as conducting research, assisting the admissions office or teaching. There are exceptions to this rule, however. Exceptions include if you
PHOTO: MEREDITH COE PHOTOGRAPHY
How have you seen risk management priorities change for nonprofits throughout your career?
receive a scholarship or fellowship as a result of the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program or participate in a comprehensive student work program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college. 4. You didn’t use all the money
Any remaining dollars after qualified expenses will be taxable. For example, if you received a $10,000 scholarship but your qualified expenses only totaled $9,000, the remaining balance will be taxable. ■ Jackie Bright, Executive Director, National Scholarship Providers Association
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Ensuring — and Insuring — Nonprofit Survival in the Face of Disaster When natural disasters destroy property and threaten lives, nonprofits are often among the victims. Insurance helps them continue to help others. SPONSORED
isasters like the recent California wildfires are devastating — the cost is estimated to be close to $20 billion. The impact disaster has on nonprofit organizations often spells doom.
Ensuring survival “We were a whisker away of losing the company,” Irvine says. “We could not have done this without the support of the Nonprofits Insurance Alliance (NIA) and our insurance agents.” “Nonprofits are particularly challenged in a large-scale disaster,” says Dave Gibson, chief claims officer at the Nonprofits Insurance Alliance. “Many nonprofits care for vulnerable populations, and delays imperil survival.” The right partner
That me a n s t h at nonprofits need an
insurance partner that responds quickly in a crisis. “NIA’s sole purpose is to protect its nonprofit members,” Gibson points out. “There is a clarity of aligned purpose that pervades this organization. Over 30 years we developed the expertise and products that best serve nonprofits, and the underwriting and claims expertise to deliver on our promises.” Irvine lays out what a nonprofit should look for. “Property insurance, of course — but be generous with the square foot valuation,” he advises. “Extra expense and
income continuation and business personal property insurance is also important — but keep a good inventory.” Irvine stresses the importance of having the right insurer on your side. “NIA gave me a call and mentioned they were just trying to keep up with us. I appreciated that. We needed to move quickly to provide stability.” You can find more information about protecting your nonprofit during a disaster at insurancefornonprofits.org/ngo. n Jeff Somers
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How Can Nonprofits Start to Retain Their Donors? Bruce Pelz, founder of the Maji Safi Group and member of the Forbes Nonprofit Council, explains why donor retention continues to plague the nonprofit industry. How would you summarize today’s nonprofit landscape? Today’s nonprofit landscape is still vitally important to development and providing social services for vulnerable groups around the world, but it is very crowded and competitive. Giving has been on a decline in recent years, which makes it even tougher for nonprofits to maintain their annual budgets and continue to provide their beneficiaries with quality service. Additionally, nonprofits continue to be plagued by the long-held belief that their overhead costs should be between 15-20 percent of their expenses. While there has been a movement to debunk this myth, this harmful belief is still held by many grant makers and individual donors. Nonprofits these days are basically expected to run like small businesses, yet you see very few small businesses that only have a 15 percent overhead. This causes nonprofits (especially small ones) to struggle with paying top talent and takes away from the time directors have available to focus on programmatic impact since they have so many different job responsibilities. In your opinion, what is the biggest fundraising roadblock for nonprofits? I think the biggest fundraising roadblock for nonprofits is that a connection between the clients/ beneficiaries they are serving and where their income comes from is often lacking. Basically, this forces many nonprofits to have to run two different businesses. You have to do a good job serving your beneficiaries, who are often affluent and have varying levels of exposure to your mission, as well as your donors. This conundrum stretches nonprofit resources thin and forces staff members to wear many different professional hats. Why does donor retention continue to plague the nonprofit industry? Donor retention can be very difficult for nonprofits because charitable giving is often at or towards the bottom of most people’s financial priorities. There are also so many options for what problem or charity to support. According to the National Center for Charitable Statistics, there are more than 1.5 million nonprofits in the United States, which gives donors endless options and makes donor loyalty harder to achieve.
The Future of Data-Driven Nonprofits Senny Boone, the senior vice president of the ANA Nonprofit Federation, sheds light on how the future of data is changing nonprofit marketing.
