News You Can Use

News You Can Use
Issue 136/April 2014
 
501(c) Success Speaker Series
Editor’s Note: 
As part of our ongoing commitment to provide timely and thought-provoking topics that stimulate discussion as well as affect your daily work in the nonprofit sector, Jeffrey Byrne + Associates belongs to a Task Force of Nonprofit Connect overseeing and organizing the 501(c) Success National Speaker Series.  Jeffrey Byrne + Associates is also proud to partner with U.S. Trust in sponsoring this Series.
 
The 2014 Series opened on April 1 with Jacob Harold, President and CEO of GuideStar.

Jacob Harold on Creating a Recipe for a High-Performing Ecosystem of Social Change

Jeffrey D. ByrneJeffrey D. Byrne
President + CEO

More than 130 people attended the inaugural 501(c)Success National Speaker Series on April 1, with Jacob Harold. Jacob joined GuideStar as President and CEO in 2012, after six years of overseeing $30 million in grants for the Hewlett Foundation. Before that, he worked as a consultant to nonprofits and foundations at the Bridgespan Group, and as a strategist for the David and Lucile Packard Foundation.

Jacob had been at GuideStar less than a year when he, along with Ken Berger, President and CEO of Charity Navigator, and Art Taylor, President and CEO of BBB Wise Giving Alliance, launched an initiative to correct an old but stubborn misconception about what matters most when deciding which charities to support. The misconception is that administrative and fundraising costs (i.e., overhead) in and of themselves are accurate and sufficient measures of a charity’s performance. They called the misconception “The Overhead Myth.”  

Their first volley, he explained to the 501(c) Success audience, in debunking the Overhead Myth was a letter to donors of America in June 2013, asking them to consider additional factors of a nonprofit’s performance – such as transparency, governance, leadership and results – when making their charitable giving decisions.

However, in the meantime, he said, “We have to address the two elephants of the sector. The first is that some nonprofits are better than others. The second is that some donors do a better job at finding high-performing nonprofits.” 

The problem for donors, he contends, is not that there isn’t enough information about issues, interventions, organizations and resources. The problem, he said, is that “we have kept these categories of information isolated from each other and impossible to cross reference.” 

Building Scaffolding

The mechanisms nonprofits have used to tell their stories – primarily the IRS Form 990 and pie charts illustrating percent of expenses going to overhead – are useful filters but tell donors nothing about results.

Jacob envisions GuideStar as scaffolding for the infrastructure the sector needs to provide donors with comprehensive information about charities and their performance. The idea is to develop a dynamic supply chain of information that feeds the information to aggregators (such as the IRS, community foundations, the Foundation Center, etc.), who provide it to GuideStar, which in turn channels it through a growing number of hubs (e.g., Fidelity, Vanguard, Schwab, Donor Edge, etc.) and ultimately, to users.

In essence, GuideStar’s goal is to bring information together from many different sources through a common profile they call GuideStar Exchange.

Jacob reported that, to date, 90,000 nonprofits have shared information on the GuideStar Exchange platform, including 30,000 that have reached a Gold (4,000), Silver (22,000) or Bronze (16,000) level of participation.

Why the Data Matters

During a lively Q&A session, a participant asked Jacob for his thoughts about lack of investment in organizational capacity and its impact on nonprofit effectiveness. Jacob agreed that funders need to be more willing to invest in capacity and said that GuideStar hopes to develop new tools that will make it easier for nonprofits to measure their own effectiveness.

Another audience member wanted to know what percentage of donors really look at the kinds of information collected by GuideStar. Jacob cited research showing that about 85% of donors believe performance matters, 32% do some research, 20% look beyond financial data and between 3% and 6% use their research to make choices. For donors who already support an organization, said Jacob, providing detailed performance data may have a “thud factor” leading to more generous gifts.

A question was asked about how GuideStar promotes transparency in community foundations, citing problems nonprofits encounter in obtaining basic information about funds held there and in other financial institutions. While admitting that he was unable to answer that question, Jacob shared that he sees it as GuideStar’s responsibility to ensure that the benefits of filling out a profile outweigh the costs so that, ultimately, nonprofits embrace their responsibility to tell their stories in a structured way. Members of the audience underscored the importance of this work in light of bills before Congress to limit the charitable tax deduction.

A Collective Voice

Bringing the discussion back around to the Overhead Myth, it was asked whether GuideStar has plans to take the message forward. The answer is a clear yes. Jacob explained that the Overhead Myth letter sent by GuideStar, Charity Navigator and BBB Wise Giving Alliance last June reached 15 million people.

