Category Archives: Fundraising in a Recession

Recent IRS Changes Increase Transparency

Posted on by
Reply

Recent IRS Changes Increase Transparency

judy Keller web picBy Judy Keller
Senior Vice President

Changes at the Internal Revenue Service will make financial data about the nonprofit world more broadly accessible to the public—and that’s a good thing.

According to the Chronicle of Philanthropy, the tax agency has come under pressure in recent years by open-government advocates who wanted the information available in a format that is easy to put in a spreadsheet and analyze. Until now, the IRS has released this kind of data only to a few research groups; everybody else could obtain only a set of DVDs that allowed readers to look one by one at each charity’s informational tax return, but made large-scale analysis tough to do.

The data released by the IRS doesn’t include everything on the informational returns filed by charities and foundations. Mostly it includes figures on sources of financial support, total assets and revenue, spending on overhead and programs, and compensation paid to a group’s top-paid officials. It also lacks the names and locations of the organizations, instead just offering a federal employee identification number for each group’s form.

So while the changes aren’t as user friendly as they might be, they are an improvement and will allow for wider use of information.

Nonprofits should welcome this change, take advantage of it, and encourage their donors to do the same.

As our donors become more sophisticated in analyzing how their charitable dollars are spent, the nonprofit community is under increased pressure to be not only more efficient and effective with each dollar, but more transparent as well. A well-managed organization has nothing to fear with the increased potential for scrutiny and should encourage efforts to educate and evaluate, whether by donors or peer organizations.

To encourage this drive for efficiency, The Bill & Melinda Gates Foundation is holding a competition that will offer $100,000 grants to projects that help nonprofits and donors pull together information on a wide variety of sources, such as data that would show a nonprofit program’s results, what beneficiaries and grant makers thought about the project, and what other experts say about its value.

The competition, which could finance as many as 80 projects, expects to receive at least 1,000 applications. Details about how to apply are available at www.grandchallenges.org.

Everyone in the philanthropic community grows stronger when we raise the standards of accountability by which we are all measured.

For more information on how to help your organization meet transparency standards, reach out to me directly through Jeffrey Byrne + Associates, Inc. at jkeller@fundraisingjba.com.

Repositioning and Fundraising in Senior Living

Posted on by
Reply

Senior Living Advisor, 3B Fund Development Group

The “buzz” word in the senior living industry these days is “repositioning”. What exactly does this mean? For most communities, it means changing the image, changing the brand for marketing/sales, and changing broader community relationships. As we all know, it is a time for the entire world to be retrenching and maximizing existing resources. Many of the leading national senior living communities have celebrated their twenty or thirty year anniversary. If a community has worked hard over this period to meet resident needs successfully, and maintained an above average census, many of its operational systems are tired and antiquated. It may not be necessary to undergo a significant expansion, but some changes more significant than simple remodeling seem important. Hence, “repositioning” is the term that encompasses all of the above. 

For a community to change its image and infrastructure, a project team must be convened that includes architects, contractors, marketing/sales experts, interior designers, financial experts, Board members, residents, family members and other important stakeholders. Very often, the members of this team were not involved in the original design and development of the community. In depth research will have to be undertaken to educate team members how decisions were made in the “beginning”. Perhaps the most important members of the team are residents. First and foremost, the community being repositioned is their home, and they may have no desire to change any particular aspect of their lifestyle in the interest of attracting future residents. Many times, residents can be quite insular in their perceptions of their way of life. And so, it becomes very important to work hard to prepare a budget that is finely tuned with all i’s dotted and t’s crossed. So many times, residents will agree to move forward with a major repositioning as long as it will not cost them more money, in other words entry fees and monthly service fees will not be raised. The financial team members are challenged to walk a fine line assuring Board members and Executive Staff that the costs for the repositioning can be handled without a restructuring of a favorable debt arrangement that has been in place for a number of years.

