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Creating a Case Statement

A Case Statement is the first document that you will need to develop for your non-profit strategy, but it is always a work in progress as your project develops. It is the single most important document because all other marketing, ministry and fundraising documentation will be developed from your Case Statement. In the world of fundraising, telling a good story is the first step toward reaching your goals. Without a good story, donors don’t have anything to buy into when they give their money or gift to you. The Case Statement is a dynamic document that includes your Statement of Purpose, Vision Statement and Mission Statement and inspires people to join with you to meet your goals and objectives.   From a donor’s perspective, organizations don’t have needs, people do. While you may view your project or organization as needing funds to keep providing services, donors perceive your organization as needing funds so that you can help more people or help them more effectively. The cause is more important than the structure. Donors also need to believe in you and to believe what you believe. If donors do not connect with you personally, they will probably not connect with the organization and probably not chose to support your project.

Write your Case Statement as if you are standing in the shoes of the donor trying to understand what you believe and what your project or organization wants to do about it, make it a simple, compelling and believable call to action. Be careful about making assumptions as to what your donors know about the cause or how best to address it. People don’t give because of what you do, they give because of what you believe! A good Case Statement is the starting point for any conversation with potential donors. In just a few pages the Case Statement should give you the information to connect donors with the Mission and Vision and build commitment to the organization’s goals. It is only when a donor believes what you believe and embraces you and your cause that they will start to give consistently to your organization. A good Case Statement should be inspirational and give both you and your project credibility.   It is written to incite action.

WHERE TO BEGIN:

The Formal Case Statement. The formal case statement states all the reasons for supporting a particular project or organization. This is a work in progress and should be updated regularly. It should become your backroom document that answers the important questions around your project for use in a variety of different contexts. Typically this document is at least 5-6 pages long but is often 12-15 pages when fully developed. This information can then be personalized and customized for different donors because different constituents have different needs. You may not be able to answer all of the questions at the beginning of your project but you should seek to answer them as your project matures.   The case statement answers, with brevity, all the following questions:

1.Organization History
 - Founded when and by whom
 - Major accomplishments
 - Milestones in the organization’s history

2. Whom does the organization serve?
 - Demographic information
 - Description of a real person who benefits from the organization – testimonials or anecdotal true-life experiences

3. What needs confront the people served by the organization?
 - What pressing problems does the organization address?
 - What challenges do the people served face?

4.How does the organization address these challenges?
 - What programs does the organization offer?
 - What services are provided for people in need?

5. What are the goals for the future?
 - What are the program, financial, facility, technology, administrative, governance, and human resource goals for the project?
 - How will those in need be served better?

6.How will the donor’s investment be used?
 - Why is the fundraising campaign being conducted?
 - What are the project’s key budget items?
 - How do these expenditures relate to the project’s mission and services to people in need?
 - What specific items, if funded, would help your project move ahead more quickly or solve problems more effectively and efficiently?

7.How will the donor’s involvement be acknowledged?
 - Describe your thank you process
 - Describe the intangible benefit the donor receives by this philanthropic investment


Statement of Purpose. From your Case Statement you should put together a comprehensive yet simply stated “Statement of Purpose” which clearly defines what you believe about the world and the problem and what your organization is all about. It should be short, concise and “Wordsmithed” to be the basic description of why you exist and why the world is a better place with your project or organization in operation. The Statement of Purpose should be no more than 1-2 pages that uses bullet points to highlight the most important topics and/or programs. Think Super Bowl Ad! Think elevator speech! Think simple and passionate.

A good Purpose Statement tells a compelling story that answers 4 basic questions:

1.      Why this need? What is the problem or need and why does it need to be addressed?

2.      Why this way?   What vital services do we offer to meet the need?

3.      Why us?   Why are we uniquely qualified to meet the need?

4.      Why now?   What is the urgency to respond and what will be done with their support?


Vision Statement. If your organization were functioning at its highest capacity, what would it look like?   To put it another way, “what do you see when you close your eyes and dream about what could be the impact of your project”. What do you want to be “known for” when people think about your project? This is what gets you up in the morning!


Mission Statement. Your Purpose Statement should also be able to be condensed down to a slogan, hashtag or key phrase, nine words or less, that identifies and symbolizes who you are and simply states your objective -- this is your Mission Statement. “To boldly go where no man has gone before!” “Taking your Vision to the World!” Coupled with your project name, this will be what makes you memorable. A good descriptive name moves people to want to find out more about your project and what you do.

