Hello again and welcome to week three of course 2 in the Coursera specialization, developing leadership and improving the governance of non profit organizations. This is your co-instructor Vick Murray of the School of Public Administration at the University of Victoria, back again. As you will recall, this second course of our specialization focuses on an indepth examination of the roles and responsibilities of nonprofit organization boards of directors. The topic this week is the role of the board in fundraising, or as we will be calling it for the rest of this lecture resource development. Here are the questions this short lecture today will address. First of all, what is fundraising/resource development? And why is it important? Second, what should be the board's role in resource development? Third, why do many boards have problems clarifying and implementing their role in resource development? Fourth, what basic information should be in a resource development plan? Fifth, how can boards improve their effectiveness in carrying out resource development responsibilities? And then finally as always, we wind up with some questions to inform your own peer to peer discussions. First, let's discuss this question of terminology. You'll see we've headed this topic fundraising, and then we're talking about resource development, what's the difference between these two things? May be the easiest way to explain how we've ended up in this position is to remind you of the book we use in the course, which is our guidelines for improving the effect with the boards of directors of nonprofit organizations. And that book in turn was based on our research into what board members and those who relate to boards consider to be important and difficult. When we put that question open endedly to a lot of different kinds of board members and others, the term they use is often been fundraising. We're not sure what our boards supposed to be doing in fundraising, I don't think we do a very good job of fundraising. However, when you turn to the literature on this subject, that term in recent years has pretty much been replaced by a more accurate term, probably, its resource development. In particular in this context, it's the development of financial resources, ensuring that a nonprofit organization has the financial resources to carry out what it wants to do. We should also note that the same term, resource development, can apply to other resource is which we will not be addressing in this topic, such as human resources, leadership resources. You'll hear about those later. So for the day and this topic, we are actually going to be replacing the term fundraising popular though it was in our research with the more accurate term resource development. And it is a key board responsibility without any question. The question that does remain is how should a board play that role? We can tell you that the research I was just referring to carried out by my colleague, Yvonne Harrison and I, did discover something after looking at the survey findings from over 1000 respondents, board members and others. In terms of what they saw as a challenging issue, and right up there in the top two or three was resource development, and that's why it's important. boards are often confused by it, boards often feel they're not doing a good enough job of it. Well, let's look into that in more detail now. We just said that a keyboard responsibility is to ensure that the organization has the financial resources it needs to fulfill its mission. And that's very true. But what does it mean? In practice, what does it mean to ensure that the organization has the financial resources? We have to break that down a little more. What it turns out to be is that when you're talking about the board as a whole, exercising its responsibilities for due diligence, etc. They have to ensure two things. That there is an effective resource development plan or strategy in place. And when there is one, to track and assess the results of resource development efforts. And some would say, well, that's all a board really needs to do. Make sure there's a plan going on and track how it's doing and if it's not doing well, then of course they've got to get some action from management etc. But as we know, if you know much about the smaller nonprofit organizations especially, boards are much more active than that, especially in places like board committees. Often there is something called a fundraising committee. We're calling these activities optional. We call them optional because it's not really necessary for every board to get involved with all of them. And we'll talk soon about which ones any given board should opt into. But in committees such as a fundraising committee, there the board can assist with developing a resource development plan and how it should be evaluated once it's in place. They can also help implement certain resource development activities. Often you'll find boards are running a gala fundraising nights or other kinds of fundraising activities which we'll get into later. And then there's always the fact that boards are made up of individual people. And as individuals, members can do two things. One is give or donate out of their own pockets and the other is to help on an individual basis, help raise money for the organization. In the US, there's a term I've always liked, sometimes it's misused but it's the word. If you're going to come on the board, you gotta give, get or get off, which is a little harsh and we'll talk about it. That's always true, but anyway, that's the way board activities breakout, required and optional. Okay, so now let's talk about when it's appropriate for board committees and individuals to engage in that optional kind of resource development work we were just talking about. The easiest way to describe that as to recall back in module one when we identified three basic models of governance in non profit organizations. We called them governance only, working working boards and mixed model boards. And you may remember we said back then that working boards and mixed model boards are most appropriate when the organizations are small, are engaging in fairly simple mission, new, unable to afford professional