Tag Archives: Financial Stability

Should Your Nonprofit Spend Endowment Principal to Cover Budgetary Shortfalls?

For those looking for a five-minute escape, grab a friend and play MJALibs! Fill in the blanks to play. Or just jump down to the next headline to read the rest of the article.

The endowment dream – an MJALibs fill in the blank game

MJALibs to help with budgetary shortfalls

Raising an Endowment

When thinking about an endowment, the possibilities seem endless. Will you have an additional $50,000, $120,000 or even $200,000 every year? Will you be able to cover budgetary shortfalls or expand your services and/or the number of people you serve? Will monetary stress disappear from staff and board meetings?

The Realities of Having an Endowment

For many organizations, having an endowment – whether inherited by the nonprofit’s current staff and board or raised in recent memory – is essential. Most of the time it does what it is supposed to. It helps the budget by providing operating revenue to be used on an annual basis. But, when the organization has a budgetary shortfall – like organizations may be experiencing or expecting during this pandemic – it can be tempting to take principal from the corpus of the endowment. Consider this a warning, it is a slippery slope.

Well, from an MJA new business perspective, it’s a great idea! Organizations often engage us to raise money after they have reduced or depleted their endowments. But, we also give advice to our clients to prevent this from happening. In fact, this is blog post based on an exchange I had with a client just this week.

The Slippery Slope

It starts with an unusual need. A new roof or, let’s say, a pandemic. You need to cover $100,000 one time.  So while it feels wrong to take out principal, it may be urgently necessary. But, once you start taking out principal for the annual budget, it is then easier to go to the well again and again for capital needs and budgetary problems. It is much simpler to get board approval to take out more money than spend time and/or money on a real self-examination. That would require looking at the organization, it’s mission, the current needs of the community, reducing expenses, the annual fundraising, etc.

The reduced endowment is a future problem when the lack of annual funding is current problem.

Before long, instead of $75,000 a year towards the budget it is $40,000 – causing a larger annual deficit/budgetary shortfall every year. And then you must spend money to engage us to help you raise funds to increase your endowment. It’s a vicious cycle we are committed to assisting you to avoid.

If you do decide to take out principal, “just this once,” make sure there is a Finance policy in place. To ensure this does not happen again.

So, if you are confronting financial challenges that have you looking at the balance in your endowment as an easy answer, what do you do? It may seem hard to fundraise in this climate. It is different – but not impossible. (Here is a webinar that will give you some tips). Consider a self-examination (we offer a special Organization and Development Assessment to our clients which we can tailor to your needs).

Want Your Own Endowment?

And of course, if you want to raise an endowment, click here to schedule a time to talk. Yes, we are still raising endowments during the pandemic. Our world still needs nonprofits. Nonprofits still need funding. And donors, still have money to donate – maybe not all donors – but many still can, and want, to give.

Can Nonprofits Turn Previous Failures Into Future Success?

Can Nonprofits Turn Previous Failures Into Future Success?Listen to any conference speaker, self-help guru or tech entrepreneur and you are sure to hear about their failures. Of course, they are speaking because they turned their failures into lessons that helped them succeed. Can you imagine going to a funder and telling them that you had to close down your last nonprofit due to lack of money but this time you knew how to handle their 7-figure gift? Can nonprofits turn previous failures into future success? Of course, saying you have changed the way you run your organization is not enough.  You need to “walk the walk as well as talk the talk.”

  • Show that you now have a strong case for giving and are only approaching the right people at the right time.
  • Prove you have learned your lesson by talking about your new and detailed focus on acknowledgements.
  • Demonstrate that you understand stewardship for each and every donor and each and every gift.

What are other areas that nonprofits ignore that can be turned around to prove success?

To some this list may seem overwhelming. To others, it will highlight areas on which to focus or tweak in the coming year. Either way, turning previously missed opportunities into growth and prosperity will sustain your nonprofit. And, it will be something positive to talk about to current and prospective funders. Showing that you are learning and growing is something everyone can get excited about.   Please let us know if we can help you improve your nonprofit by emailing Abigail Harmon.

The Key to Any Successful Fundraising Campaign

Kerry Olitzky

by Dr. Kerry M. Olitzky

There is no obligatory giving

Following World War II, as families moved out of urban centers and into the suburbs, they continued to support non-profit institutions, especially synagogues, out of a sense of obligation. Over the last decade, obligation diminished as a primary motivation for support. Today, people who support these institutions do so mostly because they can ascertain a personal benefit—for themselves and their families—from such support. This notion is called a value proposition.

