The number one reason ministries have lost revenue during the pandemic: “We are unable to receive donations because we aren’t meeting physically.” (WayBase survey results)

If your church has relied only on passing the offering plate to collect tithes and offerings, you need a new way for your congregation to support your church during the COVID-19 crisis. If you are unsure where to start with electronic giving or if you have church members for whom that is not an option, read on. The Canadian Council of Christian Charities is providing you with seven quick and easy alternatives to passing the plate.

Donations: What’s Happening Right Now

CCCC teamed up with WayBase to survey Christian ministries and find out how they are doing during the pandemic crisis. Over 2,600 ministries responded (about 80% were churches), and the results will be released June 9, 2020. What we learned from the survey prompted us to create a guide to help churches and other ministries provide their donors with new and easy ways to donate.

Overall, almost 70% of Christian ministries have lost revenue and two thirds said one of the reasons was that they are unable to receive donations because they aren’t meeting physically. This implies that passing the offering plate during a service was the only way their church received tithes and offerings. Other factors for loss of income include job losses by donors (55%) and fear (38%).

The percentage of revenue lost by local churches ranged from minimal to catastrophic:

• 7% have lost up to 10%
• 28% have lost 11-25%
• 28% have lost 26-50%
• 15% have lost 51-75%
• 16% have lost 76-100%

Increase Donations by Increasing Giving Options

We know that adding alternative giving methods will increase donations because, of the 5% of churches who increased their revenue, almost half did so by expanding their giving options (e.g., online giving).

We saw an initial drop in revenue but we have now seen a recovery to regular levels since we began online giving.

-Survey Respondent

Guide to Alternative Giving Methods

So, in the spirit of helping our brothers and sisters in local church ministry, and other ministries who haven’t set up e-giving yet, here is a guide from CCCC that you can freely share with any ministry that needs help setting up new ways of receiving donations. It includes four ways to safely receive cash and cheques, and three simple ways to get started with e-giving.

The guide includes an appendix of instructions you can provide to your donors so they will know how to give using your new options. I’ve pulled that appendix out and made it available as a Word file so you can personalize the donor instructions to suit your ministry for the giving options that you choose.

May the Lord bless you and your ministry!

The post Church Donations: Quick & Easy Offering Plate Alternatives appeared first on CCCC Blogs.

Ability to Change

“Harvard predates the country and has lots of arcane systems. If we can change, you can change.” Frances Frei.

On Excellence

Frances has done global research on what customers want to get and what employees want to give. Her summary is, “Every single customer wanted to receive excellence. Every single employee wanted to give excellence. However, well-intentioned, energetic people following their natural instincts are a large part of the mediocrity problem.”

In order for an organization to reliably produce excellence that is sustainable and scalable, the following problems must be overcome:

1. Not having the courage to be bad. In order to be excellent at some things, you have to be willing to let others things be done badly. Choose to be excellent in what the customer values. This is the Blue Ocean concept, which she builds on in her book Uncommon Service. Don’t be apologetic about what you are bad at. That would be the beginning of the end. For example, Ikea has no sales staff. You have to find what you want for yourself and figure out if it goes together. They have low prices and the trade-off is no sales help. If someone hates you for the bad thing, great! That means you have been clear about what you will and will not do excellently. When we design to eliminate complaints, everyone is ticked off at something and you have in fact designed mediocrity into your organization.
2. Excellence costs money. You must design reliable funding options into the offering or revenue model to pay for excellence. The alternative is mediocrity.
3. If employees fail, it is our fault. We design jobs for the employees we wish we had. We need to design the jobs so that the people we actually hire can be successful. Commerce Bank in the U.S. hired the happiest people they could. The risk was they would end up with pleasant incompetence in their branches. They prevented this by designing the jobs in a way that they could not fail. For example, they only had one product – chequing accounts. They didn’t have to know how to cross-sell, up-sell, advise customers or do anything else. All they had to know was how to open an account and transact deposits and withdrawals.
4. We must be able to observe when customers’ discretionary actions can influence cost or quality so that we can manage and train them in a way that makes them like us more for doing it. Not having sales help in a furniture/decorating store could be a negative. So Ikea trained customers to have it their way and explore their own sense of style. Customers believe Ikea is helping them express themselves by not having sales/design staff.

