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More People Donating Online, Say Fundraising Costs a Key Concern

A new study shows that more donors from every age group are going online to make a donation, and they are increasingly sensitive to over-solicitation and fundraising costs.

Things seem to be looking up for philanthropic giving in 2011 as 79 percent of U.S. donors surveyed recently said they plan to give the same or more to charitable causes this year. One-quarter of all donors said they would increase their donation this year, while only 7 percent expect to give less, according to a survey of more than 17,500 donors conducted by Cygnus Applied Research Inc.

The Online Migration

More and more, this giving is taking place online.  Sixty-five percent of respondents said they plan to make at least one gift on a charity's website this year. And, a majority of donors from each age category plan to give online in 2011 for the first time in this annual study. Fifty-three percent of donors over 65 plan to make an online gift this year, 69 percent of those between 35 and 64 plan to do so, and a large majority of donors under 35 (86 percent) plan to give online.

Even donors who are responding to direct mail pieces from a charity are choosing to make their transaction online. While 66 percent of donors responding to direct mail appeals in 2010 chose to donate through the mail, 29 percent went online to the charity's website to make a gift.

Looking ahead to 2011, while 43 percent of direct mail donors plan to continue giving through the mail, 26 percent said they plan to give less (less money, less often or both) or stop giving through the mail altogether this year. The results show that while direct mail is stimulating fewer mailed transactions, it is increasingly playing a role in stimulating online activity.

Cost Concerns

Donors say that it is more than just a sense of convenience that is drawing them to the online giving option. They are also concerned about fundraising costs. While 50 percent of donors who plan to donate online this year said that they will do so because it is convenient, 25 percent of people cited cost-effectiveness as a factor in their choice of how to give. This was particularly true for donors over the age of 65.

The donor study also separated online donors into two types: Those who opt to give online as a decided preference and those who include online giving among other transaction methods. Thirty-one percent of donors who prioritize online giving over other methods said that multiple forms of solicitation will not cause them to give more often or more generously, and an additional 49 percent said that soliciting them in ways other than online will actually persuade them to give less or stop giving altogether.

Penelope Burk, president of Cygnus, advises nonprofits to identify donors who only give online and take a hard look before sending them direct mail pieces or adding them to the telephone call list.

"As giving online is a conscious choice in order to maximize return on investment, it is counter-productive to attempt to increase giving frequency or accumulative gift value by soliciting these donors through more costly methods," the report notes.

Burk says that donors who give online prefer to be contacted via email and are interested in getting information about the impact of their gifts. She says the amount of communication is not the problem, it is the amount of solicitations.

"Asks are very powerful," Burk explains. "You should not ask before you have communicated the impact of a previous gift. However when you do ask, it should be clear and persuasive."

The Cygnus Donor Survey: Where Philanthropy is Headed in 2011, is available at www.cygresearch.com. The report provides an overview of giving trends by donors in 2010, donors' plans for giving in 2011, and explores topics including donor retention, giving patterns, social media and board fundraising. This report is based on a sample of donors in the United States. A separate report is available covering donor trends in Canada.

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Oregon State Government Considers Administrative Cost Ratios for Charitable Organizations

The Oregon state legislature is considering a bill that would establish administrative cost ratios for nonprofits. If passed, Oregon will be the first state to establish such ratios.

Under the bill, already approved by the state Senate, if charitable organizations do not expend at least 30 percent annually on program services (averaged over a three-year period), the state attorney general can declare that donations to those organizations would no longer be tax-deductible, and the charities would have to notify potential donors of that status.

The state House gave the bill its first reading April 12 and referred it to the House Revenue Committee.

If Oregon enacts the bill, it would be the first state to codify administrative cost ratios. 

AFP supports transparency and ethical behavior but opposes the establishment of administrative cost ratios for a number of reasons.  In addition, the bill potentially could face a constitutional challenge because the Supreme Court has ruled that government discrimination against charities and/or charitable appeals based solely upon spending formulas are unconstitutional. See, e.g., Village of Schaumberg v. Citizens for a Better Environment, 444 U.S. 620 (1980); Secretary of State of Maryland v. Joseph Munson Company, Inc., 467 U.S. 947 (1984); Riley v. National Fed'n of the Blind of NC, 487 U.S. 781 (1988); and Illinois ex rel. Madigan v. Telemarketing Associates, Inc., 538 U.S. 600 (2003). 

For these reasons, AFP opposes the bill as currently drafted.  AFP urges its Oregon members to educate House members, particularly those sitting on the House Revenue Committee, about this bill. 

