Thursday, December 18, 2008

Minnesota Charities and Nonprofits are in Trouble

Nonprofits must change their approach to fundraising!
They could be saved with an Obama type effort!
by Charlie Leck

When it comes to charitable giving, my wife and I have tried to be cautious, informed and wise in our donations. We consider the Charities Review Council (CRC) here in Minnesota one of the important tools we use in educating ourselves about organizations that ask for money. We turn to CRC to get reports on how wisely organizations use the money that they are given. And, we make sure we give a little support money to the CRC each year for the work they do. You can get a lesson on how to be a smart giver at the CRC web site.

The economy is hitting your favorite charities very hard right now. Many of them have had to cut staff and cut programming. The stories about this matter have been abundant in the newspapers over the last couple of weeks. About 50 percent of Minnesota’s nonprofits have had more than a 50 percent decline in revenue. And, about 50 percent of all our nonprofits have had nearly a 50 percent increase in expenses. At the same time, these nonprofits have had nearly a 50 percent decline in individual contributions. It gets more staggering when you understand that most of these organizations have had a 40 percent increase in the demand for their services. On top of all this, about 10 percent of these worthy organizations have seen about an 8 percent drop off in volunteers. [Source: Star-Tribune report of 17 December 2008]

Big time givers (I’m talking about people who give hundreds of thousands of dollars) are cutting back their giving by up to 50 percent. When you are a non-profit that is accustomed to getting $200,000 annually from an individual giver and that donation gets cut in half, you are in big trouble. It means a cut back in staff and/or programming.

The criminal case against Tom Petters here in Minnesota, and against Bernard Madoff, in New York City, has really hurt a number of significant nonprofits. Hundreds of thousands of dollars – more likely millions of dollars – are at stake. A couple of those big nonprofits who had invested in Madoff’s funds are Minnesota organizations.

Hundreds of fine organizations are feeling the pinch because of this very tight economy. I have never seen anything like it in my lifetime.

Nonprofits must change their approach to fundraising
Nonprofits must change their approach to fundraising and they could learn a lot from the way Barack Obama financed his campaign for the Presidency. To really raise dough, Obama turned to the little guys – to small donors – looking for gifts of a few hundred dollars or more, rather than thousands of dollars; however, there were thousands and thousands and thousands of those small donors and the amounts that came in each time Obama made an appeal for help were astonishing.

I’m told by someone within the apparatus of Obama’s fund raising operation that they didn’t even push the gas pedal completely down. They had a contingency plan, had they needed more money, to really put out a call to thousands and thousands more of the ordinary people in America. They never had to engage the plan.

The Obama organization used email and the Internet as creatively as it can be done. In a single 24 hour period they could restock their treasuries with millions of dollars. The money came mostly from people who had never heard of hedge funds and/or derivatives.

I’m currently watching a little non-profit, cooperative food market try to get going in our region. They’ve plodded along so slowly, at a snail’s pace or worse. They haven’t tapped one little bit into the Internet or into email fund raising and membership growth. I’m astonished at their lack of sophistication in this important arena.

The nonprofits that will survive, and even thrive, in our current atmosphere will be those that learn how to harness the power of the World Wide Web. Snail mail is a thing of the past. I don’t believe I ever got a letter in the mail from the Obama organization; yet I found myself making $100 contributions about a dozen times during the course of the campaign. And I was only one of millions who did that. Play with the numbers! And remember, the Obama organization barely used a piece of paper or a penny for postage.

The Red Cross is using the Internet and email wisely. So are a lot of political and lobbying organizations. Beyond that, I haven’t seen any of the nonprofits I favor using the power of email. Even the CRC hasn’t used email as wisely as it should or could.

The case against Arkansas!
Among telephone solicitors for charitable organizations and nonprofits, those from Arkansas dominate on our telephone. I can’t tell you the number of calls I get from that state, soliciting money for every type of charitable organization. I always beg-off and decline to give. Why? Because Arkansas has very loose regulations for fundraisers in that state. The calling company can actually peel away more than 50 percent of the funds given to a particular charity. It’s another instance about how we can be smarter in the way we give.

If I give, for instance, to the Special Olympics, I try to give to the Minnesota Chapter or directly to the national offices of the Special Olympics without going through an independent fundraiser. I don’t want a big chunk of the money I give going to a private, for-profit, fund raising organization.

Give more than you can afford this year!
I urge you to give until it hurts this year! Give wisely, but give more than you usually do even if it means you need to cut back on your own life style. And, if it's possible think about volunteering some of your time to one or more of these organizations. It’s time for Americans to show what they’re made of.

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