“Crisis of the Ages” Averted: How Nonprofits Can Survive and Prosper

laughing from the bankLast month I alerted you to a coming crisis that will befall nonprofits and businesses in general. You can read about it here Crisis of the Ages … Is Your Nonprofit Ready?.

I promised that I would provide you with ideas that will help nonprofits to withstand the crisis, and possibly help organizations to thrive during this critical time in our history.

In 1989 When I left the for-profit world and ventured off into the world of nonprofit management and fundraising, there wasn’t much being said about planned gifts at that time. Nonprofits gladly accepted bequests as their donors passed away, but those gifts were few and far between. The majority of nonprofits, except for colleges and hospitals, didn’t have planned giving as part of their overall proactive development strategy.

Then in the mid-1990s while serving as Director of Development for a Detroit, Michigan-based nonprofit, the good folks at Indiana University School of Philanthropy (now the Lilly Family School of Philanthropy) invited me to attend a series of seminars focused on major gifts, endowment and planned gift fundraising. These were terrific experiences! This was also the first time that I heard anything about the fast-approaching wealth transfer/planned giving opportunities.

The aging Baby Boomers are presenting the largest wealth transfer in history with an estimated $41 trillion dollars in wealth being transferred before the year 2052. Learn more about this wealth transfer and its opportunities for planned gifts by reading Wealth Transfer Report from Boston College.

Fast forward to today, and in the 20 years since I first learned of this historic wealth transfer, and since then having worked with many consultants who were advising the nonprofits I served on matters of planned giving and major gifts, not once did these consultants ever suggest what the nonprofits should do with the planned gifts as they are received, nor did they warn of what was coming after the end of The Great Wealth Transfer in 2052. Unfortunately, many nonprofit consulting firms, like many businesses, tell their customers what they want to hear. Nonprofit leaders are eager to learn how they can raise more money, but do not like being told how to use the funds they’ve raised.

What can nonprofits do now to be prepared for the forthcoming crisis?

First, every nonprofit small and large should have their own endowment. I learned this 20 years ago. And as often as I have advised nonprofit CEOs and Boards to establish an endowment, most were concerned only for today figuring that any huge benefit from an endowment wouldn’t occur until there was another Board and CEO in charge. So if your nonprofit doesn’t have an endowment — create one soon!

Second, make it a policy that as planned gifts are fulfilled the money is invested in the nonprofit’s endowment — that is unless the donor designates his/her planned gift for another purpose. You will be surprised how quickly the endowment will grow, and how it can provide revenue that the organization can use both now for its programs and later in response to a crisis.

You will find that your donors love this idea, and that the number of planned gifts will grow because of it. After all, a planned gift is a donor’s way of leaving a positive legacy. The way that many nonprofits spend their planned gifts, “the legacy” lasts only as long as the money. Once the money is spent, the legacy ends. If the donor’s planned gift is invested into an endowment, the money not only remains indefinitely, but grows over time with some of it that can be used now and every year to serve the cause so near and dear to the donor’s heart. Now that’s a legacy!

Imagine how much money will be in your nonprofit’s endowment by year 2052 if your planned gifts are being invested into it. Imagine how much money there would be now, had your nonprofit began investing its planned gifts in its endowment 20 years ago! If you do this now, when this historic crisis hits, your nonprofit will be best prepared to withstand it — and maybe even prosper through it!

What we “do unto others” can make or break your development strategy

The “golden rule” for nonprofit FundAbility is the same as the “Golden Rule” for living, “Do unto others as you would have them do unto you.” To behave any other way is not only shortsighted, but will cost a nonprofit organization potentially hundreds, if not thousands of new donors — some of them having the capacity to make large gifts.

As leaders of nonprofit organizations large and small, we should set high standards for how our employees and volunteers interact with others, and train them to follow these standards. Ask yourself, “How is our receptionist greeting people as they walk through the door?” “How are we treating our vendors, the mail carrier, and restaurant staff?” “How do we treat our own employees — and how do they treat each other?”

With unemployment rates at historic levels, no doubt your nonprofit has seen an increase in the number of job applicants. How are you treating them? If you do not believe that some of these applicants are your donors, sons and daughters of donors, or potential donors — you are wrong!

For an Executive Director, HR representative or hiring manager to ignore job applicants by not following up with a letter, phone call or email to say “thank you” is narrow-minded at best. Most charities that I know of would never think of searching an applicant’s name through their database of donors … but they should! Even if the applicant’s name is not in the donor database, do not count them out as part of your organization’s donor acquisition strategy?

I had served a large international charity for several years and got to know the major gift officers rather well. One of the gift officers had been a major donor to the nonprofit before selling his business and working for the charity full-time. He continued making large gifts to the organization while in its employ.

Message to nonprofit leaders: “Never underestimate the value of job applicants and others to the future of your organization.”

Welcome to FundAbilityRules

Dear Friends,

Welcome to my website, “FundAbilityRules.com”

FundAbilityRules is devoted to holistic approaches to nonprofit advancement. Believing that every action and activity of a nonprofit will have either a positive or negative impact on the organization’s ability to raise money, I created this blog/website to help employees, Board members and volunteers take a more critical and introspective look at their entire nonprofit operation.

You are welcome to participate, so that together we can discover root causes for our organizations’ revenue problems, as well as find new pathways to success.

Thank you!

Kevin D. Feldman