The Intelligent Edge by Helen Brown

6 Reasons Why Real Estate Matters to the Savvy Prospect Researcher


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Driveway of Traditional Craftsman HouseEvery so often, the topic of “Should we or shouldn’t we include real estate as one of the factors we use to determine a prospective donor’s gift capacity” comes up in the prospect research community.

Some folks have this logic: “Well, our prospective major donor is never going to give us their house (or sell their house and give us the money), therefore we shouldn’t include it.”

Which is absolutely true. (<stage whisper>: I won’t mention “planned gift” at this point, okay?)


They are never going to sell their yacht, their plane, or their horses just to make a donation, either. They probably won’t liquidate their art collection, or the diamonds, or that fur they wore to the benefit. The privately-held company they own will remain unsold. Likewise the stock options that don’t convert for another 5 years.

So we should disqualify those assets, too, right?

You can’t pick and choose. If you select one non-liquid asset to take off the table, you have to take all of them. Figuring out someone’s gift capacity is hard enough to begin with. Purposefully handicapping yourself makes absolutely no sense to me.


Real estate certainly isn’t the be-all-end-all, but like all of those other assets I mentioned, it’s an indicator of wealth. So, #1, it’s information. In a realm where anything concrete is already in short enough supply.

But if that’s not enough, here are five more reasons why real estate is important to consider:

2. Real estate is a green flag. When I’m trying to find new prospects in a group of regular donors I may pass over someone who lives in a $850,000 home in San Francisco, but I’m definitely not going to pass over a donor who has a $850,000 condo in Aspen. I’m now going to search for their primary residence.

3. 100% of the world’s high net worth individuals (HNWI) own real estate. And for the more privacy-aware amongst them, real estate is sometimes the ONLY hard asset we can find for them. Knowing what kind of real estate they own gives you clues into the type of personality they are, how they may want to be cultivated, and what philanthropic investments may interest them. The billionaire who owns a 12-bedroom party house on Miami Beach is very different from the one living in a three-bedroom ranch in Omaha. Real estate gives you clues that they may be a good prospect for naming opportunities with big splashy events or funding boots-on-the-ground clinics for vaccine delivery and student scholarships.

4. We can use real estate for estimates. According to the CapGemini World Wealth Report 2013, real estate accounted for 20% on average of a HNWI’s total assets globally. (In the US, it’s 13.5% of total assets; in Europe it’s 27%). Even if all you can find is someone’s real estate holdings you can still come up with a fairly decent guesstimate of their total assets with that one ratio.

5. Super rich owners of real estate are re-shaping our cities. We need to be aware of who these movers and shakers are, and see if they’re among our constituents. According to a recent report by Savills, “Around 3%, or US$5.3 trillion, of the world’s total real estate value is owned directly by 200,000 of the wealthiest individuals (0.003% of the global population). These private owners are also very active in real estate that is held indirectly, through private companies and other entities, making them increasingly central to traded investable property…Around 35% of global big ticket deals (US$10 million-plus) in 2012 were only possible because of private funding. The behaviour of private wealth has the power to transform cities.” Would you want to miss knowing about one of those titans and how influential they are in your town?

6. Planned giving. There, I’ve said it. Let’s say you work at a college and you’ve got childless husband-and-wife alumni with a condo in Vermont, a vacation home at Los Sueños in Costa Rica and a primary residence in Boston’s Back Bay. They’re consistent donors and lifelong volunteers. You bet the planned giving officer needs to know about them. And in this case, it’s not only the real estate that’s interesting, but also what it tells us about them. Here is an active, outdoorsy couple who possibly enjoy golf, tennis and skiing. A pair that enjoys regular seasonal travel, but whose lifestyle may require extra cultivation time because they are not in town very often.


I know you’re dying to ask, so yes, here at HBG we do include primary residence in our total visible wealth calculations on profiles.

We believe it’s an asset.

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You really should get out more


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Strong wind blows the clothes hung on the clotheslineYou need to spring clean your brain – really air it out and get new, fresh ideas in. At least, I know I do. This time of year, I start itching to get out and meet people and learn lots of new things. It’s always worth it when I make the effort.

