Monthly Archives: March 2012

Make way for mobile purchasing

Have you bought coffee on your mobile phone yet?

Mobile phone payment systems have been around for almost three years, and Starbucks was one of a few large retailers to pilot the technology.

Now PayPal has launched its mobile payment program Paypal Here, signaling that phone payments have gone mainstream. Not only will we be buying more lattes by phone, but more nonprofit goods and services, including workshop fees, concert tickets, and festival tee shirts.

Nonprofits have begun using mobile platforms so that supporters and customers can make payments on the go. The Girl Scouts tried out mobile payments for cookie sales this year, and the Salvation Army used the technology for holiday donations.  A handful of farmers’ markets are piloting mobile sales, and several savvy museums and concert halls now offer the option.

Mobile payment companies like Square and LevelUp have been around a few years, but Paypal Here is expected to take the technology to the masses. The Paypal Here app can be used to accept any credit card or debit card, as well as cash, checks, and, of course, Paypal. Merchants get a plastic dongle that attaches to the phone through the headphone jack and acts as a reader. They can also use the iPhone camera to read the credit card, and the system can generate electronic invoices.

PayPal Here will charge a flat 2.7% rate for swiped cards and PayPal transactions and 3.5% plus $.15 for key-in and scan-in card transactions. Sending electronic invoices and scanning checks will be free.

Both Square and LevelUp have been used by nonprofits for donations, auctions, and other events. LevelUp works like the Starbucks mobile payments system–after you sign up and input a credit card number, you get a unique code that can either be scanned by a smartphone or waved in front of a terminal. Square, which has a card reader like the forthcoming Paypal service, is the most popular option for nonprofits. With these services, geotracking confirms customers’ locations, so they don’t even have to even take out their phones.  Intuit GoPayment uses the same technology, and helped Girl Scout Troops in Ohio increase cookie sales by 13 percent.

Are you using mobile payments in your nonprofit? Let us know, we’d love to hear how it’s working for you.

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Social media needs social strategies

“Successful social strategies (1) reduce costs or increase customers’ willingness to pay (2) by helping people establish or strengthen relationships (3) if they do free work on a company’s behalf.”

–Misiek Piskorski, Harvard Business       Review, November 2011

How would you feel if you were at a dinner party with friends and a stranger sat down next to you and asked, “Hey, can I sell you something?”

That’s how many companies use social media, says Harvard business professor Misiek Piskorski.

In his recent study of 60 for-profit businesses, Piskorski found that companies that performed poorly in online social realms “merely imported their digital strategies into  social environments by broadcasting commercial messages or seeking customer feedback.”

The problem, he says, is that people get involved with social media to connect with other people, not with organizations.

Piskorski’s study shows that companies that devised social strategies to help people build relationships are the ones that found significant returns from their investment in social media.  Returning to the dinner party analogy, these companies ask “May I introduce you to someone or help you develop better friendships?”

Nonprofits face similar social media challenges. We spend precious staff hours on building “friends” and “followers” but are we seeing a real return on the investment?

Nonprofits that use social media to create deeper engagement with their community can generate tremendous benefits. They recruit new allies, strengthen and mobilize support networks, spread information, and raise money.

The potential payoff from social media is the subject of our annual conference this year. We hope you’ll join us May 2 for Powerful Networks: Nonprofits, Social Media, & Community, an exciting day of expert information and practical training to help your organization further its mission with social media.

Piskorski’s work suggests there are four types of effective social strategies for companies:

*Reduce costs by helping people meet.
*Increase willingness to pay by helping people meet.
*Reduce costs by helping people strengthen relationships.
*Increase willingness to pay by helping people strengthen relationships.

Check out the HBR article to understand how companies like Zynga, Yelp, and American Express use these strategies to reap the benefits of social media. And join us at the annual conference to learn how nonprofits can choose social media goals that fit their missions, allocate resources to accomplish these goals, and define and understand their communities.

Endowments, part 3: the campaign

A few weeks ago we discussed the pros and cons of endowments, and last week we touched on the key decisions and policies needed to get an endowment up and running effectively. Today we share some thoughts on running endowment campaigns.

