In mid-October of this year, Israel’s Registrar of Charities issued “10 Golden Rules for Donors” (Hebrew).  While the document is meant as a guideline for  individuals, it holds immense value for the Israel’s charities, as well.

Here’s why:

Governments equate the tax-deductible rebate on donations to a donation by the government (via the tax authority) to the nonprofit sector as a whole.  In essence, the government views itself as a donor.  Israeli Charities, or amutot, can be sure that Israel’s Rasham Ha’amutot (Registrar of Charities), as an extension of the government, will be heeding its own advice when it vets charities for compliance.

Below are The 10 Golden Rules (in English) and its implications for nonprofits operating in Israel.  

THE 10 GOLDEN RULES FOR DONORS

1) Check the status of the amutah

“Visit the Rasham‘s site (Hebrew) to see if the charity actually exists and it’s current status (current, erased, or in the process of involvement).”

Charities:

The above site lists the charity’s name, status, registered address, and status of Nihul Takin for current and upcoming year. The site also allows people to search by name.

So…

Check the page from time to time to ensure that what appears is accurate; what you see, the donors see.  This is otherwise known as Reputation Management 101.  (More about this in rule #3.)

Additionally, it is advisable to test-search your organization by inputting its partial name or nickname.  This is a great way to observe the competition or help choose a unique name when registering your charity.

2) Confirm that the charity has a Nihul Takin [Certificate of Proper Management]

“The Nihul Takin is a certification issued by the Rasham every year to charities that fulfill the reporting requirements as dictated by the Registrar. Please note that in years when a charity was audited by the Registrar, the Nihul Takin is also a good judge that the organization’s activities are sound. As this is not the case in most years, donors are recommended to carry out their own investigations.”

Charities:

Withholding an organization’s Nihul Takin status is the Registrar’s most powerful and effective tool in its arsenal.   Organizations seeking a government grant or contract must have this status.  Additionally, many foreign funders will also only give to nonprofits that have a Nihul Takin.  (See previous post, Defining an Amutah.)

In simpler terms, having a Nihul Takin lets donors know that an objective third party — in this case  the Registrar and/or its sub-contractors — has reviewed a nonprofit’s activities.

Furthermore, the above website lists the date that the Nihul Takin was granted, meaning that viewers will know if an organization submitted their forms on time or were delinquent.

It is important to note that only charities that have two years of financial reports are eligible for the Nihul Takin.  The above site, however, will not list “not eligible” rather “none.”  Young organizations should proactively warn their constituents so current and potential donors aren’t left wondering why “their” organization is lacking this important certificate.

3) Check the charity on the site Guidestar Israel

“Guidestar Israel contains information from the Rasham [official] and other sources [less official]. The site contains financial and narrative reports, certifications, summaries of activities, and other relevant information on a charity.”

Charities

Moving onto Reputation Management 201.

Has your organization verified that the material listed on Guidestar Israel is accurate and up-to-date?  Organizations can obtain a login password to update and supplement the material that appears on the Guidestar site, including adding text in English.

It is also possible to upload a link to a fundraising site so that impressed individuals can donate directly from Guidestar.  Has your organization availed itself of this function?

Has your organization uploaded its logo for brand recognition?

4) Ask the amutah for details about the purpose and destination of your donation

“Do not hesitate to ask the receiving charity for details or for documentation regarding the intended purpose of the donation. Some of this information can be found in the yearly Narritive Report that the charity submits to the Registrar or in the Board protocols [meeting minutes] pertaining to the charity’s goals for that year.”

Charity:

Does your organization make it easy for donors to navigate its website?  Perhaps, creating a unique “landing” page for the specific drive; don’t make it hard for your donors to find the answers to the questions you know they are asking.

In general, what was considered good practice a few years ago is now the norm. Organizations should expect that would-be funders will conduct their own investigations and act accordingly.

5) When receiving a request for a donation by telephone, clarify before giving

“In the case of receiving a request by telephone, you can certainly ask the caller to either wait or to call back later so that you can properly check the request via the organization’s website or other  means.”

Charities:

Continuing on the previous point: Has your organization equipped its telephone staff with the proper background information to make the ask seem legitimate and answer basic questions?

6) Avoid donating to temporary kupot tzedekah [donation boxes or pushkas]

“It is best to avoid putting donations in these boxes, unless it is in a permanent location or well kept and connected to a organization you know well. Donation boxes are likely targets for theft or fraud. Regardless of familiarity with a particular organization or donation-box locale, it is best never to give large gifts via these pushkas.”

