Final Text For Affordable Housing Le[1]


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New presentation -- given 4/12 at Michigan Affordable Housing Conference

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Final Text For Affordable Housing Le[1]

  1. 1. Relationship-based Fundraising for Community Development Organizations Michael J. Montgomery Montgomery Consulting, Inc., The Remington Group & Lawrence Technological University
  2. 2. Starting Points <ul><li>Tax credits, developer fees, program grants and banking industry likely to remain predominant forms of funding </li></ul><ul><li>But, no organization ever achieved financial sustainability through project funding alone. </li></ul><ul><li>Have always needed flexible funds to fill gaps. </li></ul><ul><li>Increasingly, need funds to maintain continuity of effort (survive between projects), meet full cost or be competitive for some grants (meet “match requirements”). </li></ul><ul><li>Spend a minute or two understanding how we got here as a starting point for discussing how to proceed. </li></ul>
  3. 3. How America funded services for low income populations 1620 - 1933 <ul><li>Services for low income populations to some degree local government but mostly a PRIVATE matter </li></ul><ul><li>Philanthropy was Individual and largely Major Gifts </li></ul><ul><li>Frequently to/through ethnic or denominational charities </li></ul><ul><li>Often related to personal & spouse volunteerism </li></ul><ul><li>Board membership at agencies serving low income populations was prestigious, socially advantageous and business/career enhancing. </li></ul>
  4. 4. New Deal started cultural change in how America funded services for low income <ul><li>New Deal = start of significant federal spending on services for low income populations. </li></ul><ul><li>Care of low income populations came to be seen as at least in part a public responsibility. </li></ul><ul><li>Some private philanthropies closed or ceased direct service provision. </li></ul><ul><li>Detroit’s McGregor Fund great example -- origins in pre-depression McGregor Institute (mission). </li></ul>
  5. 5. 1960s War on Poverty accelerated change. <ul><li>Many grant opportunities for expanding services. </li></ul><ul><li>New agencies born & older evolved to benefit. </li></ul><ul><li>Service providers often also joined United Way – so, even much of their private money now came in directly. </li></ul><ul><li>1960 – 1970 funding for services to low income shifted from traditional philanthropy to grants/contracts. </li></ul><ul><li>Redefined role of agency Board from mobilizing resources to representation of community interests. </li></ul><ul><li>Clearest expression: Equal Opportunity Act 1965 –”maximum feasibility participation.” HUGE impact FAR beyond legal requirement. </li></ul>
  6. 6. A Tale of Two Boards <ul><li>Traditional Board: </li></ul><ul><li>Affluent & Influential (“Power Elite,” “Establishment,” & “the Ladies who Lunch”) </li></ul><ul><li>Give & Get in Substantial Ways </li></ul><ul><li>Oversight using upper/middle class values </li></ul><ul><li>Often prescriptive </li></ul><ul><li>Sometimes paternal/maternalistic </li></ul><ul><li>Potential to be socially and culturally insensitive </li></ul><ul><li>Great for fundraising, maybe less so </li></ul><ul><li>for other things. </li></ul><ul><li>Post-1965 Board: </li></ul><ul><li>“ Tri-partite” Community + Providers & Officials + Private Sector. </li></ul><ul><li>Private Sector = Biz, Labor, Education, Religion, etc </li></ul><ul><li>Modest Giving and almost no significant “Getting” </li></ul><ul><li>Oversight using political / provider / community values </li></ul><ul><li>Reflect community desires. </li></ul><ul><li>Socially & culturally sensitive </li></ul><ul><li>Great for understanding community needs </li></ul><ul><li>& sensitivity but LOUSY for fundraising! </li></ul>
