Whose Your Real Competition: Hint, it is not the Church Next Door

Soggydan

When most businesses think about their competition, they often identify businesses that offer similar products and services.

For example: HP thinks about Dell. American Airlines thinks about United Airlines. In essence, their competition is defined as those other businesses that compete for the same market share.

In a recent blog post, Shaun King highlighted that while this trend is true in business, it is not true for churches and nonprofits. In his post, “The MAJOR Disadvantage (& ugliness) of Non-Profits & Churches Misunderstanding Who Their Competition Is,” Shaun highlights that other nonprofits and churches are not in competition with each other.  He argues, instead, that the real competition is the factors that cause the problems.

For example:

• If you are trying to fight hunger, the competition is poverty and access to food.
• If you are trying to fight slavery, the competition is slave traders
• If you are trying to fight drug crime, the competition is drug dealers

Unlike businesses, churches or nonprofits don’t compete against each other. Instead, they offer each other a partner for mission and work.

I really appreciated Shaun’s post and I would encourage other leaders to give it a read and to share it with their leaders in their organization. After all, operating a church is about changing lives, not fighting with other people who have the same goal.

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5 New Innovations for the Next 5 Years

svenwerk

Each year IBM makes 5 major predictions about what new 5 technological innovations will impact our lives in the next 5 years. They call it their 5 for 5 list.

Here are the top 5:

1. Energy: People power will come to life– normal activities will soon be converted into energy to power our houses, work, and lives.
2. Security: You will never need a password again– think biometrics and unique identification based your physical attributes
3. Mind reading: no longer science fiction– linking of phones, computers, and the web to your personal preferences and body actions
4. Mobile: The digital divide will cease to exist– mobile devices are making access to information and technology universal
5. Analytics: Junk mail will become priority mail– via analytics, technology will begin to filter the information you prefer to your inbox

Obviously these shifts will impact our lives, how we communicate, and our culture…aka every aspect of our lives. As you consider how to position your nonprofit to serve others, these advances will also impact the mission work of our world.

I encourage you to read the full story on the IBM Website

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Financial Basics for Nonprofit Managment

s_falkow

Recently, I was asked, “What are some basic steps we can do to improve our financial management?”

I was visiting a local congregation and the leaders were in the process of reviewing their financial history, operations, and current accounting controls. In the meeting I listed off about five items, but in reflection, I thought I would create an official list of financial basics for nonprofit management.

Financial Basics for Nonprofit Management:

• Tracking of Data- by tracking data, you can determine benchmarks for growth or decline. Be sure to track participation, income, expenses, donations (and levels of giving), and long term goals (and to communicate these to leaders, donors, and members).
• Accounting Controls-many small nonprofits rely upon 1 or 2 people to handle all of their bookkeeping. This leaves them vulnerable to fraud and usually limits financial communications. Be sure to have monthly review of finances, independent reviews of bookkeeping, limits on spending, and requirements for approval of spending.
• 6 Months of Emergency Savings- every organization should have 6 months of cash savings available to cover expenses in an emergency.
• Line of Credit- as organizations grow, they can improve their cash flow by taking out a line of credit or operating loan. LOC should be capped at around 3 months of expenses, and often operate similar to a credit card for an organization.
• Multiple Income Streams-no organization should only have one line of income. By creating multiple revenue streams, nonprofits increase their stability.
• Endowment & Net Assets– Gone are the days when a nonprofit organization should operate at a net zero. By creating endowments and net assets, nonprofits can cover the cost of their operations, allowing more of their donations to immediately  go into outreach.
• Facility Management– Buildings cost a lot to maintain and operate. If you own a facility, be sure keep up with facility maintenance, use it as resource, and improve it as building code and mission needs change- otherwise it can become black-hole that sucks money away from your mission focus.
• Board Development- Board members are ultimately responsible for organizations- be sure board members understand their roles and that they are giving proper oversight of staff and operations.
• Insurance- Be sure that your organization has enough insurance to cover its liabilities for its staff, operations, facilities, and to protect the organization from lawsuits and emergencies.
• Management & Gift Policies-smaller nonprofits often lack staff, organizational management (by laws), and gift policies which help organize and outline how nonprofit organizations operate and how donations should be accepted and used.
• Financial Relationships– this may seem like an odd item for this list, but knowing your bank manager, accountant, insurance broker, and financial advisers personally can be critical in emergencies and/or when you need additional help.