In addition to gaining a lot of great information, I get to hang out with old friends and meet lots of new and interesting people. Last month’s NEDRA conference really got me jazzed (I mean, have you heard Dan Pallotta speak? Wow!), and no matter how many years I’ve been doing this, I still learn something new at every conference I go to.

If you’re trying to figure out if prospect research is going to help you and your nonprofit, or if you’re a research professional wanting to rev up your game for the year – take a look at this list of great conferences and seminars coming up and just GO.

Most of the conferences are pretty reasonable and many offer scholarships, so even if your nonprofit doesn’t have a training budget there may still be a way for you to attend. Building up your expertise and meeting others who can answer your questions is always worth the investment.


15th: APRA Illinois seminar, Lewis University, Oak Brook. More here.

16th: APRA Indiana, webinar on database segmentation. More here.

16th: New England Development Research Assn., seminar on markers predicting philanthropy, Boston. More here.

16th: APRA Virginia spring conference, Harrisonburg. More here.

17th: APRA Great Plains spring conference, Ames, IA. More here.

17th: APRA Greater Houston, webinar viewing and discussion, University of St. Thomas. More here.

18th: APRA Maryland, webinar viewing and discussion, Johns Hopkins University, Baltimore. More here.

24th: APRA Metro DC annual conference, American University. More here.


1-2: APRA Georgia annual conference, Atlanta. More here.

1-2: Ohio Prospect Research Network spring conference, Columbus. More here.

6th: APRA Minnesota spring conference, St. Paul. More here.

7th: APRA Canada, webinar, private company valuation. More here.

8-9: APRA Florida annual conference, Tampa. More here.

9th: APRA Wisconsin spring conference, Kenosha. More here.

16th: APRA Michigan annual conference, Lansing. More here.

23rd: APRA Northwest annual conference, Seattle. More here.

27-30: Mid-Atlantic Regional Conference, Philadelphia. More here.


6th: APRA Illinois Basic Skills Workshop, Evanston. More here.

26-27: California Advancement Researchers Association, Palm Springs. More here.

Have I missed anything? Let me know and we’ll get it on the list!

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3 Ways to Build a Great “Gold Guide”


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Easter Egg HuntProspect researchers tend to grab great information sources with the zeal of kids let loose onto the lawn of the White House for the annual Easter Egg Roll.  

And for good reason: well-curated information sources are really interesting and offer valuable time-savings. Especially because (for most of us, anyway) the pile of pending research requests is always a foot high.

Sources can range from compensation in the private equity industry to how many staff the rich need to hire for each mansion or yacht they own. Conferences where the rich and powerful hang out and discuss world business like Davos and Bilderberg. Or places where they hide out (or just hide out their money).

I’m not talking about just a list of websites that you check off when you do research. A great Gold Guide is the kind of thing you may even bind portions of to share with new fundraising staff members. For example, how about a chapter based on this segmentation:

“x% of our alumni are attorneys working in mergers and acquisitions. Here’s what their networks and compensation structures look like.” Wouldn’t that be a great chapter for a newly hired fundraiser to see on their chair on Day 1?

Taken together, a good collection can help a fundraising team work faster and smarter.

I’ve been privy to several “Gold Guides” and my team and I have helped a fair number of organizations create their own. It’s been my experience that a well-crafted guide of research sources gives a fundraising team a substantial advantage.

Do you have a Gold Guide?

Here are a few ideas to help you build your own guide or refine the one you’ve got:

Keep An Easy-to-Access Daily Research List

For my own purposes, I have a spreadsheet with the following columns:

  • Month/year found
  • Resource name
  • URL – unless it’s a print resource, of course!
  • Description – a few words (or copied snippet of information) to remind me why I loved it
  • Tags/Keywords – allow me to search and sort

I keep the list open on my desktop for easy access throughout the day. The best of the sources I find go on our free HBG Research Resources List, added to the ones my team finds, too. We put a copy of the best whitepapers and reports on our shared server in topical, regional, or profession-specific folders. Any “Rich Lists” or “40 Under 40”-type lists we find go on our Wealth Lists page.


