Embracing Gratitude in Coronavirus Times

 2020 has been a tough year for nonprofits. Even now, when it feels like there may be an end in sight with our new administration plus vaccines on the way, shelter in place orders keep expanding throughout the country. 

Yet we all have much to be grateful for: 

  

Connecting virtually: The miracle of Zoom has made it possible for to stay in touch with clients, colleagues, donors, and volunteers. Zoom is a tool that you can and should continue to use strategically – for staff meetings or donor calls, for instance - even when it becomes possible for people to meet in person again.

 

Expanding your reach: Zoom has also allowed nonprofits to connect with lots of new folks. You should be thinking now about how you can continue to maintain and strengthen these contacts and relationships in the future.

 

New rules for charitable deductions:The renewed stimulus bill continues to allow folks who do not itemize deductions to deduct up to $300 (single/joint filers) and $250 (married filing separately) in 2021. As well, folks who do not itemize can deduct up to $300 (single/join filers), and $250 (married filing separately). Those who do itemize can deduct contributions up to 100% of their gross income (previous limit was 60%). Be sure to let your members, donors, and supporters know about this.

 

Stimulus Bill support:The bill includes a renewed PPE loan program that expands eligibility for nonprofits (two tips: get on this right away, and avoid big corporate banks who favor big corporate clients). There is also a specific provision for entertainment and cultural institutions/venues, with $3 billion designated for nonprofits.

  

Fundraising in new ways: More and more folks are paying and donating online, through Venmo, Paypal, and other vehicles. You should continue to make this easy and to offer options, both for program payments and for donations. 

 

Re-focusing mission: These challenging times present an opportunity to focus on your core purpose and how you will continue supporting your communities while furthering your non-profit cause. Think about what you have done that is new and different, not just in terms of tools, but also in terms of programming and content. Look at what has worked, and what hasn’t; what has touched people, what has helped people. 

 

2020 was hard year for the nonprofit world. It’s already been a long haul, and there are more pandemic months to come. Here’s hoping for a new and better year ahead.

Nonprofits Behaving Badly: Paycheck Protection Program Recipients

 More questionable behavior from big nonprofits is in the news lately, centering around millions of dollars received through the Paycheck Protection Program.

Let's start with the Catholic Church, which used a specially crafted and unprecedented exemption from federal rules - customarily churches and faith-based nonprofits promoting religious beliefs aren't eligible for SBA dollars - to land more than $3.5 billion in coronavirus aid. Much of this money went to dioceses that were required to pay huge settlements and/or applied for bankruptcy protection because of sexual abuse scandals. The Conference of Catholic Bishops lobbied vigorously to be included in the program, and for waivers from standard SBA rules:

• A West Virginia diocese, where an investigation last year revealed that the Bishop had embezzled funds and made sexual advances to young priests, received a log of $2 million.
• Saint Luke Institute, a treatment center for priests accused of sexual abuse, received a loan of close to $1 million.
• The New York Archdiocese received a special waiver from the 500-employee cap specified in the Paycheck protection Program in order to receive its funding.
• Four dioceses in bankruptcy proceedings due to mounting sexual abuse claims received loans, despite standing SBA rules prohibiting loans to applicants in bankruptcy.

And then there are the public charter schools, which downplayed their public status to grab some cash. In Chicago, numerous public charter schools received PPP money - despite the fact that all of these schools were already fully funded for the school year, and were slotted to receive extra funding through the CARES Act designated to help offset the pandemic's extraordinary costs. Recipients included wealthy charter school networks like Summit, which has assets of $43 million, a substantial endowment, a CEO whose salary is $500,000 -- and received recent donations from Michael Bloomberg, Bill and Melinda Gates, and the Bezos Foundation.

But this one was the topper for me: the Ayn Rand Institute, a think tank focusing on exalting capitalism, rejection of any kind of social welfare program, and dedicated to the proposition that we are not our brother's keepers, received $1 million.

These well-heeled nonprofits, which by law are supposed to be dedicated to charitable and ethical purposes, managed to manipulate the political system to get public funding that should have been used to help small grassroots organizations that actually make a difference in the world. Let's hope the next round of funding is done with more oversight, less rule-bending, and a true focus on helping essential small nonprofits that are struggling to continue to do important work during this pandemic.

Coping With the Impact of Coronavirus

As shelter in place orders keep expanding, with no real end in sight, every nonprofit in the country has needed to completely re-think their work, their staffing, and how to navigate this crisis. 

Here are a few things you should know:

IRS Form 990 deadline extended: The deadline for filing your 2019 form is now July 15. You still have to file, but you have more time to pull it all together.

The stimulus bill includes nonprofits: This includes the Paycheck Protection Program, Economic Injury Disaster Loans, payroll tax deferral, and an employee retention credit.  But…the process has been chaotic and problematic. 

Resources for assistance with stimulus bill programs: Check the SBA website for detailed information at https://www.sba.gov as well as the SBDC (Small Business Development Center) in your area. Consider reaching out to community banks that have been more receptive. And do not hesitate to ask for help and assistance from district staff for your Member of Congress.

Charitable tax deductions: The stimulus bill expands the charitable deduction to all taxpayers for one year.  It will allow non-itemizers to deduct up to $300 in cash giving for the 2020 tax year. For itemizers, the bill lifts the cap on annual giving from 60% to 100% of adjusted gross income. 

Here are some things you should be doing:

Stay in touch: Check in with your members, donors, and clients via phone, Zoom, email, and mail to see how they are doing. Let them know both how much you value their support and how you are managing the crisis.

