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Diversified Funding: A Grantmaker’s Perspective

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Founded in 1915, The Chicago Community Trust is one of the nation’s oldest community foundations. It is also one of the largest, disbursing millions of dollars to Chicago-area nonprofits in the arts, human services, health care, education, and more.

The trust is also a firm believer in the need for healthy diversification of funding sources. “Whenever we see that a nonprofit has support from a wide range of sources, we can immediately tell that this is an organization that has a wide number of investors,” says Ngoan Le, the Trust’s vice president of programs. “We see that as a sign of strength, that this nonprofit has a low probability of going out of business.” Le says that when the Trust considers funding a nonprofit, it looks at the applicant’s program and administrative budgets to see if they are funded from a mix of sources. “We never want to be the only source of revenue for a budget,” she says.

Jamie Philippe, vice president of development and donor services at The Chicago Community Trust, explains that funding diversity can be broken down into three interrelated categories:

Diversity of sources, which includes earned and unearned income as well as competitive government grants;
Diversity of methods for securing sources, which includes direct mail appeals, face-to-face fundraising, special events, grant proposals, etc.; and
Diversity of purpose, which encompasses restricted funds such as facilities, programs, and endowment, and unrestricted funds.

The key, says Philippe, is to find the right balance of these three elements for a particular organization. For example, a membership drive is typically a fairly modest source of revenue, but its method is labor is intensive. However, membership funds are typically unrestricted. Special events are also labor intensive too, but the revenue is potentially greater, even though the funds raised may be restricted to a particular program.

The Trust encourages nonprofits to explore alternative revenue sources due to the economy, such as social enterprises and counseling services, but notes that these ventures can require fundamentally different approaches, a shift in the organizational culture, new staff, and possibly even changes to the mission. It even encourages nonprofits with similar missions or constituencies to consider mergers. “If merging helps you do your mission better and get a better base of support, then you are doing your mission well,” says Le. However, mergers should not be sought when in a position of weakness. “A merger can still work then, but it’s not a strategy for growth,” she says.

The Chicago Community Trust’s belief in diversified funding isn’t simply philosophical.

“Diversification is very relevant to us,” Philippe explains. “Community trusts are one of the few types of foundations that have to proactively raise money.” The Trust is currently in the middle of an endowment campaign, and is seeking a broad range of funds to continue serving an equally diverse spectrum of community nonprofits. “If it’s done well, we don’t think there’s such a thing as too much diversification,” she adds.

This post was adapted from “The Right Mix: How to Strengthen Your Organization’s Sustainability through a Well-Thought-Out Plan That Sees Money as a Strategic Asset,” by Paul Lagasse, Advancing Philanthropy, Summer 2013 (reprinted with permission). You can read the whole article here.

How to Tell Great Fundraising Stories

“There are three rules for writing the novel,” the author Somerset Maugham once wrote. “Unfortunately, no one knows what they are.” The same holds true for nonfiction stories. In his latest book, Storytelling Can Change the World, author and fundraiser Ken Burnett distills some valuable tips and techniques that he’s picked up in his more than twenty years as an advertising copywriter and fundraising consultant.

Key among them is to trust your readers. “Writers everywhere quickly learn that their job is not to tell the whole story, to etch in every detail of characters, places, impressions, and actions,” Burnett writes. “Much better instead to leave it to the reader’s imagination to fill and color in the gaps.” This is especially true for nonprofit storytelling, in which writers are often tempted to buttress their case with impressive facts and figures that only end up smothering the story. “Stories stick,” Burnett admonishes. “Statistics don’t.”

You can avoid data dumping by taking the time up front to think about what the reader will want to get out of your story. To help writers put themselves into the minds of their readers, Burnett recalls a lesson from playwright David Mamet. For every scene in a drama, Mamet taught, a writer has to ask three questions:

Who wants what?
What happens if s/he doesn’t get it?
Why now?

Even then, it may be hard to hear the beating heart of the story the first time you sit down to write it. Experienced writers know that the best stories require multiple drafts. Newbery Award-winning author Shannon Hale has likened the first draft to shoveling sand into a box from which she will later build sand castles. Feedback and testing are important for improving drafts; don’t be afraid to ask people to read each version and tell you what works for them and what doesn’t. But when you do, stress to your readers that you’re not seeking rewrites, approvals, or sign-offs at this stage. Draft stories are vulnerable to well-intentioned meddling, which inevitably hurts the story more than it helps.