Customer Surveys

Frances says research shows that customers are not reliable at saying what they prefer, so customer surveys don’t work. Instead, she recommends conjoint analysis, which sounds fancy but basically means giving people two alternatives and asking, “Do you prefer this to that?”

What Should Board Governance Contribute to the Organization?

Kathleen McGinn says the board should have four visions that it contributes:

1. The overall vision. A focus on goals, what you are trying to accomplish
2. The strategy vision. How you should organize and execute to achieve the overall vision
3. The operational vision. Performance and outcomes definitions of success and their related measurements
4. The compliance vision. How you will ensure the organization stays within the rules set by the board

High Performance

Allen Grossman says that achieving high performance in business is like playing chess. In nonprofits it is like playing three-dimensional chess. His question is, “Do your board and your staff have a shared definition of what high performance looks like?” He doesn’t have a firm definition of high performance, but he thinks this one is pretty good: A high performing organization is measurably achieving its mission with effective use of resources over an optimum period of time.

Getting high-profile board members

Paul Salem owns fifty businesses, many are multi-billion dollar businesses. He is chair of one of the charities we studied today and he says that generally the rich and powerful will not join your board, but they will join your advisory board.

The Biggest Decision of a Board

According to Paul, there is no decision bigger than, “Do we have the right CEO?” You can mess up on a lot of other things as a board, but if you have this one right you’ll be okay.

Government Funding

Paul says nonprofits that rely on government funding will wake up one day really disappointed.

When People Don’t Want to Take a Position

Robert Kaplan, famous for co-developing the Balanced Scorecard and Strategy Maps, taught a case that ended up with the entire class acting out the board meeting. Issues were on the table and we had to vote. Some people wanted to waffle and they stated principles, or said “If this, then…but if that…” and he used a line several times that I thought was terrific. When people must take a position and they try to wiggle out of it, his response to what they say is, “That’s fantastic! I agree with everything you said. Now, what do you want to do? What is your vote?” Of course, the follow-up questions are “Why are you voting that way?” and “Why do you believe that?” People sometimes equivocate to avoid making a commitment. But when you are in a leadership position, you must commit to a decision. You can’t avoid it.

What Is the Board’s Mission?

Kaplan said that so much focus is placed on the organization’s mission, vision, and priorities that those of the board are often never considered. So the board should ask itself these questions:

• What is the Board’s mission?
  • Kaplan said this question should help the board define its role in the organization.
• What is the Board’s vision?
  • This question will help the board identify what it is trying to achieve.
• What are the Board’s top three priorities?
  • Succession planning and mission accomplishment are huge responsibilities and if they haven’t been addressed recently, they should be. Other priorities may be defining the governance structure, setting policies, fundraising and so on. Larry Nelson, former CCCC chair, always asked it this way, “What must the board accomplish through its work over the next year?”

Nomenclature

Howard Stephenson says we are not nonprofits. Every organization needs to end up with a surplus or profit or whatever you want to call it. We all must spend less money than we receive. What we really should be called is tax-exempt.

The Guaranteed Fundraising Formula

The formula you absolutely must know for success in fundraising, according to Howard, is:

# of donors x the average gift size = the amount raised

Don’t make something more fancy than it needs to be. Just do what you can to affect the variables!

Getting to a Significant Gift

Cold-calling and telethons just get the small gifts. For big gifts you must go and see the person face-to-face. Howard says he tries to perform a cashectomy without anaesthesia!

You have to frame the project in a way that is attractive to the prospective donor. If he’s raising money for scholarships, Howard will tell conservative people that we need to ensure the best talent is developed to help our great country. He tells liberal people that we need to ensure the disadvantaged have an opportunity. He says he is telling the truth to both groups of people, but framing it in a way that they want to hear it.

Don’t try to get someone’s largest gift of the year. If they haven’t already given you their largest gift, you are unlikely to get it. Instead, Howard asked someone whom he knew preferred other universities to Harvard, “I really hope that we can be #5 on your giving list this year.” The person replied, “Yes, #5 sounds about right.” He got a cheque for $35 million!

Talking about needs will get you small gifts. Talking about impact is the way to get large gifts.