Charities:

The Registrar is essentially telling donors that those nonprofits that have temporary collection plates are not as careful with their funds — or else they wouldn’t collect money in ways susceptible to theft or fraud!

After all, these boxes are not monitored 24/7.  Certainly in today’s day and age, organizations can think of more efficient and safer ways to collect funds.

7) Request a receipt from the recipient for your donation

“A receipt is an essential tool for internal and external monitoring of the integrity of the organization. By law, a charity must offer a receipt for any donation. The receipt should minimally include the name of the amutah, the amutah’s registration number, and amount of the donation.”

Charities:

This is really ABCs of Israel charity management. If your organization isn’t providing receipts for every type of donation, I strongly suggest the manageent of the charity read the Nihul Takin, Israel’s guide for proper management of nonprofits. [Click for Hebrew & English versions of the Nihul Takin.]

8) Plan your donations

“If you donate regularly, once a year, at least, you should plan out your donations. This planning should include the total amount you plan on donation for the upcoming year, including the purposes of said donations so you can come to an informed decision on where you might want to give. If you have personal information about the activities of a favorite charity, or you were and have been pleasantly impressed by this nonprofit’s activities, there is preference for a contribution to this organization after the aforementioned tests have been executed.”

Charities:

Listen up and listen well: Nonprofits that help their donors create such a plan — even one that includes donations to other charities — are providing a much-needed service and proving added value.  Such an organization is engaging and connecting to its donors in a much more intrinsic and personal manner than by simply receiving a check.  This type organization will be remembered by the donor for a long time to come.

On a more basic level, this is why a nonprofit organization must invest in its branding. Does your charity clearly state its goal and how it plans to accomplish said goals? Do you make it easy for donors to understand how you fit into the social-service stratosphere?  Has your organization focused on causation to prove it is worthiness?

9) When necessary, view the charity’s file at the Registrar or request a copy of it on CD

“When necessary you can request to view an organization’s file at the office of the Registrar or to request a CD copy to be mailed to you, for a fee.”

Charities:

There is always a paper-trail.  Almost everything filed is available.  The exceptions are  documents or sections-of-documents that relate to board members or staff on a personal level.  Nuff said.

10) Report an organization’s improper or illegal activity

“If you notice something that seems wrong or illegal about the organization, please contact the offices of the Registrar of Charities by email at: RashamA@justice.gov.il. It is important to note that public inquiries are an integral ingredient used by the Rasham Ha’amutot to monitor the conduct of nonprofits and, thus, to ensure that donations are used for their intended purposes.”

Charities:

Scoff at constituents at your own risk.  Moreover, recent scandals have shown that wrongdoing was first noticed by Friends Of charities, those tasked with financially supporting the organization!

The above point includes staff, as well.  A recent lecture quoted an international report that the primary source of fraud detection in charities are internal tips.

To quote popular culture: you can run but you can’t hide.

I join Israel’s Registrar of Charities in wishing that a smarter donor and a more transparent sector will hopefully lead to greater participation and support of Israel’s charities.

What do you think: Good Rules to Live By or Too Oppressive?

Tizku Lemitzvot,

Shuey

Disclaimer:  This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Photo: Courtesy of Timo Studios (Flickr)

Links to the articles I’ve reviewed and posted to Twitter between June 6 – June 19, 2011.  This week’s topics include:  U.S. Regulations  •  Jewish & Israeli Sector  •  Governance & Strategy  •  Fundraising & Marketing  •  Donors’ Strategy  •  Social Media & Internet

As last Sunday saw me preparing like mad for my presentation at the Kishor Conference,  this week is a double Weekly Roundup.

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. REGULATIONS

Study Shows How Changes to the Tax Code Could Affect Giving http://ow.ly/1tyKQl via eJPhil // only time will tell how this affects policy

PatrickSternal: Cat Lady Beats IRS http://t.co/dpJ337n // shows importance of receipts & gift acknowledgments

JEWISH & ISRAELI SECTOR

Excellent analysis on the Jewish Innovation Sector, by Bobgoldfarb http://ow.ly/5iCHr on eJPhil

GOVERNANCE & STRATEGY

Excellent points about board service I’m general (legal stuff only for USA) from Nonprofitlawyer http://ow.ly/5aNsY

Food for thought >> Tactphil: An Interview Approach to Charity Rating http://ow.ly/1tCu4G more on Charting Impact

Stonewalling in a crisis is risky business for a nonprofit http://ow.ly/1tKbAJ

This should probably affect how one should structure a nonprofit >> KatyaN4G: Seth’s Blog: Organization vs Movement vs Philosophy http://ow.ly/1tUZnV

