FAQs: BHS Board Announces New Fundraising Strategy
The Barbershop Harmony Society Board of Directors has announced a new philanthropic strategy to support our BHS singing communities and programs. Effective July 1, 2020, the Barbershop Harmony Society will manage its own charitable efforts, rather than relying on Harmony Foundation International, Inc. (HFI) as its intermediate fundraising organization.
Why the change and why now?
For several years, the Society Board has been concerned about the inefficiencies inherent in our charitable process, which has relied on HFI as an intermediate fundraising organization. From 2015 through 2019, HFI raised $16.2 million, almost entirely from the BHS community, and granted $3.6 million to Harmony Hall programs (22%) and $2.2 million directly to chapters and districts (14%). Said another way, $10.4 million, or 64% of what was raised from the BHS community, was spent on things other than BHS programs, chapters, and districts -- the very things our community most cares about. The Society Board believes it is our fiduciary responsibility to make sure the dollars donated by BHS members are used for the donors’ intended purposes of supporting BHS programs, activities, and operations, whether at Harmony Hall or in our chapters and districts.
We began talking with HFI about how to fix the process long before the economic stress of COVID. Despite sincere efforts by BHS and HFI to improve the current arrangement, we reached an impasse earlier this year.
What does the new BHS fundraising strategy mean for me as a donor?
Our new philanthropic strategy will empower you to:
- Connect your generosity more directly to the impact you wish to make.
- Direct a larger portion of your giving (up to 85%) to your chapter or district, should you choose to do so.
- Ensure that the largest possible portion of your gift goes directly to the work you care about.
- Manage all the ways you may relate to the Barbershop Harmony Society — as member, singer, ensemble member, arranger, contestant, learner, educator, spectator, buyer, etc. — in a coordinated way.
What portion of my donation to BHS will support BHS operations and programs?
By folding charitable activities into existing BHS operations, we gain huge efficiencies in every area, including donor care, field staff, finance, customer service, technology, marketing, and program evaluation. We estimate that at least 80% of philanthropic revenue will flow directly into barbershop programs, chapters, and communities. The bottom line is that more of your donated dollars will go to BHS programs, chapters, and districts than ever before.
Can I support BHS’s overall vision of Everyone In Harmony, or continue to support a specific BHS program or activity, such as Next Generation Barbershop?
Absolutely! When we launch our new platform, you’ll have the opportunity to choose among many different options for directing your support to key programs and impact areas.
Can I designate funds to go to my chapter or district?
You bet. Just tell us which ones and how much. In fact, on the new platform, a donor will be able to designate an entire gift to support a particular chapter or district. We’ll transmit your funds within 45 days, rather than the current three-to-nine month cycle. And we will also be offering your chapter or district the use of the platform to do your own peer-to-peer fundraising efforts within your community.
Does this mean my past donations to HFI have not supported BHS programs and operations?
In the past, if you directed HFI to use your funds to support specific BHS programs (such as Miller Match funds or Next Generation Barbershop sponsorships), HFI sent those funds to BHS and we, in turn, spent them on those BHS programs.
Most people, however, have made unrestricted donations to HFI’s annual giving campaigns (such as Ambassador of Song and President’s Council). As noted above, from 2015 to 2019 in total, 22 cents per donated dollar has gone to Harmony Hall programs, and 14 cents per donated dollar has gone to our chapters and districts.
Aren’t BHS and HFI the same organization?
While HFI has served as the fundraising arm of BHS since 2003 and is part of a joint audit, BHS and HFI are two separate entities, joined together through a legal document called a Trust Agreement. In the past, BHS has supported HFI’s efforts with operational subsidies and loans, rent-free office space in Harmony Hall, insurance, member lists, marketing assets, ad space in The Harmonizer, and access to premium event seating to HFI donors. In March, HFI communicated to us its opinion that the Trust Agreement is no longer in effect.
Why don’t BHS and HFI just merge their operations?
The Society Board of Directors and HFI Trustees have been discussing how to work more closely together for almost three years. We were not able to reach an agreement on how to combine our operations.
