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April 23, 2024

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From the Desk of

Kevin Smyrle ¦ Associate Partner

A.I. is a Tool NOT a Substitute

Are you tired of hearing about AI and how it’s going to change literally everything that we do every day? I certainly am.

I’ve always considered myself somewhat of an early adopter when it comes to technology. I’ve had Palm Pilots, Blackberrys, iPhones, iPads, Kindles, etc., all within the first iteration or two being released. I’ve also either adopted or tried to adopt any number of software products to help with productivity…think Evernote, OneNote, Outlook, MS Project, and many, many productivity programs, philosophies, and systems.

Now, social media is something I never got into. I realize the reach of social media is unmatched, but I’m half a century old now, so the worlds of Facespace, SnapSlap, InstaPic, Tick Tack, and others will not miss me, and I certainly don’t feel I need them. Amazingly, these devices, apps, and programs all have a couple of things in common. First, they are TOOLS. These tools can no doubt be very effective in helping us do our work as fundraisers and non-profit leaders. Second, not even one of these tools DOES THE WORK FOR US. It still takes a human being to set up and use the tool in the best possible way to work properly.

Enter Artificial Intelligence. Suddenly, this can do the work for us. A.I. can tell us when to call our donors, when to follow up after a conversation, and what specifically to ask the donor about based on our prior conversations—all without prompting from a human. It can write your emails, social media posts and even script phone calls. Among many other things, it can even write this column if I get a little lazy.

THIS IS HUGE!!!

As the world grapples with AI and how it will change virtually everything we do in our collective work, I believe it is still just a tool—an amazing, efficient, perhaps life-changing tool—that we must embrace and learn to deploy strategically. It might even help one write a column for a newsletter when one has trouble getting started (although not in this case…honestly).

Our work, the work of connecting donors and volunteers to organizations and causes they are passionate about, is at its core a business about people, human beings. Our work has always been, is today, and forever will be a relationship business. You’ve no doubt heard this many times, but it cannot be overstated.

I’ve seen some thank you notes written by A.I. and I’ve received some notes clearly written by a robot.  “Danger Will Robinson” (showing my age again). There is no replacement for that handwritten note or personal email to say thank you for your gift. No replacement for that phone call and invitation to lunch. And certainly, there is no replacement for that face-to-face meeting to learn more about those who support your cause and physically see their reaction to new ideas and priorities.

Most of us still cherish that phone call from a friend or colleague. We read the personal notes we receive. We still write on paper. We cash the paper checks mom sends on our birthday. I’m willing to bet many of us still read paper books; I do (again, my age?). In the end, it’s the IMPACT that really matters. The impact your organization has on humanity and the impact a donor or volunteer has on your organization.

I’m not hating Artificial Intelligence; we should embrace it and its many possibilities. Let the tool help you establish a communication cadence with your constituents, help you through a moment of writer’s block, or prompt you to send that email checking in on your top donor or volunteer. Just remember, A.I. can’t deliver impact. Stay in charge of the relationship, human to human. If we don’t, then I fear Sky Net will become self-aware (circa 1984).

Few Wealthy Institution Participate in Diversity Study

A report from the John S. and James L. Knight Foundation finds that few of the wealthiest colleges and universities are willing to disclose their endowment information to get a complete view of how endowments are managed and what share is handled by diverse-owned firms.

The report set out to assess the degree to which the 50 wealthiest private and public U.S. colleges and universities invest their endowment funds with diverse investment managers. Less than half of the institutions contacted fully participated in the study. The institutions’ endowments collectively hold $566 billion in total assets, more than two-thirds of the nation’s higher education endowment dollars. 

The study began in 2021, and over the course of two years, only 18 of the 50 colleges and universities contacted fully participated; eight additional institutions chose to self-report their diversity statistics using the study’s definitions. The rest of the schools—34 institutions representing $273 billion in assets—declined to participate.

