Friday, July 15, 2011

Nonprofits: When to tell donors to go to hell

Nonprofits: Don't get shafted!
Sometimes a gift ain't worth the grief
by Stephen L. Goldstein, email:

Forewarned is forearmed: Fundraisers are in the business of raising money. But you should never put yourself or your nonprofit at risk of being taken in by a donor. Everyone salivates at the prospect of any contribution. There's nothing like the thrill of telling your boss that you've landed a major contribution--or announcing one at a board meeting. So naturally, you never want to say No to a gift or discourage a potential donor--except when you have to.

Here are some tips to follow so you don't wind up with the short end of the stick:

1. Never take a verbal promise for any gift, especially if an amount is pledged over time. You must have legally binding documents to support your claims to a funder's contribution. If an amount is to be paid after a donor's death, you will be in major trouble if you haven't dotted ever i and crossed every t in your favor.

2. Never publicize a gift until you have received it in full or until you have an unshakable agreement for it's being paid--and I mean UNSHAKABLE. Resist the temptation to talk about or formally publicize a gift until it has been signed, sealed, and delivered. It is only natural for you to want to shout about receiving a gift--particularly a major one. But don't make the potentially fatal mistake of rushing into publicity.

3. Never accept a gift that costs your nonprofit more than its worth. For example, the restrictions that a donor may place on a contribution or the liabilities that may come with it may make it necessary for you to incur expenses that you would not have had otherwise. A gift of a collection of ancient coins to a historical museum may be interesting but impractial to receive because of prohibitive insurance costs. Sometimes, you must say No.

4. When a donation clearly benefits the donor more than your nonprofit, sometimes a simple NO isn't the answer. If someone tries to pressure you, someone higher up in your organization, or a board member, sometimes, you've got to tell them to go to hell. People who would try to use a nonprofit for their financial advantage don't deserve better.

Thursday, July 14, 2011

Fundraising is hell! Donors can be DEVILS!

Put "donors from hell" through hell
by Stephen L. Goldstein

It was December, the time of year when “donors from hell” look around for every piece of junk they can find to dump on nonprofits and turn into tax deductions solely for their benefit. They are officially called gifts-in-kind and may really be anything—even good stuff from truly generous and caring people, a far cry from junk. But too often, they are the philanthropic equivalent of road-kill and a rip-off on the IRS.

The phone call, one of several in an unusually busy year for end-of-year garbage donations, came from a long-time friend and supporter of the university for which I was working. The prominent entrepreneur told me that his company could no longer use one of its computers and he wanted to donate it to us.

I immediately knew what he was up to, of course, and I wasn’t in the mood to indulge him or anybody else. We needed all the help we could get and I was offended that he was playing us for suckers.

So, I decided to jerk him around. I asked him if we were talking about giving us a relatively new, usable piece of equipment. He replied euphemistically that it was “vintage.” “Oh, well then, does it have historic value?” I continued, tightening the noose around his tight-wad neck. “Not really,” he answered, sheepishly.

I then told him that the only way we could accept an old (forget vintage) computer was if it had historic value—one of the first PCs, for example. But even then, I added, we didn’t have a technology museum and, from the sound of it, even if we did, it didn’t have exhibit value.

Then, like a bullfighter leveling a mortal blow, I said, “Old equipment is of no value to an educational institution. We need state-of-the-art computers on which to teach students.” But then I told him that if he were willing to write a check so that we could buy at least one new computer for our computer lab, I would be happy to take his old one. As I expected, he said that he wasn’t interested.

I handled this dumper ad hoc. But nonprofit boards need to have clear policies on the acceptance of gifts, especially gifts-in-kind. They need to make abundantly clear that they are not in the garbage business—unless they are—and that the only gifts they will accept are those that are legitimate. Unless they do, they are party to a fraud—no less culpable than self-serving donors.
Labels: board policies, donor fraud, gifts-in-kind