CauseWire: How Charities Can Recruit & Keep Volunteers http://ow.ly/1tV09Y

FUNDRAISING & MARKETING

Here’s why proper donor research is so important in eJPhil http://ow.ly/1txaOL

5 reasons why this summer (and anytime for that matter) is a great time to start a Giving Circle http://ow.ly/5aSdz

What your wealthiest donors aren’t telling you: 9 Secrets to High Net Worth Donors, by GailPerrync http://ow.ly/5eceP

By recognizing a donor’s contribution we are also inviting others to participate http://ow.ly/1tIndu on eJPhil

NpTechblogs: 4 Global-Oriented Tips on Using Social Media http://ow.ly/1tLNAG via ReedStockman

FundraisingNews: What’s missing from your elevator pitch? http://ow.ly/1tV0wD

DONORS’ STRATEGY

Food for thought: Why we should expect good giving to be hard http://ow.ly/5iGsx via Mayanorton // but should it be?

Does our word usage make those that receive our charity inferior? http://ow.ly/1tJJpk on eJPhil

SOCIAL MEDIA & INTERNET

10 Common Mistakes Made by Nonprofits on Social Media, by Nonprofitorgs http://ow.ly/5dukp

Gr8 points by Askdebra why nonprofit organizations should get more personal in social media http://ow.ly/1tJNh6

NpQuarterly: Charity walks are expensive enough that some wonder if it’s worth it http://ow.ly/5gtWV // great discussion in the comments!

Reuw: 7 stupid mistakes teachers make with technology http://ow.ly/5iDJN // applicable to offices & homes the world over!

Enjoying watching Slideshare presentation by DaveKerpen: How to Make Your Org More “Likeable” http://ow.ly/5iGRx

Don’t get your org’s Twitter account terminated! RT Johnhaydon: RT Mintblogger A Handy Guide To Twitter Automation http://ow.ly/1ddFIs

This 1 is pure fun (& slightly educational) >> 3 Social Media Marketing Lessons from Comedians http://ow.ly/5lhDj via CharlieKalech

There is debate raging in the United States about tax incentives and the Nonprofit Sector. The U.S. government, by allowing donations to be tax-deductible, is surrendering money “owed” to it for the sake of encouraging charity. Many believe that the two – the rate of deductions and the amount donated to charity – are directly linked. Any decrease in the rate of deductions will lead to a decrease in the aggregate amount of charity donated to nonprofit organizations.

A recent study in Israel advocates the same theory, claiming that Israel’s poor standing in charitable-giving is directly related to the Israeli Government’s comparatively lower tax-deductible incentives.

However, by placing the blame squarely on the Israeli Government – instead of sharing the burden with the nonprofit organizations operating in Israel – these researchers are causing the Israeli Nonprofit Sector to leave a huge well of potential-donors untapped. The charities in Israel are failing to engage would-be donors, and it is this lost opportunity that should really be addressed.

Study: Israelis Don’t Donate

A recent article in Haaretz quotes two studies that highlight Israelis’ lack of charitable nature and provides some hard-to-ignore numbers:

Support for nonprofits in Israel — from outside and inside Israel — stands at 1.34% of GDP, second only to the United States (1.85% of GDP).  If donations from abroad are not counted, the rate plunges to 0.8% of GDP, less than in most of the West.

In 2006, revenues of nonprofit organizations [in Israel] totaled NIS 6.6 billion, of which only NIS 590 million originated with Israelis, while NIS 3.5 billion came from abroad. The rest came from the income the organizations generated themselves and from the government.

The 6,377 foundations in Israel dish out a combined $150 million a year.  Compared to the 1500 foreign philanthropic funds operating in Israel, which donate a combined $1.5 billion a year.

The Johns Hopkins study found that only 6% of Israelis volunteer, slightly more than in emerging markets but well below the roughly 15% rate in the West.

The government provides 51% of the funding to nonprofits. That rate is far above the Western norm: the average proportion of government support among the other 22 nations surveyed stands at 37%.

The Israeli research team, all big names with “facts on their fingertips” – Dr. Nissan Limor, Prof. Benny Gidron, Raanan Dinur, Zvi Ziv, Ahuva Yanay, and representatives of Israel’s Tax Authority – noted that Israel’s tax-deductible policy does not encourage charity.

One way to measure this is the lost tax-revenue from claimed donations to nonprofit organizations; this number stood at NIS 170 million in 2009, which was 0.08% of total tax-revenue of that year. In the United States, the equivalent cost stood at 2% and in Canada at 0.4%. In other words, percentage-wise, less tax-deductible donations are made in Israel than in other countries.

