Benevon Weblog

Charity Mugging

Here's a British ditty that has yet to make it to our shores although our Australian friends are the ones who actually introduced us to this interesting fundraising tactic. It is called "chugging," a shortened form of "charity mugging." Coined for a practice of face-to-face fundraising, where people are asked to sign direct debits to charities by people on the street, the practice is considered controversial. According to the Macmillan English Dictionary, "chuggers" are usually young people such as students needing to earn extra cash who are employed by for-profit fundraising companies that have contracts with charities.

Some people positively hate the practice. A British Web site, Bloody Chuggers, is aimed "to get charities to stop using this anti-social form of fund raising." It refers to chuggers as "the high street equivalent of the suicide bomber" and says "they will literally do ANYTHING to get you to stop." The Web site even has a "Hall of Shame" page listing the charities that use the practice. 

Other articles abound reciting the public's irritation with chugging. A satirical article in the Sydney Morning Herald entitled "When compassion fatigue turns to compassion rage" expresses the author's dismay at having to run "the gauntlet" of chuggers as he goes to and from his office. "Only a concerted guerilla campaign will drive this menace off the streets," he says.

There are even attempts to regulate this practice in a new draft Charities Bill in the U.K. and while some controls on face-to-face fundraising seem inevitable, it is felt that there is unlikely to be a dramatic change in the way fundraisers interact with the public.

Chugging has definitely raised the public ire in the U.K.-so much that Greenpeace was forced to abandon the practice. An article in The Society Guardian called "Public irritation forces charities to end 'chugging,'"  reported that the chairman of Greenpeace claimed chugging was having a negative impact on the group's profile and fundraising efforts.

Nevertheless, chugging's proponents say it is one of the most effective ways for charities and nonprofits to raise money. These proponents seem to embrace the face-to-face method of fundraising because it has brought in high returns and because the use of direct debit provides charities with a longer-term regular source of funding. For example, according to an article in Epigram, Bristol University's newspaper, a total of 690,000 people signed up through street canvassers in 2002, providing U.K. charities with their greatest source of income with the exception of legacies left in wills.

In another Society Guardian article, a Public Fundraising Regulatory Association spokeswoman says, "We hope that the existence of clear legislation encourages the public to reject the negative and inaccurate reporting of face-to-face fundraising and embrace the medium as one of the many ways in which to show support to their chosen cause."

As you probably know by now, Raising More Money is all about sustainable funding, so the practice of charity mugging naturally caught our interest. Multiple-year donations from lifelong donors are what we advocate for all nonprofits. Being harassed on the street for transactional fundraising, on the other hand, is not our chosen way to get into relationships with new donors-even if it works. We are curious what the drop-off rate is among people who commit to this direct debit through the practice of charity mugging. Are these really long-term donors or just people who are temporarily made to feel guilty and manipulated out of their money and who stop giving after a short time?

Either way, we think this practice may be an example of cultural differences in fundraising practices. Can you imagine people giving their debit card information to a stranger on the corner in the United States? People here often won't even stop to sign a petition or take a marketing survey, and those are free. With Americans' natural inclination to rarely stop on the street when approached, and their innate distrust for being hit up for money, we are doubtful that chugging will become a serious fundraising tactic here.

Arguments for building endowment

As the tagline in our logo suggests, we are all about nonprofits having sustainable funding for their missions. While there are many different definitions and viewpoints about what constitutes financial sustainability for nonprofits, it is clear to us that an endowment is a primary way to achieve it.

This week while reading The Philanthropy Journal www.philanthropyjournal.org, we came across an article written by one of the site sponsors, Wachovia Trust, entitled "Arguments for building endowment."  Although billed as an "advertorial"--financial institutions are, after all, looking to manage these funds--the piece is an excellent and straightforward exposition on the arguments in favor of having a source of long-term support for an organization.

Thank you Brittney

Sometimes problems seem so big it's hard to know how you can make a difference. Take hunger, for example. Across the nation, hunger has increased for the past five years according to an October report from U.S. Department of Agriculture. According to the USDA, there are now 38.2 million households in this country which are "food insecure."

Meanwhile, donations to food banks are down at least 10%, according to Bob Forney, president of America's Second Harvest. Many food banks say donations are down because so much aid was diverted to the hurricane-devastated Gulf states.

But then there is six-year-old Brittney McVickers of Indianapolis, IN, who is doing something about it. Brittney wrote a letter to her friends and families on why she wanted to help Gleaners Food Bank in Indianapolis. Her letter said on the top, "I want to help feed hungry people." This little girl raised more than $300—a testament to the power of mission-based fundraising from a little girl.

Brittney is considered a superstar in her grade school, said Debbie Wilson, the programs manager at Gleaners.

Now, Brittney is a superstar across the country. On Sunday night (Nov. 20), NBC National News highlighted Brittney's efforts in a report on the decrease in donations to food banks. (Click on the video link in the story to see the report.)