A great story is an investment. The more work you put into crafting your story up front, the more durable, and thus cost-effective, it will be for your organization. Burnett recalls how, when he was working with the international nongovernmental organization ActionAid, fundraisers were concerned that a film about the organization and its mission that they showed to prospective donors had become overused and was no longer an effective motivator. However, testing quickly revealed that the film’s effect was just as potent as when it had first appeared; it was the fundraisers themselves who were getting tired of it, simply because they had shown it so many times. As a result, ActionAid’s fundraisers continued to show the film to great effect for many more years — generating gifts that might have otherwise been lost had the film been retired early.

How much have you invested in your fundraising stories?

This post was adapted from “Once Upon a Time: How Storytelling Can Motivate Donors to Support Your Nonprofit Without Being Asked,” by Paul Lagasse, Advancing Philanthropy, Summer 2016 (reprinted with permission). You can read the whole article here.

What Makes a Fundraising Story Great?

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Fiction storytellers are taught from an early age to “write what you know” and to “show, not tell.” Both of these admonitions apply to nonfiction storytelling as well. “The most important person in a story is you,” says fundraiser Ken Burnett to colleagues who come to him for advice. At first glance, this might seem to contradict the fundraising mantra of focusing the story on the donor and not on the organization. But in practice, the two perspectives are not just complementary, but also necessary. In a well-told story, you are serving as a proxy for the donor. “It is in effect saying, ‘I was there and I saw this, and believe me, if you had been standing there beside me, you would understand this too,'” Burnett explains.

An effective eyewitness story exudes authenticity. “It’s a lot harder sell when you have to repackage other people’s stories,” Burnett says. He advises people not to write their stories down too quickly after they happen. A story full of raw, fresh emotions tends to come across as false and insincere. At the other extreme, over-editing can have the same effect, though it can sometimes be difficult to balance the need for review and approval up the chain with the need to preserve is there generic propecia in the u.s what makes the story compelling. (“I like to believe that the customer is always right,” Burnett observed, “but I wish that the customer wouldn’t always rewrite!”)

Regardless of the writing and review process, the goal should be to craft a story that reads like it was created more or less spontaneously. “You can still script a story,” says Burnett, “but the best stories retain an element of improvisation.”

A successful story is also tailored for its audience. As legendary advertising copywriter David Ogilvy put it, “If we don’t understand them, how can we expect them to understand us?” When writing stories, fundraisers can and should draw on their extensive knowledge of donors and the community to craft a tale that will resonate with them. To share a story is to give a donor something of value stands out from everything else that’s coming in through their inbox and mailbox. Your generosity in offering a story to a prospective donor is more likely to lead to that person wanting to share something with you in return.

Effective Stories Make People Trust You — So Tell Them to Donors!

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What makes donors feel good about you and your organization? Veteran fundraiser Ken Burnett likes to talk to colleagues about a chemical called oxytocin. Discovered in 1952, oxytocin is a natural hormone used by doctors to safely induce labor. A little over a decade ago, oxytocin was also found to generate feelings of trust and cooperation in people. When he read about this discovery, Burnett saw a potential application for fundraising. “If we only could work out how to release the right chemicals in our donor’s brains, we’d be more successful,” he would tell fundraisers. Then, with a laugh, he would add, “The secret of success would be to take out a syringe of oxytocin and squirt it up their noses!”

Fortunately for fundraisers, science has since discovered a less invasive method of invoking feelings of generosity within the brains of donors: storytelling.

Dr. Paul J. Zak of Claremont Graduate University in Claremont, Calif., author of The Moral Molecule: The Source of Love and Prosperity and president of Ofactor Inc., is the scientist who first discovered the emotional benefits of oxytocin and recently demonstrated that character-driven narratives caused the brain to make produce the hormone (“Why Your Brain Loves Good Storytelling,” Harvard Business Review, October 28, 2014). “When you want to motivate, persuade, or be remembered, start with a story of human struggle and eventual triumph” Zak writes. “It will capture people’s hearts — by first attracting their brains.”