 

In the total timing of all tasks leading to a successful repositioning effort, this is the point at which fundraising discussions provide a solution to accumulating available resources. Some communities may have sophisticated successful fund development programs. However, many do not, and they will be hearing about Capital Campaign strategies for the first time. One of the financial experts added to the project team at this point is an experienced senior living fundraising consultant, one that can work with residents and families, in addition to the more customary donors. In the senior living environment, a large percentage of Capital Campaign proceeds come from residents, family members, and contacts emanating from these two groups. It will take patience and straightforward realistic negotiations with all members of the project team in order for a Capital Campaign to succeed, and form the base structure for a successful repositioning. When all the aspects of the repositioning are in alignment, an individual community will be well “positioned” to succeed for another twenty years and beyond!

Life aside, art imitates our economy

Posted on by
Reply

By JEFFREY BYRNE

Only a handful of performing arts centers have opened in recent years across the country. Last fall the $366 million Kauffman Center for the Performing Arts debuted in Kansas City, Missouri with back-to-back sold out performances.  An early pledge over $100 million through Julia Kauffman contributed to fulfill her mother Muriel’s original vision.

Two months later Crystal Bridges Museum of American Art opened in Bentonville, Arkansas. The last time a museum opened with this caliber of an American art collection was a half century ago. Once again the money came from private sources, namely Alice Walton, heiress to the Walmart fortune, who funded the museum and its acquisitions, Walmart, which is sponsoring free admission for the foreseeable future and the Walton Family Foundation, which endowed $800 million—the largest cash donation on record to a U.S. art museum.

What is even more remarkable than the theater and museum being constructed during a recession and opening in cities many in the art circle consider the most unlikely of places is the fact that the arts are being funded again. Life aside, art imitates our economy.

According to the Giving USA™’s report on 2011 charitable donations, overall giving increased for a second year in a row. Giving USA estimates total donations at $298.42 billion in 2011, reflecting similar gains across the economy. The numbers represent a 4 percent growth in current dollars and .9% in inflation-adjusted dollars. Giving USA categorizes charities into 10 sectors. All but two sectors, religion and foundations, experienced gains.

“America’s charities have been traveling down a very rocky road in recent years, as evidenced by the data in our annual estimates and reports from those working in the field,” said Jim Yunker, Ed.D., chair of Giving USA Foundation™. “Our Board members are cognizant of that reality but also see a bright spot–charitable giving, like other spending categories in the average American household budget, seems to be climbing out of the trough that resulted from the Great Recession, much like some other indicators measuring the state of the economy.”

Traditionally patrons of the arts are high net worth individuals and Kauffman and Walton could arguably epitomize the definition of high net worth. Granted the Kauffman Center and Crystal Bridges are extreme examples. Of course economic hardships do not impact the wealthy’s daily lives like they affect most of us, not even close. However, a recent study shows we regular folk have something in common with high net worth families when it comes to charitable giving.

The 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy, which tracks shifts and trends in the giving behaviors of our nation’s wealthiest donors, revealed that economic uncertainty affects their financial decisions too. The study found 71.2 percent of wealthy households report they give when they feel financially secure.

Charitable donations overall took a double digit hit from 2007 to 2009. Service-based organizations were stretched to the breaking point just to provide basic essentials as demand skyrocketed. Funding the arts seems frivolous when people are losing their homes and livelihoods in record numbers.

Giving to arts, culture and humanities, the least funded philanthropic sector during a recession, increased 4.1 percent in 2011. Research at the Center of Philanthropy at Indiana University also suggests a correlation between charitable giving and the economy. In an abstract way the Kauffman Center, Crystal Bridges and the estimated $13.12 billion donated to the arts last year signals a stabilizing economy and better times right around the corner for the 99% living on Main Street.

Jeffrey Byrne is Founder & CEO of Jeffrey Byrne & Associates. Since 2000 his firm has assisted nonprofits across the U.S. in raising nearly one billion dollars. Jeffrey is a thought leader in philanthropy and his firm is a member of Giving USA, the fundraising and philanthropic arm of the Giving Institute:  Leading Consultants to Nonprofits where he is Second Vice Chair. 

