April 18, 2014


Philanthropic culture key for fundraising

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Stung by the damaged economy and a local United Way compensation scandal, the nonprofit community in Charlotte, N.C., has been working to reinvent itself.

Key to that effort have been a handful of local initiatives that aim to change the culture of the local charitable marketplace through a focus on community needs, genuine engagement of donors, and pragmatic strategies to build nonprofit capacity and collaboration.

"The major lesson that Charlotte must learn is to nurture the concept of philanthropy," says Karla Williams, a Charlotte-based national fundraising consultant and a key player in some of the efforts to rebuild the local nonprofit sector.

"It has so little to do with fundraising," she says. "It results in fundraising."

Regardless of their mission, fundraising is an ongoing task for nonprofits.

In Charlotte, the task of boosting nonprofits' fundraising capacity has emphasized their need to help themselves by identifying the limited resources they have and putting them to productive and innovative use to get their own houses in order - an approach that local nonprofit leaders say could serve as a model for nonprofits in any community.

Culture of philanthropy

Fundraising begins with understanding what philanthropy is all about, says Williams, who is principal of The Williams Group, a key adviser to United Way of Central Carolinas on transforming its organizational culture, and director of the Leadership Gift School at the Institute for Philanthropic Leadership, a local effort to strengthen the work of local nonprofit leaders and fundraisers.

"Philanthropy is all about civic engagement, essentially about social reform, community-building," Williams says. "Most development directors and most executive directors are failing to look at the underlying social dynamics of this city, to really understand how they can build a fundraising program that will contribute to the advancement of the greater society."

And as is typically the case in other cities, in Charlotte it is Baby Boomers who are driving the "transformation of civic life," Williams says.

"The ‘Me Generation' is much more focused on ‘what's in it for me,'" she says. "Therefore, fundraising from Baby Boomers has to be a process that teaches them why the nonprofit sector is so important, why civic engagement and helping your neighbor is so important, why having conversations may be more important than giving money."

History of philanthropy

It is an "absolutely essential necessity" for nonprofits to understand the history of philanthropy in America and the evolution of philanthropy "as a process that ensures democratic freedom and religious freedom," Williams says.

They should know, for example, that the fundraising profession in the U.S. had its genesis in the effort by universities to raise money for scholarships for those who otherwise could not afford higher education.

Nonprofits also should understand the various theories of fundraising, and the "methodologies that are designed to be used under certain conditions and situations."

Every nonprofit board, Williams says, should have a session once or several times a year that focuses on the history of philanthropy in America and why the nonprofit sector exists.

"It's a very sophisticated business-psychology strategy," she says. "It's steeped in psychology but it has a business application. And it's essential that board members and nonprofit staff understand how highly developed that business is."

Understanding the origins and evolution of philanthropy, and the strategies of fundraising, she says, also will help nonprofit professionals understand how to apply philanthropy to shaping their own organizations.

Fundraising capacity

Once a nonprofit is grounded in what philanthropy is all about, Williams says, it needs to understand what donors think.

That requires being "seriously interested in donors' opinions," and getting to know them through focus groups, surveys, personal interviews and other methods.

"Fundraisers have got to learn how to connect with people, to go beyond themselves into the world of their donors in order to create a true culture of philanthropy," Williams says.

Carol Hardison, who is executive director of Crisis Assistance Ministry, one of Charlotte's biggest social-services agencies, and a student in the inaugural class of the Leadership Gift School at the Institute for Philanthropic Leadership, says fundraising is all about customer service, "leveraging" relationships, and communications and marketing.

A former information-technology executive at Duke Energy whose "customers were internal," Hardison says fundraising "is no different than in the for-profit sector, having a service or a product that you want your customers to know about."

Fundraisers also can tap the relationships they have with board members, existing donors and community partners to identify prospective donors, whether individuals or institutions.

"We don't have to have money to buy a list of names," Hardison says. "We don't necessarily need a new database, although at times we do. We just have to work within the existing team that we have."

Equally fundamental, Hardison says, is the ability "tell the story" about a nonprofit to prospective donors and funders.

That includes "understanding your business case" for the needed funds, and the "ability to translate that business case for the need to a person who has an interest or passion in that area."

Fundraising tools

Based on what they learn about prospective donors, Williams says, nonprofits should "establish a process to work with them going forward."

The process she prefers is known as "moves management," or creating a profile in the computer database to track and record any interaction between staff, board and volunteers with prospective donors, as well as anticipated next steps.

That process also aims to create relationships between, on the one hand, the prospective donor, the donor's family and the donor's friends, with the nonprofit's "family" and friends.

"You connect them all," Williams says. "You are looking for ways and places to build a sense of community within the context of your organization, but your organization isn't the only thing that benefits."

A "meaningful transformative gift," she says, also benefits the donor who fulfills a need to make a difference, as well as the individual, group or community served by the nonprofit that receives the gift.

Hardison says it is critical for nonprofits to "maximize your processes and your tools" to generate the greatest benefit from relationships with donors.

A prospective donor, for example, might interact with Crisis Assistance Ministry multiple times on separate, seemingly unrelated occasions, possibly communicating each time with a different representative of the organization, she says.

"We need to have the tools and the processes aligned so that we know to communicate with this person, not as three disjointed point-in-time events, but as a friend of the agency, and we communicate with them in a cohesive and strategic manner."