Welcome to the Top 2%

WELCOME TO THE TOP 2%!
WHAT PAYING YOUR FAIR SHARE CAN MEAN FOR YOUR IRA

By Bill Moritz, JD

Let’s say that you have been fortunate and been able to accumulate a significant retirement plan during the course of your working career. Being a responsible person, you decide that you are not going to draw down that retirement plan, but live on the income from it for your retirement and then pass it on to your children. Maybe, you have structured your income so that you don’t make over $450,000 a year in retirement and your children don’t make $450,000 a year, so you are all under the threshold for being "RICH" in America, in the top 2% as it is now defined, so you are not really feeling the sting of the new tax rates. Congratulations, when you pass away, if you leave your retirement plan to your children, your children have probably just become part of the top 2%!

What does being part of the top 2% and paying their fair share mean for your children? First, since money received from a retirement plan has not been taxed, it is taxed as ordinary income. If your children’s income with the retirement assets is above $450,000 they will be in the top tax bracket of 39.5%. In addition, there is also a loss of exemptions for anyone making over $300,000, so that will also boost their taxes.   If they had any capital gain income in that year, it could add another 3.8% tax.   Finally, when you add the state tax onto the federal tax rate, in a state like Minnesota or Iowa, your retirement plan could be taxed as high as 49% and in California or Oregon as high as 53%! Paying your fair share can mean losing half of your retirement plan when you die to the tax man, a retirement account that it took you a lifetime of work to accumulate and that is assuming that there is not estate tax due as well at your death!

You can solve this problem by using the Spousal Charitable IRA Trust or its successor the Family Advantage Charitable IRA Trust.

THE SPOUSAL CHARITABLE IRA TRUST OR FAMILY ADVANTAGE CHARITABLE IRA TRUST

There are probably no more highly regulated entities under the IRS code than the qualified retirement plans. Retirement plans can be structured as corporate plans, IRAs, KEOGHs, 403(b) plans or 401(k) arrangements. Plan assets are potentially subject to at least three types of taxes:


  1. The 10% penalty tax for distributions before age 59 ½ under IRC 72(t).

  1. The income taxes during life (IRC 61(a)) or at death (IRC 691(a)), which are due when assets are taken out of the plan

  1. Estate tax under IRC 691(a) which could be up to 40%, depending on the size of the estate after 2013.

Even Generation Skipping tax can occur when retirement assets go directly to grandchildren or great-grandchildren. (IRC 2601).

The 10% penalty tax is easily avoided by waiting until age 59 ½ to withdraw money. Estate tax and generation skipping tax are often handled with normal estate planning or now with the high exemption amount, but the income tax consequences will affect almost everyone.


Income In Respect Of A Decedent

The proceeds of IRAs and qualified retirement plan accounts after death are taxable for income tax purposes to the direct recipient of the plan assets in the year received. This additional income is called Income in Respect of a Decedent (IRD). This income is normally taxed at the top tax rates because the total is added to your heirs’ income in the year received -- usually driving them into the top tax bracket for some or all of the proceeds. This income is subject to both federal and state income taxes, leaving the recipient often now with less than 60% of the value of the assets. For example, if an individual had a retirement plan of $800,000 at death, over $350,000 could be due in income taxes and it could be higher depending on the tax situation of the recipient.   Given such erosion in value, it’s no wonder that increased attention is being paid to combining charitable gift planning with retirement plan distributions.

Because of the tax-free accumulation and growth that occurs in retirement plans, the government has gone to great lengths to build a complicated tax structure to reclaim any lost tax revenue. Fortunately, the tax code has continued to protect charitable planning, at least for now, which is one of the few ways left to ease the tax burden from retirement plans at death.


Contribution To A Charitable Remainder Trust

Perhaps the most useful technique to minimize the adverse tax effects of IRD and maximize the benefits available to children and other heirs is to distribute the plan assets to a charitable remainder trust. The primary goals of this type of planning are to eliminate IRD tax, enable the children to enjoy the economic benefits of the retirement plan proceeds over time, and provide a substantial gift to charity after the term of the trust. The Charitable Remainder Trust (CRT) can pay an income to individuals for a term of years or their lifetimes, and then the principal that is left in trust goes to charity. The CRT is a tax-exempt entity and is not subject to the IRD tax. It also provides a charitable estate tax deduction for a portion of the amount placed in trust.