Connect virtually: Send weekly enewsletters with updates as well as virtual connections including on-line classes, videos of performances, and any funny messages/jokes you can find. Right now folks need every opportunity they can get for connection, music, song, art, and laughter.

Connect your work to the pandemic: Are you helping out with food drives, distributing masks, providing books or learning opportunities for kids and seniors? Let folks know, and invite them to help out in any way possible – making soup, sewing masks, calling isolated seniors.

Update your website: Make sure your website has current information about closures, ways to connect virtually, and ways to help out.

Give people the opportunity to give back: If you have cancelled events and programs, give folks the choice of donating the fees back to support your organization. And don't hesitate to gently ask folks for basic charitable donations; history tells us people continue to be generous during crises like these. 

Participate in Giving Tuesday on May 5: You’ve probably already been doing this around Thanksgiving; there’s a new campaign aiming to support nonprofits right now. 

Diversify your funding: If your income is heavily weighted towards grants, either from foundation or government grants, start working now to broaden your funding base. These nonprofit income streams are going to decrease substantially, just as they did 2008.

Encourage your members and clients to fill out their U.S. census forms: Data from the census determines how much government funding will come to your city, county, and state to support nonprofits, local governments, and schools (not to mention defining how many representatives you have in Congress). It’s easy and essential; do it now at https://2020census.gov.

None of this is easy - it's heartbreaking to cancel programs, close facilities, worry all the time about your nonprofit's future, and lose personal connections. It's going to a long haul - but we will get through it together with grace, a sense of humor, and hope for a better new world.

Coronavirus Crisis Hits the Nonprofit Community

Social distancing. Limits on group gatherings. Fundraising event cancellations. Programs curtailed. Venue closures. Working from home – or not working at all. 

The coronavirus has hit the nonprofit community, and the impact will be huge. It’s likely that program income will decrease, and fundraising income as well. You may have to lay off staff. Many venues, especially those that present public events and programs, have been forced to close. Others that provide basic services and food to the homeless and low-income folks have been slammed, while volunteers are scarce and employees are staying home.

Here are some specific areas of concern:

• Stock market decline and recession: At a time when charitable needs will soar, wealthy donors and foundations will suffer losses and cut back on giving. And foundations are legally required to give away 5% of assets a year; that amount will plummet along with the value of their investments. 
• Charitable donations: As happened in the last recession, all charitable donations will probably decline. Note that in 2008, giving plunged by 5.7%, the steepest decline since Giving USA began its survey in 1956.
• Venue closures: Arts organizations that depend on income from participants at ongoing exhibits and performances will be especially impacted. As well, folks are less likely to prioritize donations for the arts during an emergency situation.
• Fundraising events: Galas and fundraising events for many nonprofits that take months to plan have been cancelled.

In the midst of this crisis, here are some things you should be doing, and some issues you should be addressing:

• Capital reserves: I am hoping you have exercised prudent management and have a reserve fund with enough money to cover six months of operating expenses. If you do: kudos - and now is the time to use it. But I’m betting many of you don’t. Perhaps you had one for a while, after the 2008 recession, and then your board and leadership let it slide, or used the funds for new programs. Here I’d like to quote one of my father’s favorites: “Experience is when you make the same mistake a second time and recognize it.”   
• Paid sick leave: I am also hoping your organization has in place paid sick leave for your employees - and that your workers are actually employees, rather than independent contractors, so they are covered. So many small nonprofits I see are focused on saving money at the expense of treating folks in a humane way. If you're one of them, now is the time for change.
• Remote work capacity: You should assume crises like these will happen again, figure out an emergency plan for your staff to work remotely, and train them in how to do so on a yearly basis.
• Increased demand for services: If your agency serves low-income folks and provides for basic needs (food, shelter, medical assistance), you’re going to be slammed because so many folks will need assistance. You should immediately be in touch with your local and state government representatives to find out what kind of help they can provide you.
• Communication: Stay in touch regularly and honestly with your clients, members, foundation contacts, local government officials, and donors (small and large). Don’t sugarcoat. Ask them for help.
• Fundraising: And keep asking them for money, with thoughtful and appropriate messaging – via email, phone calls, mail, your website, Facebook, and whatever social media you use. 

This too shall pass. Keep breathing. Shelter in place. Cherish your friends and family. Take care, and stay healthy.

Year-End Nonprofit News Roundup

Here’s an update on some key nonprofit issues I have written about in the past year. 

There’s bad news…

Child Detention Centers: New government data shows that an unprecedented 69,550 migrant children were held in government custody over the past year. That's more than in any other country, despite the U.S. government's acknowledgement this puts children at risk of long-term physical and emotional damage. And even after Congress approved a $4.5 billion border aid package, many children continue to sleep in cold cells without proper clothing or food.

Abortion Rights: The Trump Administration established new rules stipulating that recipients of federal funding cannot refer patients to abortion providers. This effectively defunded Planned Parenthood, while making a huge pot of $60 million a year suddenly available to the anti-abortion movement's so-called crisis pregnancy centers. These centers mislead women, provide limited services, and essentially exist to coerce pregnant women into carrying pregnancies to term. In addition, most are supported by religious institutions that also oppose the use of contraceptives as a matter of “staying true to the standards set forth in the Bible for sexual behavior.”

And this...