Before starting any fundraising campaign, leaders should be able to clearly articulate their nonprofit’s value proposition to potential contributors.

In other words, what do prospective donors gain from an association with your institution?

A value proposition differs from a mission statement.

While often well-crafted and poetic, the latter attempts to concretize the ideals of the institution, often including goals and objectives. On the other hand, a value proposition is donor-centered and focused on the prospect. A value proposition is particularly important as donors ascertain the cost-benefit of their gift to the organization.

The idea “we’ll be there when you need us” will no longer  create support. And “community,” which is often offered as a benefit, can be found in a variety of other locations, often only a short distance from your organization. Thus, the value proposition should be unique and clearly distinguish your institution from any other. It should also identify and meet the needs of its target population – your current and prospective donors.

During a fundraising campaign (annual, capital or endowment), planners have to move the conversation with potential donors from obligation to benefit which is encapsulated in the value proposition. All support materials should reflect this change, as well.

Interested in learning how MJA can help you develop a values proposition and lead you to a successful campaign? Email Kerry Olitzky



The Most Common Fundraising Mistakes …and How Not to Make Them

Common Fundraising MistakesIn the past, we have touched on overcoming anxieties when confronted with the opportunity to share the joy of giving with a prospective donor on a face-to-face basis. We are anxious, mostly because we are afraid that we will make a mistake. Think about that for a moment! What is the worst thing that you can imagine might happen? The prospect will say, “No!” That’s no reason to be so afraid that you do not ask for the gift!

Today, I want to address what I have learned are among the twenty most common fundraising mistakes people are likely to make and to offer simple strategies on how to avoid them. In this way, you might identify problems that you have had or of which you are afraid. Perhaps, then you will be more successful when you are face-to-face with your next major gift prospect.

Mistake #1: Not Being Obsessed

You must maintain a commitment to results every moment you are at work; you should use every tool at your disposal and implement new ideas quickly.

Mistake #2: Not Listening to the Prospect

When you are with a prospect, never interrupt. Get the prospect to talk. Respond by delivering key facts to the prospect. Isolate problems that the prospect presents, and send the right message, both verbally and nonverbally: “I am here to help you.”

Mistake #3: Not Empathizing with the Prospect

You should always try to see the other person’s perspective; remember that you are not going to be thought of as the most important item on the day’s agenda. Develop respect for the prospect’s time.

Mistake #4: Seeing the Prospect as an Adversary

You have to strive to get the prospect to work with you; do not approach the meeting from a confrontational mindset. The prospect should be considered an ally, someone you want to have play on your team?

Mistake #5: Getting Distracted

Concentrate throughout your meeting; maintain eye contact; do not become disoriented by confusing or negative remarks from the prospect.

Mistake #6: Not Taking Notes

You can establish control of the encounter and reinforce the prospect’s desire to offer information when you write key facts on a note pad. It is also easier to reconstruct a memo of the meeting when you have your notes to refer to later.

Mistake #7: Failing to Follow Up

You should write personal thank-you notes at key points in the development cycle.

Mistake #8: Not Keeping in Contact with Past Donors

Remember that someone who has already given may be your best prospect for another–and possibly increased–gift.

Mistake #9: Not Taking the Prospect’s Point of View

When talking with the prospect, isolate the benefits of making the gift not only for the agency but also for the prospect and highlight them.

Mistake #10: Not Taking Pride in Your Work

You should stand behind your organization with pride; talk frequently with others about what you do for your organization. When you can no longer take pride in your work and/or the organization, it is time to take a closer look at what is causing this lack of enthusiasm. Is it the organization or you that is changing? Are you satisfied with the direction of the change? Is it time to look for work in a different organization? If you do not live the dream, it will be hard to convince others to feel it.

Mistake #11: Trying to Convince, Rather Than Convey

You can demonstrate in a compelling way how a gift can address relevant concerns. You should never apply “high pressure” tactics that ignore the needs of the prospect.

Mistake #12: Underestimating the Prospect’s Intelligence

Strive to act as a conveyor, not a lecturer, of information; work with the prospect to identify problems and find workable solutions.

Mistake #13: Not Keeping Up to Date

Do not assume that, once a gift has closed, you need no longer attempt to learn about the issues facing the donor. The agreement to give should be but the beginning of a long and mutually beneficial relationship

Mistake #14: Rushing the “Sale”

Let the development cycle progress at the pace that’s most appropriate for the prospect. Be patient. You will always do better by waiting for the prospect to be ready, than by forcing a false sense of urgency upon the solicitation.

Mistake #15: Not Using People Proof

Build credibility by highlighting past successes with other donors.