The report can be found here (PDF). PND, 4-23

A Snapshot of Independent Schools: Regional Associations

Southwestern Association of Episcopal Schools is up next. Let’s look at what participating schools raised in philanthropic funds in this regional association.

School Count   28
 

Advancement Median Funds Received for ’23-24 $1,817,306
Median Number of Donors 582
  
Median Percent Participation by
Constituency & Hard Credit Funds Received
 
Median % Participation by Parents/Guardians of Current Students 84.3%  $639,698
Median % Participation by Alumni/ae 5.6%     $54,094
Median % Participation by Grandparents of Current Students11.7%    $145,010
Median % Participation by Parents and Grandparents of Alumni/ae 8.8%     $145,110
Median % Participation by Employees 99.4%     $54,986

 


Trustees
 
Median Number of Trustees 18
Median Hard Credit Funds Received by Trustees $62,637
Median Soft Credit Funds Received by Trustees $80,681
  

Funds Received by Purpose (‘23-’24)
 
Median Funds Received for Current Operations: Unrestricted $750,013
Median Funds Received for Current Operations: Restricted  $303,656
Median Funds Received for Endowment $68,345
Median Funds Received for Other Capital Purposes $1,569,710
Median Funds Received for Irrevocable Deferred Gifts at Face Value $0


Data from NAIS Facts at a Glance.

Giving Remains Stable, Online Giving Rises

Most organizations saw very little year-over-year change in giving (-0.2 percent) in 2023. A report from the Blackbaud Institute found giving at the average organization remained well above pre-pandemic levels, with a five-year compound annual growth rate of 1.79%, illustrating a solid upward trend.

In addition:

  • Online giving continued to make gains, with 12% of giving occurring online in 2023 versus almost 8% in 2022.
  • Small organizations (revenue below $1 million) received nearly 17% of their donations from online sources versus nearly 10% for medium organizations and 12.5% for large organizations.


Based on a dataset of nonprofit organizations totaling more than $50 billion in fundraising revenue globally, the report, Blackbaud Institute Spotlight: 2023 Trends in Giving, can be found here (PDF). NPD, 4-17

DAF Regulations Loom

After years of concerns about how quickly Donor Advised Fund money reserved for charity gets distributed and whether DAFs need to operate more transparently, proposed new federal regulations are pending. Though the regulations would not create new requirements for how rapidly these funds distribute money, they do provide some new guidelines for what uses for DAFs are allowed by law.

The IRS released proposed new DAF regulations at the end of 2023 that would clarify what constitutes a DAF, who is considered a fund’s adviser, and restrictions on DAF disbursements.

  • The proposed regulations would identify certain distributions as taxable and declare that donors are not the only parties considered DAF advisers—the donors’ personal financial advisers are, too. This means the financial advisers, like donors, cannot receive any benefits from a DAF.
  • The regulations include the possibility that funds used to support lobbying or activities tied to political campaigns could lead to penalties for both the donor and the fund’s manager. And evidence suggests DAFs are commonly used to support lobbying.
  • tax would be levied on the DAF totaling 20% of the distribution and another 5% charged to a participating fund manager.
  • Investment fees paid to financial advisers for their services would become impermissible “excess benefit” transactions. The proposed new rules would require the repayment of their compensation plus a 25% penalty.

More information can be found here.

We Know Independent Schools
For more than 35 years, Alexander Haas has been a fixture in the nonprofit community. We are honored to have worked with so many remarkable independent schools, both secular and non-secular, across the country that help mold today’s adolescents into tomorrow’s leaders. Take a look at our list of independent school clients, past and present.

A Fresh Approach to Fundraising
Our services aren’t cookie cutter. We don’t operate with a boilerplate, merely changing names and locations. We craft each and every service we provide to match your organization’s unique needs, wants and abilities. We work hard and expect you to do the same. Together we can help you transform your institution, your fundraising, and the community you serve.

Whether your need is in Capital Campaign, Annual Fund Campaign, Major Gifts, Leadership Annual Giving, Planned Giving or all of the above, we take a fresh approach to nonprofit fundraising.