Moderator: Dana Bezerra
Program Officer, The F.B. Heron Foundation

Lets start.

My name is Dana Bezerra and I'm a program officer with the Heron Foundation. In part of this session our guests will introduce themselves. When we get to the dialog part please jump in. It is actually more important to think about this as new approaches to funding and not fund raising. This is an important topic because we are seeing public funding across the board diminishing The grant funding cycles can be quite time consuming. The goal of this session is to think outside our funding boxes.

What if I told you there are new innovations going on that distributed $15m year to date and $100m since inception. Before we turn it over to them lets tell them who is here.

(For the nonprofits in the room)
1f. What is your annual level of revenues?

A. Less than $250,000
B. At least $250,000, but less than $500,000
C. At least $500,000, but less than $1 million
D. At least $1 million, but less than $5 million
E. $5 million or more

(For the nonprofits in the room)
2f. What % does earned income represent of your overall revenues:

A. 5% or less
B. At least 5%, but less than 25%
C. A least 25%, but less than 50%
D. At least 50%, but less than 75%
E. 75% or higher

(For the nonprofits in the room)
3f. Do you have at least 1 FTE devoted to fundraising/development?

A. Yes
B. No

(For the nonprofits in the room)
4f. Do you have relationships with individual donors?

A. Yes
B. No

(For the nonprofits in the room)
5f. Have you ever tried to raise money online?

A. Yes
B. No

This time only say yes if you have solicited online and accepted money online.

(For the nonprofits in the room)
5f. Have you ever tried to raise money online?

A. Yes
B. No

What we are going to do now is have each panelist introduce themselves.

Not asked:

(For the funders in the room)
1g. Have you ever provided funding to enable a grantee to pursue individual donors?

A. Yes
B. No

(For the funders in the room)
2g. Have you ever provided funding to enable a grantee to raise money online?

A. Yes
B. No

We do support the Aspen Institute and Fanny Mae and others in this space. We began in the end of 1999 because we recognized the world of giving is done in a very archaic way. The internet provides a revolution in giving in a much more granular way and provides feedback. It allows the donor to be emotionally engaged in the whole process. The donor needs to know what has happened with their gift - they feel its clear, they are recognized and they can see the impact.

The engagement layer is anything a constituent might do with a non-profit. One of the best ways is to get consumers involved in ad campaigns and they are ready for deeper interactions. There are friend to friend solicitation and social networking opportunities. These new social networking sites are getting the attention of the world now. Where people are is where they expect you to be.

The amount of funding that has taken place online is astounding. It's much more personal and dramatically enhances it. There was about $5b donated online last year and its been doubling every year. Even things as simple as direct mail campaigns will connect to the internet. About 77% of people will go online and check the campaign even if they don't donate. The online world is very relevant to non-profits now.

The front office is what keeps track of all the interactions with an organization. The Southern Baptist organization had a database made up of 48 different databases. Social serum - what are you interested in and what have you done? Social wallet or social accountability. If I donated in this activity what happened over time? What's important overall is the consumer has an expectation of emotional interactions. It is equivalent to google or ebay or myspace. The consumer is viewing you based on these experiences. Applying this - the tools of today can be accessed on a very easy basis now.

Having a full featured set of tools that can be applied by marketing and business people to enhance their businesses.

I was at a meeting where Harry said that if people can meet and get married online they can learn to give money online.

I appreciate being invited here. At the end of last year I sold my firm and I am now at UBS. The genesis for me to make the change was this idea of scale. What happened over the 22 years I was doing this is the space had grown immensely. They wouldn't invest with a small boutique firm like mine but they wanted the values and the impact we were getting.

I'm thrilled to be with UBS. I'm really impressed with what they are doing. I've been into SRI (socially responsible investing) and I didn't know they had an SRI research team in London and a bio-fuels index and other things. I serve on our social benefit board and I run a social benefit conference.