The Spousal Charitable IRA Trust

The Spousal Charitable IRA Trust (SCIT) is a specially designed charitable remainder unitrust that has been developed to benefit a surviving spouse who is due to receive a large retirement plan inheritance at the death of their mate. Since retirement income has not been taxed, withdrawals are taxed at the highest possible tax rate, compounded by required Mandatory Minimum Distribution rules.   A surviving spouse may be paying a large amount of income tax, as high as 45% in some states, on money that he or she really doesn’t need for living expenses. With the SCIT, this money could accumulate in a tax-free environment during the spouse’s lifetime and be used for income if he or she needs and then for children and charity. Here’s how it works:


  1. The Spousal Charitable IRA Trust is a part of the revocable living trust with the surviving spouse as the primary beneficiary and can have children as the secondary beneficiaries.       At the death of the first spouse, if he or she is the owner of the retirement plan, the funds in the plan are distributed directly to the SCIT.   There will be no tax on this distribution since the trust is tax-exempt. One planning option might be to name the spouse as the primary beneficiary and the SCIT as the successor. That way the surviving spouse will have a choice as to whether to roll over the retirement plan personally or have it paid into the SCIT by disclaiming all or part of her interest. He or she could also keep the IRA personally and then have it got to a Family Advantage Charitable IRA Trust after death. This decision can be made after the first spouse’s death depending on the situation at that time.
  1. The SCIT is a net income with make-up charitable trust which invests its assets, usually in a single member LLC, so that income is only paid out when the surviving spouse wants to receive it. There are no Mandatory Minimum Distribution requirements with a charitable trust. Income the spouse does not want to receive can either accumulate for their future use, be saved for the children or be given away to charity.       One advantage that comes with giving money to charity from the SCIT is that the surviving spouse gets a current income tax deduction in the year of the gift without having to declare any income. The IRA Rollover that has been used the last couple of years was a benefit because money went to the charity without having to be received personally, making it a wash. This is even better, because the spouse gets a tax deduction by releasing principal from the trust without having to declare the income so he or she can use the deduction against their other ordinary income and unlike the IRA Rollover the money going to charity can go to a Donor Advised Fund.
  1. The SCIT can be written so that it pays a large income to the spouse, for example 10% a year, and then pay that income to the children for a period of years, up to 20, after the surviving spouse’s death. Because one of the advantages of the trust is the ability to receive a current charitable tax deduction for gifts to charity, the SCIT is often written so that it has the least charitable value allowed by law, which is 10% of the value of the trust, and the greatest amount attributable to the income interest for the spouse and the children, which is 90%.       This will produce the highest amount of current tax deduction when gifts are given to charity during the term of the trust. The SCIT can also be written so that income can be distributed during the life of the surviving spouse to the children and taxed to them in their tax bracket without any income tax consequences to the surviving spouse.  Using an independent Trustee, the family can make the decision each year as to who will get the income - the surviving spouse, the children or charity.
  1. The SCIT can be written so that it is outside of the estate of the surviving spouse and the children so it cannot be reached by creditors. It would also not be marital property and would not disqualify beneficiaries from receiving government benefits like Social Security Disability or Medicaid.
  1. The SCIT does not have to be funded with all of the retirement plan. The spouse can roll over half of the IRA to their own IRA and disclaim half so it will go into the SCIT. In so doing, charitable deductions from the SCIT can be used against Mandatory Minimum Distributions from the personal IRA making distributions from the IRA tax-free.
The Spousal Charitable IRA Trust is a great way to enable charitably minded couples to plan to make significant charitable gifts, while saving taxes, after a spouse passes away. Because the trust is not funded until after the retirement plan owner’s death, it can be changed up to that time or the surviving spouse can choose not to fund it or only partially fund it. But if the SCIT is not in the revocable living trust and named as a successor to the plan, you will not be able to take advantage of the benefits.   If the spouse that does not own the plan dies first, then the SCIT operates as a Family Advantage Charitable IRA Trust (FACIT) for the benefit of the children at the owner’s death.   Its name is appropriate since it can act like a “faucet” to flow income to children with reduced taxes. The payout to children could be 10% of the value for 10 years or a term up to twenty years and then the assets in the FACIT will go to the charities of your choice or to your Donor Advised Fund. This enables you to give the assets in your retirement plan away twice, once to your children for a term of years and then to charity.   Unfortunately, unless congress changes the law, the SCIT or FACIT cannot be funded during the retirement plan owner’s lifetime, which would make the benefits even greater.