 

 

Thoughts from Jeffrey

Posted on by
1

As you know, I’m a fundraising “nerd” and I just love numbers. This morning when I couldn’t sleep, I turned on CNN, Fox News, MSNBC and watched these news programs starting around 3 am. What I found was fascinating.

First, we’ve had the best first quarter of any year since 1998. First quarter of 2012 is the best we’ve had in 14 years with the Dow over 13,000.

Second, gas continues to inch up and is nearly $4.00 per gallon.

Third, market capitalization of Apple was $648,000,000,000 (that’s $640 billion) making it the most valued company in the world.

Fourth, Wisconsin’s primary is next Tuesday, the Republican’s are narrowing down their nominee, and this year political actions committee’s and candidate committee’s will spend $6,000,000,000 (that’s $6 billion).

Finally, nonprofits are doing more with fewer nonprofits according to the Chronicle on Philanthropy. Looks like the recession’s taken a hit for a couple hundred thousand nonprofits. See the link below.

LINK
If I can help you with your fundraising numbers, let me know. Have a great weekend!

JByrne@FundraisingJBA.com
cell: 816.678.9655,
800.222.9233
www.FundraisingJBA.com

The Time is Ripe: Clean Off The Shelf And Start Planning For Your Senior Living Community

Posted on by
Reply

By Jean G. Bacon
Partner
3B Fund Development Group

Following more than two years of fear, paralysis and “tread water” management, senior living communities may once again be in the position to dip their toes into the development waters. It may need to be done gingerly, and most certainly will require courage on the part of administrators and boards willing to take risks, but the signs are there and developments are moving again.

The earliest signs of the bond market freeze began to appear in late spring of 2008. In the intervening three years, many a plan was put on the shelf, gathering dust as leaders struggled to cope with economic realities that were part of the overall recession.

Interest rates were all over the map and very little new construction began. Sure, there was money out there to be had, but only for those who didn’t need it. Those who did need financing, found the financial gurus – the bond underwriters and the financial feasibility consultants – were retrenching and unwilling to invest in expansions. There was some refinancing of older communities, but this was mostly done in an effort to cut monthly bond payments.

Communities that were fortunate to have a large percentage of “healthy” residents in independent living saw that their census remained relatively stable. However, new sales were a challenge given the housing crisis and how difficult it was for older people to sell their homes. Older adults who had always imagined that they would choose to move to a senior living community reversed course. They sought help in their homes for their health and support needs and settled into a “wait-and-see” mode, continuing to live in the family home with the hope that the economy would turn around. This same population, unfamiliar with the real costs of in-home healthcare, worried with stock market declines that if they were able to move they lacked the resources to live out their lives in the type of community they’d always wanted.

In an industry which requires continuous upkeep and updating, it was hard to identify cash for projects that did not immediately show revenue returns. Given the overall climate and all these conditions, there was no desire to take risks. This created an interesting dynamic in an industry that had always taken risks to improve products and services for their residents.

And, now, the pendulum is swinging. The housing crisis is easing and older adults who have adjusted to the “new normal” in resale values are showing signs that they are willing to sell their homes for less than they could have two years ago, especially when they aren’t carrying hefty mortgages.

Economic indicators are encouraging bond underwriters and financial feasibility consultants to cautiously advise communities to begin planning for the future. Projects that were in a holding pattern largely since 2009 are now moving forward and new construction is on the horizon. Management teams and Board members realize that a deteriorating physical plant will not compete successfully in the market place, and if they want to preserve their identity and market share, they are going to need to spend money to update.

For those who are willing to venture into the visioning and planning cycle, the time — and the environment – may be ripe to clean off that shelf and get those plans that have been gathering dust the past two years into action. But those same leaders are wise to keep in mind that those are two, maybe three years old, and should ask how the environment has changed and whether those plans may need re-tooling post-recession. Beyond that, smart senior living leaders will not only ask whether the plans meet current and near-term needs, but will once again start that longer range process of master planning for the resident of tomorrow.