Fundraising costs at LCMS, Inc.

A year ago, when Synodical President Gerald Kieschnick and Board for Communication Services executive director David Strand tried to make the claim that Issues, Etc. was responsible for the financial problems at KFUO — indeed, it was the only cut that could be made to salvage the financial health of KFUO, many of us thought such reasoning was ridiculous.

I would now like to draw your attention to a tidbit from the most recent board minutes covering KFUO:

“Treasurer Kuchta returned to the Monthly Operations Reports, noting the negative variance for KFUO and expressing concern regarding an apparent reduction in contributions compared to the previous year. He also noted that KFUO paid $188,000 to the LCMS Foundation for fundraising, resulting in $240,000 in revenues. Revenue received from FM station advertising remained constant compared to the previous year.”

Note:
1) reduction in contributions compared to previous year.
2) Paying $188,000 to raise $240,000. I don’t think you have to have an MBA to realize that spending 78 cents to raise one dollar is problematic. Again, industry standard is much lower than that.

I recognize we’re in a tough financial climate but when will these bureaucratic heads be held responsible for this waste of money and resources — not even getting into their lack of theological direction? These fundraising costs have been sky high for many years. This can’t all be blamed on an economic downturn.


Comments

Fundraising costs at LCMS, Inc. — 17 Comments

  1. Being ignorant on the matter, is it possible that the LCMS foundation has, um, ties to one of the executives in the LCMS? A common pattern in a corrupt not-for-profit is that either the fundraising is done by an inefficient family member or else program expenses are paid to the same.

    Beware of family run not-for-profits.

  2. Unless I’m misreading what you said (you didn’t provide a link to the actual minutes I don’t think):

    Technically, they raised $428,000 (the $240,000 raised plus the $188,000 cost of funds).
    They paid $188,000 to raise that $428,000, resulting in $240,000 in actual receipts to KFUO
    Therefore, they paid 43.9 cents to raise $1, not the $0.78 that you list.

    Is there information that says whether KFUO-FM is paying for itself or not, and how much is paid by KFUO-FM for their fundraising? Is there information on how much of the $800,000 that friends of Classic 99 group (“Circle of Friends” is what I think it was called) mentioned in the article in the paper actually made it through to KFUO-FM?

  3. “Treasurer Kuchta . . . [noted] the negative variance for KFUO and . . . an apparent reduction in contributions compared to the previous year.”

    I can think of 7678 reasons why contributions might be down. You can read them here: http://www.PetitionOnline.com/mod_perl/signed.cgi?Issues.

    I had thought of sending a note in response to the continuing appeals from KFUO explaining that I supported Issues, Etc. and continue to do so. It was the only reason I ever sent money to KFUO. I decided to save myself the cost of a stamp since the powers that be at KFUO and the BCS haven’t seemed interested in what so many of us have had to say about KFUO in the past.

  4. Mollie or someone, where can I find the Board minutes online?

    Thank you.

    ps: My brother, a professional internal auditor, suggested that restricted gifts may be the way to go for persons who want **all** of their donation to go to a non-profit organization. The donation should be given as ‘restricted” with a note as to how it is to be spent. The donor should expect back a letter from the non-profit confirming that the money is being spent as instructed.

    In theory, if an audit reveals that the money was spent elsewhere, the non-profit has to answer for that.

    It’s a Swiss-cheesy peace of mind, but it’s better than knowing that only $57 of your $100 donation actually got to where you wanted it to go.

  5. BOD minutes online are found here.

    BOD home on the LCMS.org website is found here.

    Re: restricted giving. Most organizations will allocate the restricted funds to the appropriate fund, then reduce unrestricted giving to that fund by the given amount. I’ve been at churches where the building fund budget is say $5000 a month. If I and a group of people give $1000 a month to try to reduce our debt faster, does that mean that they will pay $6000 a month towards the mortgage, or just include the $1000 in the $5000 that is already allocated, meaning the debt is not paid off any faster than it would have been?

  6. Norm, what you say about restricted giving is probably true in a number of cases. I guess it eventually comes down to whether you want to support an entity so much that you will give to it, even knowing that the final say-so over your donation is not yours.