Curiosity about donors

During a session of the Leadership Gift School, Williams asked the 25 nonprofit professionals in the class to identify their top 25 prospective donors, and encouraged them to try not to simply choose from among the same pool of the 200 wealthiest individuals most fundraisers in Charlotte know about.

"They came back realizing they did not have enough information on their donor base to easily identify who would be their 25 top prospects for a major gift," Williams says.

"What they had was the assumption that people would give," she says. "They did not have knowledge they would give or knowledge of why they would give or who else did they know who could make the ask and who else was giving who would give credit to them."

Nonprofits give "a lot of lip service to our practice," Williams says. "We go through the routines. We buy the great computer programs in the sky. We have all the tools."

Still, she says, nonprofits are missing "the importance of caring about an individual in that database enough to be able to know them, to be able to cause them to be interested in our organization to a greater extent. How do you know somebody if you've never met them? You don't have a relationship."

Most fundraisers, Williams says, learn their profession in the sequence "how, what, why" - how to write a letter to a donor, for example; what information is needed about people to get more letters written and answered; and why would people want to give to the organization.

That sequence is the inverse of what it should be, she says.

"First, you have to know why people give, and have to do research around that," she says. "Two, you need to say, ‘What do we need to do to cause people to want to give here?' And then, how are we going to do fundraising - write a letter, do a phone call, do a special event?"

A fundraiser cannot really know a prospective donor, Williams says, until the fundraiser has developed a relationship of trust and reciprocally-shared information with the individual, so the fundraiser and donor truly know one another.

"If you've not had a conversation that says, ‘Tell me what you're most concerned about,'" she says, "you don't have a relationship, you should not be asking that person for a major gift."

Community and collaboration

A "new" city that was built in large part by big banks and powered in recent decades by an influx of new residents that fueled a local housing boom, Charlotte was hit hard by the economic and financial crisis.

The city also is fragmented geographically, demographically and by the "context within which you work," Williams says.

Yet many nonprofit fundraisers do not see or understand the schisms that define the city and lie at the root of many of its problems, she says.

It would be beneficial for development directors and executive directors to look more closely "at the underlying social dynamics of this city, to really understand how they can build a fundraising program that will contribute to the advancement of the greater society," she says.

The city's problems have hurt the local nonprofit sector, which also was damaged two-and-a-half years ago by public outrage over the high compensation paid to the now-ousted CEO of United Way of Central Carolinas.

To help the local nonprofit sector cope with the financial crisis and the erosion of trust triggered by the United Way scandal, a number of groups have stepped up to help build the capacity of the community's nonprofit sector.

Foundation for the Carolinas, for example, raised $3.5 million for a new Community Catalyst Fund that has distributed roughly $2 million in grants to spur efficiency, effectiveness and innovation at local nonprofits.

Michael Marsicano, the foundation's president and CEO, says the challenging times have provided an incentive to help local nonprofits better understand the growing expectation among donors for "return on investment" from their donations.

"We've known that donors want a return on investment," he says. "I don't think we knew what that meant was we had to collaborate with them from the outset."

Fundraising is "all about donor engagement," he says. "The fundraising approaches that are not the personal approach will be less and less effective."

A focus on collaboration with donors has driven a series of big initiatives such as the Community Catalyst Fund that the foundation has undertaken since the economy collapsed two-and-a-half years ago, Marsicano says.

Nonprofits, he says, increasingly are "trying to find the nexus between what we think should happen in the community and what donors strategically are prioritizing in the community, rather than what most fundraising operations do, which is to make the appeal for what they need in isolation from what the donor believes is needed."

Self-directed training

Another common ingredient in the emerging new culture of philanthropy in Charlotte is self-directed professional development that emphasizes self-help.

"We have boards of directors, we have current existing donors, we have community resources," says Hardison of Crisis Assistance Ministry. "And we have access to donated expertise."

Marsicano says professional development for fundraisers "doesn't have to be expensive or elaborate but a vehicle for getting into the mindset of donors."

Many donors, he says, are "willing to give time to talk through what their expectations are in giving, how they want to be approached, what they're looking for, and the initiatives they might be willing to support."

So nonprofits looking to boost their fundraising should consider inviting donors to have a conversation about their interests and their approach to giving, he says.

"It's not a skill set here," he says. "It's a mindset."

Philanthropy and community

Williams says many fundraisers, because they are "working off of all the techniques they have been taught but not going deep into a commitment to be really interested in people," seem to be "functioning at a level that's mechanical."

Many professional fundraisers, she says, "strive to be interesting rather than interested."

And she is concerned about the charitable marketplace in Charlotte.

Nonprofits are too dependent on corporate support, and weak on major-gift support and repeat gifts, while donors have a "very shallow understanding of accountability and measurable results," she says.

"They want it but don't understand what it is when they get it," she says.
"We are all crying and calling for outcomes but I doubt that we know what we're talking about."

Because Charlotte is a "new" city, she says, "it is imperative that we understand how much work it takes to be deliberate in our creating a sense of philanthropy and social change in order for it to lead to the creation of the community."

Nonprofits have a "huge responsibility going forward, not just in Charlotte but everywhere, to teach the kind of philanthropy that will sustain itself through the Baby Boom generation and ultimately transfer to the next generation," Williams says.

That begins with fundraising that is "based on an appreciation of what the donor wants to give to, not because I need the money," she says.

"And if the donor does not know anything about the problems of the community and they are making their first gift," she says, "then it is imperative that nonprofits help that donor understand the problems of the community, not just the one they deal with."

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