National Rifle Association: So many scandals have emerged in regard to the NRA that it’s hard to know where to start. First there were revelations that CEO Wayne LaPierre spent hundreds of thousands of dollars on clothing and travel, and that the organization considered buying him a multimillion-dollar estate. Marion Hammer, a past NRA Board  president and current ED of an NRA affiliate, took out below-market value loans to refinance and purchase homes, which likely violate IRS guidelines. And eighteen board members received thousands of dollars from the NRA in the past three years for various services. According to nonprofit tax attorney Daniel Kurtz, "Most groups lean on board members to give money, not for board members to get money." The NRA currently faces several investigations including one into its finances by New York’s attorney general, and a congressional probe into its potential ties to Russia. 

And my absolutely favorite good news...

Trump Foundation: I am thrilled to report that The Trump Foundation is no more, per final decisions in the New York court case. The Foundation was ordered to pay $2 million in damages for misuse of funds - a remarkable and unprecedented rebuke to a sitting president. This money, along with the remaining $1.8 million left in foundation funds, has been split between eight charities: Army Emergency Fund, Children’s Aid Society, Citymeals-on-Wheels, Martha’s Table, United Negro College Fund, United Way of National Capital Area, U.S. Holocaust Museum, and Give An Hour. And Trump has agreed to special supervision if he ever returns to charity work in New York. According to Attorney General Letitia James, “My office will continue to fight for accountability because no one is above the law – not a businessman, not a candidate for office, and not even the president of the United States.”

Wishing you all a happy holiday season, and hoping for a better year for the country in 2020.

Ethical Fundraising

The ethics of fundraising have been in the news lately due to Jeffrey Epstein and his gifts to major nonprofits that knew about his reprehensible behavior. So it seems appropriate to talk about how nonprofits can and should fundraise in a responsible manner. 

Here are a few basic lessons for you:

Never accept a donation from Jeffrey Epstein – or anyone like him. Period.

Never let the size of a donation blind you to inappropriate quid pro quos. When I was the ED of small nonprofit community center, I had a well-to-do businessman approach me about a gift that would have funded our organization for six months. In return, he asked a “small” favor – that I publicly endorse his very controversial application to the local planning department. I said no. You should too.

Never accept a donation that is meant to fund a donor’s specific pet project. By this I don’t mean a gift to support a program you already do. My example – another wealthy donor “generously” offered a gift that was specifically and only for a one-time project of hers. This would have allowed her to have fun, get staff support for free, and receive a tax deduction.

Always respect a donor’s request for anonymity. One of the very worst things you can do is reveal the name of a donor who does not wish to be named. Only the ED (and possibly a Board member who has been a primary contact) should know the donor’s name and amount of donation. Maintaining this over time can be tricky, especially through staff changes, so be sure you have a system in place to pass information on to a new ED (and no one else). And if a donor puts their money into a blind trust, the name cannot be shared at all.

Always maintain confidentiality. When I left my longtime ED job, I was immediately pursued by the ED of a local nonprofit who wanted recruit me for their Development Committee – clearly hoping I would share information about donors. I laughed in her face and said absolutely not. Make sure you have a clear confidentiality policy in place for staff – and for your Board members.

Always thank your donors promptly and correctly. Get it right – name, salutation, how they want to be contacted, how often they wanted to be contacted. And if you make a mistake – I certainly did, and you will to – immediately apologize and rectify the error.

One final personal story: my father died of Alzheimer’s. And the way I knew something was amiss was when I discovered he had donated $5,000 in three months time to the Ayn Rand Society (he was a lifelong Democrat), Father Joe’s Home for Christian Boys (we’re Jewish), as well as numerous other well-known nonprofits. He thought he was paying bills; each time he wrote a check, they sent him more solicitations. Phone calls, letters, even a threatening missive written by my lawyer didn’t put an end to this. Finally, I simply stopped letting him get his mail (and he loved getting the mail). Don’t do this, ever.

Do the right thing – it’s better for your nonprofit, for the world, and your soul.

Nonprofits Behaving Badly: Immigrant Children's Centers

The controversy over the treatment of immigrant children continues. And some of it centers around immigrant children’s facilities run by 501(c)(3) nonprofit organizations. 

The language of this crisis is also controversial. Are the children immigrants or migrants? I have chosen to use immigrants, as the definition of migrant - someone who moves from place to place in order to find work or better living conditions – doesn’t fit. And then there’s detention center vs. children’s shelter (the latter preferred by the Department of Health and Human Services/HHS). I’ve gone with the neutral word “center.”

Here's some context: Customs and Border Patrol (CBP) detention centers are part of law enforcement through the Department of Homeland Security (DHS). Immigrant children's centers are under the jurisdiction of HHS and required to comply with state regulations (CBP facilities are not). CBP shelters are specifically designated for short-term detention. Under U.S. law, once DHS learns that an unaccompanied child is in its custody, the child must be transferred to HHS custody within 72 hours. 

There are numerous nonprofits receiving federal funds for children's centers, but Southwest Key Programs is the biggie. It houses over one-third of all unaccompanied immigrant children in detention. This has proved to be quite lucrative - the organization has an annual HHS contract of about $460 million, and it has collected more than $1.5 billion in federal funding since 2008.The Austin-based charity operates 24 permanent facilities in Texas, Arizona and California. One of those is Casa Padre, the nation’s largest, which houses more than 1,400 minors in a former Walmart featuring a massive mural of Donald Trump. 

Southwest Key has been cited repeatedly by state health authorities for infractions including improper handling of food, unsanitary bathrooms, inappropriate behavior by employees, insufficient medical treatment for detainees, and child sexual abuse. The agency was forced to close one Arizona shelter because staffers were accused of physical abuse, and two others that weren't doing employee background checks.

