Organizations find changed landscape for fundraising

BY REPPS HUDSON, SPECIAL TO THE JEWISH LIGHT

Three years or more of a bad economy have tested nonprofit organizations in a time of high demand for their services while the money and other resources they need to operate have been harder to find.

Yet non-profit leaders and university instructors agree the resources are there for the asking – as long as the nonprofit is well managed, transparent and paying very close attention to the interests of donors and volunteers who are crucial to making it function successfully.

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“You have to work harder now,” said Barry Rosenberg, executive vice president of the Jewish Federation of St. Louis. “Fund raising is much more relationship based than when I came into the field 30 years ago.”

Experts in nonprofit fund raising emphasize that relationships between donors and the nonprofit staff and volunteers are more important than ever. Because times are tighter and donors are often more careful in how they give their money, building and maintaining relationships between a nonprofit’s staff and its invaluable volunteers and its lifeblood – its donors – have become more critical.

“You have to develop long-term relationships with people who have similar interests,” said Tim Willard, president of the St. Louis chapter of the Association of Fund Raising Professionals.

Donna McGinnis, managing director of institutional advancement at the Missouri History Museum and coordinator of Washington University’s nonprofit management program, noted that many nonprofits are competing for donations of all kinds.

Nationwide, she said, there are twice as many nonprofits as there were 10 years ago, for a total of 1.6 million. Two thirds of those have annual revenue of less than $25,000, she said. Missouri is home to 40,000 of all sizes.

“When the economy shifted in 2008, a lot of donors pulled back,” McGinnis said. “The nonprofits that were well run and had good relations with their donors did not have too many problems.”

She told a story that illustrates the importance of relationships – and of nonprofits keeping in close touch with their donors.

Her husband has been a volunteer who was in a position to hand out a donor’s contribution of $5,000 to six different nonprofits over six years.

“Only one called him and stayed in touch with him and did that kind of thing to help him understand what the nonprofit was doing,” she said. “That’s not good. Donors want to know that their money isn’t going into a black hole.”

Efficient management is crucial for nonprofits to remain successful. The United Way of Greater St. Louis, the umbrella organization that collects donations from throughout the area from corporations, foundations and individuals, holds its costs to about one tenth of its budget.

In other words, said Gary Dollar, the agency’s president and CEO, which hands out money to 177 health and human-services organizations, including the Jewish Federation of St. Louis and affiliated agencies, United Way spends 10 cents to raise $1.

One reason for that low administrative cost, Dollar said, is that many donor companies provide in-kind services and volunteers to offset expenses.

At the Jewish Federation, “we have had to work hard to under-perform on our budget. We have been able to do that,” said Rosenberg.

Salaries have been frozen for three years, Rosenberg said, while raising funds has been relatively flat during the same period at around $10 million a year.

That fund-raising is usually no worse than flat says something about the willingness of donors to continue contributing, nonprofit leaders say.

“We have a very strong cadre of donors who have been giving for 30 to 40 years,” said Rosenberg. “Others want to put their money into specific programs. They have certain projects or needs they favor.”

A Challenge Grant campaign at the end of last year’s fund-raising period brought in another $350,000.

Dollar pointed out that United Way raised slightly more than $68 million last year. The board has not set its goal for the fall campaign that begins next month. In 2007, United Way’s best year, contributions hit $68.8 million.

Nationwide, Dollar said, contributions to organizations like United Way here have dropped 13 percent over the last three years. The fact that contributions overall have dropped relatively little says a lot about the willingness of St. Louis area residents to kick in when times are hard.

“The fact that we stayed relatively flat shows that people recognize the needs that are out there,” Dollar said.

Patrick Welch, professor of economics at the Cook School of Business at St. Louis University, pointed out that nonprofits asking for donations should make a distinction between average income earners and senior corporate executives.

The former may have suffered setbacks in their jobs or even been furloughed to hold down expenses at the company where they work.

But senior executives, he said, often have seen their salaries and other compensation rise during this same period.

“Their income has not necessarily been hurt,” he said.

Therefore, the effective nonprofit fundraiser may home in on executives who may have the money and the will to make strategic donations.

“If you have an active, involved board, you will use professional and personal contacts in a campaign,” said Willard of the Association of Fund Raising Professionals. “You get the right people in touch with the right people.”

Another important aspect of the success of a nonprofit is its management, which can face more scrutiny of operating practices from donors, be they corporate, foundation or individual, than in the good old days when times were not so lean.

Willard is blunt about the challenges facing all nonprofits, regardless of economic conditions.

However, if the standards Willard cites are met, nonprofits have that much better chance of surviving, even thriving, in tough economic times.

“Every nonprofit has to build an effective board. If fund raising is an objective, then you need a board of influence and affluence,” he said. “You also have to have a mission and explain it well to the world. It has to be unique. If you cease to exist, what difference would this make?”

Put another way, Willard said, the nonprofit has to be able to say: “We are saving or changing lives.”

If it is not doing that, he said, the nonprofit is not doing what it should be doing.

“If people are buying into your mission, they will help,” said Patricia Rich, head of EMD Consulting Group. “Every organization is different. Each one has its own case to make.”

Furthermore, Rich said, “every donor wants to see where the money goes, and they want to make sure it goes where it does the most good.”

The paradox of the nonprofit world is that demand for services has shot up dramatically while donors’ money and other resources can be harder to acquire. This is almost always the case: When economic times are the most challenging for individuals who need services from nonprofits, those same conditions cause donors to be extra careful.

And yet, the St. Louis metro area ranks 10th nationally in its volunteer participation – a rate of involvement that sets this region apart. Nearly one of every three area residents volunteers in some way to help others, according to Corporation for National & Community Service.

Dollar said the United Way has 400 volunteers who visit recipient and potential recipient nonprofits to review their books and make sure they are performing as they should.

A keystone nonprofit like the St. Louis Area Foodbank (http://www.stlfoodbank.org/), which supplies government agricultural surpluses, manufacturers’ surpluses, baked goods and non-perishable foods to nearly 500 food pantries in 26 counties in Missouri and Illinois, is finding that in-kind and financial donors are still willing to help.

But those donors often need to be made aware of the Foodbank’s needs and then a way devised to get the food to the pantries.

“Our biggest single expense is transportation,” said Ryan Farmer, the foodbank’s communications manager. “Kellogg in Battle Creek (Mich.) may say it has cereal to give us, but we have to drive a truck there to get it.”

In these times, with metro area unemployment running at 9 percent – and much higher in certain cities and neighborhoods, people have many needs.

They need money to help pay the rent, so nonprofits have to have more cash to be able to help clients stay in their homes.

Parents and children are under greater stress, so nonprofits like Jewish Family and Children’s Service have more clients who need counseling to help them confront the challenges of daily life.

And people need more food to get through the week, so food pantries are busier than ever serving their clients.

The pressure on such agencies is likely to continue for years.

That food pantry recently announced plans to expand in a new or remodeled building to be able to feed 10,000 people a month, up from its present level of 4,000 a month.

“The Harvey Kornblum Jewish Food Pantry has seen double-digit gains in clients,” said Donald Meissner, outreach coordinator. “We have no reason to believe our clientele is going to go down.”