Offering Incentives to Give

Offering gifts for donations might find some new donors for you, but Howard says it turns the gift into a transaction and not a shared mission. That means you will get only small gifts and you are aiming too low.

One more day to go!

The post More Pearls of Nonprofit Wisdom from Harvard appeared first on CCCC Blogs.

Two Vital Worthiness Factors

From the donor’s perspective, there are two key questions related to the ministry as a whole:

1. Are your strategic statements clear and compelling and is the tagline motivational? These statements form the core of your appeal to donors and they are the connection between what your ministry does and the cause your donors want to support. The statements must motivate prospective donors who are interested in your cause. They must be clear about the external change your ministry intends to make in the world and lead potential supporters to say “I’d like to get behind that and help.” Your job is to connect your prospective donor’s passion with your ministry’s mission.
2. Are you really making a lasting change in the world and how can you prove it, or at least demonstrate that you are having an effect outside of the ministry? Donors don’t just want to see activity. According to Penelope Burk, “A donor’s prime needs are to know the gift was received, to know the gift was set to work as intended, and to know the project or program is having the desired effect.”[i]

Proving Lasting, External Change

Some ministries have missions that are difficult to tangibly measure, but any measurement is better than no measurement. You can use stories to add the human factor to your statistics, but stories alone are not as convincing as stories and stats together.

If you find it difficult to provide hard data about your outcomes, another approach is to develop a persuasive theory of change that explains why you believe that your work is accomplishing the mission. If you can develop a logical connection between your mission and your programs, donors will be able to follow each link in the connection and test it for reasonableness. The overall result is that even if you can‘t provide tangible proof of success, you can provide logical evidence that success should be the result of your work.

Worthiness Review Questions:

Based on these considerations, here are some questions that will help you evaluate the organizational context for your fundraising program. Be sure to answer them from your donors’ perspective:

• Do your donors find the strategic statements clear, compelling and motivational?
• Is there a clear rationale (called a “theory of change” or “logic model”) connecting your programs to mission fulfillment?
• Is the external change you create real lasting change or is it a temporary helping hand? If a helping hand, can you make a compelling case that this is either all that is needed or that it is a vital specialized niche that other ministries will build on? If it is the latter case, then you will need to talk about partner ministries that carry on the work.
• What accountability program does the charity have? What, how, and when do you report to your donors?
• Does your online presence support donors? Donors want to know who you are, what your goals are, what you do and how you do it, how you use your donations, and what your expense ratios are. The answers need to be available from your home page (Eg., A link to “Information for Donors”).
• What is your overall ratio for Fundraising and Administrative Costs to total Expenses (the FACE ratio)? Most people expect this ratio to be between 10 and 35%, so if your ministry is outside of these bounds it will raise questions. These are arbitrary limits, but arbitrary or not, they are what most people think is reasonable. If your ratio is too low, you will have a credibility problem, but if it is too high you will be seen as not devoting enough of your resources to ‘good works.’ You should at least know what this ratio is because others can use publicly available information to calculate it. To find out how easily your donors can get this information, go to CRA’s charity search page, enter the name of your charity (and if there are several results from the search, pick your charity), click on T3010 and then on “Quickview.” Scroll down the page and that’s what your donors are seeing about your charity! If the FACE ratio is high and cannot be reduced, or if it is really low because of some unusual circumstance, you will need to explain why.

Other Worthiness Factors

Donors want to have good interactions with your ministry, so you should have a donor bill of rights or an ethical fundraising policy in place. Be sure to provide excellent service to your donors and keep them engaged with your ministry by regularly asking for prayer support and providing outcomes information.

The post Evaluate Your Fundraising Worthiness appeared first on CCCC Blogs.