Not only that - its founder and longtime President Juan Sanchez resigned in March amid scrutiny over the nearly $3.6 million in compensation he received during 2017 ($1.4 million in salary, the remainder in dubious payments from life insurance and retirement policies). Six other officers, including their Chief Financial Advisor and Vice President (Sanchez’ wife) also earned more than $1 million.

According to Marcus Owens, former head of the IRS nonprofit division, these salaries are extraordinary even for a large charity. CharityWatch president Daniel Borochoff said Sanchez's salary was the fifth-highest CEO salary among the more than 600 charities his organization ranks. The head of the American Red Cross (a multi-billion dollar charity) receives a $600,000 salary to run an organization that is ten times larger.

Just a quick reminder about the legal definition of a nonprofit: to be tax-exempt under the IRS code, an organization must be organized and operated exclusively for exempt charitable purposes (including relief of the poor, the distressed, or the underprivileged) and none of its earnings can be used to enrich any private shareholder or individual. This reprehensible behavior by Southwest Key leaders takes the “non” out of nonprofit.

Southwest Key is currently being investigated by the Justice Department  for financial malfeasance. Yet despite this investigation plus hundreds of violations recorded at its centers across the state in the past few years, Southwest Key’s shelters are expanding (along with the number of children in detention), and the nonprofit is slated to receive $458 million from the federal government this year. According to Interim ED Joella Brooks, Southwest Key has hired a new chief financial officer, reexamined pay incentives, and the organization is trying to steer itself in a different direction. 

Let’s hope so - but I'm not holding my breath.

When Things Look Bleak, It’s Time to Bring Out the Jokes

I was thinking about writing a blog post on the potential IRS investigation into the NRA’s nonprofit status, or the campaign to close Planned Parenthood clinics, or the big nonprofits that are operating immigrant detention centers. But instead, it seemed like time to bring out the jokes again.

So here you go:

A doctor, a lawyer, and a fundraiser arrive at the Pearly Gates. St. Peter tells them they each get one wish before entering Heaven. The doctor asks for a million dollars, St. Peter grants the wish, and the doctor enters Heaven. This generosity did not go unnoticed by the lawyer, who proceeds to ask for a billion dollars. St. Peter grants his wish, and the lawyer enters Heaven. Then St. Peter asks the fundraiser what she would like. She quickly replies, "If it's not too much trouble, could I please get the business cards of the two people who entered heaven just ahead of me?"

Staff at a nonprofit come to work to find that their office has been broken into and many things stolen.“ Oh, no,” says the ED, “we got a check for a major donation at the event last night. I hope the thieves didn’t get it.” ”No worries,” says the Finance Director, “I stashed it where no one would ever look in a million years,” and comes back with the check. “Where did you put it?” the ED asked. “In a copy of our strategic plan.”

A nonprofit’s Board Chair, Treasurer, and Executive Director are captured by terrorists and condemned to death by firing squad. Each is granted one wish before dying. The Board Chair says he wants to embark on a lengthy, intense process to develop a new strategic plan. The Treasurer says it’s time for the organization to have a complete financial audit. And the ED says, "Shoot me first."

A Development Director found a magic lamp, and rubbed it. Presto! A genie appeared and offered the Development Director one wish. Not wanting to be greedy, she said, "I wish for one million dollars to support my organization." "Done," said the genie. "Come to your office tomorrow, and it will be there.” The next day she arrived at the office, and when she opened the door, three million binder clips fell out. "What the hell?" she said to the genie. "I asked for one million dollars! "Yes," said the genie, "but you didn't say it couldn't be in-kind…"

The ED of a nonprofit community center was faced with the prospect of asking folks at the annual fundraiser to come up with more money than expected. He asked the musician for the evening to be sure to play some inspirational music after his speech. So after the ED announced, "Friends, we are in great financial difficulty – any of you who can pledge $500 or more, please stand up," the pianist played The Star Spangled Banner. 

An angel appears at a nonprofit board meeting and tells the ED that in return for her unselfish and exemplary behavior, the will be rewarded with her choice of infinite wealth, wisdom, or beauty. Without hesitating, the ED selects infinite wisdom. “Done,” says the angel, and disappears in a cloud of smoke. Now, all heads turns toward the ED, who sits surrounded by a faint halo. A board member whispers, “Say something.” The ED replies, “I should have taken the money.”

We may be in the midst of a constitutional crisis, but a few jokes and some big laughs can help us all in these times. I hope it does so for all of you.

Nonprofits Behaving Badly: U.S. Soccer Federation

This past week, the U.S. women’s soccer team (USWNT) filed a gender discrimination class action lawsuit against the U.S. Soccer Federation (USSF), a 501c3 nonprofit organization dedicated to “helping develop world-class players, coaches, and National Teams that inspire a nation.”

The USSF is the governing body for American soccer. Its home page motto is “one nation, one team.” But there are actually two national teams, and they are not created equally. They play the same game, on the same size field, under the same rules. The men’s team (USMT) didn’t even qualify for the most recent World Cup and has never won a championship. Yet the men got performance bonuses of $5,350,000 for losing in the 2014 Cup Round of 16. The USWNT got paid $1,725,000 for winning the 2015 Women’s World Cup. 

The lawsuit outlines violations of the Equal Pay Act and Title VII of the Civil Rights Act of 1964, both of which prohibit employers from discrimination based on gender. Grievances include pay, bonus money distribution, field conditions, travel conditions, and overall treatment in comparison to the men. According to player Megan Raphinhoe, “we feel a responsibility not only to stand up for what we know we deserve as athletes, but also what we know is right – on behalf of our teammates, future teammates, fellow women athletes and women all around the world.”