What does this mean for the HFI staff members I’ve worked with all of these years?
The HFI staffers are our dear friends, and many of them are fellow Barbershoppers. We work with them, sing with them, and share a common belief in the power of barbershop to transform lives and communities. The struggle between BHS and HFI came at the senior leadership and board levels. Neither leadership team is faultless, but none of the fault lies with, and did not involve, the HFI and BHS staff you work with every day. BHS doesn’t control HFI’s operations, and we don’t know what decisions HFI will make regarding its staff. We love them and appreciate these good people for every moment of amazing work we’ve done together.
Will you be hiring new staff to support BHS charitable efforts?
We do expect that we will be doing some hiring for key professional development positions in the future, and will welcome all applicants for those roles.
We know that we will have to earn the trust of members who previously expressed their generosity towards BHS through their gifts to HFI and their relationships with HFI’s awesome staff. Many of our staff will have the privilege of working directly with potential donors in the future. For example, the BHS staff who lead those programs you most care about will be positioned to work directly with donors to describe how donor dollars will be used to support those programs. We look forward to sharing details of how giving can make a dramatic impact.
Can I give directly to BHS today?
We will be officially launching our donation platform on July 1, 2020. You can rest assured that we will let you know exactly how to make a gift to BHS at that time. If you would like to make sure we contact you directly once we are up and running, simply leave your name and contact information here.
Can I make a gift in honor or in memory of someone else?
Yes, you can! Just indicate that on your check or in the notes of our electronic giving form. We will work with you on the proper acknowledgement.
Will my donation to BHS be tax deductible?
BHS is recognized by the IRS as a tax exempt 501(c)(3) organization in the U.S. Your donation may be tax deductible if you itemize your deductions. Please speak with your tax advisor.
What about charitable giving in Canada?
The Barbershop Harmony Society is classified by the U.S. Internal Revenue Service as a 501(c)(3) tax-exempt organization, and your donation is tax-deductible within the guidelines of U.S. law. Outside the U.S., your donation is not currently deductible, per local jurisdictions, but your generosity to support Society programs is still appreciated!
We are putting plans together for discovery of options for Canadian operations and fundraising. We look forward to working with all Canadian chapters and impacted districts toward achieving a solution that supports barbershop programs throughout North America. In the meantime, you may wish to consider supporting the work of Sing Canada Harmony - singcanadaharmony.ca.
Is the BHS 501(c)(3) nonprofit status in jeopardy as it starts its own development operations?
Not at all. The Barbershop Harmony Society is recognized by the IRS as a 501(c)(3) nonprofit independent of Harmony Foundation International. The Society received its 501(c)(3) determination letter from the IRS (reflected here) in May 1946 and is the basis of the IRS Group Exemption that benefits all of the Society’s U.S. districts, chapters and subsidiaries. The Society’s nonprofit status remains unchanged.
Do other nonprofit 501(c)(3) organizations have internal fundraising departments like BHS is launching?
Most 501(c)(3) organizations have an internal development or fundraising department (sometimes called donor affairs or external affairs). A few performing arts examples include our choral ecosystem partner Chorus America and the League of American Orchestras, local organizations like the Nashville Symphony, Santa Fe Opera, San Francisco Ballet, as well as performing arts centers (NJPAC), museums (MOMA), and national non-arts organizations such as the YMCA, The Greater Twin Cities United Way and Big Brothers Big Sisters of Colorado. It is actually quite uncommon for a 501(c)(3) organization to rely completely on a separate outside organization or foundation for all fundraising.
What is the status of BHS as a charitable organization registered and licensed to receive donations?
As a registered 501(c)(3) nonprofit organization in the United States (see FAQ), BHS may receive charitable contributions in all 50 states and the District of Columbia and is also permitted to issue a gift receipt for U.S. tax purposes. There is also a separate registration to solicit funds, which is required in some states. Many states allow any non-profit to solicit funds from “members” without any further paperwork, while other states require that the organization be registered in order to solicit funds from anyone -- both members and the general public.