Endowment campaigns are structured like annual campaigns, with specific goals, timelines, and gift charts.  However, they don’t happen every year. Some experts say that five or seven years should be the minimum time between endowment campaigns, and others say ten. They also differ from annual campaigns in that they focus on large givers. Annual campaigns are broad-based, relying on smaller gifts from a lot of donors. In an endowment campaign you might expect half or more of the goal to be raised from just a handful of donors.

So how do you prepare for an endowment campaign?

1. Set a goal. You’ll first need to determine how much interest income you want and the size of the principal needed to generate that much interest. In general, nonprofits can take out up to five percent of the principal each year and still have it continue to grow. A financial advisor can help with projections, and a feasibility study can help set ambitious but realistic goals.

Sometimes an organization will set a goal for their endowment that is higher than what it can raise immediately. Instead  a campaign is conducted to “seed” the endowment fund. For instance, your ultimate goal might be one and a half million dollars, but $500,000 is a more realistic target for an intensive endowment campaign. You continue raising money for your endowment after the campaign, with the hope that having raised the seed will make donors feel more confident that their gift is joining existing funds. The problem, say some experts, is that too often the endowment levels off after the seed is raised, and then the fund is too small to generate the interest really needed. A seed campaign only works with a good follow-up plan!

2. Create a gift range chart. Fundraising gift range charts are based on proven guidelines. For endowment campaigns, you will usually be seeking a lead gift equal to 20 percent of the goal, two gifts that equal ten percent, and three to five gifts that make up the next ten percent. That’s 50 percent of the goal from six to eight donors.

Remember that donors have several years to pay off their gifts—a donor’s pledge of $100,000 may be paid as $2,778 a month or $16,667 twice a year for three years.

3. Establish a timeline. Endowment campaigns usually run from two to five years. If this sounds like a lot, consider that it may take months to do prospect research and develop your written materials. Also, you can expect that soliciting lead donors will take place over several conversations. Experienced fundraisers say that five years is the maximum most nonprofits can sustain interest in the campaign and balance it with other fundraising activities, and that the active part of the campaign is best conducted over two to three years.

4. Develop communications materials. You’ll need a fundraising case in the form of a printed brochure or other documents. Although this may seem like a quick and easy step, a good endowment packet takes time to develop and involves major decisions about content and style as well as design, length, color, etc. Allow plenty of time but also be clear about how and when the decision-making process will take place so your materials don’t get hung up by endless discussion and debate.

5. Form a solicitation team.  Endowments are mostly funded by donors’ assets or estates, not their annual income. Your solicitation team should be comprised of people who are comfortable asking donors for assets. Usually they will be people who have made an asset gift themselves—they will be asking others to join them in funding this endowment. Typically a team of a Board member and staff member will identify a few people who are close to the organization and able to make a large gift. They will solicit gifts from these people and then ask them to be on the solicitation team. The team may start with just two or three donors and build gradually over time.

6. Develop a list of prospects. Prospects are people who demonstrate a commitment to your nonprofit, have money, and to whom you have access. Your list should start with the people who are closest to the organization, including Board members and major donors. You will have to think through this group of people to determine who can give the biggest gifts, and who is most likely to be excited about your endowment. The more you know about your donors and the nature of their gifts, the more likely it is you’ll create a strong prospect list. For instance, if a donor is already giving you regular gifts from her investment income, she may be willing to give you an asset to fund your endowment. A general rule of thumb for endowment campaigns is that you will need about four times as many prospects as the gifts you seek.

 7. Solicit the gifts.  Soliciting endowment gifts is similar to soliciting other large gifts. However, you must articulate and communicate a different kind of need for endowment gifts. Soliciting major gifts depends on communicating a pressing, immediate need to the donor, and capital gift solicitations must convey a specific need for a facility or some other investment. The case for an endowment must express your organization’s need to build long-term stability and convince the donor that her gift will help permanently sustain your mission in the community.

Endowments represent a big responsibility for nonprofits.  Supporters have to do more than just like your organization to be willing to give to your endowment. They must believe your organization can manage investing large amounts of money and that it can steward that money carefully in the future. No matter where you are in the process of preparing for or running your campaign, your most important job is to ensure you’ll do both.

We’d love to know if your organization is planning an endowment campaign now, or if you have lessons learned you’d like to share from past campaigns. Considering an endowment?  Give us a call–we can help you find a great consultant to help you evaluate whether to establish an endowment or to help you organize and operate an endowment campaign.