One week after the suit was filed, the Federation issued a statement saying it was “surprised” at the legal action, claiming they have done everything they can to invest in women’s soccer. And yet the USSF has admitted to paying its female players less than the male players, claiming they do not deserve to be paid equally. The women receive far less than men for games played, wins, wins against internationally ranked teams, and making the country’s World Cup Roster. They play more games annually. They are frequently forced to play on substandard fields. This despite the fact that the USWNT has been ranked #1 in the world for the last eleven years, winning three World Cup tournaments and four Olympic gold medals. The men are ranked #25, and have never won an international tournament.

Full disclosure: I am an obsessed soccer fan. And I have been playing in a regular Sunday morning pick-up game for over 25 years (we call it the Church of Soccer). I stumbled onto the game when my kids were playing youth soccer. I had wanted to play when I was in high school, but it wasn’t allowed – girls were forced to play field hockey, which I hated. So as an adult, over many Sundays, I learned the game, making lots of mistakes, but loving every minute of it. My kids played (actually out-played) with me, until they left home.

The game is a virtual melting pot, with players from Germany, Mexico, Palestine, France, El Salvador, England, and Peru. But I am usually the only female on the field. Often, young families walk by, and I can see the moms pointing me out to their daughters. It makes me proud to know that in some small way, I am a role model to these girls, just as the incredible women on the USWNT are. They deserve better. And the USSF, as a nonprofit organization, should be forced to fulfill its mission in an equitable and fair manner.

By the way, the 2019 Women’s World Cup starts on May 12. I hope you’ll join me in rooting for the team, both in winning the lawsuit and the World Cup.

Five Fundraising Tips for 2019

There’s no rest for nonprofits; raising money is a full-time, year-round, all-staff job these days. So here are my top five tips as you launch into 2019:

• Ask more: I am constantly surprised at how many nonprofits continue to do just one fundraising campaign per year – and insist that their supporters will be pissed if they get asked more often. Yet research consistently shows that asking more does not turn off supporters. At the very least you should aim to both double and diversify your asking. Along with a full-on campaign (including snail mail, phone calls, one-on-one meetings), do more email asks. Consider pitching monthly donations, scholarship funds, capital improvements. And be sure to hit the peak giving days - Giving Tuesday, and December 31.

• Ask strategically: This means collecting data constantly, and using it wisely. Your database should not only include the obvious – name, mailing address, email, phone numbers, and giving history – but much more: proper salutations, volunteer activity, whether folks want to be anonymous, how they like to be contacted, who has contacted them in the past, whether they have attended your sponsored events (and which ones), particular interests in your programs. This information will allow you to focus your asks and to maintain continuity if/when there are staff changes.

• Make it easy: Have you ever actually checked to see whether it’s quick and easy for folks to donate to your organization online (the preferred method these days)? When you search via Google, is it easy to find your website? Is the donate button prominent? When you go to the donation page, is it easy to navigate? Are folks given choices of how to donate? Do they have to create an account to do so (one extra step can turn donors off)? Have your Board and staff test all of this out on their various mobile phones, iPads, and computers by making quick small donations. And fix anything that’s not working.

• Stay in touch: Don’t make your fundraising campaign letter, email, and/or call the only time you contact your donors. Send them emails about a particularly successful program. Invite them to special events. Ask them to get involved through an ad hoc committee, an online survey, or a fun volunteer opportunity. All of this builds and strengthens your relationships with donors.

• Thank promptly: I can’t say it enough – the number one reason folks stop donating is because they were not thanked. When you are asking them for a donation, always thank them first for their previous generous support. Host an annual donor appreciation event. And get those personalized thank you letters (or emails) out within ten days.

Back to basics: remember that the main reason people give is because they are asked – and that folks feel good when they donate to nonprofits that do good work.  

Donor Advised Funds: Ethics & Issues

There's been a lot of buzz about donor-advised funds (DAFs) lately.

For the uninitiated, DAFs are investment funds for charitable donations. You deposit money, get an instant tax deduction, avoid capital gains tax on appreciated assets, get a reduction in your gross estate - and then use that money to fund charities of choice over time. DAFs are set up and managed through commercial funds (Vanguard, Schwab, Fidelity), community foundations, and comment funds (such as Jewish Federations).

Here's the buzz (with 2017 Giving USA stats):

• Contributions to DAFs have increased significantly as a share of total giving over the past decade (10.2% in 2017). 
• The number of DAFS increased by an astonishing 60%.
• Grants from DAFs totaled $19 billion, increased 20%, outpaced contribution growth, and were 40% of total funds granted through all foundations.
• Contributions to DAFs are at an all-time high.
• DAF assets saw phenomenal growth of 27.3%.
• DAF grant payout has been 20-22% for the past 5 years, higher than that of conventional foundations.
• A significant proportion of these new DAFs are modestly funded ($5,000 and under).

Here are the issues for the nonprofit sector:

• DAFs are completely private; there is no legal or IRS requirement for any public accounting or public grant process. So, unless you know someone, or your local community foundation connects you, there is no way to even make your case for a grant.
• DAF donors can remain completely anonymous and unrevealed. If so, you don't have the wherewithal to build relationships or cultivate repeat donations.