Zak’s discovery didn’t surprise Burnett, the managing trustee for the Showcase of Fundraising Innovation and Inspiration. Shortly before Zak’s findings were announced, Burnett released what he considers his most important book, Storytelling Can Change the World, a handbook for building lifetime relationships with donors through the power of compelling narrative. Science, it seems, has finally caught up with Burnett, who’s been trying to convince nonprofits about the power of stories for years.

“The book is the core of my philosophy of what’s wrong with fundraising,” says Burnett, an active participant in the ongoing cheap xanax no membership civic debate in the UK over fundraising practices that have led to controversial regulatory changes. “We have to move from persistent asking to consistent inspiration. And storytelling is brilliant at doing that.”

Changing the World, One Story at a Time

In Storytelling Can Change the World, Burnett argues that there are only two types of stories: those that inform and entertain people, and those that rouse them to action. Fundraisers, he says, too often rely on the former while avoiding the latter. He illustrates the distinction using a story of his own. Imagine two Roman senators, Caius and Marcellus. Both are master orators. Caius presents indisputable facts and persuasive evidence using reason and logic, inspiring his audience to applaud his skill. Marcellus, on the other hand, arouses passionate emotions and paints vivid narrative scenes, inspiring his listeners to rise out of their seats willing to follow him wherever he points.

Fundraisers, argues Burnett, need to emulate Marcellus. “We don’t want our stories merely to move our readers to applause,” Burnett writes. “Rather, we want them to leap to their feet, passionate, angry, impelled and determined to make change happen.” According to Burnett, the stories that rouse audiences to their feet are:

About the reader, not the cause
Interesting, surprising, or unexpected
Believable, real, and accessible
Gripping
Simple, visual, memorable, and friendly
Capable of grabbing the audience’s emotions

Storytelling also offers a solution to a troubling paradox revealed by many donor surveys: Donors report feeling a sense of satisfaction and achievement when they give, but dislike being asked. A good story, says Burnett, encourages people to give without feeling like they’re being asked in the first place. “The two ‘i’s in fundraising should not stand for ‘interruption’ and ‘irritation,'” he emphasizes. “They should stand for ‘inspiration’ and ‘information.’ And storytelling is key to that.”

Mobilize Donors Fast to Respond to Breaking News

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Nonprofits should always be ready to capitalize on “overnight sensations” — such as the social media storms that catapulted the Bard Prison Initiative’s surprise debate victory over the national-champion Harvard team and the University of Mississippi’s 2014 upset victory over the University of Alabama — to promote other programs that donors might want to know about too.

That’s what the Washington, D.C., based Humane buy propecia online hong kong Society of the United States (HSUS) did following the public outrage over the killing of Cecil the Lion by an American big-game hunter in Zimbabwe in early July, 2015. Within two days of the story’s breaking, the Humane Society’s social media, email, website, video, and photo advertising channels launched a coordinated effort to encourage people to sign a petition calling on the U.S. Fish and Wildlife Service to place African lions under the protection of the Endangered Species Act. The initial Facebook post, for example, reached over 3.8 million people and was shared 34,000 times. “Trophy hunting is an issue that HSUS has been working on for a very long time,” explains Carie Lewis Carlson, director of social marketing at the Humane Society. “But until this tragic incident it was never brought to the forefront.”

The Humane Society seized the opportunity to build momentum for some of its other core issues as well. For example, it encouraged people to call on airlines and UPS to ban the transportation of hunting trophies; ultimately more than 40 airlines worldwide agreed to implement the ban. The Humane Society also alerted its supporters and social-media followers to legislation being considered in Congress that, among other things, would permit the importation of polar bears killed by hunters.

Carlson explains that the Humane Society was able to launch these campaigns quickly, while the killing of Cecil was still being widely discussed, because it already had the pieces in place for just such an occasion. “The best thing to do is to be prepared with a plan if something goes viral,” Carlson says. “You should always be developing campaigns, creative, and messaging that you think people will love and glom on to, though you never know what is going to resonate.”

