Peer-to-Peer Fundraising

HARRY FOX, CPA

We have all seen them before at work, at the local supermarket and even online at Facebook or Twitter:  The peer-to-peer fundraising event.  Peer-to-peer fundraising events, such as walks and runs, have become one of the most common ways for not-for-profits to raise money. But are you doing all you can to maximize and safeguard those event funds?

Using Existing Relationships

Peer-to-peer fundraising is often an attractive option for organizations with limited resources.  As opposed to traditional fundraising, which requires you to invest heavily in building relationships with donors, peer-to-peer events let you tap the existing relationships of participants.  Instead of relying on staff to get the word out about your organization, you can rely on friends, family and others who share your beliefs to spread your message and create awareness.

But it is important to remember that awareness is not the end goal — fundraising is.  A study by Blackbaud, a software and service provider for not-for-profits, found that peer-to-peer event participants see participation and fundraising as separate tasks.

According to Blackbaud, these events are frequently marketed as awareness events, with the fundraising aspect only implied.  It is not unusual, then, for a participant to sign up for a 10K run, pay the registration fee and not pursue fundraising at all.

Setting Goals

One of the most effective ways to encourage fundraising by participants is to set goals.  Blackbaud found that 80% of survey respondents who set a goal raised that amount or even more.  Participants who are working toward a team goal generally raise more than if they are fundraising on their own.  Goals also make it easier for an organization to implement metrics and analyze financial performance during and after an event.

Encourage participants to be realistic and to avoid setting goals too high. It is best to set lower, achievable goals.  Not only will your participants be less likely to become frustrated, but also smaller donors will be more likely to feel as if they are making a difference.

Also be aware that, if participation in an event requires meeting a fundraising minimum, a participant might cover the whole amount, rather than actually engage in fundraising that could attract new donors.  So, while success is usually measured based on the total amount a participant raises, also consider the number of donations a participant generates.

Controls are Crucial

By definition, fundraising involves the handling of funds, which presents the opportunity for theft and other fraud, as well as simple accounting errors by nonprofessionals. Not-for-profit organizations, therefore, need to implement appropriate controls from the outset.

The good news is that the use of social media to drive peer-to-peer fundraising means that monies are typically submitted through the Internet, as opposed to the not-so-distant past when participants would collect cash and checks.  As with any online transaction, you will need effective controls to protect credit card data and personal information and prevent fraud, including firewalls, encryption and similar protections.

Help Them Help You

Although peer-to-peer participants shoulder much of the burden with these events, it is up to your not-for-profit organization to provide appropriate support.  Make it as easy as possible, but also as secure as necessary, for them to drum up support.

If you have peer-to-peer fundraising questions, please contact Harry Fox at [email protected] or call him at 312.670.7444.

Newsbits

KEN TORNHEIM, CPA, CFE

Court Says Donor is Entitled to Return of Restricted Gift

A New Jersey court of appeals held that a charity that solicited and accepted a gift from a donor, knowing the donor’s expressed purpose for the gift was to fund a particular aspect of the charity’s mission, must return the gift because it had unilaterally decided not to honor the purpose.

From 2002 to 2004, Bernard and Jeanne Adler donated $50,000 to SAVE, a New Jersey no-kill animal shelter, for a planned expansion.  In 2006, the shelter informed the donors that it was merging with another organization and would instead use their contributions to build a smaller facility in another location.  The Adlers sued after the charity refused to return their donation and they won.

The court of appeals ruled that, absent the donor’s consent, a not-for-profit cannot ignore or significantly modify the expressed purpose for a gift, even if the conditions that existed at the time of the gift changed significantly, making fulfillment of the donor’s purpose either impossible or highly impractical.

The case is a reminder of the importance of clearly establishing donor stipulations at the outset and adhering to them.  If a charitable organization is unwilling to accept those terms, the wise choice is to decline the gift.

Kaizen Aids Food Bank

Japanese automaker Toyota has put a different twist on its philanthropic efforts with the Food Bank for New York City, which helps provide 400,000 free meals each day throughout its network of community-based programs.  Toyota was already a financial supporter, but in 2011 the company offered to help the organization apply the Japanese concept of kaizen, or continuous improvement.

Since then, small changes inspired by the concept have had a major impact on the food bank’s efficiency.  For example, the New York Times reported that Toyota engineers reduced the wait time for dinner from 90 minutes to as little as 18 minutes.

Community Foundation Wealth Recovers

Since the recession, public support for community foundations have reached new heights according to a study conducted by the Council on Foundations, a not-for-profit association of grant-making foundations and corporations, and CF Insights, a division of the not-for-profit consulting firm FSG.  The community foundation field represents $58 billion in assets, $6.9 billion in gifts and $4.5 billion in grants.

Average growth rates for those categories ranged from 6% to 15% between 2011 and 2012. Almost 80% of community foundations had 2012 asset levels that exceeded their 2007 levels. The data was collected from 276 community foundations, including those representing more than 90% of total estimated community foundation assets.

If you have any questions related to the above Newsbits, please contact Ken Tornheim at [email protected]  or call him at 312.670.7444.