There are many other items that could be added to this list (brand management, communications, mission focus, etc), but these are some highlights to help you review how your church or nonprofit organization manages its financial operations.

 

 

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New Survey Shows Giving is up at 41% of Nonprofits

Earlier this week Guidestar posted the results of a survey that asked nonprofits about their fundraising and operations for 2011.  Here are some of the highlights:

• 41% of Charities saw an Increase in Giving for the first 9 months of 2011 over 2010 (28% had less income & 31% no change)
• 65% of nonprofits saw an increased need for their services– over the past 9 months compared to 2010
• Approximately 50% of charities have some financial stress – income, cash flow, # of donors, non-donor income

For more information, visit Guidestar’s website

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Improve Your Church’s HVAC w/ Wifi

The Nest

When most of us think about a HV/AC system, we usually picture an older furnace- rarely would we picture a sleek thermostat that connects to a wifI system. However, this seems to be the future of energy controls for commercial and residential buildings.

Since 2008, manufacturers have offered thermostats that can connect to a wifi system, thus allowing control and access to the system via the internet. This has been a great upgrade, but until now many of the programmable thermostats have been confusing to use. In fact, the US Dept of Energy realized that most people who purchased programmable thermostats, actually used more energy than before, because they were too complicated to use.

So in an effort to make programmable thermostats more user friendly, several companies have begun to create systems that can be controlled by a computer using a program like Microsoft Outlook set set room temperatures.  Other companies, have also begun to make intuitive thermostats that create a pattern of use based on how you adjust the temperature over a period of a few weeks.

With heating and cooling systems accounting for 16% of the electricity in the USA, and more than half of the energy consumed in a house, HV/AC systems will continue to be a focus for utility companies as they try to reduce the amount of energy consumed in the United States. This trend will likely also become a focus of more and more churches, facility managers, and home owners as the cost of energy continues to rise.

After all, the less money that people and organizations are forced to pay for utilities, operations, and energy, the more money they have to support the mission and programs that they value. For more information about changing HV/AC systems, please read the following articles:

• NY Times: A Thermostat that is Clever, Not Clunky
• Green Tech Grid: Get Ready for the WiFi Thermostat

Blog notes: Several of the stats given in this blog were pulled from these  two articles. The picture above comes from several sources and is provided by the company and can be found on their website- http://www.nest.com

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Building the Base- Fundraising by Volume

laubarnes

If you follow trends in fundraising (most people don’t), then you may remember that America saw a shift in how organizations approach small donors during the 2008 election campaign.

Prior to 2008, most organizations had mainly focused on reaching major donors- and many still do. However, in 2008, there was a major shift in how organizations began to reach out to donors who made many small and medium sized gifts.  The two reasons being:

1. Most potential major donors have already been targeted
2. Technology has allowed better access and communication via email, internet, and mobile communciation

Together these two shifts have allowed more and more organizations to expand their base, and thus, improve the stability and size of their fundraising work. But when we look at this trend, however, we see that it has largely been adopted by larger nonprofit organizations, and not small nonprofits or churches.

So beyond the shift, what is the big deal as it relates to fundraising for churches?

Well the main reason is that churches have often been the envy of other nonprofit organizations, for the following reasons:

• Churches usually have a loyal base that donates weekly, monthly, etc
• Churches make a regular ask each week, most nonprofits only get 3-5 a year
• Religious people tend donate 3 times more than non-religious people
• Religion accounts for the largest segment of fundraising each year
• People who attend church are usually versed in donating habits and believe in serving other

So with the shift of other nonprofits into expanding their base of small and middle donors… churches, and other small nonprofits, will now be competing more and more for the same donors and money. This competition will not really matter for donors who are over the age of 60 and who physically give in the offering plate each week. But it will matter for donors under the age of 60, who now want more and more access to online giving and better transparency of how their gifts are used.

Thus, if you are a church leader, I would strongly encourage you to work with your financial leadership team to start reviewing how members and participates are currently donating to your church, and how you can make donating more accessible via electronic transfers and online giving. By being aware of people’s financial habits, churches can better offer ways for members to support the mission, ministry, and operations of the church.