Are We Selling Israeli Donors Short?

The article continues:

Why don’t Israelis donate more? Because the government doesn’t encourage it, says the team. “It isn’t a question of culture, but of policy,” says Limor. “Philanthropy needs encouragement. The Israeli government never did encourage it. Incentives for donors are quite limited.”

In other words, Dr. Limor points the finger solely at the government, not at the Israeli people and not at the nonprofits operating in Israel.  If ind it hard to believe that there is nothing more that can be done by the charities to encourage more donations and by the donors to get more involved.  Thus, this explanation, sells the Israeli people short.  The grim numbers shown above cannot be easily dismissed by blaming it all away on the Israeli government.

Israelis Want to Give, They Just Don’t Know It

I attended an event organized by Shiur Acher [A Different Lesson] on April 25th. This Israeli charity encourages companies to donate manpower to teach classes in schools located in underprivileged neighborhoods.

At their event, Shiur Acher unveiled the findings of a survey sent out to the 1,600 past-and-present Israelis who have volunteered their time to the organization; 275 volunteers, or 17%, responded. (The survey had a dizzying, 40 questions. Additional answers can be found after the post marked *)

Highlights:

59% Reported that they do not volunteer outside of Shiur Acher.

67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved.

89% Recommended or plan to recommend Shiur Acher to others

Conclusion

With only 270 people answering the Shiur Acher survey, it can hardly be seen as decisive proof. However, the evidence shows that the Israeli non-giving culture can be changed when donors are properly engaged.

The study showed that volunteering for the organization was, for a majority of the volunteers, their first encounter with charity. Additionally, a majority noted that volunteering had “awakened in them a desire to become more socially active.” In other words, those that have been successfully engaged, those that had a chance to volunteer at a place that made them excited, actually want to do more charitable acts and want to encourage their friends to do the same.

The Nonprofit Sector in Israel needs to look within itself how to inspire the population to become more socially involved. Yes, the government can improve its tax-deductible incentives. But this will only increase the amounts given to charity. The desire to initially give lies within the donors themselves. So too, the responsibility to stoke that desire, to transfer that yearning into action, lies within the organizations themselves. Let us not be complacent. Donor relations is not a job title, it is a challenge. It is a call to arms.

Tizku Lemitzvot,

Shuey

* Additional highlights from the Survey:

How many years have you been volunteering with Shiur Acher?

• 44% 1 yr
• 44% 2-3 yrs
• 12% 4 or more

Would you recommend volunteering at Shiur Acher to your colleagues?

• 89% Have recommended or plan to recommend volunteering with Shiur Acher to their peers
• 74% Of the above 89% would recommend volunteering with Shiur Acher to their colleagues

What motivated you to volunteer? (Can choose more than one reason)

• 68% The desire to help educate children and help a community in need
• 22% Breakup routine, pleasure, curiosity, interest, satisfaction
• 15% Volunteering is an integral part of working in my company
• 14% Recommendation from a colleague
• 14% Request from the coordinator working for the charity
• 10% A chance to try out teaching
• 7% Existed an expectation in the company that I would volunteer
• 3% Other reasons

Do you volunteer outside of Shiur Acher?

• 59% Reported that they do not volunteer outside of Shiur Acher
• 41% Reported that they do volunteer. Of which 47% of those, belong to neighborhood watch, PTA, youth movement or give charity.

Other Survey Highlights:

• 67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved
• 77% replied that their volunteer work was very, very important to them.
• 50% Believe that volunteering is important to their company
• 47% Appreciate/value their employer more because of their participation in the Shiur Acher Project
• 57% Reported that participation in the project brought them closer to their coworkers

A list of great articles from around the web that I posted to Twitter from May 16 – May 22, 2010.  This week’s topics include: Strategy & Governance; US Tax Tidbits; Social Media & Fundraising; Economy & Finance; and Potpourri.