Here are some cautionary tales:

• John and Laura Arnold made a $120,000 grant to the Police Special Grants Fund under the Baltimore Community Foundation to be used for a massive secret community surveillance project. The CEO and the Board didn’t know about it (nor did the community).
• The Jewish Community Foundation of Los Angeles made a series of grants to Canary Mission on the advice of a DAF donor. Canary Mission spies on students, professors, and organizations it believes are spreading anti-Israel and anti-Semitic ideologies, publishes lists meant to harm job prospects, and shares these lists with Israeli security officials.
• Three groups that promote anti-Arab, anti-Muslim rhetoric, and conspiracy theories received money through DAFs held by the San Francisco Jewish Federation. 
• Tech billionaires Nicholas Woodman (GoPro) and Jack Dorsey (Square/Twitter) established DAFs through the Silicon Valley Foundation to great public acclaim. All were funded with significant gifts of appreciated stock. We haven’t heard a word since about either of these supposed charitable funds.

And here are the basic legal and ethical issues:

• As 501(c)(3) nonprofits, sponsoring organizations have a legal and ethical duty to assure that grants made are consonant with their missions.
• At the same time, federations and community foundations have become deeply reliant for assets and fee income from DAFs. 
• They also fear losing business to commercial firms that impose no ideological restrictions on the grants they will approve. 
• Yet oversight has frequently been minimal, even through IRS rules state that, “once the donor makes the contribution, the sponsoring organization has legal control over it. The donor retains advisory privileges with respect to distribution of funds.” 

Here's my take: As citizens, we need to hold our community foundations accountable - and those organizations need to be vigilant in abiding by their core principles, rather than financial needs. As nonprofits, we need to acknowledge that DAFs are here to stay; our job is to do our homework to the best of our ability in connecting with DAF donors to make our case - and to assure them of public anonymity should they desire it. As donors, we need to use this tool in a principled manner, not just for tax benefits - and pledge to actually contribute all of those funds each year to nonprofits that do good work.

The bottom line: DAFs have become a key factor in nonprofit funding, and we need to monitor them - and work with them.

How to Deal with Nonprofit Freak-Out

So many worries and so little time – grant deadlines, fiscal shortfalls, underpaid staff working too many hours, boards that hate to ask anyone for money, and yet again another year-end fundraising campaign. 

And on top of that - the foundations of our democracy are threatened, Trump’s behavior is becoming more and more unhinged, the appointment of Judge Kavanaugh poses a threat to abortion and LGBTQ rights, and Christine Blasey Ford still can’t go home because of daily threats. 

In the midst of all of this meshugaas (Yiddish for craziness), it’s important to take some time to take of yourself. Here are some ways to do that:

• Breathe. Really – deep breaths in and out periodically are a good way to relax and alleviate your deadline anxieties. 
• Smile. It actually improves your mood (and that of others around you). And note that smiling when you ask for a donation via the phone - as well as in person - improves your chances of success.
• Tell a joke. There’s nothing better than a good (or even bad) joke for changing the mood. Here are three I just found: Why did the Mars marching gift programs fail? Wrong atmosphere. Why didn’t the Invisible Man donate? He couldn’t see himself doing it. Why was the cemetery fundraiser so popular? People were dying to get in.
• Stretch. Move away from your desk and do some yoga stretches. Even five minutes of exercise can help. Better yet, leave the office, get some fresh air, and take a brisk walk around the block. 
• Repeat my favorite nonprofit mantra to yourself: "Excellence is not perfection." We all make mistakes; it’s the human condition. Learn from them, laugh at yourself, and move on.
• Give thanks. Remember all the things you are grateful for. Thank your staff. Thank your board members. Thank your donors. Thank your lucky stars that you go to work every day for a nonprofit that tries to make the world a better place. 

And try to remember that the end of the world is not coming (yet). Take a moment to savor the Democrats’ blue wave. Remind yourself that Ruth Bader Ginsburg is back to work despite three cracked ribs. Have a wonderful Thanksgiving with your family and friends. Tell them you love them. Have a moment of hope. It’s way better than the alternative.

Fundraising Update: Bad News, Good News

It used to be part of my fundraising trainings to say that 70% of Americans make charitable donations. Which meant not only that on average 7 out of the 10 people they knew were willing to support nonprofits, but also that it isn’t just rich folks who are philanthropic.

Here’s the bad news:

• The percentage of households that give has now dropped to 56%. This decline encompassed both secular and religious sectors; much it was first driven by the 2008 recession, then by general anxiety and caution as times have improved. 
• There’s been a serious decline over the past 10 years in how many small and medium donors give and how much they give. This decline has occurred in every age group and at every level of education, though the biggest drop has been among people 51 to 60 years old, an age bracket that is typically more willing to make charitable gifts.
• Total giving is actually at record levels – but gifts at the high end are driving this growth, fueled by a booming stock market. A Blackbaud analysis found that 1% of households accounted for 49% of contributions in 2015. 
• That means more nonprofits are increasingly dependent on significant donations from the wealthy. And multi-millionaires often get to drive the focus of giving. 
• Pundits are predicting things will get even worse, given that many middle income folks will likely not itemize due to the so-called tax reform.

Here's me looking at the bright side, with some trends and tips it’s worth thinking about:

• It's less than before, but 6 out of 10 people still make charitable gifts – and that’s a lot of potential donors.
• I’m guessing most of you never got and don’t expect to get multi-million dollar donations from the 1% anyway.
• Online giving increased 32% last year – so you should include an online option in all your fundraising pitches, make your donate button prominent on your website and emails, and be sure the process of making an online donation works smoothly (i.e. – try it yourself).
• Millions of dollars will pass from one generation to the next in the coming decade – so get a robust planned giving strategy in place now.
• Organizations with deep roots in their communities are better positioned to sustain donors, because of strong personal connections – what you do is tangible, and that’s important. So be sure to nurture those relationships in every way you can.
• I've never believed that getting a tax donation is what motivates most ordinary folks to support worthy causes; perhaps it’s my rose-colored glasses, but I think folks give because they care. Your job is to communicate what you do and make them care about your work.

