We are fortunate in Vermont to have well-run nonprofits dedicated to remedying the most critical human needs – lack of food, water and warmth, or threats to personal security, health and property. Most Vermonters respect and trust the mission, vision and values of beloved nonprofits such as: RRMC, BROC, Rutland Community Cupboard, Visiting Nurse Association, Dismas House, Rutland Mental Health, NewStory Center, United Way and Vermont 2-1-1. Their structure, systems and culture enable them to generate measurable positive outcomes for thousands of Vermonters, and their fundraising campaigns attract enthusiastic partners and contributions from donors large and small.
In this, the most critically important fundraising period for nonprofits, at the end of one of the most challenging years ever, Vermonters will once again field funding requests from these and other worthy nonprofits. We will also receive donation requests and sponsorship notices from new organizations, some of which are not charities at all. Even in more stable years, donors have faced tough decisions: What do I care about most? Who most needs my support? Which organizations do I trust? How will my donation have meaningful impact?
In Zoom meetings I have hosted or participated in this year as a nonprofit consultant – from Washington to Manhattan, as well as in Vermont – reputable nonprofit directors and fundraisers have prioritized the following trends and advice donors should consider.
1) Since March, there has been an inordinate increase in the number of new nonprofits. Reputable nonprofits serving critical community needs are already under stress financially without duplication of effort. New founders claim to be “unique,” but admit they “just want to start my ‘own’ nonprofit, not work for someone else.” Ethical nonprofit leaders cringe at this, and so should donors, because: a) The community, not any person, owns a nonprofit; and b) Any nonprofit director who says they “don’t want to work for someone else” does not deserve funding. Donors should ask numerous questions before providing seed money to a new nonprofit, especially if it seems to unnecessarily supplant the effective work of an established organization.
2) Many so-called nonprofits are flailing businesses in disguise. Co-opting the tax-exempt designation of “nonprofit” allows some for-profits to compensate for various deficiencies, such as: a) no viable business plan for generating revenue as a for-profit; b) inability to secure small-business financing, or other start-up capital; c) inability to meet investors’ demands; or d) all the above. Plus, there are at least 30 classifications of nonprofits, and not all are charities. Many political organizations, social movements and lobbying groups also position themselves as nonprofits. Before donating, donors should learn more about the mission, vision, values and financials of any organization calling itself a nonprofit – whether a charity or not.
3) Some nonprofit founders do not have the necessary experience and expertise in operations, financial management or fundraising. An IRS designation of “nonprofit” is not a certification of qualifications. In Vermont, starting a nonprofit can be as easy as completing online forms, paying nominal fees, and naming three board members. After incorporation, founders can seek donors, sponsors and grants. Donors, beware.
4) “Cause-related marketing” sponsorships between businesses and nonprofits may yield little benefit to the nonprofit. Such co-ops often create more work for the nonprofit’s staff and can distract them from vital fundraising initiatives that deliver more effective results. Donors should assess whether a for-profit sponsorship is an actual asset for the nonprofit, and not merely a promotion vehicle for a business.
My husband and I have directed revenue-generating campaigns for corporations and nonprofits and served as leaders on nonprofit boards. Here are criteria we consider in our contributions to nonprofits:
1) R-E-S-P-E-C-T – Up, down, inside and outside the organization. Donors should expect staff and board members to be enthusiastic allies, advocates and ambassadors for the nonprofit. Such a culture must begin with the leadership who, in turn, instills the staff with a high level of purpose and pride. Without that, the organization suffers low morale, inefficiencies, unnecessary attrition and loss of funding. All can harm the very populations the nonprofit serves. Donors should be leery about funding nonprofits that disrespect employees, volunteers, donors, job applicants, media or other stakeholders.
2) Transparency about leadership, operations, finances and impact – A nonprofit’s financial report, the “IRS Form 990,” is often online. Vermont 2-1-1 (www.vermont211.org) lists details on thousands of Vermont nonprofits. Charity Navigator (www.charitynavigator.org) and Candid (www.candid.org) rate nonprofits on financials, operations and impact. All these tools also help fulfill a responsibility to the population the nonprofit serves. Donors should not give to organizations that spend a disproportionate amount of money on administration, have questionable fundraising accountability, or consistently receive low ratings from trusted sources.
3) “Painkiller” rather than “vitamin” – A vitamin nonprofit provides a “nice-to-have” service. A painkiller is a nonprofit the community values as essential for its most pressing physiological and safety needs. Others include nonprofits that provide essential education, recreation, science, arts, and other services and assets that contribute to a community’s vibrancy. Terms like “painkiller” and “vitamin” may seem subjective or interchangeable; therefore, donors with limited funds have tougher choices.
4) Cause-related partnerships – How much does the nonprofit net? Donors should ask why, how and when, a business sponsor will make a financial contribution to the nonprofit, and for how much. Some nonprofit organizations in Rutland contribute 100% of funds raised – much of it by volunteers – directly to mission-driven programs. If donors cannot confirm the exact contribution a business sponsorship will net for the nonprofit partner, then they should contribute directly to the nonprofit.
All over the country, major foundations and individual donors are experiencing donor fatigue, and Vermont’s reputable, valuable and beloved nonprofits are competing for resources. If you can provide resources – through funds, materials or time, whether a little or a lot – be vigilant that your contributions are supporting trusted nonprofits. Those whose mission, vision and values generate measurable positive impact for the community, inside and outside the organization, are the ones that most need your support – now more than ever.
Liz DiMarco Weinmann, MBA, lives in Rutland.