The Quickest Way to Raise New Donations

Linda Parsons, an assistant professor at the George Mason University School of Management, found that providing accountability information results in real value to a charity. After surveying charities and their donors, she reports:

Using a field-based experiment, this study finds that some donors are more likely to respond to a fundraising appeal if it includes positive financial accounting information. Donors who have previously donated to an organization are almost three times as likely to make a charitable contribution if the NFP [not for profit] directly provides them with summary financial reports (instead of expecting the donors to incur the costs to obtain the information themselves)… This field-based experiment demonstrates that summary financial information can directly affect contributions from individuals. (I added the emphasis.) ⁽¹⁾

Parson’s research is backed up by other research done by Penelope Burk, who found that 46 percent of donors who were asked, “Why do you stop giving?” responded that they would stop giving to a charity they once supported for reasons that are tied to insufficient or poor quality information concerning their gifts at work.⁽²⁾

What’s even better is that a 2001 Wise Giving Alliance survey of 2,003 adult Americans found that 50% of donors prefer to get accountability reports from charities directly.⁽³⁾ This means that they want to hear directly from you, giving you the chance to determine how the information is presented and interpreted!

These research reports all suggest that the donors who are most likely to be positively affected by accountability reports are the same ones who are already supporting your ministry. This is an easy group to reach, and they are already sold on supporting your ministry, so the quickest way to increase donations may be to focus on your current givers and give them the accountability information they want. In return, they will likely increase their support.

What Donors Want in Accountability Reports

Stephanie Williams surveyed 2,000 donors not too long ago to determine what accountability information donors wanted and found that the answer depends on how old they are:

• Baby boomers (age 40-58) and young people (age 18-39) value accountability information more than mature donors (age 59 and older).
• Baby boomers and mature donors value efficiency information more than young donors while young donors value outcomes information more than the older groups.

The main points of her report are:

• Mature donors (59+) are least likely to want information, but when they get it, the most important information they want is efficiency information.
• Young donors (18-39) are most likely to want outcomes information and 74% of them look for this information on the charity’s website. Again, they want to get their information from you!
• 86% of donors thought it was “extremely important” that a charity have a Seal of Approval from an external organization that monitors how they spend their money.
• 81% of donors said it was important or extremely important to know about a charity’s recent accomplishments before giving a donation.

Notwithstanding the differences about what information various age groups want most, it’s just a matter of different priorities. Boomers care firstly about efficiency and secondly about outcomes, while young adults put their priority on outcomes first and then on efficiency. You need to provide both pieces of information.

Thus efficiency and effectiveness (outcomes) are the key information that donors want.

Another Quick Way to Raise Money: Certification by a Third Party

Given that Williams reports 86% of donors want the charities they support to be monitored by an outside agency, you should consider certification seriously. But is certification with a monitoring agency worth the investment? You bet!

Margaret Sloan has researched the effect that ratings by an external accountability program has on donor behaviour.⁽⁴⁾ She studied 683 charities in New York state that had been reviewed by the BBB/Wise Giving Alliance against its standards. She compared the fundraising success of those that had a pass rating and those that did not. Sloan reports that Wise Giving Alliance ‘pass’ ratings have a statistically significant effect on the contributions received; however, ‘did not pass’ ratings are nonsignificant. She found that for every $1,000 of total revenue, a pass rating would add a further $71. The average total impact of a pass rating was $75,000. The fact that negative ratings (or insufficient information to assess a rating) had no negative impact on the charities was attributed to several factors:

• Charities are quick to promote a positive rating.
• Donors usually don’t know about negative ratings.
• Donors may be loyal to a particular charity for emotional reasons.
• Donors may know of extenuating circumstances why a charity would have a negative rating.

Thus the upside of participating in a certification program is about $75,000 on average, and there is virtually no downside. Given the minimal cost of participating in a program such as CCCC offers, Accreditation, it is a no-brainer as long as the charity is willing to abide by the standards.

———————————————————

(1) This quote is from The Impact of Financial Information and Voluntary Disclosures on Contributions to Not-for-profit Organizations: A Field-based Experiment. Available at SSRN: http://ssrn.com/abstract=406760 or http://dx.doi.org/10.2139/ssrn.406760).

(2) From her book Donor Centered Fundraising. 2003. p 15.

(3) Reported by Margaret Sloan in “The Effects of Nonprofit Accountability Rating on Donor Behavior,” published in the April 2009 issue of Nonprofit and Voluntary Sector Quarterly.

(4) The Effects of Nonprofit Accountability Rating on Donor Behavior. Published in the April 2009 issue of Nonprofit and Voluntary Sector Quarterly.

The post The Quickest Way to Increase Donations to Your Charity appeared first on CCCC Blogs.