    And apropos the $800k raised by the Circle Of Friends …. I don’t remember hearing exactly how the FM station benefited directly from it. But I am relying on what I hear as a Friend and on-air. I’m not very active in the group, so probably miss a lot.

    Thanks for the links, too.

  7. And this is the bunch that wants us to implement all of these stewardship (read: fundraisers) in three-ring binders and slick DVDs. Stewardship has little to do with money..

    Are we sure we want to spend all these limited resources on re-taking the synod bureaucracy?

  8. One other interesting tidbit from the minutes…the Fan into Flame effort has spent $12,417,265 to garner just $36,444,285 in pledges. Rough math says that equates to nearly 33% of every dollar raised is being spent on raising the dollar…more than twice what is considered the maximum (15%) any organization can spend on fundraising. In fact, anything more than 15% must be explained to the IRS on the organization’s non-profit return. I only know this because I used to work for a non-profit and this was in the scope of my responsibilities.
    I think hard questions need to be asked about this.

  9. Norm,

    Looking at the minutes, I think Mollie’s math is probably right. But we’d have to see the balance sheet to be sure.

    Had Kuchta reported a “gain” or “profit” (a word he probably wouldn’t use in this context, but a more accurate one if you are correct as to the math), you would be absolutely right. But here we just have a report of how much spent and then how much was brought in.

    Given that the actuals for Fan Into Flame are in the minutes, and are reported as straight math, I think it is reasonable to assume that Kuchta is speaking about KFUO’s finances in the same way.

    But either of us could be wrong. We need to see the balance sheet to be sure.

    At any rate, giving is down. Wonder why?

  10. Phillip: Wow .. if the original math is correct that’s simply astounding! So you think that KFUO only received $52,000 from the fundraising!?! That’s not enough money to support a radio station! Thanks for taking a closer look at the minutes.

    Somehow there has to be a lot more light put on the finances of synod entities. I took a look at the Fan into Flames annual report that has been talked about elsewhere here, and the numbers are simply astounding. I read somewhere that the goal is 10% cost of raising funds for the program; unless they are paying nothing else to the fundraisers, this is NOT going to happen.

  11. I e-mailed Tom Kuchta for an answer yesterday. He kindly responded this morning. His reply:

    “They raised net 52000. You should note this is FM.

    Tom”

    Mollie was right.
    Perhaps more donations will come in which will lower the percentage taken by the Foundation???

  12. JR: Thanks much for getting that information. That is simply astounding! That a capital campaign would pass just 22 cents for every dollar raised on to the recipient is completely unbelievable!!

    Aren’t there federal regulations about this type of thing?

  13. One problem in understanding all this [for me] is: For our fundraising and in particular this Foundation fundraising for KFUO FM…is there a set amount charge by the Foundation at the beginning and after that whatever is raised/collected goes to the ‘client’? So the % rate is ever changing after the initial costs are recovered.

  14. J.R. — excellent question. I should know the answer. I’m almost positive it’s “yes.” And if it is the case, it says something about the incentive structure built into the fundraising operation.

  15. Bubbles,
    “We’re all family here.” 😉

    And our SP used to work for Lutheran Foundation of Texas. Someone else will have to tell you if that’s a filial connection. 🙂

  16. “One other interesting tidbit from the minutes…the Fan into Flame effort has spent $12,417,265 to garner just $36,444,285 in pledges. Rough math says that equates to nearly 33% of every dollar raised is being spent on raising the dollar…more than twice what is considered the maximum (15%) any organization can spend on fundraising.” –Darrel

    Should spend… our local version of United Way lists organizations which spend more, (but I donate to someone else.) “In GOD we trust, all others pay cash.” A pledge is a good intention until they do, especially this year.

  17. “ps: My brother, a professional internal auditor, suggested that restricted gifts may be the way to go for persons who want **all** of their donation to go to a non-profit organization.” –Walther descendant

    Maybe. How many millions, “designated”/”restricted” to world relief/human care are currently “loaned” to prop up the Violet Vatican’s standard of living-beyond-its-means?

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