management. So the same thing applies when we use those terms in the context of resource development. When facing resource development in an organization that is new, is small and unable to afford paid staff with fundraising or resource development experience or hire professionals who are available for fee to come in and help out with that. Then it's quite appropriate for board members as individuals or through committees to become active in more direct, proactive fundraising activities. But note a couple of points, it is possible, it is always not necessary or even desirable because board based resource development committees do not have to be made up only of board members. They can have others, especially others with valuable experience and contacts in fundraising. And board members who want to help don't always have to help in doing resource development work through Board based committee. As individuals they can work with other staff and volunteers on committees that are outside of the board. As I said, our research and that of others as well as shown that many boards do have a lot of problems in clarifying and performing their role in research development. So if we want to help words fix that, we need to think first. Why is that? Why do boards get in such a stew about this business of resource development? So let's look at some of the possible reasons. One of them is rather subtle and not always something that people are aware of. And that's the cultural backgrounds that board members come from in different countries or different parts of the same country where there are subcultures. In Canada, for example in Britain and many other European and Latin American countries, there's a longer tradition of looking to governments to help those in need. And a reluctance to as individuals ask people to donate money. Whereas in a country such as the US with its historical tradition of valuing individualism, and minimal government involvement in people's lives, there's much less reluctance to ask for donations for charitable purposes. So that's a very broad reason for some of these problems that arise, but there are many more pragmatic and practical reasons. For example, word recruitment criteria. When board people go out looking for new recruits to the board, they don't include checking with candidates to see if they have any experience or willingness to engage in resource development activities. Or they have the expectation, but they don't actually communicate it to the potential board members before hand. So it isn't until they get on the board that they are made aware that they are expected to do things and they go Whoo I never signed up for that. So then problems arise. Sometimes the expectation is communicated. Board members come on, but sad truth the matter is they don't actually have any real experience or practice in doing any of the activities that are expected of them. In this case, orientation and training of new members doesn't cover this kind of activity. And finally conflicts can arise, often unspoken, taken for granted, kinds of problems between the CEO and professional resource development staff who have one set of expectations about board members can do to help with resource development. And they just differ from those of the board, chair and board members. And they don't always get these out on the table, so they look in the background and cause problems. So we've already said that the one requirement of all boards and all non profit organizations that have to raise resource is to keep going. The requirement is to ensure that resource development is occurring. That there is a resource development plan and then tracking on tracking how well it works. So let's just focus on that area first. What do you think should go into a resource development plan? In an ideal world, what should the board be provided with first of all a couple of things. First of all, it needs to know where existing money comes from. What are the resources that are needed? The amounts that are going to be needed in the time they're going to be needed an for the existing sources of the present budget. What percentage of the contribution is made from each of those sources to the budget. And this is where it gets a little tricky, and it's not just obvious takes a little work. What are the chances in the next couple of years that these existing sources will provide more increased contributions? Or unfortunately, a decrease in their contributions. Given that one can turn. To the potential for new sources of funds that we're going to talk in just a moment about what those might be. And then finally, from that analysis of existing and new sources. The plan would provide resource development goals and priorities based on a cost benefit analysis of potential gains in existing and potential new sources of funding. And finally, as always with any good plan, there needs to be a statement of how the organization or the board is going to track the results of its resource development plan. The basic building block of a good resource development plan is a clear understanding of the sources of income. Two kinds of sources, the sources of existing income where the money is coming from and what percentage of the total budget each source contributes to. And secondly, the potential sources of income that might bring income in the future. So to wind this up let me just leave you with a nice little checklist of the basic sources of income and potential income. There are basically four sources four kinds of sources. Number one is sources that come from those who are part of the organization in the sense of being users of its services, clients, members who have joined it, or in the case of performing arts, organizations, museums, and so on audiences, attendees. And from those sources one can derive fees for service, admission fees, registration fees, things of that sort and those who are based on members can get membership dues. Also, it's possible to ask these sources for donations. I'm sure that's happened to you occasionally when you are a member of an organization, and then it comes along and ask you to donate money on top of your membership dues. Second set of sources are those that come from