https://bloomerang.co/resources/webinars/ Richard Neustedter of Nonprofit Financial Specialists, and Barbara O’Reilly, CFRE of Windmill Hill Consulting, will lead an in-depth look at how to combine factors like ratings, overhead, impact into strategic donor communications that showcase qualitative and quantitative results and vision to retain current donors and attract new ones.

1. Ratings, Overhead, and
Measuring Impact:
How to Use Your Social Sector
Excellence to Attract and Retain Donors
2/25/16
1pm Eastern
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Before we get started »

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https://bloomerang.co/demo/video

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Our guest presenters »
Barbara O’Reilly, CFRE -­‐ @BOReillyWHC
Richard Neustedter

5. USING SOCIAL SECTOR EXCELLENCE
TO ATTRACT AND RETAIN DONORS
WEBINAR
FEBRUARY 25, 2016
Ratings, Overhead, and
Measuring Impact

6. Presenters
Richard NeustedterBarbara A. O’Reilly, CFRE

7. Agenda
I. Introduction
II. Understanding What’s Important to Donors
III. Defining A High Impact Organization
IV. Creating New Donor Conversations
V. Conclusion

8. Introduction

9. “The Age of Assumed Virtue is Gone”

10. Key Messages
With a crowded nonprofit market, donors want to invest in
successful organizations that have sound business
practices for sustainability.
This means that donors will support nonprofits that:
• know where they’re going (vision and strategic plan)
• manage to outcomes (impact, demonstrated results)
• understand their true costs and funding needs (operational
performance)
• know if they’re making progress and how to adjust if they’re not
(metrics, evaluation, learning)

11. Key Messages
Responding to a need for donor guidance in philanthropic
decisions, charity validators have created metrics to
determine nonprofit performance.
• However, these metrics are often limited as true indicators of a
nonprofit’s effectiveness.
The result is confusion and misperceptions about the need
for ratings and how to effectively incorporate them into a
nonprofit’s story-telling to attract and retain donors.

12. Best Practices Ensure Greater
Financial Sustainability
Vision and
Strategic
Plan
Culture of
High
Performance
Plans to
Evaluate &
Grow
Greater
Financial
Sustainability
Through Donor
Investment in
Your Cause

13. Understanding What’s
Important to Donors

14. Data Influences Social Investment
• Very important the charity has evidence
that its programs are effective.Nearly 70%
• Good charity ratings from watchdogs.54%
• Very important to know that charities
spend a low amount on salaries,
administration, and fundraising
50%
Source: 2015 Chronicle of Philanthropy poll

15. VALIDATORS ATTEMPT TO DRIVE
BEST PRACTICES THROUGH
RATINGS.
INSTEAD, THEY CAUSE CONFUSION
AND FEAR AMONG NONPROFITS.

16. Public Data is Confusing
Fundraising Costs
• 37% reported having no fundraising costs whatsoever.
M&G Expenses
• 13% said that they had no management and general expenses.
Does 90-100% of every dollar raised really go to
programs?
• Yes and No. Other unrestricted funding can help to offset
administrative expenses. Or non-program costs are built into larger
major gift asks.

17. Lean and Mean=Nonprofit Starvation
Misleading reporting
& overhead “phobia”
Unrealistic funder
expectations
Pressure on
nonprofits to conform

18. And yet…
“Organizations that build robust infrastructure—
which includes sturdy information technology
systems, financial systems, skills training,
fundraising processes, and other essential
overhead—are more likely to succeed than those that
do not.”
Source: The Nonprofit Starvation Cycle (SSIR, Fall 2009)

19. RATINGS ARE JUST ONE PART OF THE
STORY.

20. Defining a High Impact
Organization

21. Social Sector Excellence
Defining what it means for you
• Passion & Experience
• Strategic & CreativeLeadership
• Financial Health
• Capable & Sustainable
High
Performance
• External validation
• Evidence of success
Evaluation for
Impact
• Internal Assessment
• Drives strategic changes
Monitoring for
Improvement
THE PERFORMANCE IMPERATIVE = HIGH IMPACT ORGANIZATION
Source: Leap of Reason, Mario Morino