“We’re in the midst of writing a second letter,” Jacob said, “to nonprofits of America.  We know we can’t do it alone. We need the nonprofit sector educating donors as well.”

A potential response to that call for help came up later in the morning at a smaller follow-up session for nonprofit senior leadership, funders and volunteers. How could organizations like Nonprofit Connect, the Association for Fundraising Professionals and others come together to promote a unifying message to local and regional funders?

Jacob suggested two ingredients as part of the recipe for creating a high-performing ecosystem of social change.

“Just the idea that the sector in a community would get together and speak to donors about this is so important and powerful,” he said. “You could sign a letter that would go to the boards of organizations asking for their help in eradicating the Overhead Myth. Or, on a less formal level, you could just agree that any time you’re in conversation with foundation staff or trustees to bring up the issue.”

“The systematic, collective voice is the way to go,” he said. All of us at Jeffrey Byrne + Associates couldn’t agree more.

Editor’s Note:

Trudi Galblum (trudi@galblum.com) of Trudi Galblum Communications, contributed to this story. 

Jeffrey Byrne + Associates will keep you informed of the latest progress in the campaign to end the Overhead Myth, including the second letter to nonprofits of America. Stay tuned.

And be sure to mark your calendars for our next 501 (C) Success National Speaker Series program on Thursday, June 19 at the Kauffman Foundation Conference Center: the First Look at Giving USA 2014 – The Annual Report on Philanthropy, with Patrick Rooney, Ph.D., Associate Dean for Academic Affairs and Research at the University of Indiana Lilly Family School of Philanthropy. This program follows the national release of Giving USA, which covers giving trends and statistics in the U.S. during 2013. It also includes High Net Worth Philanthropy Studies commissioned by U.S. Trust. A must-attend for nonprofit professionals and volunteers, this event will provide valuable insight to fundraising. 


Got Research?
Editor’s Note: 
We are pleased to introduce Kay C. Tabscott and Christina Pulawski as guest contributors to this month’s issue of News You Can Use. Kay is Principal of Independent Development Research and Prospect Research Training, which she founded in 2002.  Her firm provides a wide variety of local and national nonprofits with the best in prospect research profiles of corporations, foundations and individual major donors. Profiles include biographical information, giving interests and gift capacity ratings. Kay has more than 15 years of development experience, teaches prospect research classes and also created and taught “Introduction to Prospect Research” in Washington University’s Master’s Degree in Non-Profit Management program.
 
As Principal of Christina Pulawksi Consulting, Christina is an independent consultant specializing in development research, prospect management and information flow for fundraising. Her clients range from large private and state universities and healthcare systems to localized social service nonprofits.  Christina obtained her J.D. from the University of Illinois and practiced in the fields of real estate and litigation before entering the development profession in 1991.  Christina is a founding member of the Association of Advancement Services Professionals and has served in leadership roles with the Association of Professional Researchers for Advancement and its local chapter.  Christina’s writings appear in numerous publications and she regularly chairs and presents at workshops, conferences and symposia around the country.
 
Part I:  What is Prospect Research?
Kay Tabscott
Kay C. Tabscott
 
Prospect Research is fundamental – and essential  – to fundraising.  Yet I find many in the development field today who do not know what it is and how its use can increase donations for their organization.
 
When I began my research career, I didn’t know what it was, either.  I had a Bachelor’s degree in English and had just finished a Paralegal Certificate.  Looking for a job, I scanned the positions at a local, private university and saw a Prospect Researcher job description: “Assisting the Development Staff in identifying new donor prospects and researching and writing profiles on corporations, foundations and individuals using the library and other public data sources.”   Having honed my library research skills as paralegal student, I got the job and I have loved it ever since. 
 
So what is Prospect Research?  Research gives fundraisers essential information about their major donors – individually and as a group:  what is the right ask amount, what is the right project, what is the right timing, whom should I ask first?  So-armed, they are giving their potential donor the utmost respect in not asking for too much (and embarrassing them) and yet not leaving dollars on the table (and the donor thinking they didn’t do their research); they are asking for the right project because they have researched other giving the donor has done; they are asking at the right time (the donor has just sold her business and has cash on hand…) and they are asking the right donor because the researcher has done an in-depth profile and rated and ranked the donor as an “A-1.”  
 
Prospect Research is the due diligence of the Development Officer.  Got Research?
 