When people who otherwise support your cause say “What can I do? I don’t have lots of money to give”, this story is an encouragement for them not to look at what they lack, but at what they have. Even the cash poor in Canada are wealthy compared to the poor in India, and if they are rich in generosity with what they have, then we in Canada should be rich in generosity as well. When prospective donors don’t have cash, ask them what else they have that they can give. If it is useful to your ministry, then gifts-in-kind and gifts of service can be very helpful. (The latter gift is not receiptable unless they charge for the service, you pay it, and then they donate the income back.)

Everyone can be a giver!

The post “If you eat, you can give” appeared first on CCCC Blogs.

Why You Should Give Donors More Information

I’ll make my case with these observations:

• In sales training, you learn to make two sales. The first sale is to convince the prospect they need what you are selling. Once convinced, then you sell them on why they should buy your specific offering. A lot of fundraising appeals only deal with the first ‘sale’. We say “People are starving, people are lost without Christ, and we’re there to make a difference! There is a great NEED and you can HELP!” We might even show pictures of those poor, suffering people. That might be enough to induce some ‘guilt’ donations, but this strategy alone will not get you where you want to go. It only raises awareness of the issue. Yes, you must build awareness, and yes, pictures help to tell a story, but don’t be content with just that for your fundraising strategy.
• A basic attempt at the second sale is to impress people in some way about your ministry, such as how many meals you served or how many people made decisions for Christ (“One hundred and forty-two billion people converted”). This is the McDonald’s or statistical approach, and it at least shows that your ministry is busy. A reputational approach distinguishes yourself based on longevity (“Since 1285 we’ve been…”) or size (“The solar system’s largest…”). These approaches can work well enough because many people are too lazy to make their own decisions, and so rely on the crowd to make a decision for them. Their assumption is, if you are that old or that big or did that much, then obviously others must think you are worthy of support and that’s good enough for them. But is this the best we can do?  I don’t think so. It’s fine to have some pride in the size and history of your ministry, and I throw around statistics too, but I think the case for support needs to go beyond all that.
• A more sophisticated approach is the business approach (which is all the current rage). Fundraising appeals talk about cost effectiveness (“130% of your donation goes to good works because we found a way to make money on our overhead!”), leverage (“For every dollar you give, the government will add another one hundred and thirty-three…”), efficiency (“We can innoculate 8,531 people per hour at our one doctor clinic”), and return on investment (“For every dollar you invest, 300 people will…”). Measurements such as these are fine, and they are useful to a degree, but I question how applicable they are as the final selection criteria between ministries, especially those that are focused on evangelism and individual change. I know you can measure pretty well anything, but how do you account for seeds that are planted in a student one year by a Christian worker at a university, and the marketplace ministry that ultimately leads the graduate to the Lord ten years later on?  Is one more worthy of support because they get to count the decision? A business approach requires results, and the results sometimes are quite separate from the intervention. This approach also devalues the effort that goes into getting results. Who would attempt the impossible if only the result counts? Would you turn a project or a person away because they might bring your numbers down? Or we can be highly efficient in dealing with people, and to keep the efficiency levels high we give up the capacity to spend time and really love a person by caring for them, listening to them and simply being there for them. The essence of Christianity is relationship, and a business approach doesn’t account for that. Again, there is great value in this approach, but it’s not the best way to choose between ministries.

A New Mindset for Fundraisers

There is a better way to ‘compete.’ A donation is not a guilt offering or a business transaction. It is an act of worship. Every donation represents a donor who is voluntarily participating in the mission of God. We must not reduce fundraising to ‘selling’ our ministries to donors. The corporate model of revenue generation and all that goes with it is simply not the appropriate model for Christian ministry. We are not selling. We are not begging. We are actively working on God’s mission and inviting others to help us as we do. So with so many ministries sharing similar missions, what is an appropriate way to ask for support?

When I receive an appeal for a donation my first question is, “I understand the need, but what do you think the problem really is?” and my second is, “What is your methodology?” I then look for the answers. I’m tired of giving money to fund methods of questionable value that address only the superficial aspects of the problem. I want real change. Lasting change.