For more information about this trend, check out a recent article in the WSJ entitled, “Strength in Numbers”

 

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Myths & Facts about Successful Fundraising- Freakonomics Style

If you have read the book Freakonomics, or listened to Marketplace on NPR, then you probably are familiar with Stephen J. Dubner’s use of statistics to explain common behaviors in economics and society.

As a stats junkie myself, I love their work, and on Tuesday’s Marketplace radio program- Dubner reported on some truths and myths about fundraising (to listen to the program, click the NPR link above). Dubner’s report included an interview with John List, who is a professor at the Univ of Chicago. Professor List studies the economics of charities

So here is a taste from the interview:

• Seed Money helps– The more seed money that you have induces more people to give, and those people tend to give more money.
• Matching Gifts– only work up to a 1-1 match.  People will not usually give more than the original match amount (this is contrary to most expert advice)
• Raffles are a Big Deal– Research shows that by offering someone a prize will increase their gift by almost 100%
• One & Done- This is new, but it gives control to the donor. Donors who are offered the “give us one gift and you can tell use never to contact you again” option, tend to give more money and more often. Few actually choose to not be contacted again.
• Guilt Pleas Don’t Work– You may get a 1 time gift from guilt or shame tactics, but in the long run you are only burning bridges.

As you think about how to raise money for your organization and its operations, I would encourage you to consider this information. Take a moment to think about how you raise money for your annual fundraising, and take a second to listen to the full interview.

Blog Notes- the above bullets are paraphrases from the interview found in the Freakonomics & Marketplace Report for Nov. 29, 2011.

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Church Financial Health Index

photo: edgeplot

Unlike most commercial businesses, which have a common standard by which to rate their financial operations and health, churches struggle to identify healthy financial norms.

Part of the reason for this struggle has to do with the following reasons:

• Churches are faith based organizations
• Church are contextual
• Churches are organized by mixed polity (denomination or independent)
• Churches are exempt from many IRS and government reporting requirements
• Churches vary in size, financial support, and ministry
• Churches don’t usually follow GAAP (General Accepted Accounting Principles)
• Churches are run by volunteers

However, while all of these factors cause incongruity, there are a number of common ratios and principles that many churches share related to income, expense, debt, membership and worship attendance. I have highlighted a few of these in some of my earlier posts (please see: Financial Rules: Ministry Distribution), but another resource is a new financial database that was created by Capin and Crouse, CPA.

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Considering Social Media: Think it Through- @MSNBC

On Monday I was interviewed by Alex Johnson, a reporter for MSNBC.com about how churches are using social media.

In the interview I really tried to stress that churches really have a great opportunity to connect with their local communities (via social media), and that the conversation was taking place, with or without their official presence.  Here is the link to the full article: “For Some Churches, The Internet Clicks; for Others It Doesn’t”

some_communication

Much of article focuses on how different denominations and local churches have adapted to using social media.  But, the article also helps to spell out that congregations need to think through how they plan to use it.  It is not enough just to create a facebook page or to have a static website.  Instead, churches really need to think about their ‘brand’ and what messages they hope to convey to their potential audience.

As you read the article, here are some helpful questions to ask about your church’s use of Social Media:

1. Who are we trying to target?
2. What is our overall goal for using Social Media
3. What messages should we try to communicate?
4. How can we participate in the conversation, rather than just push out information?

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Mobile Wallets May Provide Easier Online Giving

Feuillu

The holiday season is upon us, and I have begun to plan out my end of year donations. So far it has been fairly easy to make donations online, but in a few cases I have become frustrated by the multiple steps/screens to set up an account.

If you have ever tried to make an online donation, then likely you share my pain.

• First, you log on to a website of your favorite charity.
• Then you click the “Donate Now” button.
• Next you are taken to an second screen and asked to fill out an online form with your name, address, and contact information.
• Then are asked to enter your bank account or credit card info.
• And finally you are asked to enter your amount and to click submit.

Now if you were not counting… that is approximately 5 steps.

Not bad, but what if it only took 1 step… sort of like swiping your credit card, writing a check, or dropping cash into an offering plate?

If banks and retail stores have figured out away to make shopping convenient, why can’t charities and banks find a way to make online giving easier?

Enter the mobile wallet.

Originally designed to assist customers to shop at online merchants,

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