How has data changed the way nonprofits fundraise and reach new donors? At the Nonprofit Federation, we know that nonprofit organizations are prolific users of data to raise funds, inform their donors and ensure their missions are being communicated to those they serve. The difference now is that the range and type of data have drastically expanded in today’s new data ecosystem. For example, a disaster-relief nonprofit can reach a donor in real time for local disaster relief using mobile devices to deliver results and updates. It is the most exciting and challenging time to be a nonprofit fundraiser. Data is available at every point in the communication with a donor, and this means that the charity can bring donors into the mission with immediacy and results. Where do you see the future of data and nonprofit marketing in the next 5-10 years? In the next 5-10 years, I see optimized engagement through datadriven relationships. Data is only one part of the equation for a charity — it is meant to be used as a valuable resource to reach the right person, deliver on mission and drive an organization’s results. We need to engage our donors in real time for the benefit of the social good. The future is
limitless as long as the nonprofit community treats data with respect and has a bigger, more meaningful relationship with donors beyond the donor data captured. What is the biggest benefit for nonprofits to use data in marketing/fundraising? There are several benefits: proper resource allocation, attribution based on channel, the ability to assess results and to inform decision making. Nonprofit organizations have very limited funds and need effective tools. With data comes knowledge and this enhances the use of limited resources to manage an organization’s mission now and for future growth. What is the GDPR? What does it mean for nonprofits? The General Data Protection Regulation (GDPR) came into effect for organizations active in the European Union on May 25, 2018, and it replaces the European Data Protection Directive in all EU member states. It is a very broad set of data protection rules and is important for charities in the United States to be mindful of. The GDPR does not exempt nonprofit organizations from data rules. Nonprofits collect a great deal of personal information, and this means organizations
with contacts in the EU will need to comply. The fines are very steep: 4 percent of annual turnover or 20 million euros. Here are some factors to consider which may trigger your compliance with GDPR: •Is your organization serving or reaching out to EU citizens? •Are you transferring data from the EU to the United States? •Does your website purposefully outreach to EU countries for donors or other mission-related activities? •Have you reviewed the types of data covered by the GDPR? Have you reviewed how to protect the data you may be collecting and sharing as a result? •Do you have proper permission processes in place to ensure you have the required consent for the data uses you may be engaged in? What is your biggest piece of advice for nonprofits looking to grow their fundraising and marketing efforts? As much as you need to build scale, do not forget the individual. Individuals want to give back, and you can help them by offering new, simple ways they can donate and get involved in your mission, not just as a one-time donor, but throughout the lifetime of your organization. Data is important so long as you can see the individual behind the numbers. n
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One CEO on How Women Are Breaking Barriers for Nonprofits Carolyn Miles, president and CEO of Save the Children, discusses her career in nonprofit work and gives advice to citizens looking to get involved.
and large ways that you can get involved, but the most important thing is picking that thing that you really care about and then looking at all the different ways to get involved.
What are the biggest differences between working in the for-profit sector and the nonprofit sector?
Sixty-six percent of nonprofit staff are female, yet only 28 percent of these women have executive positions. How did this dichotomy affect you and your career path?
The biggest difference I have seen is that for nonprofit organizations, the mission drives everything — both the bottom line and the people. What can everyday citizens do to help support the nonprofit sector?
As there are so many fantastic causes, I think the first thing is to decide what you are passionate about. Start with finding the thing that you really want to dedicate time and money to. There are small
Across the board, women have faced barriers in rising to executive positions, but change is happening. In 2011, I became the first female CEO of Save the Children in the United States since our founding in 1932. Now, almost half of our senior management team is female. Since becoming part of this leadership, one of my top priorities has been to drive the change to support more women to take on top positions both in my own organization and in the nonprofit sector.
with the private sector. There are not enough donations in the world to solve the issues of hunger, preventable deaths of children or inadequate access to basic education. We need innovative solutions to tackle global problems, and we need the resources and expertise of for-profit partners to create the best solutions. For decades, Save the Children has been working with companies ranging from health care to hotels, and these worldwide partners allow us to bring new tools to our challenges and ultimately help more children.
P H OT O
IA A ST
Why do you think the above contrast exists?
This contrast is more pronounced within nonprofits because many of the staff are female, but it’s the same issue that we see across industries and across society with women not having equal opportunities at the highest level. Save the Children works in communities around the world, including in the United States, to ensure everyone is treated and valued equally. Change doesn’t happen overnight, but it’s clear we’re making big strides. What is the number one challenge you have seen nonprofits face?
One of the biggest challenges I’ve seen among nonprofits is learning how to work
What are some of your best strategies for a nonprofit looking to scale up their impact?
Don’t go it alone. Even though Save the Children is large and works in almost 120 countries, we always work with partners to scale the programs and strategies that are proven to work. We partner with local NGOs, governments, corporations and the United Nations to help children and marginalized families. Without a strong network of partners, it would be impossible for Save the Children to reach more than 150 million people with our services each year. What is your inspiration in working in the nonprofit industry?