House Revenue Committee Membership:

Phil Barnhart, Co-Chair

Vicki Berger, Co-Chair

Jules Bailey, Co-Vice Chair

Katie Eyre Brewer, Co-Vice Chair

Cliff Bentz

Sara Gelser

Tobias Read

Matt Wand

For your convenience, AFP has drafted the following talking points:

  • As a member of the Association of Fundraising Professionals (AFP) and [insert your title and position at your organization], I urge you to oppose SB 40 as currently drafted, which would allow the Oregon Attorney General to disqualify charitable organizations from receiving charitable contributions that are deductible for Oregon state income tax purposes if the organizations do not expend at least 30% annually on program services when those expenses are averaged over the most recent three fiscal years.
  • AFP represents 30,000 members in 222 chapters throughout the world, working to advance philanthropy through advocacy, research, education and certification programs. The association fosters development and growth of fundraising professionals and promotes high ethical standards in the fundraising profession.
  • AFP supports transparency and ethical fundraising, exemplified by the AFP Code of Ethical Principles and Standards. However, a potentially arbitrary administrative cost threshold overlooks more important aspects of nonprofits, including their mission, and ignores the fact that some highly-effective nonprofits, particularly very small nonprofits, may have high administrative costs. Furthermore, some charitable organizations that support necessary, yet unpopular missions may have higher administrative costs due to the additional challenges that they may face.
  • Administrative costs alone are poor indicators of nonprofit effectiveness, and AFP has raised this issue both with the Internal Revenue Service (IRS) and the Canadian Revenue Service (CRA). The IRS revised its updated Form 990 in response to charitable sector feedback by placing less emphasis on simple cost ratios and other raw data, and the CRA revised an evaluation grid based upon cost ratios in its fundraising guidelines in response to similar feedback.
  • For these reasons, we urge you to oppose SB 40 and instead seek sector input to ensure that the bill curbs unethical behavior without establishing an arbitrary mathematical formula that might impede the altruistic mission of our state's charitable organizations.
  • Thank you.

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Results of Canada's 41st Federal Election Offers Charitable Sector Opportunity to Re-engage Parliament

AFP members now have a great opportunity to communicate with lawmakers in Canada about important legislation affecting nonprofits as a result of the May 2 federal election.

We urge you to meet with newly elected (as well as incumbent) Members of Parliament (MP) and, where applicable, local Senators.

Bill S-203 that would have established National Philanthropy Day® (NPD) and Bill C-470 that would have affected nonprofit compensation both died on the order paper when the federal election was called on March 26.  It is hoped that the NPD legislation will be reintroduced soon after Parliament reconvenes in the coming weeks.

Your efforts are key to educating our elected officials and addressing misconceptions about the sector while raising the visibility of AFP and the fundraising profession as a whole.

When meeting with MPs, Senators and/or their staffs, you might find the following talking points helpful.

Talking Points

  • Thank you for taking the time to meet with me. I am here as a constituent and an employee of [name of your organization and its mission], as well as a member of the Association of Fundraising Professionals, also known as AFP.
  • AFP is the largest community of fundraising professionals in the world. It represents 30,000 members in 222 chapters throughout the world, including 3,100 members in 16 chapters across Canada. Our mission is to advance ethical and responsible fundraising and philanthropy through research, education and certification programs.
  • Building on a record of recent success, our key message is that AFP members are keenly interested to provide our expertise and experience to Parliament on any issue relating to the charitable sector.
  • Over the past few years, administrative costs (including fundraising expenses) and nonprofit compensation (recently considered in Bill C-470) have been suggested as effective baseline indicators of nonprofit performance and transparency.
  • AFP contends that attempts to create simplistic indicators such as these are far too misleading and overlook other equally important elements of nonprofits such as the use of commission-based compensation (which is prohibited in the AFP Code of Ethical Principles and Standards), the size of the charity, charitable causes with limited appeal and the organizations' internal fundraising evaluation processes.
  • Unfortunately, the charitable sector has been placed under greater scrutiny due in a large part to some well-publicized accounts of wrongdoing by a select number of nonprofits. We think that these wrongful acts are quite rare and the exception to the rule, but we nevertheless support transparency and ethical behaviour, exemplified by the AFP Code of Ethical Principles and Standards that each of our members must sign and abide.
  • When legislative or regulatory changes affecting the nonprofit sector are proposed, we urge you to consider taking a broad view. The charitable sector is complex, and one-size-fits-all approaches often fail to acknowledge that complexity.
  • We again offer our expertise and experience to Parliament on legislative and regulatory matters relating to the sector and would welcome a collaborative relationship with you and your staff.
  • Again, thank you for your time.

Meetings Feedback

Over the next couple of weeks, all MPs will be sworn into office and the official list of the 41st Parliament will be made public on May 24.  Following the publication of the list, which AFP will provide, we strongly encourage you to meet with your MP and/or Senator and when you do, please let us know, so we can keep a record of who has been contacted for future reference.  We believe that this will enable us to foster a stronger collaborative framework with as many MPs and/or Senators as possible.  If you are unable to set up a meeting, please consider sending a letter with the points mentioned above.

UPDATE: Feedback needed from AFP members to improve Canada Revenue Agency (CRA) Fundraising Guidance

As we mention in the talking points, AFP has built a strong working relationship with the CRA.  Through Andrea McManus, CFRE, our chair, AFP has been invited to provide the CRA with feedback on and potential improvements to the fundraising guidelines.  We would welcome any comments from you regarding areas where the guidance could be improved.  Alternatively, you can also let us know which parts of the guidance are working well.