And remember - the main reason people give is because they got asked. So ask; ask more often; ask with conviction and a compelling message. Because if you don't ask, they won't give.

The Trump Foundation Gets Served

So much has been going on during the past months that you may have missed some good news – New York Attorney General Barbara Underwood filed suit against the Trump Foundation and its board of directors (which includes the president plus his three oldest kids). The suit outlines a long-standing pattern of illegal behavior that includes self-dealing and coordination with Trump’s presidential campaign. I especially love the fact that it was filed on Trump’s 72nd birthday.

According to Underwood, “Mr. Trump’s wrongful use of the foundation to benefit his campaign was willful and knowing.” And: “As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality.” 

Here are a few examples: soliciting donations for veterans' organizations at campaign rallies that were then deposited into the Foundation bank account; claiming credit for donations that actually came from other groups; using hundreds of thousands of dollars to settle personal lawsuits and contribute to political causes; failing to disperse funds to charities as promised; bragging that his “charitable” donations aided his political standing; repeatedly signing tax forms that said the Foundation did not carry out political activity. Note that it’s a felony to knowingly file a false tax return, and Trump and his kids are personally liable.

The lawsuit hearing is scheduled for October 10. When the Trump Foundation’s lawyer asked for a postponement until after the midterm elections, the presiding judge laughed, refused to change the date, and hinted she will likely require the President to testify.

Trump, in a tweet of course, blasted the suit as politically motivated and vowed not to settle.

This is a civil action, asking that the Foundation be dissolved and that Trump and his cohorts be prohibited from serving on the boards of any other nonprofits. It also asks that the foundation’s assets (valued at $1 million) be distributed to actual charitable organizations, and that Trump cough up almost $3 million in restitution. 

Although the attorney general’s office does not have criminal jurisdiction, the IRS, Justice Department, and the Federal Election Commission do. Underwood has sent referral letters urging action to all three outlining serious breaches of federal criminal law.

And a more recent New York State Department of Taxation and Finance investigation focusing on the Foundation’s violations of state tax laws could indeed lead to a criminal referral for possible prosecution. 

The Trump Foundation is also in breach of the most basic nonprofit standards. Its Board existed in name only, without regular meetings or knowledge of fiduciary and governance responsibilities. One of the organization’s board members said that he had no idea he was on the board and that the board had never met, to his knowledge. The Board failed to exercise any oversight at all, allowing Trump to run the Foundation as he pleased and to his own advantage. And it breached the most basic guiding principle: that nonprofits are exempt from paying taxes, and in return all their money must be spent in pursuit of the public good.

This has broader implications as well. Why should any nonprofit corporation – or for-profit business or taxpayer for that matter - feel obliged to meticulously follow the law if Trump and his foundation get a pass?

And recently the plot has thickened. It turns out New York State investigators issued a subpoena to Michael Cohen as part of the probe into the Foundation, after Cohen’s attorney said his client had information of interest to both state and federal prosecutors about whether the Foundation lied about its tax liability and/or broke state law. Trump Organization Financial Officer Allen Weisselberg, who has been granted immunity in the Cohen investigation, may also have something to say about the Foundation's practices.

Keep your fingers crossed that justice will be served, and stay tuned…

On Abortion: It's Professional, Political & Personal

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First, Trump proposes a “gag rule” denying funds for any organization that makes referrals for abortions, shares physical space with an abortion provider, or provides abortions directly. Next, he appoints Diane Foley, an avowed religious activist, to oversee family planning at the Department of Health and Human Services. Then the Supreme Court rules that California cannot regulate Crisis Pregnancy Centers (CPCs) based on a dubious free speech argument. And now, with Justice Anthony Kennedy stepping down, the future of Roe v. Wade and a woman’s right to a safe abortion is threatened.

As deputy secretary of H&HS, Diane Foley will oversee Title X (the sole federal program that supports family planning and preventive services). Foley is the former president of Life Network, an organization that runs two CPCs.

CPCs are nonprofit organizations. Here’s a typical vision statement: “A culture where women and men faced with pregnancy decisions are transformed by the gospel of Jesus Christ and empowered to choose life for their unborn children and abundant life for their families.” Yet their ads claim that all options about pregnancy are provided. This is a consistent tactic – deliberately deceptive advertising followed by falsified information stating abortions cause breast cancer, lifetime depression, and suicide. Note that the gag rule eliminates requirements that providers counsel patients about all health care options (including parenting, adoption, and abortion). Voila – CPCs will be replacing full-service nonprofits like Planned Parenthood.

And the Supreme Court just ruled that the state of California can’t require CPCs to provide accurate information about all pregnancy options. This, even though the Court has allowed states to require that medical providers tell pregnant women about the possibility of adoption.

I have worked in the nonprofit world all of my adult life. I didn’t do it for the big bucks or the bright lights; I chose this work because it’s a world in which people and organizations choose to heal the world, to make it a better place. For me, it is profoundly unethical for a nonprofit to lie to clients based on religious doctrine.

Here’s my personal story. In my early twenties, shortly after the Roe V. Wade decision, I had two abortions. I was young, trying to find my way in life; I was using contraception that failed. All I had to do was walk down the street to the local clinic where the doctor (a friend of mine) treated me compassionately and professionally, without judgment. I have never regretted those abortions; they were absolutely the right choice for me at that time in my life. And when I was older, ready, and in a stable relationship, I chose to have a family (two sons and now four completely adorable grandchildren).

