Do Springfield-area residents suffer from donor fatigue? How can nonprofits change that? To find out, Springfield Business Journal Editorial Director Eric Olson sat down with Children’s Smile Center Executive Director Jackie Barger, Community Foundation of the Ozarks President Brian Fogle, Care to Learn Executive Director Morey Mechlin and Breast Cancer Foundation of the Ozarks Executive Director Crystal Webster. They talked about the nonprofit landscape, about doing away with special events and local misconceptions.Eric Olson: In one word, how would you characterize the nonprofit industry?
Jackie Barger: Overwhelmed.
Morey Mechlin: Vital.
Crystal Webster: Evolving.
Brian Fogle: You took all the good words. Mixed.
Olson: We know the nonprofit industry is significant here in Springfield; about half the private workforce is nonprofit organizations. Is that healthy?
Mechlin: You are obviously including the hospitals. While they are nonprofit, sometimes they don’t appear like that. That is a large part of that 50 percent.
Barger: It would skew a lot of the averages.
Mechlin: Even taking that away, it could become unhealthy if we don’t have an educated populace who is philanthropic and interested in social opportunities. So much then is relying on personal beliefs and passions versus those things that are written into taxes and other bases. It could become unhealthy. Fortunately, I think we live in a community where it’s been a healthy climate.
Olson: I believe those stats don’t factor in public bodies, like the school system. Any other takeaways on what that says about our community?
Barger: It certainly speaks to diversity. There are a tremendous amount of services available. That could tend to be unhealthy. There is a small community about 40 miles away from here, and there was much more need for a certain population because a certain office decided to locate in Aurora. It was a services agency for a region that located in Aurora. The school district commented they saw much more of the higher need population because they live now closer to that office. They view it as unhealthy within its population.
Olson: Last year, the Drury University Center for Nonprofit Communication did a deep study on local nonprofits. It found nonprofits represent 38 percent of the city’s gross domestic product, holding assets of $8.9 billion.
Mechlin: And that’s just Fogle.
(group laughter)
Fogle: I wish. I would love that.
Olson: That study also pointed out some misconceptions. What have you guys come up against?
Fogle: The two biggest I hear, you know from donors, is overhead expense. That’s what people give to. That really has nothing to do with the impact and effectiveness of a nonprofit. That’s one I wish people would think about. That doesn’t measure impact. If one charity has a higher overhead expense, but it has a lot more impact serving people more effectively, it doesn’t matter what the overhead rate is. We have two rules, rules for businesses and rules for nonprofits. One of those rules is you can’t spend to market. But on the for-profit side, we encourage marketing and we encourage paying our people to keep them. I do think we have two different rulebooks, and I don’t think we should. The other thing I hear a lot is you need to run your nonprofit like a business. I think that is a misnomer. Businesses are here to create a customer. Effective nonprofits are here to do away with customers. We would love nothing more than to do away with all of our customers and the world would be better for it.
Mechlin: I think the point is we have to run it better than a business. To me, the big misconception is [the word] nonprofit. I would rather we were called a social business. Nonprofit is an oxymoron. If we don’t have a profit at the end of the day, we are not in business.
Olson: Let’s clarify that. What does a nonprofit do with profit?
Mechlin: It goes back to service, to your mission. We are not paying dividends to boards.
Barger: My CPA would say a nonprofit doesn’t have a profit, it has a surplus and deficit. That surplus is used for the charity mission. The Community Foundation says all the time: “No margin, no mission.”
Olson: What do you guys say to the person who researches overhead ratings, the person who is donating and says, “I want to know that to be a good steward of my money?”
Webster: If the outcome is only measured in dollars, sometimes the true impact of the help that is provided is undervalued. It comes back to that multiplier effect. If BCFO pays someone’s mortgage, was the value of that $963? Or did it save the bank from having to step in in a very awkward situation in our very tight-knit community and repossess a home from someone who is seriously unwell? What is the value of that? It’s hard to put a dollar value on the impact.
Barger: The overhead discussion is really blown out of proportion when you compare everybody. I think every organization has legitimate overhead. Some organizations tout you can feel better about giving because you know more money is actually going to provide care. I would challenge that. I would say they might have their overhead donated. The overhead cost is still lower, but the value of the giving is still the same. Was the mission still achieved?
Olson: Any other misconceptions you want to kick around?
Webster: How about novelty of programs? So many times we see, not locally so much as nationally, there are a lot of grant applications seeking novelty in an approach. So much of what has stood the test of time are organizations that don’t so much seek out novelty, but consistent, effective methodology you can apply to a social problem to solve it. I’m not a fan of novelty.