The Humane Society’s plan broadly follows these lines:

A vice president instructs staff to drop what they’re doing and prepare a response to a breaking story.
Communications and program staff meet to hammer out the organization’s messaging.
The organization issues a press release and sends out an initial tweet.
An action alert or donation form is created and made available to supporters.
Staff prepare and roll out a formal marketing plan that includes assignments for all communications channels.
Strategies are shifted in response to daily reports.

“An opportunity can happen to anyone at any time,” says Carlson. “Nonprofits should be prepared with an outline of how to activate when an opportunity arises to insert their brand into breaking news, something that is going viral, or a trending topic.”

This post was adapted from “Expect the Unexpected,” by Paul Lagasse, Advancing Philanthropy, Summer 2016 (reprinted with permission). You can read the whole article here.

Be Prepared to Launch Campaigns Fast to Capitalize on Breaking Events

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Development officers know how to prepare for the uptick in giving that accompanies planned events, but sudden and unexpected surges in publicity like the one that hit the Bard Prison Initiative following its debate victory over the national-champion Harvard team last October can send staff scrambling to capitalize on them before the moment passes and people’s attention shifts elsewhere. “The vast majority of nonprofits don’t consider what will happen when something unexpectedly goes viral,” says Justin J. Ware, Vice President for Digital Fundraising Strategy at ScaleFunder, a Los Angeles-based digital fundraising platform for universities and nonprofits. “And when it does happen, they don’t know the first place to start.” Ware says that nonprofits can avoid that problem by taking three steps right now.

Ensure that you have, or can call on, enough people to staff up in response to a surge.
Develop a formal response strategy that identifies who is responsible for doing what and when.
Employ a multi-channel communications approach for mobilizing stakeholders and staying in front of the story as it spreads.

“When you build that capability, it’s not just there to catch lightning when it strikes,” explains Ware. “It should be part of a comprehensive plan that involves direct mail, phones, social media, a strong crowdfunding platform, and other resources.”

That plan should include taking photos and even video of events. Not only will you have something to distribute through your own social media channels, but you will also have something ready for the press should it come calling. Also, prepare background materials such as participant bios and histories of the organization and its mission to hand out when needed. The responsibility for curating these materials should lie with a person whose is tasked with anticipating media needs.

Ware understands that it’s not easy for development and communications staff to make a winning case for developing a strategy to respond to extreme-case scenarios that may never come to pass. In an era of tight budgets, “better safe than sorry” just isn’t persuasive enough. Ware counsels clients to try buttressing their arguments with persuasive data, such as the overlap between the organization’s programs and popular trends, or accounts of recent media attention elsewhere.

To illustrate, Ware shares what can happen when you have the staff, strategy, and outreach tools in place to capitalize on an unexpected opportunity. Following the 23-17 victory of the University of Mississippi’s football team against longtime rival the University of Alabama on October 4, 2014, jubilant fans stormed the field and tore down the goalposts, resulting in a $75,000 fine against Ole Miss Athletics, which it promptly paid. Hours after the event, however, Ole Mis Athletics director Ross Bjork tweeted a photo of the celebration and joked that the people in the photo should help cover the expense. The tweet went viral, and donations immediately started flowing in, accompanied by significant media attention. The Ole Miss development office decided to capitalize on the response by launching the Victory Celebration Fund campaign on the fly.

Fortuitously, at that moment the development office was putting the final touches on its new crowdfunding platform called Ignite. “We had to hurry up and finalize everything for the launch of the campaign,” recalls Angela Avery, annual giving coordinator at Ole Miss. “We finalized the layout and testing of the platform on Monday, October 6th and we started planning the campaign with the Athletics Department at 3:30 pm the same day. The project launched the next day at 1 pm” — less than 72 hours after the game had ended.

The results were impressive: the $75,000 goal was met in less than four hours, and when the campaign was suspended two days later it was funded at 140 percent.

Taking advantage of the campaign’s momentum, the department simultaneously launched another campaign, “I Wear 38” (after the jersey number of the late defensive back Roy Lee “Chucky” Mullins) to raise funds for the Chucky Mullins Memorial Scholarship Fund, which provides scholarships to students with physical disabilities or exceptional financial need. This campaign raised just under $103,000 in its first day, and reached its full $150,000 funding within a week.