How to Distinguish Your Ministry to Donors

I think the invitation to support should be pretty straight-forward. Explain your logic model. That’s it. That is the best way to ‘compete’ with other Christian ministries. It doesn’t say you are better than everyone else. It simply says, “Here’s how we see the problem or opportunity, these are the values and assumptions we base our strategy on, and this is the theory of change we use to design our programs and services.” Donors are now free to compare your logic model with another, and see which one is most compelling for them. The logic model gets down to the real, substantive differences between ministries. Is this a healthy way to differentiate yourself from others? I think so, because all you are doing is describing how you will change things, and inviting those who agree with that strategy to support you.

I think God allows for legitimate diversity of opinion as to methodology and priority. For example, Christians can be found in virtually all political camps, so they may have very different proposals for solving the world’s problems. Trickle down economic policies are one way to address poverty, while income redistribution through the tax system is a very different way. Christians may legitimately disagree on these points. If opinion is divided, the local church or denomination may not be able to address the issue directly because their open membership covers a wide range of opinions. However, its members could consider the competing solutions offered by Christian agencies and each member choose the solution that seems best to them. One person may be big on mass evangelism events while another supports one-on-one approaches. The same goal, but different methods.

If giving is an act of worship, then it should be done intelligently. That is simply good stewardship. Providing information about your logic model shows respect for your donors and their stewardship of God’s resources. Rather than simplifying your giving opportunity, make it more complex by explaining the logic behind your ministry. Your donors will have greater confidence in your ministry, they will be better educated about the real issues, and well-equipped to tell others about your ministry.

Some people will decide your model is not their cup of tea, and some may not be interested in your logic model but will continue as transactional or habitual donors. But others will now be far more engaged with your ministry because of their deep understanding of it. They will become your missionary fundraisers as they share their enthusiasm for your ministry.

Here are statements that might be used when explaining your logic model:

• Our mission is…
• Our values include … which means that our programs are designed…
• The root issues underlying our mission are… so we…
• We assume that… and therefore we…
• We believe that if we can…then the lasting impact will be…
• We realize we are only part of the solution, so we…
• Once our work with an individual or community is done, we believe they will…
• To ensure sustainability, we…
• We define success as…
• The indicators of success are…
• Change will occur because we…

Most ministries probably do not have an explicit logic model, but every ministry has an assumed one that can be uncovered by asking yourself “Why do we do it this way?” “Why do we believe this will work and not that?”

I’m putting this ‘out there’ as food for thought. It’s not an all-or-nothing proposition, but it is a suggestion for how to communicate with a segment of the Christian public who want this sort of information. Jump in with your thoughts!

For more suggestions on this topic, I’ve written about the unhealthy aspects of competition between ministries, about performance measurement, theory of change, and about logic models. I still intend to write about reporting to donors.

The post A Healthy Approach to Competition appeared first on CCCC Blogs.

Be Nice

Having to raise financial support is stressful for many people, and is most stressful when doing the initial fundraising.

• One couple is currently raising money to go and after almost two years have raised just one-third of what they need to actually go to the field. They estimate that only 15% of churches they approach will even bother to return their calls.
• Another missionary wrote about the very negative reception many churches gave them, some pastors even referring to missionaries as living off the backs of churches.
• Some missionaries spoke of meeting with church mission committees and then never hearing back from them about their decision. The committees would not even return their phone calls.

Suggestion: Extend common courtesy to fellow believers who are called to specialist ministry vocations. Be gracious, and even if the church cannot or chooses not to fund them, at least let them know so the issue is resolved and they can move on. You will spare the missionary from wasting time trying to contact you. As one said, “At least respond with a ‘no.’ I’d rather receive a gracious ‘no’ than be ignored.”

Be the First to Fund Your Own Missionaries

A common question new missionaries are asked is “What is your own church doing to support you?” This is a valid question because it adds to the credibility of the missionary’s call to ministry that his or her own church affirms that call, even if they are going under the banner of an independent agency.

• The time for a church to give its support to a new missionary is at the beginning of the fundraising process, when it will add credibility and get the ball rolling. Churches that wait to the end to commit to their own members are actually hurting their fundraising efforts and possibly delaying their going to the field.
• Many churches are reluctant to support a missionary to a higher dollar value than their own church is giving, so churches should be as generous as possible in setting the support level for missionaries from their own congregation. One missionary recommends that home churches provide 10 to 20% of their missionary’s budget, and perhaps 5 to 7% for missionaries from other churches. Both of these amounts are significant portions of the missionary’s budget.