Who are my clients and what are they looking for? I am an advisor for high net worth clients and foundations. There are all kinds of acronyms being used to describe what we are doing. We use a lot of tools to help them. Maybe we screen things out of their portfolio or maybe we screen things into their portfolio. We help them vote their proxies. We will engage companies on behalf of our clients. Our Foundation clients might have something that is important to them around biking and we might talk to computer companies for them about reducing waste. Instead of just giving a certain amount of money to this issue we were able to take a lot more of their money and put it towards their mission and vision.

Community investing is something we do for our clients. Our clients invest about 8% of their portfolios in the community.

What is UBS doing in the area of philanthropy? One of the things they have done is partnered with Ashoka who invests in micro-enterprise and micro-entrepreneurs. We've got a program for an Ashoka Fellow. Our focus for that program is Brazil, Mexico and Argentina.

Thank you for inviting us. This whole idea of socially responsible investing is often thought of as mutual funds. Companies that are screened in have good environmental practices and some companies are screened out. The Calvert Social Investment Fund was started in the early 80s. Screening and shareholder action can only go so far and they realized they could use the mutual fund assets themselves and use them to invest in community development. There is 1% set aside for this.

The experience of the fund went so well that they launched the Foundation to move to community investment as a new asset class. The main way we have gone about creating community investment is to create an instrument (you can invest as little as $1000 and they can choose their interest rate and their term). The full value is then lent to the types of organizations that are here today.

We started in 1995 and I joined 18 months into its existence. We are now about $105m note sales and a X portfolio. The securities industry is quite regulated and the distribution networks are quite controlled. We are really often focused on the in-between space. We are really using a financial instrument but we are a soft financial instrument because we fall between the returns that are expected from a financial instrument.

We are always active to look for borrowers. Our product is a general recourse loan. We are also a source of capital for affordable housing projects. We have about 200 borrowers at this point. Our loans range from $50k to a couple million. Our funds are not as inexpensive as we would like. We are currently lending in the 4 to 4.5% range.

Q - You two have worked together. Can you talk about how that has evolved.

Shari works with both spaces. Calvert must have some credit for this. The socially responsible investing community have wrestled with these things for a long time. There are a lot of us would work with Calvert no matter what but we had to think like the UBS and Merrills of the world. There had to be a compensation option and a number of things that are structured into the product. I don't consider myself unsophisticated but what you do in this room spans a huge range of expertise and areas of interest. Calvert has put this into an application that is so elegant - it only has something like 5 questions on it.

The concept that resonates with my clients is impact. They have done an excellent job of talking about what happens if my client does something. They also talk about leverage. You can give away this amount of money but you can also invest this amount of money and get this kind of impact.

One of the things we do is to give awards to the financial advisors that have promoted socially responsible investing. It is really important to understand the business of the people we are working with and working through. We do pay commissions - they are small - but we do pay them. These are professionals just like anyone else. We have also had to work hard for the distribution of these securities. We have now resolved matters so it will exchange just like any other investment instrument. They now show up on your brokerage statements.

There are a bunch of financial individuals committed to this. You can check Socialinvest.org and you can learn about more professionals that are committed to this field.

How many of you have funds that are managed by an investment firm? We are used to leveraging down but we very rarely try to leverage up that pipeline. You can leverage your assets to get things from these partners.

Q - Back to fundraising, we talk about telling our story, in terms of fundraising, are you one of the companies that put a Donate Here Now button on their site?

It has to do with creating communities online to get people engaged in activities online and they hear about why they want to get engaged. This year our non-profits will raise about $1.4b using our tools. Today we have 180m people that have donated online and we have records of those transactions. An example from Dallas: employees will become involved in a walk and they will send emails to their friends and they will click on a link and a very high success rate of donations will come from this. That is just one example of how these tools work.

You have a record of every transaction. Does that mean can you have a complete record of interactions with people that have more complex needs? The data is very robust and some of it falls into the privacy category. You get a complete record of what they do. There is also external data that is available and we overlay all public data on top of our customers data.