Empower your entire team to update and curate your list. For some shops that place might be a centrally-located paper file cabinet; for others it may be on Evernote, or a privately shared spreadsheet created on Google Drive.

The most important thing is that your ‘Gold Guide’ gives you a space to keep and share information so that you’re not constantly reinventing the wheel.


It’s also really important to keep your treasured resources in categories where you can find them easily. Use folders, tags, and hyperlinks, and cross-reference when it makes sense. I’d rather have a copy of the same great resource in two folders rather than try to remember where I last put it.

Some categories you might want to consider keeping track of are:

  • Top co-op apartment buildings in New York City (and how much it costs to own them)
  • Planes, yachts, and collectible cars ownership
  • Horse breeding and thoroughbred ownership
  • Oil and gas rights
  • Venture capital, private equity and hedge fund deal structures
  • Information about family offices


What you decide to curate very much depends on the type of constituency you have; an art museum might decide to keep a deep reference Gold Guide on recent art auction prices, for example, but their Guide might be fairly thin on oil and gas rights information.

And finally, if you have found the most amazing resource ever and it’s updated annually – create a shared calendar for you and your team so that you never miss the latest version.

What have you got in your shop’s Gold Guide?

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Why wealth screenings are a waste of money


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Money down the drain

“Yes, we did a wealth screening a couple of years ago. We didn’t really find it very helpful.” <pause>

“Well, to be honest, we didn’t really do anything with the information when it came back. It just kind of sat there.”

If I had a twenty for every time someone said that to me I’d be making major gifts already.

It absolutely kills me, too, because wealth screenings

     a) are not cheap, and

     b) can be worth every single penny.

No matter which screening company you use, no matter if your organization’s database is tiny or gargantuan; every single nonprofit can get something great out of a wealth screening.

And no, the screening companies are not paying me to say that.

Wealth screenings are a waste of money when people aren’t prepared for the process.

I guarantee there is no way you’re going to waste money on a screening if you follow these steps:

Take two hours to make a plan. Here are the three biggest questions to ask:

  1. What do we need to know from the results?
    Be very specific about your goals, and plan ahead for how to measure progress. How else will you know if you achieved success?
  2. Which records will we send?
    Decide how you’re going to segment. Is it based on your budget? how many returns you can reasonably get through? a specific constituency type that you need to know more about? Or do you want (or need) to send the whole group to get a baseline?
  3. Who will be responsible for dealing with the information when it comes back?
    You will need to clear the schedule of the person dealing with the returns so that they have the time to do the analysis, verification, rating, coding and uploading needed. If you can’t, stop right now – seriously. This is the top reason why screenings fail and are a waste of money.

These three questions are the make-or-break for a screening’s success. After you have the answers to those questions, here are a few other pieces of advice for a much-improved experience:

Choose someone (internal or a prospect research consultant) who has experience with screenings to liaise with the vendor. It’s important to have the best data in the right format to send off. If you send bad data, you will get bad data back – it’s as simple as that.

Do a test screening. Each of the vendors will allow you to run a certain number of records through their matching system as a test.

  1. Chose three groups to send: people you know very well (45%); people you don’t know very well (selected at random) (45%); and members of staff who have agreed to participate (10%). This last group isn’t necessary but it can really help you zone in well on where gaps lie and what you need to focus on in the analysis.
  2. Send THE SAME group off to more than one vendor.
  3. Verify these results just as you will when the full-scale screening results come back. This will help you budget and plan for the time needed to do the real analysis work. You can get a feel for what needs to be done, and see which vendor provides you with the most useful information in a format you can work with best.

Understand that a wealth screening (like Lexis Nexis or Google) is just another tool in your prospect identification toolbag. It’s a power tool but it’s not the be-all end-all.

Be an educated buyer. Screenings will only find what is publicly-available. If you want to know about the properties your millionaire constituent holds in trust, or the extent of someone’s private art collection, you will need to utilize entirely different tools. You really can’t blame a hammer for not being a screwdriver.