Moritz and Associates, PC has been in business for over twenty-five years. We have helped clients with this type of estate planning technique and would be happy to help you implement this plan or customize a plan specifically for your situation.

 
IRS CIRCULAR 230: UNDER U.S. TREASURY REGULATIONS, WE ARE REQUIRED TO INFORM YOU THAT ANY TAX ADVICE CONTAINED IN THIS COMMUNICATION (INCLUDING ANY ATTACHMENT) IS NOT INTENDED TO BE USED, AND CANNOT BE USED, TO AVOID PENALTIES IMPOSED UNDER THE INTERNAL REVENUE CODE.

The Future of Planned Giving

By: Bill Moritz, JD
Executive Director

Based on a report by the National Council on Planned Giving’s Strategic Directions Taskforce

In 1990, young fundraisers hoped they might grow up to be planned giving officers. They sought the pinnacle of their profession—the most specialized knowledge, the wealthiest donors, the top nonprofit salaries and respect usually reserved for the most experienced estate planners. The National Council on Planned Giving grew by more than 1,000 new planned giving council members every year throughout the 90s with very little recruitment effort. No organization wanted to be the last to offer its donors the complex and coveted CRT. Fifteen years later, philanthropy and fundraising practices have changed. The economy and the geo-political climate have reorganized priorities for many Americans, with a related reorganization in the prospects of charitable gift planners. The number of people involved in gift planning has actually increased since 2000, but there are fewer specialists. More nonprofit planners are doing gift planning among other duties. In the for-profit professions, more financial and legal advisors are incorporating charitable planning into their general practices. As many of the job postings suggest, many people who work as gift planners are not narrowly focused on traditional planned gift vehicles.

Three new trends have shaped the prospects for gift planners and the plans for their national organizations. 1. The self-directed consumer, whose professional experience and access to information combine to make him less reliant on the advice and services of a gift planning professional. 2. For-profit advisors are directing more of the planned giving decision-making. 3. There has been a convergence of planning that deals with wealth and family values. It seems that once wealth-holders recognize their families are financially secure, they tend to look for deeper purposes for their material means.

The National Council on Planned Giving conducted an exhaustive study of the environment surrounding the field of planned giving and came up with some interesting conclusions about the future of the industry.


The study came up with eight key conclusions about Planned Giving within the Field of Development.

1.      The erosion of planned giving as a separate specialty within charities’ development offices is ongoing.

2.      There is an increasing emphasis by charities’ senior management on current dollars and the bottom line, with a resulting shift in resources toward major gifts fundraisers.

3.      The number of highly specialized gift planners within charities is dwindling

4.      Changes in tax laws and the economy over the past ten years have reduced tax incentives for planned gifts, and reduced the visibility of the most common planned gift instruments.

5.      A small top tier of charities tend to have sophisticated planned giving operations, while the majority of charities have few if any fundraising staff that specialize in planned giving and most staff have limited understanding about the basic principles of planned giving.

6.      In local charities there is an increasing demand for generalist programs, ie. fundamentals and marketing, and a continuing debate about whether planned giving specialists exist to serve solely the charity or a broader notion that planned giving serves the donor first and the whole charitable community.

7.      Senior management is less and less willing to buy into a distinction between planned giving and major gifts.

8.      Most small and mid-size charities are doing little to no active planned giving work. The trend is toward hiring major gifts officers and then hoping for the best in terms of planned giving.


The study came up with five key conclusions about Planned Giving and the Financial Services Professions.

1.      An increasing number of planned gifts are being structured by professional advisors and charity is very often not included in these conversations.

2.      Many donors are seeking technical advice from professional advisors, who are not necessarily better informed or more technically proficient than in the past but they have products to sell or commissions to earn.

3.      There is still underlying suspicion of –and negative feelings for—professional advisors among planned giving officers who feel excluded in the process.

4.      There are many segments in the ranks of professional advisors, and each segment has differing needs and interests relative to their work and charitable gift planning. They often have a product agenda.