Mechlin: It leads to unhealthy practices. They call it the grab for grants. You come up with something new just to get that money. It’s so ineffective.
Barger: You are being way too kind.
Mechlin: The new guy on the block may be great, but to continue to come up with new ideas just to get that money is the worst practice.
Olson: It becomes a sales pitch?
Fogle: A lot of folks are looking for innovation. Give me your latest twist or program to solve this problem. Funders have been guilty of that. Back when the recession hit, we redid our entire grant making. We said we just want you to keep your doors open. We gave grants that said we don’t want new programs or solutions, just keep doing what you are doing. The other thing is the classic, three-year grant. Three years and you’re out. How do you sustain something when you know you are only going to have three years? We have seen some really good programs go over time. Contrast that to business.
Olson: What’s the most interesting new nonprofit idea you have heard?
Fogle: If you can think of a need, we probably have a fund for it. Care to Learn is a good example. I remember when Doug [Pitt] first called years ago and said, “I want to do something for children.” I was telling him all these other things. He said, “No, I want something really direct.” I said, I don’t think that exists.
Barger: And a lightbulb went on.
Webster: Can I bring up another misconception? It’s my boiling point. Special events are a good way to raise money.
Barger: Who said that?
Webster: Nobody in this room would say that. It’s a Catch-22. We do it because it’s been done. We have to get away from that as a fundraising mechanism.
Mechlin: We do it because people get excited about it. It’s the least effective way to raise money. If the goal is to raise knowledgeable donors, we shouldn’t be out on a 5K route.
Fogle: You don’t buy pizza unless you have a coupon. The pizza industry is ruining the buyer. I think we have educated our donors: Don’t give money unless there is an event. It’s not effective, but we are in this cycle.
Olson: What I’m hearing is it’s good for dollars, bad for staff and mixed results for the mission.
Mechlin: I would even challenge it’s good for dollars by the time you put staff time into it. Are they counting the hundreds of hours it takes staff?
Barger: If a donor is concerned about overhead, why are they not concerned about special events?
Webster: Because special events drop off before the net profit. Nobody sees them.
Barger: But it doesn’t meet the test. Why are we asking them for sponsorship dollars to fund an event, not the mission? That being said, we are still doing events.
Mechlin: We all are. The reason is different than raising money. It’s visibility. It’s become the way to get a sponsorship. There isn’t a Monday without a golf tournament.
Webster: It’s incremental revenue. It’s chasing the iron bunny. You add one more event, you get a little more incremental revenue. If you do it with your existing staff base, then it’s tempting. But when does it become too much for you and the donors? At BCFO this year, we have had a pivot on that. We were famous for event proliferation. How should we be spending our time? Are there mission-based ways or different ways of fundraising that are more efficient than going after another 20 participants in that 5K?
Fogle: We encourage people to have a signature event. When you are getting up to five or six a year, it wears people out. It wears staff out.
Olson: What was the tipping point for BCFO?
Webster: The tipping point was when we figured out a way to offset our revenue in a different manner. We did that with license contracts – 100 percent of our overhead is now covered.
Olson: Can you just take events out of the equation?
Mechlin: I think you can. It would take effort, but I’m an old-fashioned fundraiser. I can sit down with an individual and do in a half-hour what it would take months with special events.
Olson: Is this discussion an indication of donor fatigue?
Mechlin: They are all tired of those runs, but they are in great shape.
(group laughter)
Fogle: I think among certain people. There are the usual suspects everybody knows. There is fatigue on writing checks. We need to be more like our university communities. They aren’t fatigued on planned giving because they haven’t been asked enough.
Barger: I wonder if our existing donors could help find new donors. I’m not asking for a check, I’m asking for you to find three new names.
Webster: Donors may be tired of being asked for a check, but they rarely tire of hearing about the mission.
Fogle: We are also starting to do better with younger donors. The 35 and under don’t write checks.
Olson: What new fundraising methods are out there? Social media is a great example; maybe it’s the first step?
Mechlin: I love my Square. I never go anywhere without it. No woman should be without a Square. With that, comes a warning. Texting $5 to Haiti. How much of that goes to AT&T?
Fogle: Texting works well for a national catastrophe, but not locally. After a big national media event, the peak day is the fourth day. Then you are on to the next.
Barger: I’m not trying to find the next ice bucket. It’s old school. It’s a half-hour meeting with a friend to talk and tell the story. The basics still work. It’s asking and receiving and thanking.
Interview excerpts by Features Editor Emily Letterman, eletterman@sbj.net