  7. 7. Impact: Cultural, Organizational and Financial <ul><li>Let affluent Americans “off the hook. ” </li></ul><ul><li>Major individual giving swung even more heavily toward things donors/families use themselves… Elite Education, Arts & Culture, Hospitals… </li></ul><ul><li>Middle class Americans generally came to also look at low income populations as collective – not individual – responsibility. If they give, probably UW and/or church. </li></ul><ul><li>Private fundraising skills and Board composition needed largely left human/social services environment. </li></ul><ul><li>Not a problem as long as the gov’t money held out . </li></ul>
  8. 8. Two Hard Facts <ul><li>Post-1981… greatly reduced willingness of political community to embrace and ability of government to fund services for low income populations. </li></ul><ul><li>Cultural change that recast services for low income populations as a public, rather than private, responsibility generally persists. </li></ul><ul><li>The first puts many agencies out looking for private giving. </li></ul><ul><li>The second assures that the environment for securing such funding is generally not very favorable. </li></ul>
  9. 9. Components of Fundraising Success for Groups Serving Low Income Populations Continuity of Fundraising Effort Seen as Good Value for Biz Supporters Attractive to Clubs & Congregations Compelling to Individual Supporters Logical Investment for Foundations Good Stewardship Strong & “ Connected” Board Fundraising Success
  10. 10. Create a Realistic Fundraising Plan…. Based on understanding of why people & groups give <ul><li>Makes provision for fundraising (time & $) </li></ul><ul><li>Initiates preparations for fundraising </li></ul><ul><li>Organizes for increasing access & influence </li></ul><ul><li>Builds contact, suspect & (ultimately) prospect base </li></ul><ul><li>Make “case” for organization/projects </li></ul><ul><li>IDs “value proposition” for different kinds of supporters </li></ul><ul><li>Assures aggressive, effective and efficient solicitation of prospects </li></ul><ul><li>Provides for stewardship of gifts and eventual re solicitation of donors </li></ul>
  11. 11. Incentives for Voluntary Action (Giving)* * Derived from Clark & Wilson, Administrative Science Quarterly (1962). <ul><li>Purposive – Sincere desire to accomplish purpose; seeking nothing else. ( Grants, Broad Based Giving/Mass Solicitation ) This is where most groups serving low income populations operate! </li></ul><ul><li>Solidary – Be seen as part of desirable group. (Donor lists by level & “societies”) Arts and Education big on these. </li></ul><ul><li>Material – Expects somehow, sometime to become better off as a result of giving. (Sponsorship, Peer Solicitation) Major campaigns w/high level “cabinet” operate here. </li></ul><ul><li>Tap all three incentive systems and you will raise more money!!! </li></ul>
  12. 12. The Board <ul><li>Strong Board = “path” to Solidary and Material incentives </li></ul><ul><li>Primary conduit to flexible funds (unrestricted or effectively so) </li></ul><ul><ul><li>Solidary: Strong Board = Desirable “club” with which prospective donor can be associated (gives to change how/by whom seen) </li></ul></ul><ul><ul><li>Material: One or more members of Strong Board are “business relevant” to prospective donor (gives to gain visibility/goodwill). </li></ul></ul><ul><li>If no capacity to “give” significantly on your Board then most likely no real capacity to “get” either. </li></ul><ul><li>Strong Board can overcome many problems. </li></ul>
  13. 13. Board: Bridge to Resources <ul><li>Give appropriate to means --100% participation. </li></ul><ul><li>Advocate for organization </li></ul><ul><li>Help fundraise: </li></ul><ul><ul><li>Arrange gifts/grants/sponsorships from group they represent or with which affiliated (company, foundation, club, congregation, family). </li></ul></ul><ul><ul><li>ID/rate other prospective donors. </li></ul></ul><ul><ul><li>“ Open doors.” </li></ul></ul><ul><ul><li>Solicit peer commitments (when appropriate). </li></ul></ul><ul><li>Board – collectively – must have these capabilities even if each individual member does not. </li></ul><ul><li>Need to consider these tasks when targeting people as potential future Board members. </li></ul>