Rescue the money you would have wasted

You can get so much out of wealth screenings! Follow my advice and you will never waste money doing one again.

For those of you who have gone through screenings before, do you have any other advice to share? Please comment!

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What your capital campaign plan is missing


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There’s a critical piece of information missing from most capital campaign feasibility studies:

          The amount of money an organization’s constituency can actually give.

We need the answer to that before we can set the goal, right?

And yet… most of the time nonprofit organizations launch their campaigns without knowing the full answer to that question. They wait until after they’ve launched to finally get all the pieces in place. Which seems kind of crazy to me.

Here’s how planning for a campaign normally happens:

  1. The nonprofit hires a capital campaign consultant to help them set the goal, outline the fundraising priorities and come up with a campaign plan.
  2. The consultant looks at similar organizations in similar markets with similar constituencies to see what those organizations have raised successfully in their most recent campaigns.
  3. He or she factors in how generous the organization’s constituency was during the last campaign, and what the organization needs to raise money for.
  4. The consultant interviews executive leadership, the board, and a selection of key major donors to get a sense of their interest in and commitment to a potential major campaign.

From that, a fundraising goal is set. chocolate cake

And it’s a good start. But like I said, it’s missing something. A Texas-sized something. With extra frosting. And that something is a wealth screening.

Campaigns are a big deal

Capital campaigns are the largest, most expensive and time intensive undertaking that a nonprofit organization will undergo. Instead of doing a wealth screening after the goal has been set, we need to use the screening to help set the goal.

You may be surprised and encouraged at your organization’s potential or soberly prepared for a long slog ahead. Or maybe you’ll decide to put it off for a year or two until you build up your base. No matter which way you go, you will be better prepared than you’ve ever been before.

Be prepared

  1. Get a screening done early, as part of your pre-campaign due diligence.
  2. Use the results to inform your final goal figures in collaboration with all of the estimates and interviews.

If you’ve had trouble in the past getting good results from a screening, come back here next week when I’ll discuss why most screening dollars go wasted, and what you can do to avoid falling into the same trap.

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What do you say?


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Counter to what you’ve probably been thinking, I do have more to do than simply wax philosophic about what it means to be a provider of fundraising intelligence. I do sometimes go on a bit when I get passionate about a topic, and I realize that my last few blog posts have been heavy on the forty thousand feet and light on, well, the feet.

So let me come back down to earth and talk about that elevator speech I referred to last week. The practical one. The one that answers the question:

What do you say when someone at a party says, “So what do you do?”  

That can be a sticky-wicket question no matter where you work in fundraising, right? I’ve had front-line colleagues tell me that people have physically moved back a step when they’ve said “I’m a fundraiser.” Ouch. So we’re all in the same boat.

When people ask me what I do, my vanilla statement is: “I help lots of different nonprofit organizations find people, companies and foundations that are interested in supporting the work they do.” I say “vanilla” because really, sometimes people are just being polite and they’re really more interested in the canapés than your answer. So it’s the one-liner before I ask them the same.

But: if they say something like “oh, that sounds interesting” or “you must really enjoy your work” I usually go on to tell a brief story, like:

It really is interesting (or yes, I really do love what I do). In fact, a prospective donor that I identified ten years ago recently gave several scholarships. One of them was so that a kid living in a Nairobi slum who had nothing going for him except brains and guts could schlep halfway across the world to get a university degree. He’s now back in the slum – in a shiny new school and community center he set up.

There. See? I’ve talked about the impact my work makes rather than what I mechanically do.

Because really – think about it.  If you meet a surgeon at a party, do you really want to hear every detail about their last operation? No – they can just say “I perform reconstructive surgery on kids with cleft palates” or “I saved three lives last week” and you’re pretty much in awe, right? No need for the gory details.

The gory details

Still, every once in a while, someone will say to me “yes, but HOW do you do that?” So they really do want to know. Which tells me that either:

a) they want to be a prospect researcher (Yes! Another convert! I win the toaster!) or

b) they’re potentially creeped out and here’s my chance to set them straight.