Q - How is an interaction with an individual different from a Foundation or a more corporate organization?

We believe the individual is very important. What we found is the decision making process is much slower with larger institutions. For a lot of average individuals you can see the connection between making a softer return and making an impact as well. It often takes a high worth individual that can act on a decision in a quick way.

On the other hand when I hear about broader efforts you need to go to larger organizations and raise more money.

I would agree with what Shari said. My work has been based on individual investors. There are concerns about fiduciary responsibility and a lot of organizations had boards from a traditional financial background. If you are a mission driven organization it is no longer an issue to include mission based investing or socially responsible investing in your portfolio. A lot of time there are leaders and learners. The leaders have been a large donor in a community that wants to see a change.

Heron Foundation Board has chartered us with locating investments that 30% of our endownment will be socially responsible.

They are being very low key about the work they are doing.

My experience is that Foundations are hesitant to do program related investments. It seems to make sense to take the corpus and invest that money in mission work. We encourage program related investments that are required to be below market. We carry our mission driven investments on our books.

There are an affinity group of PRI Makers - talking to people to have them check out primakers.net - it is a collective endeavor to share information across foundations.

We are exploring maintaining a deal flow database. We do lengthy due diligence. If we are going to invest the time and money for due diligence there is no reason another foundation can borrow that.

Q - there is a ton of residence to individual giving. You really have to look at the giving market in two segments - one to many where you have 5 or six themes and you are talking to 100,000 people at a time. You can spend less then 10 cents to get a dollar. Within the first year you see somewhere between 25,000 or 100,000 people that join.

People do donate at a surprising rate online. We have a number of organizations that have just one employee.

The major gifts are a bigger challenge. You have to have a way to cull out the people that can give a million dollars. That takes a lot of time to do that. The goal is to find people that are interested in your causes.

The way it works on the internet is peer to peer and it grows itself. To buy a list is a bad thing. You start out with negative trust. You have to get people to send emails to their friends.

The state of CA did a bond fund and we did an email campaign. They get a life of their own. It depends on your creativity and how you write your message.

Q - I wish we would explore more the marketing and branding so more high net worth organizations can see our organizations and our causes. Higher education have done this well. As an outsider I think we need to do the development work and touch base one to one. I'm hesitant to throw those nets out so wide.

It wasn't that long ago when I went to American Heart and American Cancer and they said NO. I explained to Visa how they worked and I got a quarter of a million dollars to bribe them to do this.

I don't think it can't be done. Its a great opportunity to do it right and create the awareness.

Habitat for Humanity got $2m their first day. Higher Ed had a resistance originally but they are coming to us now because their giving rate is at the lowest in history.

We have mentioned this - its not an either or. Its another tool in the tool box. One on one is great but if you want the scale that you want you need to think differently.

If you want to use all the tools available to you you have to consider all the options.

Q - Can you give us a few examples of small organizations that have fully featured web sites? There is one that is called lifegoeson.org (number one ranked site on myspace - 52,000 people - they raise about $1m per year.

Lance Armstrong is one example. Heifer International is one as well. Someone that belongs to Heifer automatically have their credit cards debited every year.

We have to be open minded and we can't think it won't work here. People can begin to identify with opportunity investing as much as they do with Heart or Cancer.

Q - How does an organization of one person handle donations of $1m? The credit cards are handled by a bank and the checks come to a bank and our software aggregates everything. What Harry has done has created a back office service that we can all take advantage of.

Q - if we were to come up with a figure for Texas CDFIs that do small business lending and affordable housing and if we came up with an alternative investment vehicle what is realistic for a five year goal? In terms of what might be possible - anything.

PIck a number $20m in five years and go for it. I do cover Texas and I would say, lets do it! I have one example that comes in mind but it doesn't relate to Texas.

Disasters occur and things get very popular and it is not uncommon for us to see $20m or $50m come in in one day.

We are working tomorrow and we can get some traction to keep going!