“I think the key is that you have to be ready to seize opportunities when they present themselves,” says Avery. “If we had done the prudent thing and waited a week and planned more thoroughly, we probably would have lost all the crazy enthusiasm and excitement that followed that momentous win.”

Based on the lessons learned from the two impromptu campaigns, Avery and the development staff now encourage project teams to build in time to prepare a campaign while also timing them to coincide with significant events that are likely to have significant audience response. “It’s all about creating a personal connection with the donor to inspire them to be a part of the campaign,” Avery explains.

This post was adapted from “Expect the Unexpected,” by Paul Lagasse, Advancing Philanthropy, Summer 2016 (reprinted with permission). You can read the whole article here.

After Harvard Debate, Bard Prison Initiative Sees Jump in Giving

When the debate team of the Bard Prison Initiative (BPI) at Bard College in Annandale-on-Hudson, N.Y., defeated the national-champion Harvard team in a friendly contest last October, no one at Bard was shocked by the outcome. After all, the Bard team, a trio of of inmates at the nearby Eastern New York Correctional Facility who participate in Bard’s rigorous educational program for incarcerated men and women, had won its first-ever debate when it went up against West Point. “We know how talented our students are,” explained Laura Liebman, director of development for the Bard Prison Initiative. “The outcome was not surprising at all.”

What was surprising, however, was the sensation the story caused when it unexpectedly went viral several weeks later. At first, when an article about the debate in the Wall Street Journal briefly spiked as the site’s number-one story, BPI’s small staff was able to easily field the media and donor inquiries that followed. But then word began to spread on social media. First, there was a brief Twitter exchange about the Wall Street Journal story between then-Secretary of Education Arne Duncan and documentary filmmaker Ken Burns, who is producing a film about the Bard program. Then, the news website Vox published a feature on the debate that was widely shared. From there, the story exploded on Facebook and Twitter and on other media outlets, catching Liebman and the rest of the Bard staff off guard.

“Our understanding was that if the story was going to go viral, it would have done so right away,” Liebman recalls. “So we weren’t anticipating more attention. But by Monday morning, we were being flooded with media inquiries. It suddenly felt like the whole world was calling.”

In addition to reporters seeking interviews, the calls included donors eager to make gifts and grantmakers inviting BPI to apply for grants. What had started out as simply an inspiring underdog story morphed virtually overnight into a tremendous fundraising opportunity for the institution. But would BPI’s staff have the time and capacity to take advantage of it?

“It was ‘all hands on deck’ for a few days,” Liebman recalls. “As is typical for any small nonprofit, we don’t have a large staff. Initially, we were just answering phones and responding to emails as fast as we could.”

When the dust settled, BPI calculated that the media attention had resulted in a 40 percent increase in gifts and a 40 percent increase in new donors. Not only that, but the geographic distribution of the donor base has widened dramatically as a result of the international attention. “It looks like I’m going to be doing a lot more traveling!” Liebman says.

The BPI-Harvard debate may also prove to be a turning point in the growth of the organization. “There’s absolutely no question that that the Harvard debate and the media explosion around it has had a major effect on our efforts to secure stable revenue,” says Max Kenner, BPI’s founder and executive director. Though the donor base has grown dramatically, Kenner, who makes a point of sending a handwritten thank-you note for every gift regardless of its size, believes that this will not change the organization’s approach to donor relationships. “Our community is made up of individuals and institutions across the country to whom our work represents something meaningful,” he says. “The result has really been an affirmation of what we do here.”

What are the major takeaways from the experience? “Events like this are when it’s really critical to have a strong team in place, people you can trust and really rely on,” says Liebman. “When you’re tested, that’s when you really see the strength of your team and your commitment to the mission.”

This post was adapted from “Expect the Unexpected,” by Paul Lagasse, Advancing Philanthropy, Summer 2016 (reprinted with permission). You can read the whole article here.

Powerful Fundraising Appeals: Advice from Two Advertising Masters

The elements of a compelling fundraising letter are timeless — but that doesn’t mean they’re easy to explain to writers. That’s why I like the advice offered by Kenneth Roman and Joel Raphaelson in their long-out-of-print guide to good business writing, Writing That Works.