So here’s my more in-depth story:

I used to work at a school of public health and, as you can imagine, most of our graduates went on to work in …public health. Most didn’t come from money to begin with, and most weren’t ever going to get rich working in public health. So the school couldn’t really rely on wealthy alumni to provide scholarships for the next class of needy students.

But the faculty, students and alumni were doing amazing work in just about every country in the world: HIV/AIDS education in Africa; nutrition education that helped prevent kids from being malnourished in the United States; health and human rights work in the Middle East; and cancer prevention work everywhere.

So we got this idea to approach CEOs at multinational companies whose workers were in the geographic areas that the school had an impact. By helping the school’s work, they were helping keep their employees and customers healthy.

My job was to use sources like business directories to find the names of those multinational companies and their CEOs. I gave their business contact information to our fundraisers and volunteers. These folks made contact and, if the CEOs were interested, they were asked to become members of an advisory committee in an area that impacted them most.

Usually what would happen is that the company (and sometimes the CEO as well!) would decide to support that work financially. We were able to create 7 whole committees from scratch of industry leaders who had no prior affiliation with the school but who became committed volunteers and donors.

That’s my usual how-I-do-it story. Hopefully their eyes haven’t glazed over by now, but they asked for it! I keep a few of them in my back pocket – stories that illustrate, with enough detail to satisfy their curiosity without too many boring details.

But really, just keep it simple

Unless you’re a celebrity, chocolate dessert maker or rocket scientist, most people are just being polite when they ask what you do. Metrics and database searching and Boolean logic are way beyond what someone really wants to know when they’re standing holding a glass in one hand and a mini plate with an awkward hors d’oeuvre on it. Trying to be polite and figure out how they’re going to manage this with only two hands.

Offer to hold their glass for them, and tell them a feel-good story.

What’s yours?

Special thanks to Ralph Rohrer and all the commenters on last week’s blog post who inspired this one.


Coming out

Prospect research pride flag

I’m going to let you in on a secret. Across the US, Canada, the United Kingdom, Europe, Australia, and a growing number of other places around the globe, there are more than 5,000 of us.

People who, at one time or other in our professional lives have faced bias and, at times, even open revulsion from the public or the very people we serve. Most of the time we face well-intentioned misunderstanding without even knowing it.

My story

Several years ago on a sunny Saturday, I was at a World Team Tennis event. As I was waiting in line to get a photo of my friends with Serena Williams, a fundraiser I worked with spotted me in the line. He was walking with another man, and I smiled and waved a little hello to them and they veered over.

Fundraiser “Bob” introduced me to his companion, a venerable trustee and alumnus of the institution who (naturally) I’d heard of but never met. Bob then said, “Hey “Fred,” you’d be very interested to talk to this young lady. Helen knows more about you than your wife does! She’s a researcher – sort of like a private eye in our office. She can even find out how much you make!”

As I tried to stay smiling and hold up my head, every cell in me cringed. Bob outed me, and I wasn’t prepared for it.

At the time I didn’t think it was the right moment to set Bob straight, and I’ve always regretted not going to his office the next Monday morning to talk with him.

But I missed a huge opportunity, because even though he was wrong, Bob was trying to be right. He was trying to advocate for me in the best way he knew how.

I wasn’t ready. I could have gotten a two-fer, and educated a donor and key volunteer as well, but my silence allowed someone else to tell my story for me. And it wasn’t the true one.

At the APRA Chapter Leaders summit last week, many APRA international and chapter board members gathered in our bi-annual meeting. One of the things we talked about in detail was advocacy. APRA and the chapter leaders are keenly interested in discovering ways we can tell our own story to the world, so that what we see reflected in the media and at the conferences of sister professional associations is something we recognize as true.

So we’re coming out.

All of us. It’s time for us all to stand up, advocate for ourselves and voice our pride in what we do.

We have been waiting for our frontline fundraiser brothers and sisters to speak up for us, but even many of them are in the dark about what we do. We have to educate them so that they can be advocates for us – in the media, at professional conferences, in the office, and with donors. But so that they are advocates, too – not instead.