Here’s a powerful quote from Ruth Bader Ginsberg: “The decision whether or not to bear a child is central to a woman’s life, her well-being and dignity. When the governments controls that decision for her, she is being treated as less than a full adult human responsible for her own choices.”

So what I am feeling now is deep and angry. It’s professional, political, and very personal. Anyone who does not believe in abortion has the right to let that determine her personal decisions. But no one – and certainly not five men in black robes – has the right to tell women what our personal reproductive choices should be. I urge you all to join me in speaking out against the gag rule, opposing the nomination of Brett Kavanaugh, and donating to Planned Parenthood.  

One More Time: Congress, the IRS, and Nonprofits

Heads up: Congress is considering two measures that will affect IRS regulation of nonprofits.

First, a little background – for the past ten years, Republicans lawmakers have vented their anger at the IRS’ supposed bias against right-leaning nonprofits by slashing its budget big-time (current budget is 18% less than it was in 2010, adjusted for inflation) – despite the inconvenient fact that numerous left-leaning groups were also targeted for similar scrutiny. 

Now, suddenly things have changed, following the passage of the new tax (their signature and pretty much only legislative accomplishment since they have controlled the Presidency, the House, and the Senate). The House Appropriations Committee just released a spending bill for 2019 that would increase the IRS budget, albeit modestly, including new funds to help implement the GOP tax law.

Here’s what else is in the bill: a provision that would pretty much bar the IRS from denying tax-exempt status to churches that participate in political campaigns. Sound familiar? It’s the Johnson Amendment redux (quick review – it’s a long-standing tax law that prevents churches and other nonprofits from endorsing or opposing political candidates). The House Appropriations Committee included a provision trashing the Johnson Amendment in the 2018 spending bill, but it didn’t make the cut. Apparently, if at first they didn’t succeed, they intend to keep trying and trying again. 

On the other side of the aisle, the Senate Appropriations Committee is considering a proposal eliminating donor reporting requirements. As it stands now, federal tax law requires nonprofits that file an annual tax return to provide information on donors giving contributions totaling $5,000 or more (in money or property). Note that the IRS is required by law to keep this information confidential.This issue has long been fought in state courts. In 1958, the NAACP successfully challenged an Alabama law requiring nonprofits to provide a list of members, arguing that disclosure would harm them, their supporters, and their right to free speech - and they won. But more recently, in a case brought by Citizens United in New York, a federal court ruled the other way. According to the judge, "an individual who seeks to advance a cause might reasonably hesitate knowing that an officer of the state will see that they have done so, but totalitarian tendencies do not lurk behind very instance of a state's collection of information about those in their jurisdiction." 

So: Is maintaining donor anonymity essential to protect free speech, especially for those voicing controversial options in hostile environments? And does free speech mean that churches should be able to use tax-deductible dollars to support partisan political candidates? The debate continues in courts, in Congress, and online. 

Here's where I stand: I'm firmly on the side of donor transparency. I believe the public has the right to know the provenance of tax-deductible donations supporting issue-driven nonprofits, whether conservative or liberal. And I'm firmly on the side of separation of church and state. All nonprofits, including churches, can already speak out and advocate on important issues, but active participation in partisan politics crosses the line.

Three Simple Fundraising Tips: Bequests, Brokerage Accounts & IRAs

Bequests, brokerage accounts and IRA contributions: all of these are important tools to include in your fundraising kit. Here’s some basic information about each, including how they are affected by the new tax law:

Bequests: Bequests are a simple, easy, and common form of charitable giving (8% of total annual giving, and 90% of planned gifts). All a donor has to do is add a clause in their will or trust, designating a specific amount of money (or stocks, bonds, assets) to be given to your nonprofit. Your nonprofit doesn’t have to have a complicated planned giving strategy, or a designated legal advisor, or a big marketing plan. All you have you to do is actively encourage people to consider a bequest to your nonprofit – on your website, brochures, enewsletters – as well as in personal meetings with supporters. Start building a list of folks who have done so, give the group a catchy moniker, and post the list (with permission) on your walls and website. Ask them to publicly share a personal story about why they chose to do so.  And note that bequests come for all kinds of people (not just the obviously well-to-do) - often as a surprise, from long time donors who have given small gifts over time, and whom you may not have even met.

Brokerage accounts: Many Boomers may not be to make significant cash donations, but as their parents pass on, they are quite likely to inherit appreciated stocks. Under the new tax law, folks who donate appreciated stocks, bonds or other assets to a charity will continue to be able to avoid all capital gains tax - regardless of whether or not the donor is able to itemize. To facilitate these gifts, your nonprofit needs to have a brokerage account (my recommendation: Schwab is the easiest and best option). It takes some doing to set it up, but there's no cost, and once the paperwork is in place you are ready to go. Be sure to make it clear on your donation page that you welcome gifts of stock, and that it's easy to do.

IRA Rollover Contributions: Folks who are 70 1/2 or older and have an IRA can make a charitable donation (of up to $100,000) directly from their IRA accounts. It's easy - and, similar to gifts of stock, can be done whether or not the donor is itemizing. Plus the amount of the distribution will be excluded from their taxable income, yielding a much better bottom line on returns; as well, these donations will count towards the annual required minimum distribution.

None of these tips are instant money-makers: we're just talking basic, long-term strategies, all of of them simple and well worth pursuing. You just need to make a decision to move forward and let folks know about these opportunities to support your good work.