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

<br>

Strategy & Governance

Guidestar CEO stresses that good metrics help nonprofits attract (strategic) deep-pocket donors http://ow.ly/1LFba #philanthropy

<br>

US Tax Tidbits

RT @NAFund & @aznonprofits: 6 Important Facts about Tax-Exempt Organizations http://bit.ly/9n8Qcz // The ABCs of donating money to US NPOs

New online tax form for small US charities: Good. IRS deadline-extension of new form: Bad. http://ow.ly/1ODte via @philanthropy

<br>

Social Media & Fundraising

6 Ways Board Members can fundraise w/out having them solicit peers, by @GailPerrync http://ow.ly/1LDdY via @npmaven @PamelaGrow

Engaging consumers about their social/environmental concerns? 75% believe you should (by @andrealearned) http://ow.ly/1NQkP via @elainecohen

Real-Life stories from nonprofits on incorporating social media into marketing strategy http://ow.ly/1OAyg via @nptechblogs @reedstockman

The mantra for all who work with social media >> The Cornerstone of Social Media Strategy is Clarity, by @askdebra http://ow.ly/1OD3d

Intro in “What the Hastag,” a wiki hash directory & metric analyzer, by @jewishagency http://bit.ly/bskHmx via @eJPhil

<br>

Economy & Finance

Rethinking the metric of a good economy, maybe the G.D.P. isn’t the best judge. On @nytimes http://ow.ly/1LFvj

Haaretz: European crisis could cause #Israel exports to fall by $1 billion http://ow.ly/1LWi7

Haaretz: Why gold is spiking & why it matters to the Bank of #Israel http://ow.ly/1LWoM // Good summary of currency fluctuations & inflation

<br>

Potpourri

ATM-style vending machine that dispenses GOLD! http://ow.ly/1LSTh Not to be confused with ATM-style vending machine that dispenses French Fries http://ow.ly/1LSXX

Who says Britons don’t have a sense of humor? >> RT @johnhaydon: Man loses licence after drunk driving in toy Barbie car http://ow.ly/1NQxP

Loans can be a vital, strategic tool for a charity. At the most basic level, donations do not always arrive before the expenses they are needed to cover. At such times, credit – in the form of a bridge loan, for example – might be the perfect tool to allow a nonprofit to survive until the particular donation or grant is received.

The simplest way to lend money to a charity is for a donor to just give the organization the needed funds – either through cash, check, or wire transfer – with the (often unwritten) understanding that the funds will be returned at an agreed upon time. As no financial institution is involved, this type of loan is given in a relatively shorter amount of time, less complicated (no/less forms), and cheaper (no/lower interest rate and associated fees).

Nevertheless, an organization or donor might not want to procure a loan this way but rather through a registered financial institution; such as a bank, credit card company, or insurance company.

When suggesting this to a director of a nonprofit, he couldn’t understand why both parties wouldn’t choose to execute the loan in the least-bureaucratic and most inexpensive option and not through a registered financial institution.

To answer this question succinctly, the nonprofit sector has gotten increasingly complex in the last ten years or so. Methods that are the quickest and/or cheapest do not always satisfy the requirements of today’s private individuals, public institutions, and governmental bodies.

Below are some additional considerations that might convince the donor and/or the nonprofit organizations to forgo the easy way of a non-registered loan in favor of recorded and issued loans at a financial institution.

From the Donor’s Perspective

1. Lack of a Clear Agreement – Often these casual loans are unwritten agreements. Even with those that are, amounts and dates tend to be blurred, confused, or simply ignored.
2. Taking Money from a Charity — No one likes to take money back from a charity. It goes against our DNA – the donors are supposed to be giving the money, not getting the money. If the organization doesn’t return the money as agreed (even if not intentional), it is just darn-right awkward for a donor to chase his favorite charity to get money back from them.
3. He Said, She Said – Because of the unofficial nature of these loans, they can, if not handled properly, turn into a gigantic mess (pardon my French). Even with written contracts it can sometimes degenerate into a game of “He said, She Said” that pits both parties against one another.
4. Temporary Becomes Permanent – Fear that the temporary gift might decide to stay a little bit longer – once a loan, now a donation. There is a feeling that once money is in the hands of a charity, it will very likely remain there forever (and let’s be honest, its not that crazy of a leap).

From the Charity’s Perspective

1. Transparency – Need I say it: transparency is essential for nonprofits. Everyone at every level of the nonprofit equation is checking to make sure that a charity has it. The “unofficial” loan rarely is hard to find in a charity’s books, if it appears at all. It’s a general rule, if the loan isn’t apparent or easy to find, the organization is lacking transparency.
2. If it Feels Like a Duck and Quacks like a Duck – it’s a Duck – Experience has shown me that organizations have a harder time treating the loan as temporary (either because of forgetfulness or premeditated ignoring) when the money is simply given outright, sitting in the organization’s account. Simply put, if it looks, feels, and smells like a donation then it will be treated like a donation – which, of course, it isn’t.

Conclusion

While the blog was inspired by a conversation I had with a nonprofit CEO, the above points are the product of years of personal observations and analysis, as well as conversations with other nonprofit-support professionals.