I think now more than ever, getting engaged with something you care about is really important. We cannot depend on governments in many parts of the world. People doing this kind of work is going to be future. ■
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Solutions Fit for Nonprofits Ensure Success Nonprofits have dual challenges — the mission side and the business side. A solid back-office supports the latter and enables the former. SPONSORED
lthough non-profit organizations (NPOs) have many of the same concerns as businesses in terms of project planning and cash flow, they’re very different animals in terms of income stream and goals. But there’s one
area where NPOs should follow business trends in order to serve those goals better: the back office. A new nonprofit era “Like many businesses, not-forprofits are entering a new era ruled by fresh, actionable data,” notes Rob Gethen Smith, global head of the Not for Profit Centre of Excellence at Unit4, a software company delivering enterprise software applications to NPOs and other services organizations. “The ability to use technology to gain insights
into consumer behavior enables them to attract more funding and optimize program delivery.” An example of how Unit4’s back-office technological solutions can help NPOs maximize their resources is Save the Children. The organization had been using a struggling decades-old legacy system prone to crashes and lacking modern collaboration tools. After selecting Unit4 to update their back-office, Save the Children U.S. can now roll out information across all locations in
real-time and can accurately forecast their financials. Purpose-built solutions Gethen Smith warns that NPOs must seek technology partners that understand their unique needs. “A good technology partner must be the ‘right fit,’” he says. “A solution adapted from commercial business software often comes with higher cost of ownership. NPOs work in a world of constant change. For a project-driven not-for-profit, efficiency means
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streamlining core organizational processes, like post-award grants management, managerial reporting and project reporting.” For Gethen Smith and Unit4, it’s all about helping organizations like Save the Children focus resources on reaching their goals and serving their communities. “Strong back-office technology is the linchpin of any strategy to help NPOs drive toward mission objectives.” n Jeff Somers
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Experts on How Technology Is Changing the Future of Fundraising How has technology changed fundraising? Mike Gianoni: Not long ago, Mike Gianoni, President and CEO, Blackbaud
Bill Strathmann, CEO, Network for Good
fundraising meant a letter in the mail with a return slip enclosed and the long wait that followed. Today, it’s so much more. Donors can contribute with just a few taps on their phones and amplify their impact with peer-to-peer fundraising platforms that integrate seamlessly with social media accounts. Thanks to analytics, fundraisers know how to set realistic campaign goals and then engage donors, prospects and their greater communities to achieve them. Bill Strathmann: Technology
Mike Geiger, M.B.A., C.P.A., President and CEO, Association of Fundraising Professionals
Steve Spinner, CEO, RevUP Software
Jean-Paul Guilbault, President and CEO, Community Brands
has leveled the fundraising playing field for small nonprofits who make up the vast majority of the sector. When reaching donors, direct mail was unaffordable, fundraising e-commerce was inaccessible and spreading awareness through social media was incomprehensible. Now, small nonprofits can manage donors with advanced technology that doesn’t require an advanced technology degree. Even companies like Facebook and Google have incorporated fundraising technology that empowers any consumer to fundraise for any charity instantly. The time for small nonprofits has arrived. Mike Geiger: Technology has been incredibly helpful for charities and their fundraising. It’s allowed charities to find global audiences for their work by reaching potential donors around the world. It’s also allowed charities to show their work and impact up close and personal through videos and other social media. And on the back end in the fundraising office, it’s allowed fundraisers to work more effectively and efficiently
using better computer programs and online applications. However, charities don’t need to be on the leading edge of using technology, but they need to show they are keeping up and have a presence in the online spaces where their potential donors are. Steve Spinner: Time is the
most precious commodity when it comes to fundraising. Technology allows you to research in minutes what previously took hundreds of hours to do. It enables volunteers to have access to the same tools as experts and leverages data to make smart asks. Technology is a cost-effective turbocharger to any professional fundraising organization. However, with all that is good, privacy concerns should remain paramount and need to be carefully monitored and observed. That is the balance data analytics technology requires: Data for good, not for bad. Jean-Paul Guilbault: Where and how we give has been transformed by both technology and business models. We have seen an increase in giving via mobile and online methods. Three out of 4 faith organizations and charities offered online giving as of 2017 — that’s up 42 percent since 2015. When you have a fundraising idea with mass appeal, crowdfunding technology platforms and messaging apps are becoming the go-to in connecting with younger donors and their networks. Quickly emerging are the technologies of machine learning that will automate financial reporting, reduce fraud and increase transparency about where organizations spend their money. Where do you see nonprofit technology in the next 5-10 years?