5.      Professional advisors are doing more seminars and outreach on planned giving and think of themselves as gift planners with a more global and holistic plan for clients than charities.

The study also came up with several conclusions about the Accessibility of Information.

1.      Information about charitable planning has proliferated, and is now easily accessible to all.

2.      There is a heightened charitable awareness and receptivity among donors.

3.      Planned giving officers have less control over the gift planning process and are not the only source of information and advice.

4.      Models for planned giving operations based upon the ability to control and manage the information are no longer effective.

5.      Private foundations, supporting organizations and donor advised funds are proliferating as record numbers of donors are implementing gift structures that increase their active involvement.


Finally the study came up with the following key conclusions about gift planner knowledge and expertise

1.      Despite an abundance of options, the need for high quality continuing education for gift planners is still critical.

2.      An increasing number of planned gifts are cultivated by major gift officers and professional financial advisors, many of whom have rudimentary gift planning knowledge.

3.      A number of planned gifts are thwarted or not pursued, due to lack of knowledge by major gifts officers and professional financial advisors.

4.      Planned giving officers can now work smarter and faster due to rapidly evolving advances in technology.


The critical needs in the area of planned giving for existing charities who might be considering outsourcing their planned giving program are:

1.      A Planned Giving service provider with technical expertise who can complement and work with major gift professionals at the charity and provide services “a la carte” for the charity based on their individual needs and the needs of their donors.

2.      A Planned Giving service provider who can be brought in by charities that is respected within the financial profession and who can work directly with the professional financial advisors and assist them in structuring and closing planned gifts that will benefit the charity.

3.      A Planned Giving service provider who understands the new landscape of private foundations, supporting organizations, charitable trusts and donor advised funds and can help charities work with donor who are utilizing or would like to utilize these tools of charitable planning.

4.      A Planned Giving service provider who can help the charity with both simple and complex charitable solutions for donors that keep the charity relevant and involved in the planning process focusing on both current gifts and future gifts.

5.      A Planned Giving service provider who has a comprehensive understanding of the fields of estate planning, business planning and charitable planning and will help educate the major gift advisors at a charity and work with them to serve the donors of the organization more completely.

6.      A Planned Giving service provider who cares about the charity and its development staff and who will work to build a successful planned giving program for the charity, on their budget, and work to enhance the relationship between donors and the charity and its staff as a member of the development team, not a stand-alone service.


The New Horizons Foundation specializes in helping donors with Planned Giving arrangements and has been in service for 25 years. The Foundation provides sophisticated charitable services to its projects and also serve the needs of separate charities and their donors in this changing landscape. If you would like to talk to a stewardship professional at The New Horizons Foundation about the possibility of having the Foundation provide support services to your charity, please give us a call.

How to Start a Successful Project

How to Start a Successful Project

1. WHY – Why do you want to set up a project? It helps if you start with something that you really care about and are willing to spend time to develop.

2. WHAT – What are you raising money for and what is your funding goal? Be specific about what you are doing, how much money you need and how the money will be used.

3. HOW - How are you going to raise the money necessary for your project? The easy answer is by rallying your friends and family, but it is always a good idea to think broader and develop a fundraising plan beyond just a simple ask.

4. Now that you have the basics, set up your project account at the Foundation. You will need the following information to get set up:

a. A project name – choose a descriptive name that will make an impression.

b. A picture or video of your project in action or a logo that will be a brand for your project.

c. A concise narrative description, 255 characters, covering what the project is all about.

d. A headshot picture of you, the project manager and the location of your project activities.

e. Complete the Operating Project Application with a broader description of your charitable purpose and activities, a first year budget and send them in with your initial funding for the project of $2,000. All but 5% of this will be available for you to use in your project activities.

f. You will be set up on the website as a project and will receive a username and password. You can now begin to raise funds for the project. You can also edit and update your project information at any time and get information on who has given to your project, money available and distributions you have requested from your project. All of the forms used in the foundation are available in the FORMS SECTION of the Project Manager page and can be submitted online from anywhere in the world. The charitable contribution information is uploaded every night to the web.

5. Now that your project is active, it is time to start your fundraising. First, make a donation to your own project so you can see what happens. Don't ask friends and family to donate until you have set the example and you know what information they will receive. This may also give you a chance to set the benchmark that you would like to see for the average donation.

a. Assemble an email mailing list of friends and family, write your first post and email it out to the mailing list with a link to your webpage. Personalize the emails if you can. Most people don't mind pitching in for a cause if a friend or family member is involved and is passionate about it. Personalized invitations to contribute work way better than mass emails.

b. Face to face presentations are even better. Develop your "elevator speech" and include the following information:

Why is it important?