I would like to leave on this note: It is not WHAT the nonprofit does that arouses suspicion, mistrust, or confusion but rather HOW the charity does it.

Take a loan, borrow money, apply for a line of credit – whatever you do, just do it in a way that will inspire trust and responsibility. Doing this will satisfy all parties and encourage future financial support.

Tizku Lemitzvot,

Shuey

Things to add? Errors to correct? I look forward to hearing both (although, to be honest, I prefer the former rather than the latter).

This post is intended for informational purposes only. Please read my full disclaimer.

A list of the essential articles I posted to Twitter from February 7 – 14, 2010.  This week’s topics include:  Nonprofit Strategy & Governance; Social Media & Fundraising; Jewish Nonprofit News & Insights; and Potpourri.

Tizku Lemitzvot, [May you merit to continue doing good deeds]

Shuey

Nonprofit Strategy & Governance

->@eJPhil: Do nonprofits spend too much time catering to NextGen and not CurrentGen? http://ow.ly/17itZ

Though exempt from 990, Religious NPOs should do independant audits for Transparancy & Good Governance http://ow.ly/14Wgf

Social Media & Fundraising

->@eJPhil: Importance of fundraising strategy vis-a-vis hiring Fundraising Professional or Consultant http://ow.ly/178S8

RT @eJPhil: New Post: Facebook’s Strong Senior Growth http://is.gd/84wpm

RT @lblumenthal: Good examples and insights // 10 Nonprofit Text Alert Campaignshttp://tinyurl.com/ylcjckk via @diosacomm@dsgold

RT @nonprofitorgs: 10 Tips for Managing Social Media Burnout http://nonprofitorgs.wordpress.com/2009/10/22/10-tips-for-managing-social-media-burnout/ // A truly holistic approach

Insightful Talks (Videos) on Social Media from recent TED conferences. http://ow.ly/15FvS via @PresenTense

Wow. Comprehensive. // RT @lblumenthal: 30 Top Objections to Social Media and How to Respond. http://ow.ly/15FGx via @jbhester@NateatFFWD

Jewish Nonprofit News & Insights

->@NYJewishWeek: Will Mobile Giving Take Off In The Jewish World? by @TamarSnyder http://ow.ly/14XUq

Potpourri

“175 orgs are recognized as tax-exempt by the IRS ever day” & other IRS/NPO facts worth knowing http://ow.ly/14YHx

NY Times: U.S. jobless rate falls to 9.7%, giving hope that worst is over. http://ow.ly/14Waz

Guidestar: The New Economic Normal is here to stay (& how nonprofits should react).http://ow.ly/16gWJ

RT @CharityNav: Residents that left NJ cost the state $70 billion in wealth & $2 billion in potential charitable giving http://ow.ly/152K9

Top 50 Donors of 2009: “A Slow Year for Big Gifts Spurs Creativity by Wealthy Donors” on@Philanthropy http://ow.ly/1797z via@askdebra

To the best of my knowledge, Judaism, Christianity and even plain-old, agnostic ethics advocates giving someone a second chance.  But is this true with nonprofit organizations? Does a charity that has made mistakes and lost our trust deserve our donations in the future?

This question was inspired by an article in CNN Money by Allan Chernoff entitled, “Is the American Cross Worthy of our Donations?”

Haiti’s catastrophe has triggered an outpouring of support for the American Red Cross, which has raised more than $203 million for its Haiti Relief and Development fund in just three weeks, far more than any other charitable organization.

But, is the American Red Cross worthy of such generosity given its mixed record of performance during the past decade?

In short, the article explains that recent years have seen local American Red Cross chapters victims of embezzlement, the organization attempt to defer donations earmarked for a Word Trade Center Relief Fund for other purposes, and the charity blamed for poor coordination of relief efforts after Hurricane Katrina.

With the millions rolling into The American Red Cross, I’m forced to wonder exactly at what stage a charity washes itself clean of previous wrong doing? When is a rehabilitated nonprofit worthy of our donations?

My answer: It depends (so sue me for being non-committal).  The following are my thoughts on the subject:

Trust

“American philanthropy is built on trust,” said Kathleen McCarthy, director of the City University of New York Center on Philanthropy (the quote was taken from the above Chernoff article).  Charity is like every other relationship on the planet, its all about the trust.  A nonprofit that ruins this trust might just have burnt their bridge – permanently and with no questions asked.  However…

Change

Has the organization undergone real change?  Beauty is skin deep, but mismanagement can seep into the core.  It is a definite red flag if the charity still has the same practices and oversight in place that led to previous disasters.  However, if a nonprofit has undergone change – including but not limited to changing directors, board of directors, procedures, transparency – than maybe a re-examining of the embargo is warranted.