Nobody is going to tell your story like you.

Let me start. Here is my creed.

I am a prospect researcher, a relationship manager, a data analyst. I provide fundraising intelligence.

I am proud of my profession and my colleagues.

We make it possible for the world’s smartest organizations to feed, clothe, educate, protect, inspire and advocate for a better world. We do this by identifying future supporters who are most interested in our causes and philanthropically willing and able to support them.

We as a profession are fundamentally against nonprofits wasting time and money bothering people who have no interest in or money to support our organizations. Our presence signals our organization’s intention to efficiently and intelligently use limited resources in good stewardship of past donor support.

We educate ourselves and uphold our profession’s ethical codes on behalf of the private citizens, companies and foundations our organizations approach. We are the guardians of these respected donors’ information, and we only gather what is lawful, available to every citizen, and appropriate to the purpose. We care for their information as if it were our own, because we are donors, too.

We serve as protectors of our organizations’ good reputation, by making sure through due diligence that our nonprofits partner with those who will serve as role models and be honorable representatives of our organization and its mission.

I believe this because it is true.

Be an advocate

Even if you think that everyone at work knows what you do, and how you do it, and why you do it – they don’t. Some do, but many don’t, and they’re not going to ‘get’ it by osmosis. And you need them to. We need them to.

So lead brown bag lunches, write articles, and just talk about what you do (and how you do it, and what you stand for) with your colleagues, your family and friends. Volunteer to speak or serve on a panel for the Association of Fundraising Professionals, the Association for Healthcare Philanthropy, the Council for Advancement and Support of Education, or a regional fundraising group so that our frontline partners have exposure to what we do and how it helps them. Give them talking points to share with donors who have questions about our work. Help educate our advocates.


I officially declare that from now on, March is International Prospect Research Pride month. Get your elevator speech together and help dispel the mythology that what we do is creepy or invasive. It’s not, and it’s time we all let people know.

Come out.

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Actionable information


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Turn knowledge into actionImagine with me that it’s Saturday afternoon. You are flat out busy today, and tonight you have exactly two hours to prep and cook dinner for guests. One of the guests is a good friend, but the other two you don’t really know all that well. They are friends-of-friends in town for the weekend.

Is this the night that you’re going to pull out the 25-ingredient recipe for a gourmet French dinner? Julia’s cassoulet, perhaps?

Non. First, you’d never even get the duck fat rendered in that amount of time. And second, wouldn’t you go with something shorter to prepare? A time-trusted recipe? Something good, quick, and appropriate to the situation? With just 10 (or even five!) ingredients?

And even if you had the two days you would need to prepare Julia’s cassoulet, wouldn’t it be just a little bit de trop for a first meeting?

So why, when a fundraiser is going to meet a prospect for the very first time, would a researcher create a full profile? Isn’t that also just a little bit too much?

Maybe you’ve always done it this way. Or maybe someone asked for more, and someone else did, too, and before you knew it, a full profile was created before every first meeting. It happens. And maybe it’s okay. But it’s probably overkill.

How to know when a lot is too much

Here’s one way to tell: take a look at your conversion ratio. For each of the times you created (or requested) a full profile before a first meeting with a prospect, find out how many of those individuals went on to make a major gift.

If your record is 50% or more, then you should have a case study written about you in every fundraising book that exists. And your whole team should get a big fat raise.

But if, as I suspect, that ratio is closer to 5% or less, isn’t it time to take a hard look at how much information is needed for that first visit? Working together, frontline fundraisers and researchers should create a menu of the 10 (or even five!) critical pieces of information every fundraiser should know before a first visit.

Doing a study like this can provide you with actionable information. Which is exactly what prospect research is.

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Six Benchmarking Questions to Enhance Your Shop


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Christmas Steps Bristol

This week I’m in England talking with our colleagues at The Factary in Bristol. Their offices are open-plan and I’m impressed at how collaborative they are, with each other and with their clients. I met with nearly everyone on the team to learn more about the kinds of projects they’re working on, what they each do to meet their clients’ needs and how they work together as a team. It’s really interesting to see the ways we’re the same and the ways we do things differently.