Suggestion: A missionary’s home church should be the first to affirm his or her call to missionary service and be the first to make a meaningful commitment to fund their member.

Give Support a Term at a Time

A commitment to fund is often limited to only one year, requiring that the missionary report each year on their activities and results and also re-apply for funding for another year. This is a time-consuming exercise.

• Reporting should happen on a regular basis throughout the year regardless of the length of the funding commitment, but
• It would be very helpful and much less stressful for the missionary if churches would commit their funding for a longer period of time, perhaps even for the duration of the missionary’s term. This would give most missionaries a four or five year commitment and allow them to focus on the work to which they have been called.

Suggestion: Consider committing for more than a year at a time.

Simplify the Paperwork

A significant amount of time can be spent filling out application and reporting forms that may be unique to each church.

• A common application form (that may allow for some variation by providing space for additional questions) would save a lot of time for missionaries who may be filling out dozens of these forms.
• At the very least, perhaps denominations could develop a common form for their churches.

Suggestion: Before designing your own custom application forms, see if there are generic forms you could use as the basis for yours.

Your Ideas

Please contribute to the discussion from your own experience and ideas. Do you see problems with their suggestions? Could you add more of your own? How do you think a missionary should go about raising their initial support? Jump in!

The post Don’t Sabotage New Missionaries! appeared first on CCCC Blogs.

Problems with the Ratings

However, in spite of numerous cautions expressed in the ratings article, which I think are fully warranted, the rating system gives a final grade as an overall assessment. The existence of a final grade undermines an otherwise fine attempt at rating charities. Few people will have the inclination to do any of the more nuanced follow-up work that MoneySense suggests, because (human nature being what it is) they will take the path of least effort and simply rely on the final grade. (How’s that for a pessimistic assessment of humanity!  Sorry, but I think it’s true.)

How to Improve Charity Ratings

Here are some ideas for improving the rating system:

• When examining fundraising costs, use a multi-year period instead of a year at a time. While direct mail fundraising, for example, should raise immediate dollars, major gifts and deferred gifts can take a year or sometimes decades (in the case  of bequests) to materialize. Capital campaigns usually take three years to convert pledges into cash receipts. So while the revenue comes in over an extended time, the costs to get that revenue tend to be incurred upfront. This makes older charities look better than younger charities because they are now receiving donations from work that was paid for years before. Using a three-year rolling average would be a more realistic way of determining fundraising costs as a percentage of money raised. It’s still not perfect, but it’s better than using only one year.
• For both overhead costs and fundraising costs, any rating system assumes that all charities allocate their expenses the same way. While I think charities are getting better at this due to changes in accounting rules and CRA guidelines, I suspect there is still a wide variation in how costs are allocated and therefore the percentages that raters are so eager to calculate are not likely as solid as they believe. Even if everyone reported based on the same allocation criteria, a number is just a number until it is compared to something useful. When assessing charities, the focus should not be on inputs such as administration and fundraising, but on the outcomes that those expenditures generate. A higher administration expense could lead to better oversight or even better quality staff, potentially achieving much greater social good. The real evaluation of a charity should be based on its ability to use its inputs for the greatest possible social good. So shift the focus from inputs to outcomes as the primary focus (effectiveness), and leave the cost of achieving those outcomes as an important but secondary consideration (efficiency). I’m not taking the time to hit the books while writing this post, but there is a good literature available on measuring the effectiveness and efficiency of intangible missions such as many charities have.
• Sarah Efron, the originator of this particular rating system, acknowledges quite correctly that there are complicating factors that make it impossible to do a pure number-crunching exercise alone:
  • Some causes are more popular than others, so it is easier to raise money,
  • Some charities are household names while others are brand new and have to do a lot more promotion to get noticed,
  • Some charities make greater use of volunteers and thus have lower overhead costs,
  • Some charities work only locally and others nationally or internationally, adding to their oversight costs,
  • Some fundraise nationally, incurring greater costs, while others are closer to their donors because they only fundraise locally, and
  • Some charities operating in the same ‘business’ receive government funding and some do not.
  • Therefore it makes sense to highlight these differences in the report.
• It would be more helpful if, in the governance rating section, the report mentioned whether or not a charity responded to the survey. They may have poor governance or they may not respond to inquiries like this. Both reflect negatively, but they are very different from each other. Poor governance is much more of a concern to me than not disclosing information. (I can think of no good reason, but the way, why the information should not have been provided.)
• To be fair, charities should be sent a draft report and given a chance to add their comments to explain any results that they feel do not fairly reflect their operations.
• The underlying assumption of a rating system for charities is that donors are interested in the “return on investment.” But when investment analysts assess corporate investments (stocks and bonds), they do not rely only on financial reports and checklists, they also visit the companies, interview their CEO’s and dig into their strategies. Without this sort of analysis (suitably adapted for the charitable sector), any charity rating system is deficient. But who would pay for such a system? Foundations normally do their own due diligence that includes these extra assessments, but they only work with so many charities. Is it practical to think that 85,000 charities can be rated? If you only rate the largest ones, are you penalizing the smaller charities?