Case in Point: The Red Cross hired a new CEO, Gail McGovern, in 2008.  She promises that “we are [The Red Cross] excellent stewards of every single dollar that we raise” and that 91% of a donation goes to supporting programs with only 9% covering various  overhead.  This last fact is confirmed by Charity Navigator (again, check the above article).

Connections/Experience

Charities (specifically those that support causes abroad) spend much time and effort developing contacts and perfecting methods to deliver their support in the most efficient way possible.  It is quite possible that a new or different charity might lack the experience and contacts to properly render a particular charitable service.  Lack of options could, conceivably, thrust a donor back into the arms of an institution he or she once abandoned.

Case in Point: I have opened bank accounts for wronged donors who were convinced they could do it better than the charity that they just stopped supporting.  It has killed me seeing these same donors squander resources as they fumble around trying to build new infrastructure and reinvent the wheel.  Many in this last category have eventually closed shop realizing their mistake to go at it on their own (A better choice might be to try to change the organization from within).

Bureaucracy

It could be that despite the change in management or sworn promises, an institution’s murky organizational structure and red tape cannot guarantee a true change. If so, the best option is to run, and run fast.

Case in Point: A colleague of mine was hired by a large institution as their fundraiser, a new position created at the behest of one of the board members.  The CEO/Founder refused to change his M.O. and did not allow this new employee access to the information that was necessary to do his job.   Needless to say, after some time on the job, the person quit.  And this is one example of many, which I know of first hand.

To Err is Human, To Forgive is Divine

Maybe everyone does deserve of second chance, if for no other reason than because each one of us has made mistakes in the past; mistakes that we have probably taken to heart and earnestly tried to correct.

When feeling Christian enough to take this leap, I would only suggest that a donor require the organization in question to earn back his or her trust, maybe starting with a smaller donation and increasing the amount as the charity proves itself worthy.

So where does that leave us?

1. I’m not a believer that one mistake should condemn a nonprofit forever. If the need arises and the opportunity presents itself, a donor should consider giving again under some of the guidelines mentioned above.
2. I’m also a firm believer that witnessing a problem, you can either sit on the sidelines or become part of the solution. If a donor honestly feels that this organization is the right man for the job, then it might be incumbent upon him or her to try to change the direction/policy/behavior of a particular charity be becoming involved. Yes, sometimes doing good or doing the right thing actually requires more effort than writing a check (scary, but true).
3. Charities need to realize that giving charity, for many people, is a way to make donors feel better about themselves. This feeling can be easily be gotten from simply donating to another charity. A nonprofit that makes it harder for someone to donate (from either a moral, strategic or technical point of view) can quickly lose out – and they shouldn’t be surprised.
4. Charities that have undergone true change should have the guts to let people know. Being honest and letting potential donors know that the organization is under new management is one of the best hopes of luring back previous supports.

So what do you think?

Tizku Lemitzvot, [May you continue to merit doing good deeds]

Shuey

A list of the essential articles that I posted to Twitter from January 17, 2010 – January 23, 2010.  This week’s categories: Crisis in Haiti; Nonprofit Governance & Strategy; Internet, Social Media & Fundraising; Israel & Jewish Nonprofits; and Israel Economy & Finance.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

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Crisis in Haiti

RT @fundermentalist: New post: Where to give for Haitian relief http://twurl.nl/kak4nz

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Nonprofit Governance & Strategy

New blog post: “Dear Mr. Foundation, Please Reject My Application.” http://ow.ly/YUFM

->@eJPhil: NPO investment committees want more direction & accountability from investment consultants. http://ow.ly/Xrwt

How an org can conduct a Self-Evaluation on a shoestring budget (Good tools, tip sheet & slides). http://ow.ly/XVoN via @LJacobwith

College president receives %-based bonus of money he raised, sparking controversy http://ow.ly/Z9mF via @Philanthropy // Good incentives?