  14. 14. Continuity of Effort <ul><li>Remember the old Fund Raising “Cycle” </li></ul><ul><li>Get Gift, Renew Gift, Upgrade Gift! </li></ul><ul><li>Fundraising needs to be an everyday responsibility of all staff, includes: </li></ul><ul><ul><li>Talking up agency. </li></ul></ul><ul><ul><li>Making contacts & adding to central contact base. </li></ul></ul><ul><ul><li>Fundraising every year. </li></ul></ul><ul><ul><li>Communicating with current, past and prospective donors. </li></ul></ul><ul><ul><li>Solicit aggressively, effectively & efficiently. </li></ul></ul>
  15. 15. Stewardship <ul><li>General </li></ul><ul><li>Donors want gifts to organization used lawfully and well </li></ul><ul><li>Also want reasonable thanks/positive attention (unless giving anonymously) </li></ul><ul><li>Grants & Sponsorships – special stewardship issues </li></ul><ul><li>Do what, where, when promised or engage timely to re-negotiate </li></ul><ul><li>Reports timely & complete </li></ul><ul><li>Meet or exceed benefits/recognitions promised </li></ul><ul><li>Good Stewardship = the “set up” for renewal/upgrading! </li></ul>
  16. 16. Business Community <ul><li>Everybody is somebody’s customer! </li></ul><ul><li>Businesses will give – “sponsor” – for visibility/goodwill with current & prospective customers </li></ul><ul><li>Need right proposition / right sponsors. Wrong proposition / prospective sponsor won’t work! </li></ul><ul><li>Small groups serving small areas should generally focus on very local businesses. </li></ul><ul><ul><li>Bank branch, Food/Drug, Insurance, Realtor, Auto Sales or Repair </li></ul></ul><ul><li>Sometimes special value proposition opens-up larger companies. </li></ul><ul><ul><li>Compliance/goodwill with regulators – Banks & CDCs (CRA credit) </li></ul></ul><ul><ul><li>Cost savings – Healthcare corps and clinics (GOMER reduction) </li></ul></ul>
  17. 17. Sponsorship <ul><li>Increasingly popular. </li></ul><ul><li>Combines philanthropy (Purposive Incentive) and advertising/marketing (Material Incentive) </li></ul><ul><li>Audience s an organization can deliver important. </li></ul><ul><li>Up to 4 audiences for any sponsorship! </li></ul><ul><ul><li>Primary Audience – Attendees/Users. </li></ul></ul><ul><ul><li>Secondary Audience – Those promoted to directly (mailing list) </li></ul></ul><ul><ul><li>Tertiary Audience – Those learn of via media </li></ul></ul><ul><ul><li>“ Super” Audience – The “Asker” (Why major community events always have high level “Host Committee”) </li></ul></ul>
  18. 18. Value proposition for sponsors <ul><li>Nature/Business Relevance of Audience s . </li></ul><ul><ul><li>How many/who will attend? </li></ul></ul><ul><ul><li>Who/how many get promo materials? </li></ul></ul><ul><ul><li>Media promotion (if any)? </li></ul></ul><ul><ul><li>Who is asking? </li></ul></ul><ul><li>How will sponsors be recognized? </li></ul><ul><ul><li>Listed in publicity? </li></ul></ul><ul><ul><li>Name/logo on take away materials? </li></ul></ul><ul><ul><li>Presence at program/event? </li></ul></ul><ul><ul><li>Opportunity to welcome attendees? </li></ul></ul><ul><ul><li>Right to give attendees logo items or materials </li></ul></ul><ul><li>No event/program needs coffee mugs or tote bags so much you should accept logo items in lieu of cash! </li></ul>
  19. 19. Sponsor Work as well as Fundraising Events <ul><li>If can be organized/structured to clearly associated with its funders, businesses will sponsor work as well as events. </li></ul><ul><ul><li>Projects – builds & rehabs </li></ul></ul><ul><ul><li>Workshops – Home Ownership, Home Maintenance </li></ul></ul><ul><ul><li>Community Celebrations (nonfundraising event) </li></ul></ul><ul><ul><li>Programs – Foreclosure Prevention </li></ul></ul><ul><li>* This might be more appropriate for a Foundation. </li></ul>
  20. 20. Clubs and Congregations <ul><li>Civic, fraternal and religious groups support causes </li></ul><ul><li>Sometimes (not always) tied to volunteerism… ID some volunteer opportunities just in case. </li></ul><ul><li>Usually requires “insider” w/ties to your group to make the connection and advocate for you </li></ul><ul><li>Board should be path to such insiders. </li></ul>