Mistake #16: Humbling Yourself

Operate from the assumption that you bring to the table a specific set of skills and a level of knowledge from which the other person can benefit. Work with the prospect as a partner. Do not comport yourself as a supplicant.

Mistake #17: Taking Rejection Personally

Try to develop resilience and self-assurance when confronting rejection; remember that hearing a “no” answer may be the only way to get to a “yes” answer. “No,” often means, “No, not yet.”

Mistake #18: Not Assuming Responsibility

When faced with a “no” answer, consider asking the prospect where you have gone wrong, or what mistakes you might have made in the presentation.

Mistake #19: Underestimating the Importance of Prospecting

Develop good prospecting skills, and regularly schedule time to find new potenial donors.

Mistake #20: Focusing on Negatives

You should approach obstacles from a positive frame of mind; avoid negative habits such as complaining and never, never gossip.

Want to read more about?

An Annual Campaign

A Capital Campaign

Note: this post was originally published in 2004


4 Changes Your Nonprofit Can Make During the Presidential Transition

Today marks the inauguration of a new president.  Hate him or love him, he plans to make changes that will likely impact the economy – and nonprofits need to prepare for what’s coming?

Of course, no one really knows.  The potential cabinet implies that business will do well with large tax breaks.  The shift to state control of more programs will, likely, decrease federal funding for nonprofits. And, if the cuts to government subsidies are realized, more people will have to seek assistance from other sources.

While it is all a bit uncertain, let’s focus on the 4 changes your nonprofit can make to weather these uncertain times:

  1. Show your strengths. You are not the only nonprofit organization that is going to be thinking in this way.  You are going to have show your impact, describe your strengths and give donors a reason to make you and your agency a priority. Now is the time to explain how your mission and vision are fulfilled by all that you do. And that you are the best at doing it.
  2. Focus your grant searches on corporations and foundations instead of government funding.  This may seem obvious, but often people wait until the changes happen externally before they make their own shifts.  We all know that grant seeking is time consuming, be strategic in how you use your resources starting today.
  3. Focus on individual donors. Philanthropic individuals know that:
    • needs will increase under the new government
    • as wealthy individuals, they may benefit from new tax plans

    Talk to your major donors about your concerns. If you have been stewarding them properly, they will be open to the conversation about replacing other sources of funding.  Maybe they can brainstorm ways to increase your donor pool or major gifts prospect pool or connect you to different sources of corporate and foundation support.

  4. Be fluid. Do not change your goals, but look for opportunities that may arise in the next few years.  You may not know what the future will hold, but you can make sure you continue being a part of the solution.  Even if it looks a little different.

If we can help you secure your funding, call us at 800.361.8689 or email Abigail.


Monthly Giving—How to Get Your Program Started

Part 3 in Creating a Monthly Giving Program

David MerskyLast month, in this series, I made the case for why monthly giving matters. You can read about it here. This month I want to focus upon the details of how a monthly giving program works.

The basics seem easy enough to understand. You ask one of your valued donors to join an invaluable group of monthly supporters of your organization and become a Sustainer. He or she pre-authorizes a recurring gift either by arranging for a deduction directly from their bank account or a through a regularly scheduled charge to a credit card. In essence, they have pledged fixed amount each month and provided you with the means for automatic fulfillment of the commitment by credit card or bank account number, or some other means (e.g., PayPal) for direct deduction from their account.

Sounds simple, doesn’t it? Well, it is, but there are many steps that have to be taken before you “make the ask.” Preparation and planning are everything—or, as a wise person once taught me, “Well begun is half done.”

You must become an evangelist for your innovation of a systematic program of monthly giving. Here are some steps that you should take in order to organize for success.

First, understand and explain the benefits of monthly giving to both the board and staff. It may require that they change their mindset to donor lifetime value (explained in detail below) but the highpoints are that monthly donors:

  • give more, thus increasing their lifetime value to the organization;
  • retain their support for many more years than annual donors;
  • have stronger relationships with the organization;
  • provide you with a stable foundation; and
  • reduce your costs of fundraising.

Second, shift the organizational mindset that looks at each donor acquisition or renewal mailing in terms of an isolated return on investment. No longer is it as important to compute an ROI (return on investment) in terms of income received less expense divided by the direct and indirect costs of the mailing. We now need to look at each donor’s “lifetime value,” a more complicated calculation, for sure, but one which ensures that your organization will retain more donors and benefit with increased revenue.

According to Roger Craver, the guru of donor retention, among many other things related to fundraising, the simplest way to estimate lifetime value is to use the following equation:

(Average Value of a Contribution) X (Number of Repeat Contributions) X (Average Retention Time in Months or Years for a typical donor) = Gross Lifetime Value.