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Internet, Social Media & Fundraising

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Donations to Israel Foreign Min. for Haiti aid NOT tax-exept. Expert: Why is gov competing with NPOs? http://ow.ly/YUul

Fighting the Handout Culture: What solutions available when 50% of eligibles for free food don’t take? http://ow.ly/ZY9U #Israel

RT @religion_state: -> @eJPhil: Is Start Up Nation Also the Big Lesson for Jewish Nonprofit Sector? by @GaryWexler http://ow.ly/Yu1P

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RT @Israel_News: Bank of Israel will raise interest rate to 3.25% by end-year (current rate is 1.25%). http://ow.ly/XrkL

The best test to judge Israel’s economic health: The Beer Index (it slipped into the negative).http://ow.ly/XAqz

RT @Israel_News: Globes: Shekel-dollar exchange rate at 13-month low. Dollar now trading at 3.689. http://ow.ly/Y7zK

Israel Gov Ministries now on Twitter. Answers back almost immediately! http://ow.ly/Yvrt The list: http://ow.ly/YvHq

Israel is poorest of OECD countries (if it joins). 9 recommendations from OECD, incl. cutting child allowances. http://ow.ly/YUz8

A list of my favorite articles that I posted to Twitter from December 20 – December 26, 2009.  Organized by category: Nonprofit Governance & Strategy; Internet, Social Media, Fundraising & Donor Relations; Israel/Jewish Nonprofit Community; and Potpourri.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

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Nonprofit Governance & Strategy

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Internet, Social Media, Fundraising & Donor Relations

RT @davidcorman: Five Best Collaboration Tools http://ow.ly/O9C8 // @CharlieKalech the article also contains links on how to use Google Wave

->@kanter: “What lessons will Pepsi learn about crowdsourcing for social good from the Chase Bank contest failure?” http://ow.ly/ObOy

Open letter to Chase about the two mistakes of their Online Giving Challenge & how to fix them.http://ow.ly/Oll0 via @askdebra @p2173

RT @nptechblogs: ->@care2frogloop: Best Nonprofit Campaigns of 2009 http://ow.ly/P5uX

2 sides of NPO online contests: “The Dark Side of Online Contests” http://ow.ly/P4Bb & “Competition is Good” http://ow.ly/P4A5 via@kanter

Google Case Study: On websites, should the default donation amount be left blank? Food for thought. http://ow.ly/P4I5 via @nonprofitadvice

RT @jewishbloggers: ->@jgooderscom Is Your Website a Good Fundraiser? http://ow.ly/OZxPhttp://ow.ly/OZyM // Some good fundamentals

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Israel/Jewish Nonprofit Community

RT @Israel_News: Globes: OECD calls to weaken #Israel Finance Ministry, suggests an independent council like in Sweden. http://ow.ly/ObBr

RT @davidcorman: Meetup & networking groups in Jerusalem: JBNF http://bit.ly/59TLSc ESEI http://bit.ly/5Qqlhj JWP http://bit.ly/5wBtJR

New Jewish Social Venture Incubator. Could this be the best one yet? // RT @ujafedny: The New Jewish Peoplehood Hub http://ow.ly/P4DW

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Potpourri

Reuters: As U.S. housing market recovers, a few reasons why we should wait to celebrate. http://ow.ly/Oomn

I experienced this incident first-hand about a month ago. I think it illustrates how even small gestures can have large (and sometimes negative) consequences.

I was interested in registering for two events that were being run by a nonprofit organization.  I checked the website but was only able to find details about one of the events.  I emailed the organization (at the email address provided) to register for the  events and to check if the second event was even taking place:

…I am also interested in the event taking place on [such and such date] but do not see it on the website.  Is that still happening? What time will that be?

The response I got was:

…The second event is still happening and can be found on the Events Calendar.

Needless to say, this answer was nowhere close to being helpful; the employee neither provided me with an exact time nor did she provide a link.  Instead, the staff person took about 0.3 seconds from his day to advise me to check the Events Calendar — which I had already done at the beginning, but to no avail.

Frustrated and flabbergasted by the seemingly lack of caring, I rewrote my email three times until I was able to send the employee something free of sarcasm and that didn’t sound patronizing (it’s never a good idea to email when annoyed, emails always come out harsher than you intend).  If I was a donor, I definitely would have been less inclined to support the organization.  I know I’ve seen donors abandon great causes for less.

This story brought into focus a blog post I read a few months ago entitled “Whose Responsibility is Fundraising Anyway?” by Stephen Donshik.

In the non-profit organization who is responsible for raising funds? The real answer is everyone affiliated with the organization…Every staff person has a role in fundraising for the organization and this includes all administrative staff as well as the professionals who deliver the services to the clients…When someone responds in a friendly, “how can I help you” way, this says a great deal. When someone answers the phone and tries to direct the call to the appropriate person with patience this makes a lasting impression. These are the kinds of responses that encourage people to want to support an organization.

With regards to customer relations, it is critical that every employee is on the same (and correct) page.  A little training and a smile can go a long way.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey