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Thursday, September 10, 2009

Case Study: Becoming a Top-Rated Charity Can Improve Donor Support and Increase Revenue

By Kim Sharkey, CFRE is the CEO of The Heuga Center for Multiple Sclerosis.
“On behalf of Charity Navigator, I wish to congratulate The Heuga Center for Multiple Sclerosis on achieving our coveted 4-star rating . . . As the nonprofit sector continues to grow . . . savvy donors are demanding more accountability, transparency and quantifiable results from the charities they choose to support with their hard-earned dollars.”- Ken Berger, President & CEO of Charity Navigator, in a letter dated January 30, 2009

In today’s economic environment, or any economic environment for that matter, determining ways to maximize donor support is a key strategic advantage. Many charities struggle with maintaining and growing donor dollars. At The Heuga Center for Multiple Sclerosis, we embarked on a path to improve our fiscal responsibility as a strategic step to increasing revenue. Improved ratings by charity watchdog groups, and the operational improvements that enable them, can allow a nonprofit to better qualify for institutional and corporate support, as well as remove barriers to larger donations from private individuals.

The Heuga Center for Multiple Sclerosis was founded in 1984 to offer programs for people with multiple sclerosis based on the philosophy of founder and former Olympic skier Jimmie Heuga. Heuga pioneered the use of exercise to help manage the disease. Programs have expanded to include focus on the whole person and family living with the impact of chronic MS.

The Center, headquartered in Edwards, CO, serves people with MS in the US and Canada. We operate with an annual budget of $1.8 million, a staff of fourteen and an adjunct programs staff of one hundred. We are governed by seventeen board members residing throughout the US.

The first critical step to implementing an operational improvement plan is getting stakeholders to recognize that something has to be done. A simple assessment of revenue results for several years can highlight issues within the organization. Changing operational methods is not easy. There needs to be a catalyst for change, or tipping point, which creates enough tension to get an organization through the recognition stage and into taking action.
Prior to 2006, the organization had no operational reserves, and had to exercise a line of credit in 2005 to maintain basic services. With 80% of revenues resulting from one principal event, the Snow Express, donor fatigue after 20 years of fundraising had become significant. The staff was consumed with running events, leaving little time to pursue other revenue opportunities.
Numerous discussions regarding the declines in event revenue had not resulted in a commitment to change at either the board or staff level. Borrowing money in 2005 was the catalyst. A capital campaign was decided to be the solution, and immediate steps were taken to launch one ASAP. Fortunately, a professional fundraiser serving on the development committee insisted in the use of a feasibility study as a first step to ensuring campaign success.

The study was performed by Roecker Consulting Group. Results included details regarding donor and stakeholder perceptions on use of funds and focus on mission. The inputs were not favorable. It was clear that success of a capital campaign was unlikely. This issue of donor trust became the tipping point. We made the strategic commitment to improve perceptions through operational excellence, communications and transparency in operations.

At a joint strategic planning meeting of Board and staff, we established a task force, with defined goals, objectives and tactics, to implement nonprofit best practices at The Heuga Center. Our decision to make quality improvements came directly from stakeholder feedback received in the feasibility study. Use of a strategic planning process was instrumental in aligning objectives and ensuring support at all levels. The goal “to be a top-rated charity” was one of three strategies determined to improve perception, increase donor trust and enable fundraising success.


We selected charity watchdog groups - one of which was Charity Navigator - as agencies to provide independent assessment of our operations. These organizations are highly respected for inputs on nonprofit quality. Additionally, we were accepted by the Combined Federal Campaign and became a listed charity for their fundraising. These sources use different rating methods and can provide a balanced assessment of nonprofit operational quality.
Our Best Practices Task Force took on the challenge of understanding the evaluation methodology of each group. Action lists were established and implementation of operational improvements began. Initial discussions with the rating organizations were very useful in defining what we needed to do. Implementation was rapid, because most of the issues were related to how we did things, rather than what we did. Filing of our 2005 IRS 990 had resulted in an overall Charity Navigator rating of one star, including one star for operational efficiency.

By 2006, we had significantly changed our use of funds. Fundraising activities were managed to an expense ratio target. Events that didn’t meet the new requirements were eliminated, or put on ‘probation’ for the next year to assess effectiveness. Issues preventing grant proposal success were resolved. A series of policies and procedures were implemented to initiate the changes and ensure operation to the newly adopted practices. Filing of the 2006 IRS 990 resulted in a total rating by Charity Navigator of four stars, including three stars for operational efficiency.


The focus on operational efficiency made us look at all aspects of our organization. We used the inputs from a variety of sources to determine what best practices were. Our efforts had sweeping results across the entire operation, including the Board of Directors and the management of a separate endowment fund.

The overall effect has been to transform our organization into one that is focused on our mission, using more than 80 percent of our funds to support programs and services. We have ensured transparency in financial reporting and validated our results with three sources, as well as an independent auditor. Each day we spend less time on fundraising and more time improving programs and services and defining new ways to achieve our mission. We have finally been able to invest in infrastructure which will enable us to reach more people living with multiple sclerosis than ever before.
"This year I resolved to make a will and living trust. I wanted to leave a bequest to an organization which meant something to me and related to my life experiences. I conducted research on MS organizations, looking for those that were making a difference and were fiscally responsible. I had previously learned that a four-star charity rating was important. As a result I selected The Jimmy Heuga Center. I liked The Heuga Center’s emphasis on physical fitness and its expanded program of wellness, so that those living with MS and their families can achieve the optimum quality of life.” - Andra Orebaugh, Major Donor

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