Standards Are the Better Way

Maybe we wouldn’t need a charity rating service if we combined the external validation that comes from having standards such as CCCC provides for Christian ministries with greater transparency by charities who would make information freely and easily available on their websites. Our Accreditation assures donors that a third party has validated a charity’s compliance with a set of standards, and by posting information on a website, donors can find out for themselves if what the charity is doing is effective, efficient, and what they want to support.  Christian charities should speak for themselves rather than depend on rating services and post the sort of information that the public wants on their website, including:

• complete financial statements,
• annual reports,
• policies such as privacy, fundraising, executive compensation, etc.,
• governance issues such as requested by MoneySense,
• a logic model that supports their mission statement,
• a definition of success, and
• a discussion of outcomes, effectiveness and efficiency (if not covered in the annual report).

It seems to me that providing this information is something a charity would want to do because if they are performing well, the information will be a persuasive communication to current and potential supporters. Doing the work to produce the information would also be very beneficial for the charity. For example, I am thinking a lot about effectiveness and efficiency at CCCC and by getting stuff written down, I am forcing myself to rigorously think the issues through.

A lot of the information that MoneySense wants to see is posted on our website (financial and governance info here, and some sample program evaluations here), but I haven’t posted a logic model or definition of success yet. We’re in the process of rethinking our mission statement, which will determine our logic model, definition of success, and our outcomes measurement criteria, so those will be posted once we have done that work.

So, those are my thoughts. I’m especially interested in hearing from charity staff what they think of charity rating systems and how they think they can best be transparent with the public. If you don’t like the rating systems, what do you suggest instead?

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Three Circles of Giving

His research shows that people who give to charity usually give 40-60% of their donations to one to three charities working in their areas of core interest. They give another 20-30% to another four charities or so that are working in areas that are priorities for them. The remainder of their donations are what he calls “chequebook gifts” (oops—I’m in the States today, so that’s checkbook gifts). These are gifts that may be sizable to you but to them they are amounts they don’t even have to think about. They don’t care too much about what you do, but they’ll give you something so you’ll go away.

The point for fundraisers is you need to realize what kind of a gift you are receiving—core, priority or chequebook? If you do not know you are receiving a core gift, then you probably aren’t. Most likely you are getting a chequebook gift.

A Strategy for Asking for Money

Your goal is not to become a core interest of theirs since it will be very difficult to displace an organization or cause that is already in the core. A good goal would be to be at or near the top of their second-level priority gifts. You’d like to be 4th or 5th on their list.

An approach this professor finds effective is to thank the person for all the good work they are already doing in the world. After thanking them, say that your ministry is doing work that they care about and that you’d like to suggest doing something together that will be important and special to the donor. You should know the prospective donor well enough that you have a project or program that you believe will excite them.

Three questions you should answer if you want major gifts are:

1. Are we doing important work? Show them how what you do relates to what they think is important.
2. Are we well-managed? You should have an accountability plan that includes availability of your financial statements and anything else that shows you are good stewards of the money that flows through your ministry.
3. Will my gift make a difference? If you’ve done a logic model for your programs, you should be able to show what the impact will be and how you will know that you have been effective.

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