We thank you in advance for your input.

If you have any input regarding meetings with elected officials or the CRA fundraising guidelines or if you have any questions, please contact Jason Lee, AFP's general counsel, at jlee@afpnet.org or Ken Mayhew, chair of the AFP Canadian Government Relations Committee, at Ken.Mayhew@mssociety.ca.

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Angela Seaworth Earns Highest Professional Fundraising Credential From AFP

AFP has awarded its highest professional certification, the Advanced Certified Fundraising Executive (ACFRE), to Angela Seaworth of Houston, Texas.

Available only to senior-level fundraisers who have worked in the profession for 10 or more years, the ACFRE is a distinguished achievement earned by only 91 professionals since the inception of the program in 1992.

The ACFRE program is the most rigorous certification process available to professional fundraisers.  The process includes a comprehensive application, detailing achievements in practice, education, publishing, teaching, and service to the profession; a written examination that measures a candidate's knowledge of fundraising as well as the philosophical, ethical, and social aspects of philanthropy; a portfolio representing the candidate's body of professional work; and an oral peer review in which the candidate must articulate a mastery of advanced-level knowledge in fundraising management, leadership and ethics.

The ACFRE Certification Board of AFP, chaired by Jim Allen, ACFRE, oversees the ACFRE candidate review process.  Ms. Seaworth was honored for her achievement during AFP's 48th International Conference on Fundraising in Chicago in March 2011.

Seaworth currently serves as the director of the Center for Philanthropy and Nonprofit Leadership at Rice University in Houston, which seeks to increase the effectiveness and impact of the nonprofit sector by providing education and nurturing leadership among professionals and those who support the work of nonprofit organizations. She earned a BA from Denison University, an MBA from the Booth School of Business at the University of Chicago, an MA Certificate in Nonprofit Management from the School of Public and Environmental Affairs at Indiana University, and is currently a doctoral candidate in Philanthropic Studies at Indiana University's Center on Philanthropy. Her career spans corporate public affairs and more than 10 years of professional fundraising, as well as serving on a variety of nonprofit boards.

"The ACFRE credential shows commitment to fundraising as a true profession," Seaworth said. "I felt it was important to have the highest-level certification, particularly in my current position as director for the Center for Philanthropy and Nonprofit Leadership, to encourage other fundraisers to pursue professional advancement and to promote professionalization in the nonprofit sector."

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AFP Foundation for Philanthropy Gets Fundraising Boost From RuffaloCODY

The AFP Foundation for Philanthropy is pleased to announce that it will conduct an extensive donor outreach calling program in 2011 with help from a gift by RuffaloCODY, a fundraising, software and enrollment services firm headquartered in Cedar Rapids, Iowa.

For the third year in a row, RuffaloCODY's strategic partnership with the foundation will make possible a large-scale calling services program for the foundation's Every Member Campaign, which funds scholarships, fundraising and philanthropic research and public awareness programs about the importance of ethical fundraising and wise giving.

With RuffaloCODY's generous in-kind donation this year, valued at over $125,000, the foundation will reach out to members of the Association of Fundraising Professionals (AFP), the largest association of charitable fundraisers in the world, beginning in early May. In total, RuffaloCODY has donated over $350,000 in services to the foundation as a result of its three-year partnership.

"I want to thank RuffaloCODY for their continued support of the AFP Foundation for Philanthropy," said Gary L. Good, CFRE, foundation board chair and senior executive for special campaigns at the Pacific Symphony in Irvine, Calif. "Their gift makes it possible for us to contact more people in a personal way and extend an opportunity to support the foundation's important work advancing fundraising and philanthropy."

Founded in 1991, RuffaloCODY is a leading provider of fundraising, membership and enrollment management services and software for nonprofit organizations.  RuffaloCODY provides on-site management, training, consulting, direct marketing expertise and outsourced calling programs to the nation's premiere nonprofits and institutions of higher education.  RuffaloCODY is an industry leader in the areas of annual giving, membership, capital campaign and enrollment services. The company's website is www.ruffalocody.com.

"RuffaloCODY is proud to partner with AFP for a third straight year," said Duane Jasper, president of RuffaloCODY.  "Working with AFP foundation president Curtis Deane and AFP's president and CEO Andrew Watt has been a great experience.  They've provided insight and guidance that have allowed the RuffaloCODY team to really impact the Every Member Campaign on a more personal level.  We look forward to another year of excellent results."

The AFP Foundation for Philanthropy strives to enhance philanthropy and volunteerism through programs of education, research and service that will benefit all those who lead, serve and support nonprofit institutions. The purpose of the foundation is to generate the resources to fund AFP strategic initiatives that advance ethical and effective fundraising. Learn more at the foundation's website, www.afpnet.org/foundation.

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