Why is this the best way?

Why me?

Why now?

Get in front of as many people as you can to explain your project. Not only will you become more polished the more you present, but you will become more passionate about the cause as you present it over and over again.

c. Send out a broader informational appeal to your social media contacts on Facebook, Linkin, Instagram etc. and let them know what you are doing and invite them to be involved.

6. You now have a few donations and are moving toward your goal. It is time to update the original donors and connect in new people. Tell them what you are doing, what you are feeling, what you are thinking and any results you are seeing. Talk about why you are doing it and tell your supporters a little more about the cause. Build your mailing list, both email and snail mail. Ideally, your mailing list should be at least 5 times the size of your donor list. You should always be in the process of connecting with people at a deeper level linking them with what you are doing. Go back to your family and friends and ask them who they know that might be interested in what you are doing and if they would use their social media to introduce you to more friends.

7. See what other people who are raising money for similar causes are doing. Should you host a dinner or dessert, run a race, give up something for the cause, etc., it is always good to do things that connect people with your cause. Maybe you should invite people to do a Personal Fundraising Page for you, see "FUNDRAISE FOR THIS PROJECT" on the website.

8. Check your website regularly to see who is giving and to keep the content fresh. Every time you add an update to the website, send it to your mailing list. Pictures and video are very important for your website. I have a friend in the marketing business who says, "if there isn't a picture or a video, it didn't happen!"

9. Continually thank your supporters and meet with them or talk with them by phone. Tell them how their money is being used and what an encouragement they are to you. The goal is to build long-term donor relationships that last beyond the first gift.

10. Evaluate your commitment and act appropriately. Is this a hobby that you pursue in your spare time, a part-time job that gives you a sense of purpose along with your other work or would you like it to be a full time job. How you answer this question will determine how diligent you will be in your fundraising activities and how professional you will be in your ministry.

11. If you are committed to the cause then you need to assemble a posse. Nobody makes it in ministry alone. While you do not have to have a formal board, you do need people who you trust who can help you and give you honest feedback. People who will have your back when the going gets rough or things get discouraging.

12. Plan ahead for both ministry and funding. Develop a broad three-year plan, but focus on specific goals over the next six months. Pick 5-6 things that are critical to accomplish, that if done will have a major impact on your project. What would you do if your funding goals are exceeded and what will you do if funding falls short.

13. Consider setting up your own website. If you build it, they will come! Catchy phrase, but not really true on the web. They will only come if you drive traffic to it and use the website to better brand your project and better explain your cause. All of the resources available to your project in the Foundation can be plugged into your website and linked back to the Foundation. You can also set up a cause page on Facebook, post regularly and track the traffic.

14. Begin to network with others who are committed to your cause or who you can partner with to cross promote and provide mutual benefits. These people are not your competitors, they are fellow enthusiasts about your cause and we all are better together.

15. Celebrate accomplishments, important events and ministry milestones. The longer you survive and the more you report, the more committed your supporters will become. Give them opportunities to celebrate with you!

For help or questions about starting your project or making your current project more successful, please contact us directly.

The Choice Between Doing Good and Doing Well

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THE CHOICE BETWEEN DOING WELL AND DOING GOOD
by Bill Moritz

            Today we have massive social issues that need to be solved, yet a tiny nonprofit sector assembled to address these significant social problems. The way that we think about charity and nonprofit organizations is wrong and we are undermining the causes that we love. Charity is the marketplace for love and we have handicapped our organizational effectiveness with some faulty thinking. We are forcing our best and our brightest to make a critical choice between doing well for their families and doing good for society.   The way that we think about charities causes us to discriminate in 5 major areas:


1. COMPENSATION.   One primary element of the problem is that often the people best able to tackle the problems, our most promising social entrepreneurs, as they start to head toward age 30 must make a critical choice between doing well for their family and doing good for society. A study was done of Stanford MBAs who were now 40 years old. The study found that the average median income for a graduate working in business was $400,000. The average median income for a graduate working in a nonprofit organization, other than a university or hospital, was $85,000. Over a $300,000 a year difference! Over the course of 10 years, the graduate working in the nonprofit sector, can be expected to earn as much as $2,000,000 less than his or her counterpart working in business. A business graduate would be far better off financially if, at the end of 10 years, he made a $500,000 contribution to a nonprofit organization and received a charitable tax deduction, instead of working for the nonprofit.   He would also receive much greater accolades from society and would probably wind up being on the board of the nonprofit and, in essence, being the nonprofit Director's boss. We are losing the talent battle in the nonprofit arena as people grow older because of the huge sacrifices we ask them to make.


