Preparing Board Members to Play their Critical Role in Advocacy and Fundraising

Michael J. MontgomeryMontgomery Consulting, Inc. &

Center for Non Profit Management of Lawrence Technological University

michael@montgomeryconsultinginc.comwww.montgomeryconsultinginc.com

Objectives for this session

For board and staff of MPCA member organizations to:

1. Understand that fundraising is changing – becoming more competitive and (very frankly) less fair.

2. Know the classic roles of board members in the external relations and fundraising of any organization

3. Fully-understand some not always pleasant realities about how fundraising really works

4. Successfully “process” the information above.5. Come to grips with what Board members will -- both

individually and collectively – need to do for MPCA member organizations where they serve

Recent Freep Commentary"Even as economy improves, nonprofits will feel the pinch,"  Detroit FreePress, Jan. 4, 2012.  https://www.montgomeryconsultinginc.com/Resources.html

Even with recovery, funding environment is tight: Government funding less available Payroll deduction less effective & UW resource less available

in many areas Foundation grant making more narrowly focused by

topic/geography Many corporate givers not yet back in the game Fewer independent, local companies making our causes

major target of their giving More competitive funding environment Highest competition is for resources for which you can

apply via formal and presumably fair processes (Gov’t & Foundations)

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How America funded services for low income populations 1620 - 1933

Services for low income populations to some degree local government but mostly a PRIVATE matter.

Philanthropy was Individual and largely Major Gifts.

Frequently to/through ethnic or denominational charities.

Often related to personal & spouse volunteerism.

Board membership at agencies serving low income populations was prestigious, socially advantageous and business/career enhancing.

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New Deal started cultural change in how America funded services for low income

New Deal (1933-41) was the start of significant federal spending on services for low income populations.

Care of low income populations came to be seen as at least in part a public responsibility.

Some private philanthropies closed or ceased direct service provision.

Detroit’s McGregor Fund great example -- origins in pre-Depression McGregor Institute (mission) evolved into a grant making foundation.

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1960s War on Poverty accelerated change

Many grant opportunities for expanding services.

New agencies born & older evolved to benefit.

Service providers often also joined United Way – even much of the private money now came indirectly.

1960 – 1970 funding for services to low income shifted from traditional philanthropy to grants/contracts.

Redefined role of agency Board from mobilizing resources to representation of community interests.

Clearest expression: Equal Opportunity Act 1965 –”maximum feasibility participation.” HUGE impact FAR beyond direct legal requirement.

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A Tale of Two Boards

Traditional Board:

Affluent & Influential (“Power Elite,” “Establishment,” & “the Ladies who Lunch”)

Give & Get in Substantial Ways

Oversight using upper/middle class values

Often prescriptive

Sometimes paternal/maternalistic

Potential to be socially and culturally insensitive

Great for fundraising, maybe less sofor other things.

Post-1965 Board: “Tri-partite” Community + Providers &

Officials + Private Sector

Private Sector = Biz, Labor, Education, Religion, etc

Modest Giving and almost no significant “Getting”

Oversight using political / provider / community values

Reflect community desires

Socially & culturally sensitive

Great for understanding community needs& sensitivity but LOUSY for fundraising!

FQHC 51% Requirement

The most extreme form of post-1965 board may be that required of FQHCs receiving Section 330 grants and FQHC Look-Alikes. At least 51% active, registered clients of the health center who are

representative of the populations served by the center.

Assumes stewardship of public dollars is/will remain primary role of Board

Presupposes government funding (or that obtainable through other formal/fair processes) will be sufficient to meet legitimate needs

In an era of declining government support of services for low income population, makes the remaining 49% of Board seats extremely valuable

Also puts pressure on the 51% to give and raise money in ways / at levels that have probably not previously experienced

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3 Incentives for Voluntary Action (Giving)** Derived from Clark & Wilson, Administrative Science Quarterly (1962).

