Fundraising

Donors May Be Adding Inefficiencies To Fundraising

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Seth Godin recently made an interesting post about non-profit fundraising, in particular the inefficiencies that exist in the process that can’t be fixed by technology, because it can, but rather the expectations of the donors.

Along the way, it’s not unusual for a nonprofit to spend 50% of the money they raise on the expense of raising more money. That’s not because they’re inefficient, it’s because we are.

We demand a gala, or an emergency, or artfully written fundraising letters. Donors want personal attention from the folks who are ostensibly doing the front line or strategic work of the nonprofit, and treat regular donations as an exception, not the standard.

When the internet arrived, it dramatically lowered the transactional costs in a wide variety of industries. You can buy an airline ticket yourself faster and with less intervention than through a travel agent. You can buy stocks for transaction fees that are a tiny fraction of what a broker used to charge. But creative and effective nonprofit fundraising has been stuck in a cycle of risk, galas and uncertainty.

This reminded me of a letter that appeared this summer in the Chronicle of Philanthropy where a donor said he was going to stop giving because he wasn’t getting the communication and attention he expected. He made a follow up post this February which contains a link to the original letter. The original letter garnered a lot of pushback from the non-profit community, including some satiric criticism written by Vu Le While the donor says in his follow up he has learned more about the challenges non-profits face in regard to fundraising, he still seems to expect a lot of what Godin says keeps fundraising costs high for non-profits.

There Is A Group Naming Names And Advocating For Better Funding Practices

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Around the start of the year, the group Crappy Funding Practices was created on LinkedIn. Vu Le who writes the Nonprofit AF blog had started calling out the problematic practices of funders on Twitter a few years ago, but with the help of some volunteers, they decided to expand the scope of their activities and started to solicit submissions of bad practices non-profit staff have run up against.

A lot of what they call out are things like onerous reporting requirements or twenty page applications requiring world changing results in return for $5000 grant or prohibitions on fundraising for a quarter of the year. And even an instance where you had to pay $100 to attend a luncheon to learn if you received a grant.

One of the very worst examples were the requirements from a foundation supporting classical music.

The team also praises some positive funding practices like the Minnesota Council on Foundations which offered tools for other funders to use in order to reduce barriers for grant seekers. The Fairfield County Community Foundation got a shout out for acknowledging that they listened to feedback from grant seekers and had revised their processes.

Even though the page has only been operating for about four months, a writer from Inside Philanthropy took notice and reported on the page, the problems it was addressing, and the change that is slowly taking place as a result.

I expect that the profile of the group will continue to rise over coming months and years. Hopefully that will result in some industry wide changes that will make the process easier and more equitable for grant seekers.

As the article mentions, none of these problems are new. They have been acknowledged as hurdles in the granting process for years and years, but most funding organizations haven’t really worked at making changes to remove barriers for applicants. Vu Le started calling people out by name out of frustration. The group of volunteers behind Crappy Funding Practices has helped expand on this effort out to act as an advocate for non-profit grant seekers rather than out of spite. Though I imagine there is some angry frustration at the base.

I post about this not so much to encourage people to submit funders you dislike as to let people know that there is an organized effort to advocate for better conditions on your behalf. That said, if there are organizations whose practices and requirements are burdensome, you may want to consider completing their submission form.

Examples of Great Funders can be submitted here.

Benefits Of Incorporating Your Arts Career

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h/t Artsjournal.com for linking to a really valuable article on Observer about considering creating a limited liability corporation (LLC) if you are an artist.  I recently created a post on ArtsHacker summarizing some of the ways in which an LLC protects artist’s personal assets in the case of lawsuits and in some cases, divorce proceedings.

This excerpt from Observer article summarizes how an artist would operate after forming an LLC:

….but most artists operating as one-man shops set up limited liability companies, according to Powers, where the LLC is the employer and the artist is technically the employee. When a sale or commission is made, the money is paid directly to the corporate entity, which then pays the artist, either in a lump sum or in increments (as a salary), and the artist pays taxes on that money as ordinary income. But not all the money transfers directly through to the artist. The corporate entity retains some cash to purchase art supplies, health insurance, workmen’s compensation to protect employees who may get injured during transit or installation, commercial premises and liability insurance—and, assuming the artist is successful enough, to hire employees or consultants.

The article discusses a number of legal scenarios an artist might find themselves in which the buffer of an LLC would be beneficial. More than just providing legal protection, they also note that forming an LLC would allow the artist to solicit investment to support their work.  Take a look at the ArtsHacker post or go straight to the article to learn more.

 

Should Your Work Be Protected By An LLC?

Guaranteed Basic Income Programs Seem To Benefit Those With Concrete Goals

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Long time readers know I tend to pay attention to news about guaranteed basic income programs, particularly those that have artists as a target group. Thanks to a CityLab link to a story on Los Angeles’ recent foray into providing guaranteed basic income, there is more data about what approaches are most effective. This program didn’t target artists as a group, but it has some good insights.

Like most stories on the subject, there were many heartening stories about the successes people had and continued to experience after the program ended. However, this article also mentioned those who were doing well while they were receiving the $1,000 month funds, but once the program ended found themselves faced with living in their cars. Anecdotally, at least those who had problems after the funding ended weren’t spending that much differently than those who continued to thrive. (i.e. the biggest spurge spending was on rather modest once a week meals)

What seems to be the differentiating factor is whether people had concrete goals they wanted to achieve prior to receiving the monthly payment:

Participants that do achieve a measure of economic mobility, she said, are those who already had concrete goals or plans.

“What happens with guaranteed income is that it smooths that income volatility … and it creates predictability,” Castro said. “When you have that floor, that scarcity starts to go away. And we know that it calms the mind, it calms the spirit, and it creates space for people to re-imagine an alternative future, or to maybe take steps toward a goal that they’ve always had but have not been able to actualize.”

Abigail Marquez, general manager of L.A.’s Community Investment for Families Department, which ran BIG:LEAP, called guaranteed income “one effective strategy” for ending generational poverty in L.A. Such programs must be paired with workforce development, economic development and housing strategies, she said.

Knowing this, one concern I would have is that guaranteed basic income programs not gradually evolve guidelines similar to foundation grant programs where candidates for receiving the money have to provide evidence of having goals they are pursuing and just need a little bit of help gaining stability. Unfortunately, it is easy to imagine this happening because the folks putting up the money want to hear success stories and know their funds are being used effectively. Little by little, the unrestricted use nature of guaranteed basic income can become a little more restricted.

On the other hand, I feel like guaranteed basic income for artists becomes an even better idea since artists generally always have projects in mind they want to pursue. Though I am sure there are some who would say some of those projects aren’t as practical as the goals people in the L.A. Times story were working on.