2.   ADVERTISING AND MARKETING. We chastise charities that spend a lot of money on fundraising, advertising and marketing like there is greater virtue in a bake sale that spends 5% of its budget on marketing and makes $200 versus an international relief organization that spends 40% of its budget on marketing, but raises $2,000,000 for the cause. We have confused morality with frugality and the disadvantaged of the world have suffered for it. People are yearning to be involved in something worthwhile and they are weary of being asked to just give the least of what they can do. People want to be a part of a grand vision to do great things, contrary to popular belief, most people over 30 also want to save the world.


3. TAKING RISKS. We are reluctant to try anything new in nonprofit organizations particularly in fundraising, marketing and advertising. If you kill innovation in these areas, you can't raise more revenue. Without more revenue you can't grow and if you can't grow, how will you ever solve big social problems. In the real world, 50% of the jobs that people have today did not exist 10 years ago. In the nonprofit world 98% of the jobs today all existed 50 years ago. We have created a closed system with very little innovation and entrepreneurs are driven from our ranks. From 1970-2010 the number of new businesses with revenues of more than $5M grew by 1,000 times more than the number of nonprofit organizations with $5M.


4.   TIME. Amazon went for 6 years without making any profit and people had patience because of their big vision, it was easy for people to see and understand. People in nonprofit organizations are not rewarded for having big visions that may take time to develop. Regardless of the size of the vision, charities have to make a difference today or they are not worthy and will be gone tomorrow. This forces nonprofits to play small ball nibbling away at problems instead of taking them on with bold ideas. Some good ideas take time to mature and we must have the patience to stay with what we believe in.


5. PROFIT.   We do not allow organizations that make a profit to operate in the nonprofit sector and in fact they are shut out of capital markets. If you want to make $50,000,000 selling violent video games to kids, we will put you      on the cover of a magazine, but if you want to make money in a charitable organization helping people move out of poverty by helping them establish businesses or find a cure for cancer then you better not make a profit doing it. Even though you do significant good for social problems, you are a pariah with questionable motives that needs to be investigated. We need new models of partnership between business and nonprofits if we are to generate any scale to deal with the massive social problems of today. One of the killer questions for innovation today is, "What percentage of my gift is going to overhead?" Overhead is not a negative, in fact overhead in the form of fundraising, marketing and advertising is what we need if are going to grow our nonprofits to meet the challenges. It is the engine that will get us where we want to go. The better question to ask is "what is your vision and what was the organization able to accomplish?"


We must expand the way we think about the funding and operation of nonprofit organizations if we are going to meet the challenges ahead. New ways of funding must be created and tried that expand on what we have always known or done before. Fundraising or marketing needs to be viewed, in many cases, as a series of experiments looking for evidence of repeatable outcomes. We need to be constantly looking at things in new ways and staying up with social media and trends in society so that what we present in fresh and interesting to the people we want to support our cause. The lines between for profit and nonprofit may become blurred as we explore creative ways to change the world and structure a better playing field for social entrepreneurs.


The New Horizons Foundation has been in operation for 25 years, sponsored over 400 projects and invested over $100,000,000 in charities and charitable projects in the US and around the world, we have the experience that you need. We specialize in helping social entrepreneurs make the most of their time, treasure and talent to change the world. Old solutions are not always adequate to solve today’s problems and so we specialize in creative solutions. You bring the vision, we will supply everything else! We would be happy to discuss your vision and give you a no obligation review of different ways that you might consider structuring and funding your project or charitable organization to accomplish your goals and objectives.

New Horizons Foundation


The New Horizons Foundation, founded in 1989, is a nonprofit, tax-exempt, public charity, organized and operating under the laws of Colorado for the purpose of helping individuals accomplish their charitable objectives in religious, educational, scientific, benevolent and health related activities.  Read More