You can arrive at the Net Lifetime Value by deducting the costs of soliciting and servicing the donor over the period of time you’re measuring, costs which can be greatly reduced through a program of monthly giving.

The third step in your preparation and planning is to be sure that the organization has good financial controls in place. Nothing will kill a program of monthly giving faster than the inability to process and acknowledge the gifts of these most valuable donors effectively.

Before you get started, be confident and intentional. Know that you can do this! Do not simply put a line on your gift reply envelopes as an after-thought. Rather think through the program, put the infrastructure in place, and then launch a step-by-step process.
LAST MONTH: What is Monthly Giving and Why It Matters
NEXT MONTH: What You Need to Launch a Monthly Giving Program

Want to learn more about Monthly Giving? Last month I led a webinar with more than 300 participants from around the globe about “Creating a Monthly Giving Program: A Solution to Donor Retention and Financial Sustainability.” You can see and hear the recorded hour-long session here.

Successful Capital Campaigns Help With Financial Management

Successful capital campaigns not only raise money… but also help with financial management

David A. Mersky imageDonors to capital campaigns are major investors in your organization. They deserve—as, in fact, do all donors—a high degree of accountability. They want to know, and you need to tell them, exactly how their funds are being used. Transparency is the key as well as effective financial management of those very resources which they have provided.

But, even before a donor has made a gift, they merit a clear understanding of the how their gift will be employed. A case for support translated into a campaign brochure and other collateral materials should contain as detailed a financial plan both as to the true costs as well as how the funds will be raised. If donors ask, they should be shown the budget for the project or program—one which allocates fully all of the direct and indirect costs associated with the realization of the dream you are asking them to fund.

Too often, nonprofits fail to attribute the true costs to the program for which they are seeking funds. If you are creating a program of teen engagement for which you are seeking an endowment, then do not forget to include the indirect cost of the share of the building—it’s operations and upkeep—as well as the staff who will supervise the youth advisors who deliver the program directly. Failure to include those costs will result in your not receiving the level of support that will enable the program to be sustained and the organization to be fully funded.

In a capital project, when you are renovating an existing facility or building a new structure, there are indirect expenses as well. Contingencies, short-term credit facilities as well as project management have real costs. Not to include these will mean that you will fall short of the goal to raise funds sufficient to deliver the building on time and on budget.

As the funds are being raised, then regular reporting to achieve the project is important. For capital projects, quarterly reports to donors about how the fundraising is going as well as how and when funds are being spent is appropriate. If the organization is investing its own funds until all pledges are fulfilled, then that too should be reported. It encourages donors when they learn about the organization’s commitment.

If it is an endowed program, then how funds will be invested may, in fact, be part of the solicitation process. After the funds have been received, what is the total return and how much is the organization availing itself of the funds for the purposes of delivering the services that were promised. Initially, a quarterly report may be desirable. Subsequently, an annual report may suffice. Again, if the organization begins to operate the program with its own funds until all pledges have been redeemed, this, too, should be reported.

Transparency and detailed financial management on both sides of—before and after—the solicitation are one of the highest forms of prospect cultivation and donor stewardship. This is true not only for capital and endowment campaigns, but is best practice for donor relations at all times.

NEXT MONTH: Marketing and Communications

LAST MONTH: Planned Giving

Is There Enough Money to Go Around?

AKA – Can We Raise Money for Our Nonprofit?

businessman walking on question markThere are so many ways that this question is asked, but everyone in fundraising hears some form of it on a regular basis. Maybe you’ve heard something like this:

“Should we hold off on our capital campaign? Organizations A & B are already mid-campaign and many of our supporters also give to them.”  


“Why would they increase their gift to us? They are already giving to so many other organizations.”

These questions all boil down to the same essential question – Can We Raise Money for Our Nonprofit? The answer is, of course, yes.

Want proof?

Consider your own philanthropy. You may be the type of person who sets an annual amount and divides that up among nonprofits which you like. Alternatively, you might be the type who gives small amounts to a range of organizations – some on an annual basis and some depend on your friend’s marathon run or to honor someone who has died. Then again, you may give a larger share of your financial support to one or two organizations with smaller amounts supporting a range of causes. But, there is one commonality – you give.

Statistically, most of us donate to charity – according to Giving USA 2014 (2015 should be out shortly with rumored predictions of higher giving than we have seen since before the recession) – the average U.S. household giving was $2,974. Of course that includes the $100 million donations but the facts are still the same -more people donate to charity each year than vote for the President of the United States or have an annual wellness checkup.