Purposive – Sincere desire to accomplish purpose; seeking nothing else. (Grants, Broad-Based Giving/Mass Solicitation) This is where most groups This is where most groups serving low income populations operate!serving low income populations operate!

Solidary – Be seen as part of desirable group. (Donor lists by level & “societies”) Arts and Education big on these.

Material – Expects somehow, sometime to become better off as a result of giving. (Sponsorship, Peer Solicitation) Major campaigns w/high level “cabinet” operate here.

Tap all three incentive systems and you will raise more money!!!

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The Board

Post -1965 Board (inc. FQHC) presumes all giving Purposive. Traditional Board = “path” to Solidary and Material incentives Primary conduit to flexible funds (unrestricted or effectively so)

Solidary: Strong Board = Desirable “club” with which prospective donor can be associated (gives to change how/by whom seen)

Material: One or more members of Strong Board are “business relevant” to prospective donor (gives to gain visibility/goodwill)

Traditional view… if no capacity to “give” significantly on your Board then most likely no real capacity to “get” either

Of necessity, must now find ways for Post-1965 Boards to raise money

1. GIVING

Give at a level that is substantial for you.

Gifts where you are on the Board should be your biggest If on multiple boards, smallest gift to any of those organizations should

still be larger than your biggest gift to a group where you are not on the Board.

If a big current gift is not possible, multi-year pledges and/or including a planned giving component in your commitment are possibilities to explore.

Board members all need to give --100% participation. If all do not give in substantial ways, why should anyone else?

A small combined or total board gift will also be problematic. Small donors on any Board need to be balanced with larger donors

Finally, staying on a board and not giving at a significant level is devastating to the organization’s credibility… sophisticated donors can and do check! (See next slide)

Below is the lower half of the Kresge Foundation’s long time form asking about the fundraising results and plans of their applicants.

Participation of Board members (100% only acceptable number) and total Board giving are BOTH critical

Participation

Amount

2. ADVOCACY

Look for opportunities to bring resources to your organization

“Talk up” agency/cause whenever opportunities present.

Popular opportunities for doing this include: Family and Friends Congregation Neighbors Co-workers /Employer Fellow members of fraternal and civic clubs

Some also can access Foundations and/or Business & Corporate decision makers in this way.

3. ID AND RECRUIT NEW SUPPORTERS

ID people and organizations who should be brought closer to the organization and asked to give (possibly also to someday join the Board)

Each Board member should bring 2 names to each meeting, people/organizations for which they could be uniquely helpful.

Help the organization understand the interests, priorities and giving potential of the new prospective supporters (both those on existing lists and new prospects suggested by Board members)

Extend the invitation to participate, to support the cause. This can start by being your guest at an organization event or making a site visit with you, etc

4. “OPEN DOORS”

Sometimes Board members can and should say, “I’m not the right person to ask, but I can get you in there…”

For example, when they can provide insight into a major prospect but (since they’re not personally giving at a high level) they would probably not be credible solicitor of that particular prospect

If helping with major solicitations is not possible, please at least Open Doors for those significant prospects where you can be helpful.

5. Solicitation

Peer-to-Peer solicitation of gifts is by far the most effective fundraising method

Inviting people to join you in supporting this important cause… an extraordinarily compelling way to ask

Solicitors must give at/above level of gift(s) they will request

All can – once they have given – solicit Isabel Wilkerson, The Warmth of Other Suns (2011), “George Swanson Starling,”

pp 379 – 381.

But, if only a few members of an organization’s Board give big and so can then ask big, all but the smallest fundraising campaigns are likely to fail.

Recap

Strong board makes fundraising easier, weak board makes it more difficult

FQHC/Look Alike 51% requirement makes achieving strong – for fundraising purposes – boards uniquely difficult in this environment

Makes it necessary that all fundraise. Makes it critical that remaining 49% of Board

seats be allocated to people who can/will BOTH give and fundraise and at very significant levels