Show Me The Money- Disasters, Restrictions and The Future of the Fund Raising Industry
In the past few months, responding to two disasters in two countries has taught me allot about disaster funding, and the nature of the fund raising industry. My hope is that some larger market players in the fund raising industry can learn from the following.
In response to the major devastation that hit Guatemala with tropical storm Agatha AIDG recently did what we did for Haiti and what many NGOs do in a disaster, we put out an appeal to donors in our newsletter.
http://www.aidg.org/newsletters/
Now for background our newsletter has about 3000 active subscribers, our Haiti quake appeal pulled in over $125,000. The appeal for Guatemala pulled in $5250 ($5000 of which came from a long time donor and Tedster). Unfortunately $5250 isn't even gonna buy the first community's pipe.
So what happened? Do people like Guatemala less than Haiti? No. Not from the emails that came back without gifts.
In truth what happened is that the Haiti donations in large part weren't actually new money. They were existing donors giving what they would give for the year but giving it then, for Haiti. This was a huge chunk of our budget for the year from our regular donors that suddenly was legally bound by restrictions to just respond to the Haiti disaster. While helping immediately the donors accidentally stripped funding from the general resources of the organization. And they were tapped, so when a second disaster hit they actually didn't have any more to give to AIDG.
With these results and with the trouble I have had in getting grant funders, who did receive major relief money, to move at any pace faster than 6 months to process anything it was pretty clear to me last night that I needed help. Despite phenomenal impact on the ground, mind blowing press, and my best efforts to talk to people with deep pockets, the funds are not keeping up. So I started researching external fundraisers.
I had been waiting for an introduction to a fund raising consultant from another ED, but I was feeling dubious. In my different fellowships I have taken some fund-raising consultant sessions before. From fluffy-clouds-and-rainbows stuff about speaking from the heart to hardline metrics-and-evaluations-dashboard-reporting-per-customer-served-big-mac-style-philanthropy wooing. But to be honest I am not sure this is something to be fixed with just some charm school about what I can say to donors. I'm just not sure I'm THAT guy.
I mean let's be honest here. I'm no bed of roses. I'd peg myself somewhere between a bad stand up comic and Rain Man on the social graces. I'm an alright ED and I have an encyclopedic knowledge of BOP tech. I'll tear through the BS in a system and get to the core error. But I'm not a salesman for high end luxury goods. To hire THAT person at going rates with the cash flow we maintain is way outside of our budget and finding them in the time frame needed is pretty unlikely.
What I need is outsourcing. Somebody with a proven track record and connections to move the job forward. So I decided to look for a fund raising contractor, and turned to google. My search journey I've captured for you:
It ended up with a couple spent minutes here:
Aside from Tom Cruise's stellar insight into how many social entrepreneurs occasionally feel, and how my constituents will eventually feel if I can't solve these issues, this really opened up a window for me.
Where are all the big fund raising contractors? The professional solicitors? This is an industry with thousands of professionals yet none of them has a google adword? Interestingly similar fundraising term searches with adwords had hacker SQL injection attacks in the adwords. Hackers and scammers know NGOs need money, why don't the pros?
What I have learned from this is that either A) the companies and private practices that should be good at this are thinking way too small and a market opportunity exists for a serious player to dominate B) These companies need to hire me part time to manage their SEO because they suck at it . . .really. I might not be so great at the fund raising but honestly folks your google results are pathetic.
This is an industry that is waiting for its day. Small orgs need the big gift the most. I have often lamented that impact philanthropy has strangled out all the institution building big gift philanthropy of the late 80s and early 90s. Most the groups I respect in terms of impact, Partners in Health, Echoing Green, Teach For America, City Year, all started with a major million dollar or more gift in the first year. For an entrepreneur that is pretty darn useful to start an enterprise, you can staff off of that, you can build both a program execution and a fund raising team. Starting with 50-100K it's a bit more of a challenge. You are constantly just treading water to creep upwards with your budget.
Unfortunately for most small orgs today the world metric based philanthropy has crushed innovation and the big bet gift that has created some of the truly great philanthropic groups. Small groups compete with imaginary efficiencies (I'll be glad to defend this point in more detail to anybody in another post, many big org metrics are skewed when you look deep at their books and on the ground impacts. Many groups “sell” to the public subsidized philanthropic products basically “loss leaders” and capitalize on brand to draw in the gifts. It is not $1 to feed that kid for a week or $25 to get them that cow in a $100 a cow market. Sorry.) .
There are incredibly talented development people with strong contacts who raise hundreds of millions of dollars for big organizations like the ones I just mentioned, who could do a lot of good in the world by going solo and helping smaller organizations bring some new innovation into social enterprise. Somebody accustomed to raising 50-100 million for a big org could probably do a lifestyle changing business, cutting their work week dramatically while earning the same salary, by only raising 10-20 million divided between a handful of smaller up and coming orgs.
Too many of these consultants though just step off the treadmill to do training. Which is hard for small organization EDs to really take advantage of, in the new organization juggling act. I know plenty of amazing EDs who become great fundraisers eventually, but not in balance with the needs of the orgs. There need to be more contractors and less consultants in this field, people who will treat it as their job to do the work and the heavy lifting of the fund raising task instead of just offering advice.
If the mission of the NGO is the service to the community, and fund raising is truly something administrative (as most donors like to classify it in costs analysis), then it should be something an NGO can easily subcontract. NGOs subcontract back end services all the time, book keeping, accounting, payroll. I don't hire somebody to tell me how to reach into my heart and find my inner book keeper, I hire a book keeper. Why not fund raising?
Aside from finding the right contractor the boutique fund raising pricing is out of whack with the resources of its potential customers. Contrary to common development director and contractor beliefs, to build a truly sustainable client base they need to work just from commission or fee on delivery of gifts. The barrier to entry for customers in this industry is that most the the small, effective and compelling orgs lack the funds to pay a fee up front to hire one of these contractors.
If the contractor wants a stellar portfolio of orgs, ones that take off, they need to run from a comparatively small commission based or fee for award based service. Most small orgs trying to compete for the next level of grant support can't afford a greater than 10% investment in fundraising. If a contractor can raise 20 million between a few groups, 10% is certainly sufficient to run a successful, profitable, boutique business providing these services.
In closing since this is posterous and not the TED stage I'm gonna pitch. AIDG needs to run a several million dollar fund raising campaign to adjust to our new post disaster programs and the reality of the countries we work in. If we want to do things right for the communities and become sustainable off of major international aid this is where we need to go. If you are a professional, you don't get paid a cut greater than my indirect costs rate, if you have a track record and proven references I invite you to contact me to help us on this. Prove to me the industry is not the dimly lit thule I imagine it to be.You'll be doing a service to the world. Trust me I'm serving my constituents much better dealing with a training curriculum or product design issue than thinking about the right turn of phrase for a donor letter.
Don't leave me having to answer my constituents, when they come to me like Tom Cruise, “Sorry we can't get you water because there is just no money to be shown.”