BHS has submitted solicitation applications in all but two jurisdictions and will be completing those applications shortly. BHS is approved to solicit donations in 40 states and expects to receive approvals for the remaining jurisdictions prior to launch on 7/1.
When did BHS start registering to solicit charitable donations and how much does it cost?
Registering to solicit charitable contributions is not uncommon for any nonprofit and the timing in the Fall of 2019 coincides with the ramping up of our efforts to secure institutional philanthropic gifts and grants from institutions and foundations. It is not coincidental that the first 3 states were Tennessee, California, and New York -- sites of our headquarters, 2020 International Convention, and 2021 Midwinter Convention.
In the United States, 11 states have no registration requirements. Of the remaining 40 states and DC, the cost to register varies from a low of $0 to a high of $600. The total cost to register in all states and DC in the U.S. is less than $4,000.
Why did BHS take out a line-of-credit loan in 2019 and how will it be paid back?
With the announcement of the “Everyone in Harmony” Strategic Vision in June 2017, the Society Board of Directors decided to make an investment in the implementation of the Strategic Plan, which would require funding beyond revenue generated through operations.
As property values in downtown Nashville increase, Harmony Hall has also appreciated in value. Harmony Hall was purchased and renovated in 2007 for a total cost of $5.2 million. The current balance sheet carrying value of the Harmony Hall building (after depreciation) is $3.3 million and the appraised value as of January 2019 was more than $10.6 million. After conversations with three different banks and a competitive bidding process, the line of credit was discussed at length and approved by the Finance Committee, Strategic Planning Committee, and Society Board of Directors. We expect that revenue generated from renting out space in our building will cover all or most of the loan payments once we start repaying in 2022.
The Society’s ability to leverage capital assets toward growth initiatives is an organizational strength, and a fiscally solid way to expand our reach without reliance on member dues and other sources of earned revenue.
Are you asking me to switch my donation from HFI to BHS?
At this moment we are simply announcing the launch of our own development operations. We know that we need to earn your generosity on our own merits, and we know we must earn your trust first. We hope to do that in the weeks and months to come.
We will be officially launching our donation platform on July 1, 2020. You can rest assured that we will let you know exactly how to make a gift to BHS at that time. If you are interested in learning more or becoming a donor, we would be very grateful for your support. If you wish to switch your funds from HFI, that’s an individual decision you should make based on assessing where you want to put your charitable dollars to work.
If you would like to make sure we contact you directly once we are up and running, simply leave your name and contact info here.
What are HFI’s plans going forward?
HFI manages its own strategy and operations. We do not make statements on their behalf. BHS will speak only on our own actions and expectations.
Is HFI going to support BHS programs in the future?
We hope so! BHS seeks funds from a variety of granting organizations (such as the National Endowment for the Arts), and we hope to continue to receive grants from HFI.
Will HFI be supporting other singing organizations besides BHS in the future?
We don’t know HFI’s intentions on this. For the most accurate and current information, please contact HFI directly.
How can I be sure my current or future donations to HFI are going to the intended purpose?
BHS doesn’t speak for HFI. If you wish to support HFI, we recommend you contact HFI directly and inquire as to how your current or future donation dollars will be directed
What about funds held in HFI endowments, and legacy funds included in estate plans?
The recipient of endowed or legacy funds is required, through a legal agreement made at the time of the gift, to use those funds as the donors intended. We presume any funds currently held at HFI will be subject to those same restrictions and will be honored.
Will HFI President’s Council members get access to preferred seating at BHS Conventions?
In the past, BHS has offered its most valuable seats to HFI to support HFI’s fundraising efforts. With deep appreciation for members who have supported BHS via past gifts to HFI but were unable to enjoy a VIP experience at our cancelled 2020 convention, VIP seating eligibility for the 2021 BHS events (Midwinter and International) will be determined based upon donor gifts made to BHS through HFI through June 30, 2020, as well as gifts made directly to BHS after July 1, 2020. Preferred seating at BHS events beyond 2021 will be based solely on gifts to BHS.