Mike Gianoni: We’re in the fourth industrial revolution, blurring the divide between the digital world and real life. In the coming years, the most successful nonprofits will operate entirely from cloud-based platforms that enable their teams to collaborate from any location, operating from the same data — a single source of truth. In this age of digital transformation, we will see hyper-personalized communications through machine learning of supporter habits. And we will see less paper, more transparency and new levels of collaboration. Bill Strathmann: In the United
States, 75 percent of giving comes from individuals. That will continue, but new generations will soon replace boomers as the primary fundraising source as millennials (now already 22-38 years old) enter their income-generating years and as the $30T great-wealth transfer begins. That means fundraising will be all about digital engagement and will follow the changes in consumer engagement we are already seeing today — the expectation for easy experiences, transparency, real-time communication and tangible results that can be celebrated virally. As a result, donor-nonprofit relationships will also shift to more subscription-based model programs and fewer one-off experiences — if nonprofits get it right. Mike Geiger: I think the future of fundraising involves two different but related ideas: choice and technology. First, donors will continue to want to have more choices and options in how they engage with and support a charity. Simply giving a contribution once a year won’t be enough for most donors, especially younger
supporters. Maybe they’ll want to volunteer remotely online, maybe they’ll want to start a social media campaign or maybe they’ll start a video project talking about how the charity has helped them — the opportunities will be endless. Steve Spinner: Fundraising in 10 years will leverage all the current achievements in data, tools and social media technologies. Over the next few years, these combinations of data, community and smart technology will revolutionize fundraising as we know it, making the interactions between staff, volunteers and donors more personalized, more intelligent and more effective than ever before. Fundraising organizations will be able to finally fully achieve their investment charters and, in many cases, make progress on changing the world. Companies not investing heavily in technology today will be left behind tomorrow. The game really is changing that big and that fast. Jean-Paul Guilbault: Fund-
raising in 5-10 years will require bridging two very different generations and income sources with divergent expectations. Fundraisers will be engaging generation Z, where the give is no longer a cash donation from a pocket, but a swipe on a device. This is a generation that has been building social capital since birth and grew up on the internet. On the other hand, baby boomers are now the largest adult generation, and the wealthiest. This is the group that are the most generous and comprise 50 percent of what’s given to charity annually. This generation has also incorporated technology into their lives, but what triggers them to give often starts offline. However, how they pay is very much online. n
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Using Technology to Attract Small Donors to Your Nonprofit SPONSORED
For donors, technology enables people to easily find new causes to support, both local and national, and instantly take action to help them. Technology is the great equalizer, providing nonprofit organizations a cost-effective way to connect
with donors. Consequently, not having the right technology in place means you aren’t reaching potential supporters. If you don’t have a tailored, data-driven digital strategy or your donation page is poorly designed, hard to read, or confusing to understand, says Cheryl Hori, founder and chief strategist of Pacific Campaign House, you’re leaving money on the table. Software tools like AB Charities and ActBlue help nonprofits raise funds while connecting with donors of all sizes. Attracting small donors
Because technology allows non-
profits to reach a wider audience, the organizations can cultivate the small donor. “Small-dollar donors do more than just donate,” says Erin Hill, executive director at ActBlue. “They start the conversations with other people that lead to more supporters, and they’re more likely to engage with your nonprofit in other ways, like volunteering.” They also play a major role in the organization’s financial independence, by increasing the donor base and providing sustainable monthly gifts. With small donors, it isn’t just about the money; it’s also about the investment in the organiza-
tion’s purpose, adds Hori. Small donors want to help make a difference. Your organization can engage these small donors with a digital platform that reflects both yours and their values. Using your platform to connect with donors
To engage a lot of people, your fundraising platform needs to remove as much friction as possible from the donation process, explains Hill. You want to make it easy enough so they’ll want to come back and support you. Offering options like PayPal and Apple Pay, for example, make it easier for donors
to give wherever they are and on whatever device they prefer. “An under-appreciated aspect of fundraising platforms is the customized support they can come with,” adds Hill. ActBlue has entire teams dedicated to offering free digital fundraising trainings and one-on-one strategy sessions. Small-donor fundraising is seeing transformative growth, with millions of people saving their information online so they can easily donate again. Nonprofits need to start investing in these donors today, so they don’t miss out on money down the line. ■ Sue Poremba
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