The staff at Gleaners can't say enough great things about this little girl, who they describe as quiet and shy.

"She's a wonderful little girl with a great heart," said Wilson.

* * *

We are happy to report that Gleaners Food Bank in Indianapolis is one of the groups trained and coached by Raising More Money.

On Top Down Under

We traveled recently to the wonderful cities of Melbourne and Sydney, Australia, to meet with our friends at the Fundraising Institute - Australia. Before we left, we were fortunate to have had a chance to download "Giving Australia: Research on Philanthropy in Australia," an initiative of the Prime Minister's Community Business Partnership coordinated in part by the FIA.

The key finding that we think is noteworthy is that Giving Australia "has identified a growing proportion or rate of giving and increasing generosity in giving." The report goes on to say that nonprofit organizations are most likely to be sustained by regular and generous giving built on a long-term relationship with the giver. (Hallelujah!) The extent to which "individuals and businesses are connected with communities seems to be a factor in giving." Those who have used the services provided by the nonprofit or who have benefited most from the community - through, for example, higher education or high incomes - tend to give more and at greater rates.

Since 1997, giving of money by individuals in Australia adjusted for inflation has risen about 58%. This growth in giving is due to various factors, such as the increasing size of the Australian adult population, sustained economic prosperity, and greater and positive publicity for giving, including the use of more sophisticated appeals and fundraising methods by some nonprofits.

We salute the great work of the vibrant Australian nonprofit sector.

Holiday Shopping 2005: 'tis the Season for Giving

The above is the headline on the Deloitte and Touche USA LLP Web site reporting on its 20th Anniversary Holiday Mood Survey.  The survey of 17,447 consumers shows that this year consumers are more focused on philanthropic giving than holiday entertaining. Donor fatigue? Not according to this survey:

"Charitable donations ranked fourth in spending categories, exceeding planned spending for holiday entertaining at home, non-gift clothing and holiday furnishings, which all showed sharp declines from last year. These expected spending levels appear to reflect continued contributions for the victims of Hurricane Katrina and the earthquake in Pakistan, as well as a focus on providing for others rather than buying for oneself and one's family."

The Association of Fundraising Professionals expounded on this survey with some other interesting statistics. On average, consumers expect to donate $287 to charities this year, with $50 being the median. Of the respondents to the Deloitte survey, 36% said they plan to give nothing as charitable contributions this holiday season. Men expect to donate more to charities ($425) than women ($179), and the sixty-five-and-over age group is expected to contribute the most to a charity this year ($549).

Unfortunately, no comparisons were made to previous years' information.

A rich history of giving

In honor of National Philanthropy Day on Nov. 15, we want to salute the spirit of giving, which is touching millions of lives around the world every day.

The generosity of individuals is staggering. Donations to the hurricane devastation on the Gulf Coast is about to become the biggest charitable outpouring in U.S. history, according to recent articles. USA Today reported on Nov. 13 that: "Private donations total nearly $2.7 billion just eleven weeks after Hurricane Katrina struck, according to the Red Cross and Indiana University's Center on Philanthropy, which tracks charitable giving. The total amount given to 9/11 charities was $2.8 billion." Recent disasters have proven that individuals can give more when they emotionally connect to a cause.

Individual giving in the United States has stayed at about 2% of net income for the past forty years. That means that people with a $50,000 annual income generally give about $1,000 a year to their favorite charities. (Imagine what this world would look like if we doubled that amount to 4%!)

To celebrate the great milestones in philanthropy, check out the new Web site, http://www.nationalphilanthropyday.org, which includes key dates in philanthropy dating back to 1630.

Unsexy issue finds appeal at the United Nations

What was it like to have a successful fundraiser at the United Nations for mental health programs around the world? "It was awesome," said Pauline Anderson, the development director for the International Center for Clubhouse Development, an organization that helps run 400 mental health programs in thirty countries.

In this three-minute audio clip, Anderson describes what her group did to connect with donors during a one-hour breakfast in late October. She describes the event as having lots of buzz and energy and says that 61% of the guests in attendance donated that day, a number that surpassed all of the organization's wildest expectations.

Their successful strategies included incorporating emotion in every way possible. Their presenters were not only board members, volunteers, staff, and the people the ICCD serves, but also a family member of a person that was helped by the organization.

They wove in compelling facts and figures like these: One in four families in the United States today will have an incidence of serious mental illness, one in five people in the world will have an episode, and major depression is the leading disability in the Western World.

The organization also used striking photos from a Time magazine photojournalist at the event. They approached mental health in the framework of human rights and the violation of human rights.

"We don't have a sexy issue," said Anderson. But they did find a way to deeply connect with the people in the room.

"We talked about the full human potential of every human being," she said.

Unlikely donors are hidden treasure for nonprofits

Ruth Tupper, 84, of Bossier City, LA, seems an unlikely donor. She never earned more than $20,000 a year in her long career as a bookkeeper. To supplement her small income from Social Security and an annuity, she resells errant golf balls that fall into her yard. She also collects aluminum cans for sale to the local recycling plant.