third parties. Three in particular, the biggest being governments, municipal, state, or provincial, local all levels in the form of contracts for service in which there's a fee for service paid or outright grants. These are not quite as numerous as they used to be, but they still do exist. Second source from third parties is private, nonprofit institutions in particular foundations. But other non profit organizations also sometimes provide money for a given organization. I'm thinking here of partners and allies who wish you well and sometimes have money to spare to provide to your organization. And thirdly a very popular one, although it doesn't donate quite as much as some people think. And that's corporations or businesses in the form 2 forms. Most popular being sponsorships, various events, the other being outright donations. A third source of income is from individual members of the public, not the ones who are users of the service or members, but the general public. Most popular of these include special events. For example, all kinds of thons runner, swimmer. You name it, there's probably a thon great trying to raise money, auctions, gallows, dancers, dinners, potluck suppers. The list is endless. But then there are also direct public outreach campaigns. These days one here's a lot about crowdsourcing via social networks such as Twitter and Facebook and so on. But there's still traditional mail campaigns, door to door campaigns, and soliciting on the street outside of in malls and so on. Finally, there are the much desired sources of money that come from major gifts, legacy gifts, large gifts to capital campaigns designed to raise money to build buildings and facilities, etc. And finally, the final source we want to mention has been growing substantially in the past. 10 to 15 years. And that's organizations creating businesses within themselves, nonprofits, but with businesses that are designed to produce profits, the profits then going to support the nonprofit programs and activities of the organization. So a plan for resource development that lays out the existing sources and the potential sources and talks about what they have, what they can contribute, both presently and the future is the root of a really useful resource development plan. Finally let's turn to the question of what boards can actually do in a practical way to improve their effectiveness and carrying out their resource development responsibilities. Number one in this list has to be that the board must analyze and clarify the extent to which it should be involved in the optional resource development activities. We know that all the boards have to engage in oversight and ensuring that fundraising targets are met and that sort of thing. But in the optional category, direct proactive involvement in fund raising through committees and individuals to what extent really does the board need to do that in terms of affordability, better use of time? This includes analyzing the costs and benefits of using paid professional fundraisers, two kinds, full time staff person, typically call the Fund Development Manager, person of that side, or temporary employment of consultants. And there are many of them who are specialists in helping organizations raise money. But they cost money, so that difficult cost benefit analysis has to be engaged in. Then there is the matter we talked about earlier of the unspoken taken for granted, not usually confronted culture of the board with respect to how people feel about approaching others for money. That board culture has to be put on the table and taken apart, and if necessary it has to be changed. It's no good for a board to say it's going to help with resource development while its individual members are saying, but not me, I don't like having to ask people for money. The other aspect of it is, even though boards may be willing and even able, if there aren't supportive structures within which they can work to help in the resource development through, say, a committee, or with an understanding of a position description for their role, which includes their expected involvement in R&D, resource development, then it's not likely to happen nearly as well. Finally, and most crucially, even again among boards that have say they want to help and have got their members on side, if there isn't adequate training and development in the specific work of research, of resource development, then it's going to be a difficult thing to pull off. To conclude, please do have a look at the back of Chapter 5 in our book. And the group of websites on resource development for boards that are there. Some of them contain excellent informative articles that go into much more detail than we are able to do in a short talk like this. As with all the topics we cover in this course, we end this session on resource development and the board's role in it with some questions for your peer-to-peer discussions. Let me hasten to add that there are no single right or wrong answers to these questions. Existing fundraisers, managers, board members debate them to this day. So you should find them interesting. Number one, our own research has revealed the widespread confusion about the board's role in fund raising. And the question is, why do so many boards have Go with this, there are lots of other governance issues. They seem not to have as much trouble with, why this one? Number two, some have been saying that all boards should avoid getting involved in direct fundraising activities, not a suitable thing for boards to do. If individual members on their own want to help, that's fine, but keep the role of the board as a collectivity to just oversight. What do you think about that? Is that a generality you'd be willing to apply to all types of non-organizations and their boards? Finally, if the board is never played any other role but that of overseeing resource development plan created by others but now feels it should be more proactive. Maybe government grants have dried up. Other sources of income are declining and the board feels it should become more and more proactive. How would you go about changing it? Well, would you recommend to a board to become more proactive, successfully more proactive?