  21. 21. Individual Donors <ul><li>Members of community should give something. </li></ul><ul><li>More money in/tied to many communities than may realize. </li></ul><ul><ul><li>Average household with two Social Security checks has spendable income equivalent to one $22/hour worker. </li></ul></ul><ul><ul><li>Property owners (landlords) </li></ul></ul><ul><ul><li>Communities have “alumni” (a Doc, Lawyer & CPA realistically more likely to give than celebrity) </li></ul></ul><ul><li>After Board gives, should ask friends/relatives to “join me in supporting this important cause.” (1 on 1, “parlor meeting” or email/social media) </li></ul><ul><li>In year two (after donors acquired in more intimate way), may be possible to renew gifts via US Mail or Email. </li></ul>
  22. 22. Small/Family Foundations <ul><li>Board prepared to be conduit to resources HUGELY helpful here (“interlocking directorate”– C. Wright Mills). </li></ul><ul><li>Every area has small/family foundations that give toward broad purposes (“hip pocket” foundations). </li></ul><ul><li>Giving generally modest but so are expectations -- secure with proposals committing org to little/no incremental expense. </li></ul><ul><li>Review foundations directories to find. Look for familiar names among donors, board, officers. </li></ul><ul><li>“ Reach out and touch someone” before spending too much time on proposal. </li></ul>
  23. 23. Fundraising Plan/Program Board Giving & “Getting” Secure 100% participation at substantial level (determined by individual circumstances). Become “qualified” (credible) solicitors. ALL help fundraise in some appropriate way. ID & Rate Prospects, Open Doors, Solicit (when appropriate) Board Upgrading ID 3 to 5 people you can realistically hope to recruit to Board. (Give $500+/year, Arrange gift from employer/foundation/group. Solicit 3 to 5 others to also give.) Who/how/when to recruit? Stewardship Assure systems to thank, receipt and publicly acknowledge donors in-place. Make sure programs & initiatives well-conducted, resources properly used/accounted for and reports timely. Continuity of Effort Adequate resources for continuing FR effort in-place. Initially, mostly allocation of Board and Leadership TIME with some funds. Later, dedicated staff. Business Community ID sponsorship opportunities w/in organization. ID 10 or more prospective business donors & sponsors. Prep sponsorship “package.” Reach out to prospects. Educate on cause. Expose to give/sponsorship opportunities & make the “ask.” Clubs and Congregations Work with Board to ID 3 to 5 clubs, societies or congregations that might support group. Through “insiders” approach seeking opportunities to apply, present, preach or do whatever group asks those seeking its help to do. Individuals After giving, Board members solicit family and friends 1 on 1, parlor meeting or via email/US Mal. Those w/in community w/resources ID’d and solicited. Renew (year 2), Upgrade (year 3) Foundations (Major) Research. Find 3 to 5 viable prospects. Use relationships (if available) to seek discussion of opportunities to collaborate. If no relationship, approach via stated method. If invited, apply. Foundations (Small & Family) Via Board members and other friends, ID and approach 5 to 10 local small/family (low expectation) foundations seeking discussion. After invitation to apply, follow process
  24. 24. Michael J. Montgomery <ul><li>Mike Montgomery is a Detroit-based fundraising and economic development consultant with his own firm, Montgomery Consulting, and an affiliation with the Remington Group. He is also an adjunct professor in the College of Management at Lawrence Technological University in Southfield, Michigan. </li></ul><ul><li>At LTU, he teaches “Mgt 6083 - Comprehensive Fund Development for Nonprofits” (a 3 credit hour grad class) as well as an intensive two-day non-credit introductory program for fund raisers and grant seekers. </li></ul><ul><li>Earlier in his career he was the head fundraiser for Focus: HOPE, a staff fundraiser for Wayne State, a program consultant to the Hudson-Webber Foundation, and a US Department of State Foreign Service Officer. </li></ul><ul><li>He holds an M.A. from the University of Michigan and an A.B. from Columbia University. </li></ul><ul><li>Email: [email_address] or [email_address] </li></ul>