22. Accountability & Transparency
More than buzz-words to educated donors
Accountability
• Defined Board of
Directors and Staff
• Defined Governance
Structure and Policies
• Defined Ethics and
Limited Conflict of
Interest
• Audited Results and
Performance Reporting
Transparency
• Fully disclosed financial
information
• Formalized operating
policies
• Formal Articles & Bylaws
• Disclosed compensation
• Information publically
available on organization
website
BEST PRACTICES FOR A & T = DONOR TRUST AND CONFIDENCE

23. Taking the Mystery out of Ratings
Validators drive best practices through performance metrics
Charity Navigator
• 0-4 Stars system is simple
for donors
• Rated charities receive
50% of annual giving
• National organizations
with operating revenue of
$1 million or more
Better Business Bureau
Wise Giving Alliance
• Charity Seal program
defined to measure
operational excellence
through accreditation
• Self-application process
open to most nonprofit
DIFFERENT VALIDATORS USE MANY OF THE SAME INPUTS

24. Taking the Mystery out of Ratings
Understanding the Charity Navigator Methodology
 Objective rating for fiscal management, operational
excellence and good governance
 7 financial metrics, 6 inputs from 990
 Measures financial efficiency and capacity
 20 A & T metrics, 6 inputs from website, 14 from 990
 Measures good governance through policy and disclosure
A SIMPLE, DONOR-CENTRIC ANALYSIS THAT INDIVIDUALS LIKE

25. Taking the Mystery out of Ratings
BBB Wise Giving Alliance National Charity Seal
 Developed the Charity Seal Program to foster
public confidence and assist donor decisions
 20 Standards include:
 Governance and Oversight
 Impact – Measuring Effectiveness
 Finances
 Fundraising and Public Education Materials
BBB PROVIDES A NATIONALLY RECOGNIZED VALIDATION LOGO

26. Taking the Mystery out of Ratings
Validate your impact outside of your own website
GuideStar Exchange
• Provides on-line profile of
information you manage
• 3 simple categories,
Bronze, Silver and Gold
• Database links to 60+
websites, applications
and programs which
support nonprofits
GreatNonprofits
• Provides on-line reviews
of organizations
• Share impact from
testimonials
• Database links to dozens
of other nonprofit
supporters
• Powers GuideStar
Exchange Gold results
TELL YOUR STORY THROUGH EXTERNAL VALIDATORS

27. Taking the Mystery out of Ratings
Positive validation – why ratings matter
 Establish Confidence and
build donor trust
 Donors use financial data
from online sources
 Individuals use your info
even if you don’t know it
 Financial advisors direct
clients to ratings sites
 External validation to
support your claims
 Primary Sources:
REMEMBER, DATA + VALIDATION BUILDS TRUST

28. Creating New Donor
Conversations

29. Don’t Assume Trust
"What does this trust exercise teach us? Never take your
donors' support for granted."
Source: Chronicle of Philanthropy, May 1, 2008

30. New Fundraising Normal
Donor
Conversations
High
Performance
Social
Sector
Excellence
Results

31. New Fundraising Normal:
Start by Sharing Your Story and Dream
• What is your organization aiming to accomplish?
• What are your strategies for making this happen?
Strategic Vision and Plan
• What are your organization’s capabilities for doing this?
(internal and external)
Culture of High Performance
• How will your organization know if you are making progress?
• What have and haven’t you accomplished so far?
Culture of Learning and Performance
Source: Guidestar Charting Impact and Leap of Reason

32. New Fundraising Normal:
Then Explain Operational Costs
Capacity
• What does it cost to do your work well and reach the desired impact
you want?
• Is it a question of “Low pay,” “Make Do,” or “Do Without?”
Outcomes
• What happens if you don’t have the adequate funds you need to run
your programs?
OPERATIONAL COSTS BECOME FOCUSED ON
INVESTMENT IN CAPACITY

33. Conclusion

34. Validators Can Guide Nonprofit Excellence
Donors Nonprofits
Social Sector Excellence
Stronger Nonprofit Sector
Financial Investment

35. Questions and Thank You
Barbara O’Reilly, CFRE
Principal
Windmill Hill Consulting
www.whillconsulting.com
@BOReillyWHC
Richard Neustedter
Partner
Nonprofit Financial Specialists
www.npfinancialspecialists.com
richardneustedter@hotmail.com

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