So, the question should not be a version of, “Is there enough money to go around?” Instead, I would encourage you to ask a version of, “What should I be doing to ensure that I raise more money this year?” Or maybe it is, “How can we prepare our donors for our new initiative?”

Of course, you could always ask, “How can Mersky, Jaffe & Associates help me raise more money this year?” We are always happy to help.

Nonprofit Fundraising Best Practices: Is This A Good Time to Raise Money

Time for nonprofit fundraising best practices? Almost everywhere we go, prospective and current clients ask us, “Is this a good time to start a fundraising campaign?” Of course, everyone can make good use of more financial resources, but is now the time? Can you handle this type of endeavor with existing staff? Is the geopolitical situation stable enough so that it does not serve as a distraction to your donors and funders? Will the perception of the state of the economy thwart success?

Surely, there is great uncertainty with respect to the economy and the world situation. Each day brings increasing confusion to the minds of us all.

Yet, in spite of that, there is reason for great optimism for those who have the courage to create a compelling case, recruit a great leadership team and engage their constituencies in a campaign that will enrich and enhance the life of the community. In the work that our firm does, we help leadership develop the understanding and skills to mount successful programs—to initiate or enrich existing annual fund programs, capital and endowment campaigns or planned giving programs.

When it comes to nonprofit fundraising best practices consider that:

1. Campaigns Are Won or Lost Before They Start
The Planning Phase – which should begin well in advance of any potential fundraising program – is the essential building block upon which successful campaigns are built. This phase includes a number of components, including the establishment of institutional priorities, financial planning, internal consensus building, initial case development, lead prospect identification, and a feasibility study.

While each of these activities involves tremendous work, and a lot of discussions, the most important element during each step is listening. Is there agreement on and, more importantly, enthusiasm for the case? Is the financial goal based on what you’re hearing through the feasibility study, or is it based on what the institution wants or needs? In essence, the chief objective of the planning stage is to develop credible plans and credible responses to any issues major gift prospects may throw your way when you finally get out there and ask.

2. Charismatic Leaders Trump Strong Cases
Strong cases presented by weak leaders face an uphill battle. But, the converse is not necessarily true. You can raise a lot of money for a mediocre case if the leaders are passionate. The bottom line is that people are ultimately more important than the case: donors are considerably more likely to invest their charitable dollars when they believe in and are inspired by an institution’s leadership.

How can you best motivate campaign leadership to do the things they may least be inclined to do? Read on.

3. The Single Major Factor Behind Most Successful Campaigns is…
… a pervasive sense of optimism.
Campaigns succeed when people believe they will succeed. You already know that to be true, by virtue of the way campaigns are designed: you don’t take them public until you have raised sufficient funds in the private phase, and you have clearly mapped out where the rest of the money is coming from. Prospective donors need to believe that they are contributing to a winning enterprise.

Optimism has to originate with the leader: the one who has to initially impart the sense of inevitable success to the organizational and campaign leadership. If there is a leader who can do that with integrity and passion, you’ll find that your campaign leaders will be more likely to make the calls, to set up the campaign visits, and to reflect that optimism when making the ask.

4. The Single Major Factor Behind Most Failed Campaigns is…
… the leaders were afraid to ask. They procrastinate in making calls and in setting appointments, and when they finally get to the solicitation, they don’t put a specific gift amount on the table.

This is not rocket science. Despite the economic or political conditions, we know that solid planning, great leadership, pervasive optimism and fearless pursuit of the goal, will enable any entity to succeed. Your organization has great assets. We can help you, and your leadership, leverage those assets—now.

Note: this post was originally published in 2004

Interested in learning more asking for nonprofit donations?

David wrote a series designed to help you create a culture of asking in your organization.

or read
Why You Shouldn’t Take It Personally When a Donor Says “No” by Abigail

Challenge: Annual Fund Participation

Every nonprofit organization would like to increase their annual fund.  But when thoughts turn toward an enhanced revenue achievement, the focus immediately shifts to major donors.  A strong, but often ignored, path is to increase participation.

This is your Mersky, Jaffe & Associates Challenge for the month:

Consider 3 ways in which you could increase your participation.  Write them down and list what resources (human and otherwise) it would take to make a difference.  Pick the one that seems most likely to get approval and “buy-in” from staff and volunteer leadership.  Present it at your next opportunity.  Bathe in the afterglow of success.

Mersky, Jaffe & Associates and our learning community would love to hear your ideas.  Please tell us what you come up with and any results in our comment section below.