The authors of this slim, strikingly designed book worked for Ogilvy & Mather, the renowned advertising firm famous for such legendary ad campaigns as The Guinness Guide to Oysters, Rolls-Royce, and the Man in the Hathaway Shirt — to name just a few.

In other words, Roman and Raphaelson know how to persuade people to part with their money.

“To raise money for charitable, educational, or political causes, you must appeal to the emotions,” they write. “People can have strong feelings about a community fund or a church or a candidate. They can want to give.”

Whether writing a sales letter for a business or a fundraising letter for a nonprofit, there are certain elements that are universal in getting people to give you their money willingly — and happily. Here are Roman’s and Raphaelson’s tips for successful sales letters, which apply to fundraising appeals too:

Have a strategy. “Successful advertising starts with clear thinking on what to say — and to whom.”
Project a personality. “Sometimes the tone of your letter can be as important as what you say.”
Make sure the offer is right. “The offer is what gets the action.”
Get people to open the envelope. “If the sales letter is an advertisement, the envelope is the headline, serving to attract the reader to read on.”
Start fast. “Involve your reader in your first sentence, or your second sentence may never be read.”
Favor long letters over short ones. “Remember that your reader is looking for information, not for reading pleasure. Every sentence must work for its living.”
Give something away. “A simple pamphlet, perhaps one you’ve already printed for another purpose, can be an effective free offer — and a cheap one.”
Make it inviting to read. “People won’t read long letters that look formidable, with solid blocks of text.”
Make it look like the real thing. “Letters should look like letters, not like advertisements.”
Give your reader something to do. “Don’t let your reader nod in agreement, but do nothing. Your enemy is inertia.”
Don’t let your reader off the hook. “People procrastinate. You must create a reason for your prospect to act now.”

Here are a few more tips that apply explicitly to fundraising appeals:

Tell the prospect how much money you want. “The reader does not know how much you expect. Suggesting the amount is up to you.”
Make it emotional. “People don’t give to institutions; they give to other people.”
Make your donors members, not just givers. “An effective fundraising letter gets people to identify with your cause. It makes them feel part of it.”

Writing That Works is full of valuable, succinctly expressed advice about many other kinds of business writing that are relevant to fundraisers too, such as reports, speeches, and newsletters. Although a second edition came out in 1995 and a third in 2000 in order to address the advent of personal computers and the early internet, the advice in the first edition is as sound today as it was 35-plus years ago — plus, I think the design and layout are more aesthetically pleasing than those of its successors.

If you write for nonprofits, it’s worth tracking down a copy of any edition for your reference shelf. Properly applied, it can truly help your communications stand out from the crowd.

Prospect Research Can Boost University Fundraising Success

In an increasingly competitive giving climate, it is not enough for skilled researchers to provide information about just the wealthiest prospects. “The things we know about the people who will take a meeting with us are probably not true for the majority of our constituents,” says Shelby Radcliffe, Vice President for Advancement at Willamette University in Salem, Oregon. “They are less than 1 percent of our constituents. Prospect research analytics can help us develop an understanding of the other 99 percent.”

This is especially important for institutions of higher education that are experiencing far more competition for the philanthropic dollar than ever before. “I think where institutions can add that competitive edge is on the prospect research side,” Radcliffe says. “Do we know where the next $100 million is coming from? That’s not a question you can answer one prospect at a time.”

In a previous position, Radcliffe administered the private phase of a capital campaign by having five full-time researchers meet with fundraisers at least monthly to review data and, often, after each prospect visit. Radcliffe’s researchers were encouraged to accompany fundraisers on visits as part of their training, and they were required to spend at least one evening soliciting gifts with the student calling program. While it took time for Radcliffe to bring enough researchers on board and for the fundraisers to develop confidence in the data, the results were worth it, she says.

In its 2012 survey of educational institutions, Best Practices for Prospect Research in Higher Education Fundraising, Second Edition, prospect research firm WealthEngine found that high performing organizations invest more in research resources than their lower performing peers. The most successful institutions have up-to-date strategies for screening, collecting, implementing and safeguarding prospect research data and integrating it into the fundraising workflow.