But Tupper knows how to save. She bought her home for $5,000 forty years ago. With no dependents, she put half of every paycheck and all of a small inheritance into CDs and government bonds.

One of her biggest joys is nature--tending her organic garden and enjoying the birds of the season. While reading National Geographic, she came across a story on the Nature Conservancy. She was so inspired she has donated nearly $300,000.

We stumbled across Tupper's story while reading the Spring 2005 issue of Imagine, a beautiful four-color magazine on philanthropy in Louisiana.

You can read Tupper's story, "New Faces in Philanthropy," by downloading a PDF version of the entire issue; her story can be found on page 9. (NOTE: The PDF file is 42 megabytes, which is quite large. We recommend that you only try to download this if you have a fast Internet connection.)

Tupper's story provides a lesson in so many ways--saving, simple pleasures, and the impact one person can make in the world. But it also speaks volumes on the hidden treasure that is out there for nonprofits that learn to connect with donors who are passionate about the organization's mission. We tell our alumni that they never know who's going to be their next big donor, and Ruth Tupper is a classic case of this. The important thing is to get your story out in front of people who care.

Rebuilding Louisiana

Terry Axelrod describes her inspirational trip to Baton Rouge last month to be the keynote speaker for the annual conference of the Louisiana Association of Nonprofit Organizations.

It was an unusual trip. There was a power outage, so hotel guests spent the evening in the dark. When the lights and electricity did come back on, it was 12:30 a.m., and guests were jolted awake by lights and alarms. But these kinds of inconveniences were nothing new for the conference participants. Axelrod said probably half of the 250 people in attendance had been personally affected by the hurricanes. She spoke with people who had been evacuated from their homes and met many who were affected by both Hurricanes Katrina and Rita.

What Axelrod found was lots of enthusiasm to rebuild and move on. In fact, new nonprofits have already begun to spring up in Louisiana since the hurricanes, including a group called Rebuilding Louisiana.

"I was so inspired," said Axelrod. "I was once again renewed with the strength and resiliency of our sector."

A Contrarian View of the Katrina Tax Relief Provisions

We are always advocating for ways to increase the size of the philanthropy pie. In many cases, one of the best ways to do that is with enlightened tax policy. Not repealing the Estate Tax would be a good place to start. Allowing charitable deductions for non-itemizing taxpayers would be another. Allowing direct giving to charities from IRA accounts without penalty would be yet another great idea.

It may come as a surprise then that we think the Katrina Emergency Tax Relief Act of 2005 ("KETRA") has been over-hyped - at least regarding one of its most touted provisions. That provision, which allows donors to write off up to 100% of their adjusted gross income (AGI) for cash donations made from August 28 until the end of the year, is supposedly meant "to encourage people to give generously to hurricane-relief groups…" according to the October 13, 2005 Chronicle of Philanthropy (http://philanthropy.com) article entitled "Time Short for Using Tax Breaks to Increase Charitable Gifts." The article claims that "the tax break is significant: usually donors cannot write off more than 50% of their adjusted gross income in deductions for charitable gifts."

Everyone seems to have jumped on the bandwagon about what a wonderful provision this is. The Philanthropy News Digest recently ran a story which reported that "fundraisers…are expecting a number of larger donations over the next couple of months, as donors take advantage of (the) new law…"

On October 28, 2005, The New York Times also weighed in on the subject. The article "In Hurricane Tax Package, A Boon for Wealthy Donors" (registration required) says that "the tantalizing prospect (of this provision) has set off a financial scramble among some wealthy donors and charities vying for their dollars." The article even quotes some well-respected planned giving professionals who anticipate that the provision will spur $4-10 billion of additional giving. How they could come up with this prediction is beyond us.

We think they are dreaming. As much as we would love to see this result, let's put this in perspective. While it is true that these provisions could appeal to wealthy older individuals whose incomes may be small relative to their assets, how many people are actually in this position? Our well-respected accounting firm, for example, which has a large number of  wealthy individuals in this demographic, does not have a single individual even close to giving 50% of their AGI to charity, and no one has come forth wanting to do so. The New York Times article itself said the AARP is sending a brochure about these provisions to 25,000 of its biggest donors, a number representing only .007% of its 35 million members.

On average, Americans give approximately 2% of their net income (a figure presumably lower than their AGI) to charity. Wealthy donors on average give 5% of their net income!  Although it is possible that some people will give amounts of income (or assets) up to 100% of their AGI because of the full deductibility of their contribution, we would venture to guess that there are only a small number of people who are capable of taking advantage of this provision and who will actually do so.

This provision, in our opinion, is form over substance. To us, this looks like another case of Congress trying to appear to do something about philanthropy without actually giving away anything at all. It will be interesting to see if anyone ever measures the efficacy of this provision. If they do, we hope our conclusion about it is wrong.