My visit has been a wonderful opportunity for us to share the seeds of ideas and innovations across borders. As I walked out of their office today and down the cobbled street, it occurred to me that, much in the same way as American English and British English evolved after splitting off from each other, it will be interesting to see how the ideas we brainstormed will germinate for each of us on different soil.

It’s been a really fun few days, and it reminded me that I don’t take as much time during the year to benchmark with colleagues as I intend to. Do you? It’s easy to share information when we’re all at a lunch table or in between sessions at professional conferences, but how often do we make the time to actually go visit colleagues at their offices? See them in their own environment and ask questions? Speaking for myself, not enough.

When I do, though, before I go visit, I like to create a list of questions, including:

  • What are the things that you all do well?
  • How is your shop innovative?
  • Who else do you think is innovative, and what do they do that you would like to emulate?
  • If you could change three things about your shop, what would they be? What’s keeping you from doing that?
  • If money were no object, what would be the first tool or resource you would buy or thing you would enhance?

The conversations are always fun and interesting, and I’m going to try harder this year to make more of them happen.

How about you? Do you have a goal to benchmark with colleagues? How often do you try to meet, and what questions do you like to ask?

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Funding overhead


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Overhead bin

Back before I started my career in prospect research in 1987 at The University of North Carolina at Chapel Hill, I was the assistant to the director of finance for the development office at the university. My responsibility was to help my boss Jean track all of the money the university received; she had to make sure it went into the right bucket and was distributed correctly.

Even then, back when fundraising offices were a relatively new thing, I remember tracking a fund where the donor had had the vision to endow a position in the development office. The donor’s money directly supported a fundraiser raising money for the graduate school where he got his degree. It’s the kind of investment that’s essentially a perpetual matching gift. For overhead.

Overhead has gotten a bad rap over the past decade by charity-raters who haven’t evaluated the right metrics, and by some in the press who have seized on salacious stories about indefensible salaries at a minority of mismanaged nonprofits. But news about ice storms in the south this week bring home to us that people will be temporarily without power, possibly for days. We don’t want to think about being without power, or telecommunications or even toilet paper for a day in our homes. Imagine trying to run a homeless shelter without those things. Without that critical overhead.

As charity thought-leader and AIDS Walk founder Dan Pallotta said in his disruptive, take-no-prisoners TED Talk, “The way we think about charity is dead wrong”:

“Too many nonprofits are rewarded for how little they spend,” he says, “not for what they get done.”

In yesterday’s Huffington Post, author Renee C. Herrell wrote a great follow-on article to Pallotta’s talk called “The New Four-Letter Word in the Nonprofit Sector.” In it, Herrell talks about foundation funders who understand and actually fund overhead. She writes:

Peter Ellsworth of the Legler Benbough Foundation, another San Diego based foundation, provides a majority portion of their funding each year to nonprofit overhead…

…While Ellsworth is happy to fund overhead, he won’t pay five times for the same service in five separate small nonprofits. Ellsworth suggests that collective overhead is the solution. “If small nonprofits can get together and utilize resources collectively, I will pay for that overhead.”

Efficiency appeals to potential funders. It doesn’t make sense for each small nonprofit to pay for someone to do their bookkeeping or payroll or prospect research, when professional companies exist with the right expertise to do just what’s needed, right when it’s needed. Once they’ve achieved efficiency of scale, that’s the time to bring it in-house.

That being said, even large nonprofits hire my company to help out on projects like wealth screening analysis, data analytics and finding prospective donors – times where many hands make quick, efficient work or when specialized skills are needed. We’ve even found funders for small nonprofits that cover capacity-building: overhead.

Many in the fundraising field have the impression that outsourcing is expensive. But I believe that investing in quality professional services actually amplifies an organization’s internal capacity.

And that gives you more of the precious commodity of time to do what you do best, and tell prospective donors everything that your organization is getting done.

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