Now let’s take a look at what Prospect Research is not:
  • Googling
Typing someone’s name into a Google search is not “research.” Google is one of many search engines, which are among a host of tools to find information on the Internet. Research can involve proprietary sources, directories, maps, databases, as well as offline resources such as books (remember them?), other hard copy sources and other human beings.
  • The scientific determination of an individual’s precise net worth
More on this later…
  • Simply recounting information found and writing profiles
The first step of research is finding discrete, relevant bits of information and documenting them, but there is so much more.  This information needs to be analyzed and applied and the final product is a set of recommendations to the Development Office with information to support them. Therefore, research is much more than a dossier or a profile.
 
Research also encompasses prospect identification, defining groups and pools of prospects from among a large constituency, statistical analysis and predictive modeling, data mining and so much more that can be done to identify, prioritize, describe prospects and pools and provide the information to make strategic decisions about fundraising programs and activities.
 
Saying “Oh, so you write profiles” to a professional researcher is like saying “Oh, so you host galas” to a major gift fundraiser.
  • Creating and maintaining inappropriate information and dossiers on individuals
Professional researchers abide by strict ethical standards that embody respect for donors and prospects, with the ultimate goal of establishing and furthering true engagement among donors and the organizations they represent. They only seek out and objectively report and interpret public information that is relevant to the furthering of that relationship. 
 
Again, Prospect Research is the due diligence of the Development Officer.  Got Research?
 
Part II:  Congratulations!  You’re Getting Research!   
Christina Pulawski
Kay C. Tabscott and Christina Pulawski
 
We’ve convinced you to invest in adding some science to your art of fundraising – wonderful! What do you need to do now? 
  • Find, develop or contract with an experienced and/or talented researcher.
Experienced professional researchers can be hard to find, and sometimes hard to interview and evaluate.  Some organizations choose to find people with tenacious curiosity and creativity, and develop them into the role. APRA, APRA chapters and nonprofit educational programs offer numerous programs, symposia and “boot camps” for new researchers, and research consultants typically offer customized training. From experience, the research techniques aren’t as complicated to teach as the elements of analysis, interpretation and relevance to fundraising.
 
To understand what a researcher should be able to do, find APRA’s Skills Sets (there are four: basic research, advanced research, research management and prospect management; they are currently being revised into a different format and purpose) and look at other job descriptions on APRA’s job boards and relevant listserves such as prspct-l and fundsvcs– also all places to consider posting your opening.
 
If you are not ready for the full-time role in-house, there are numerous consultants and freelancers who can provide a variety of research-related services from writing profiles to statistical modeling, screening and validation, assessments and true consulting.
  • Assemble appropriate tools
A researcher’s resources can range from an internet connection to a collection of for-fee targeted resources appropriate to the constituency with which they’ll be working.  HINT: paid resources can create efficiencies and save lots of person-hours.  Subscription resources can range from a few hundred dollars a year to tens of thousands of dollars a year or more for in-depth financial databases on say, hedge funds. The best tools are relevant to the kinds of people and organizations that are important and integral to your prospects. APRA regularly surveys the community and members can see the results of the most popular and useful resources available.
 
At the very least, the researcher should have awareness of tools such as bookmark collections maintained by advanced shops (for example: http://www.nudevelopment.com/research/bookmark.html) and the availability of databases through local or academic libraries to residents, students or alumni as well as the collection of databases on the APRA website
 
In addition to subscriptions to find or understand information, there are a number of other resources common in the field, including geographic, relationship mapping and other visualization software, data append services, statistical packages, alerts and other analytical tools to consider.
  • Establish expected products and services, policies and procedures
This can answer all sorts of questions, including:
  • “What does a profile convey?”
  • “What can volunteers vs. staff see?”
  • “What fields in our database, such as ratings, strategy, note types, should research populate, and what are the data entry standards?”
  • “What are our protocols around privacy?”
  • “When is it appropriate to ask for an exhaustive research profile?”
  • “Should we use LinkedIn, Facebook, Twitter and other social media?”

Most importantly, determine how to incorporate data-based decision-making in all aspects of strategic fundraising, from working with an individual prospect to full campaign planning.

Understand how you will use the information uncovered, interpreted, communicated and collected by your research staff every day, and cumulatively.  Make sure they know the importance of accurate information, and how they will be expected to participate in every kind of discussion. 
 
Kay may be reached at ktabscott@earthlink.net
 
Christina may be reached at c-pulawski@comcast.net

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