The challenge, Radcliffe points out, is that prospect research technology has not kept pace with the communications revolution. Ponderous relational databases often lack the flexibility to allow fundraisers to update them right after a prospect meeting while key information is still fresh. “As an industry, higher education institutions and nonprofits in the United States are raising a lot of money, but we could be raising more,” she says.

When Radcliffe speaks at conferences, she often meets people who manage hundreds of staff and millions — even billions — of dollars in gifts, but have only the most basic knowledge of sound prospect research practices. “People are meeting their goals, but I think they’re setting their goals too low,” she says. “We need to be more effective in using information management tools to maximize our effective- ness, but it’s hard because we’re an industry that’s built on handshakes and relationships. We’re in a time of transition, and we have a long way to go.”

This post was adapted from “More Than Data: How Prospect Research can Help You Fine-Tune Your Ask, Allowing You to Raise More Money More Cost-Effectively,” by Paul Lagasse, Advancing Philanthropy, January-February 2011 (reprinted with permission). You can read the whole article here.

What’s in Your Donor File?

As people conduct more and more of their lives online, they are putting a great deal of personal information about themselves in places where others — including prospect researchers — can find it easily. This can lead to misunderstandings about what prospect researchers can find and use. For example, the article “Is Your Favorite Charity Spying on You? (The Wall Street Journal, May 16, 2010) claims charities are “using increasingly sophisticated technology [to] survey your salary history, scan your LinkedIn connections or use satellite images to eyeball the size of your swimming pool.”

As unsettling as it is to imagine a cadre of satellite-snooping prospect researchers monitoring everyone’s promotions and portfolios, the reality is fortunately much more mundane, says Justin Tolan, chief fundraising adviser at AMPERAGE in Cedar Falls, Iowa. “The primary reason you should be seeking information is to determine the interest before determining the wealth,” he explains. “Interest is paramount.” However, researchers routinely overlook much of what’s publicly available simply because it does not tell fundraisers about a prospect’s philanthropic interests.

At the same time, there are also legal boundaries as to what researchers can obtain and use. Anything spelled out in legislative privacy provisions, such as Equal Employment Opportunity Commission (EEOC) privacy laws, the Health Insurance Portability and Accountability Act (HIPAA) or the Family Educational Rights and Privacy Act (FERPA), is strictly off limits. Furthermore, the information that is collected must be kept strictly confidential with controlled access. The APRA Code of Ethics identifies four fundamental principles that members must abide by:

integrity and honesty in the conduct of research
accountability to applicable laws, standards and levels of discretion
accuracy, appropriateness and confidentiality of the work
avoidance of conflicts of interest

The line for charities, especially for quasi-public institutions such as state universities and public libraries that have access to vital statistics, is quite clear: information such as student grades, medical histories, fines and/or legal violations has no bearing on gauging interest. As for information about bank accounts, loans and credit card debt, that is strictly unavailable. Researchers may learn about many of a prospect’s assets, but not his or her liabilities.

Finally, there are professional and ethical boundaries governing what should be collected. Tolan says that researchers traditionally follow a “golden rule” principle. “You should not seek details on a person’s private life if you would not want him or her seeking the same about you,” he advises. (The AFP Code of Ethical Principles and Standards and A Donor Bill of Rights also apply; both are available on the AFP website.)

Joshua M. Birkholz, a principal at Bentz Whaley Flessner in Minneapolis/St. Paul and author of Fundraising Analytics: Using Data to Guide Strategy, sees a trend in both the quantity and quality of information being collected. Rather than compiling extensive biographies of prospects, nonprofits are collecting less, but more relevant, information. “It’s actually more costly and inefficient to do detailed research up front,” he says. Initial research should describe a prospect as likely to have a compatible interest with the organization, which a fundraiser can then build on during the initial contact. “Once you meet the donor,” he adds, “all the information you got before the meeting may go out the window.”

For their part, experienced donors understand and even expect that researchers are collecting information about them. However, having too much information up front can get the relationship off on the wrong foot. “It’s awkward to have a conversation in which I know more about them than they think I should know,” Birkholz explains. “Fundraisers should take the high road in the relationship.”