Thursday, September 3, 2009

Short Cuts... Everyone Wants One In Fundraising!

Some time ago I had a guy call me with this great new fundraising idea he wanted me to help him promote on my website. The scheme was to involve this company getting the nonprofits interested in contacting their donors and convince them to allow a life insurance policy to be taken out on the donor's life, and the beneficiary would be the nonprofit and of course the company selling this product.

Also, neither the nonprofit nor the donor would have to pay anything! This company had somehow gotten an insurance company to agree to this crazy deal as well as a bank to loan the money, I assume based on mortality tables.

Obviously this "great fundraising idea" has been outlawed by most states and the IRS thankfully was all over this one for good reason!

I politely denied being associated with this guy and he could not understand why I didn't want to promote this wonderful fundraising idea! Unbeknownst to the salesman of his idea, I've been dealing with life insurance since I was in my early 20's and my first question right out of the box was how can you prove insurable interest! He was shocked by my question and did not have an answer. Anyway, I passed on this "great offer" like I do on most of these "wonderful" ideas!

Sadly, I think, many nonprofits blindly jump when given the chance to sign up for a program that is touted as, the super secret and the greatest money making deal of the century, instead of doing what they were taught to do in grade school: stop, drop and roll when you find yourself on fire!

Most of these new age snake oil salesmen quickly and easily tell nonprofits that big money is just around the corner if they just do a few simple things! If you ever hear this statement:

"This plan really is the future of fundraising. In just a few weeks you can have a continuous and effortless stream of income 24/7 by just......."

Please folks, politely tell the person, thank you, but you are not interested! You're, after all, a non profit organization that doesn't have the staff or the time to be their sales force and you have enough work of your own to do just to survive!

Most of the common online fundraising concepts I'd seen or heard pitched lately involve the following themes:

The person trying to sell you this great fundraising/money making concept gives you a "free web page;" which most times is a template page with a few fill in the blank sections. All in all these pages are completely worthless because they don't have any unique content and rarely show up
on any search engine. Plus you don't have a specific domain name! However, the sales guy tries to convince you it is so easy to make money this way..... Oh they say: Just tell all your family, friends and donors to go to this page i.e. that promotes or sell their product or service, and you get a percentage by doing nothing. Come on guys!

Obviously the company selling this concept doesn't have the advertising dollars nor does it have the sales force to do the work they want done and that is why they want you! Trust me, it's not about being civic minded or because they have a wonderful love for your nonprofit. It's all hype!

Please ask yourself these questions! Does the product or service that is being sold have any real point of difference or can you find it everywhere? Is this something the consumer really wants? Lastly, is what is being sold something some one, a reasonable person mind you, would be willing to make the effort to buy from you?

To borrow a catch phase: Quality, Value and Convenience! All in all, it has to make good sound logical sense and be hassle free in order to work! Being successful online in selling goods or services only happen when: people want it and you have it at the lowest or at a reasonable price and you have repeated your message of how you can be found over and over so they know where to look!

Another twist to this same concept is the company gets you to place their information on your website and then tells you that you will get paid X percentage when people buy their product or service through your site. Usually there is no third party verification and it's all done on faith that you will get paid for what actually happens through your site. Sometimes the percentage payback is so low on these sales that it take tons of purchases before you ever get the first check, if you ever get one!

Now before I get a lot of flaming emails, and by the way I don't mind agreeing to disagree, I will admit that some affiliate programs do work but they are few and far between and you're not going to get rich doing this!

It's all based off of the web traffic you can generate, how sticky your site is because of your content and it boils down to a numbers game!

Again, let me ask you a simple question:

How many nonprofits are known for their web traffic? Very few!

Finally as I close I want to extinguish another myth that's floating around:

Being on the web is important for most nonprofits; but you have to put all this into perspective!

Establishing a website I think should only be attempted after a nonprofit has established themselves and become relatively stable in their funding. Then and only then, should they consider putting their information on the web. You don't want to have a website that is never updated or has no information in it.

Even before this happens you really first have to ask yourself WHY! Why do we want a website? It can't be for vanity sake or because other nonprofits have one! Secondly, what is the purpose for the website? Who is going to keep the information fresh and updated? Lastly, how are people going to know the site exists? All this has to be a part of your overall marketing plan. If you don't have a marketing plan...then forget the website idea!

Websites can be used as a decent advertising tool letting people know who you are and why you exist. But please folks, don't expect that people will just read your information and think they will be flooding your mail box with checks! Likewise understand that using broadcast emails, faxes and in many cases emailed newsletters can, in some cases, be effective but it will be on a very limited basis!

In general, people don't want to waste their time and the real key is:

If they don't feel personally connected to your nonprofit via face to face time then the chance of them reading your emails, faxes and newsletters I think are slim to none!

Other common fundraising idea involving the nonprofit to becoming the main sales force to promote the seller's product or service involves promoting: credit cards, selling travel services, phone services, electric services and the list goes on and on.

A more localized scheme involves professional fundraising companies who in many cases  approach a local older civic group a telling them that they won't have to do anything but make money! This company will fundraise to bring a carnival or circus into town and do all the fundraising by getting sponsors and even donating some seats so the underprivileged children in town can see the show. This is done of course using the civic group's good name. In many cases 70% or more of the money leaves town and the civic group has little to show for the fundraiser that just took place using their name.

Speaking of fundraising! All nonprofits need to establish their own signature fundraising event and do it themselves. It is not easy; no one said life was fair or easy but that is the board's job to help secure the nonprofit's financial stability.

As a consultant I can tell you that there is no one size fits all fundraiser that works everywhere! Nonprofits, however, do have to really focus on the amount of time they can spend and what they net from the event or events they hold.

Many times when I talk to a nonprofit and ask them why they are doing this event it is because they have always done it. Not that they have really analyzed it to see if it was the best and most cost effective thing to do. Also, I think nonprofits from time to time really need to stop and analyze their funding mix i.e. how much money is generated from program fees, local, state or federal government grants, United Way, individual donors, civic groups, local businesses and corporations, foundations and endowments or trusts. If you are relying too much on one source then it is only prudent of you and your board to make an effort to do something different and purpose to making a change!

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DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.