There’s a lot about fundraising folks take for granted. And not in a good way. Because… much of it is untrue!
In fact, if you, your executive director, your board members or anyone else where you work subscribes to these fictions you’ll be in for a lot of pain and suffering. You won’t raise near the money you could otherwise raise. And you won’t enjoy your work.
But there’s a fix!
Previously I wrote about certain self-evident fundraising truths. Truths you want to hold close to become a fruitful philanthropy facilitator. The problem? These tenets I call truths are too often not apparent at all.
A disinformation campaign is unconsciously being waged by leaders who:
- Don’t understand how fundraising works.
- Don’t understand pre-conditions must be in place in order for fundraising to flourish.
- Don’t want to understand because then they’d have to step up to the plate and do things that make them feel uncomfortable.
Oh, dear. Guess what?
Like anything else worth doing, fundraising must be done well to succeed.
You get out of it what you put into it. And… the truth shall set you free!
If you believe any of the following untruths, your fundraising program is in jeopardy. And so is your mission. Let’s break these down.
6 Fundraising Untruths
1. Hiring a fundraiser will do the trick.
Too often organizations finally ‘bite the bullet’ and pull together what they consider enough money to hire a development director (usually, BTW, it’s nowhere near enough to recruit someone with the skills and experience needed – especially when they’ll be running the show all on their own.) They finally find someone; then put them at a desk and tell them to “go raise money.”
This won’t work.
Fundraising is a team sport; not something to be done in siloes. It takes a village. Everyone pulling together, centered on the same mission and donor-centered focus. To your supporters, you are one organization. Everyone has a role in creating positive, productive relationships with your donors.
It only takes one rude receptionist, one disaffected, overworked, program staffer or one disgruntled board member to undermine the development staff’s hard work.
Surely you’ve heard folks talking about a “culture of philanthropy,” right? Guess what this is all about? It means everyone in your organization understands they’ve a role to play in attracting philanthropic support.
2. Our fundraiser will find all our donors for us.
If you think you’ll hire a fundraiser who will walk in the door with their rolodex and begin dialing for dollars, think again. Not only does it not work that way, but it’s actually unethical for a fundraiser to steal donor relationships and take them from one organization to another.
Fundraisers work for the organizations that hire them, not for themselves. Hence the relationships they build on the job are the organization’s relationships. The fundraiser doesn’t “own” them. Yes, the fundraiser may consider these donors friends. And they may continue to see these folks after leaving their job. But that’s different than assuming just because the donor gave to Organization A they’ll necessarily be expected to support Organization B.
Understand your best donors will come from your insiders. Don’t expect donors to come from unexpected and mysterious places (like the rich CEO who runs the biggest business in town – the one everyone else is trying to figure out how to solicit). It should be pretty obvious where you should be looking for donor prospects.
3. A fundraiser should raise their salary within a year.
Fundraising is a long-term project. Realistically, it takes a year for a new staff member to get up to speed. They need to meet your staff, learn about your mission, become familiar with your case for support, understand what fundraising strategies you do and don’t have in place, meet your board, key donors and other constituencies, understand how other departments (e.g., finance and marketing) interact with their work and begin to evaluate your strengths, weaknesses, opportunities and threats.
Paul Nazareth, vice president of community engagement with CanadaHelps, says: “I often hear ‘we hired a fundraiser, gave them three weeks, they didn’t get us Bill Gates’ money — so how can they be a good fundraiser?” I hope that sounds as ridiculous to you as it does to me. Nazareth goes on to state: “often it takes eighteen months to two years of developing relationships before a fundraiser is able to produce meaningful financial results.”
You must commit to an upfront investment of time and resources before you’ll see results. Fundraisers aren’t miracle workers, and nothing will happen overnight. It will take a consistent, concerted effort to achieve the return on investment you seek.
Your fundraiser’s first order of business is to lay a foundation you and they can build upon over time.
4. When times are tough you should cut back on fundraising expenses.
This is one of the biggest mistakes nonprofits make. They try to get by ‘on the cheap.’ Not only do they not pay living wages, they don’t pay enough to recruit the best talent. And even when they do, they’ll skimp on the support staff and infrastructure necessary to make their fundraiser effective.
When you’re tempted to get out your red pencil and begin cutting program expenses, stop. There’s a better way. See if you can get a foundation or individual donor to give you a capacity-building grant. Or if you have reserves, consider using some of those funds to build capacity. Spending less will lead to cutbacks and a retrenched organization. Raising more will help you survive and thrive.
When organizations squeeze their fundraising budgets dry, their contributions dwindle. It’s simple cause and effect. After you’ve burned bridges with some of your donors, it can take a long time to grow these contributions again.
5. It’s fine to focus our fundraising on events and/or grants.
No, it’s really not. The data from Giving USA shows 77% of all donations come from individuals — 68% of philanthropy comes from individuals’ annual gifts and an additional 9% from bequests. If you add in giving from family foundations and donor advised funds, a whopping 87% of all giving comes from individuals! The lion’s share of this comes from major individual gifts.
The real truth is your return on investment will be different for different fundraising strategies. Events are super expensive; you’re lucky to raise 50 cents on the dollar and often you’ll actually lose money when you take into account staff time. Grants aren’t stable, as often funders will give to you only for a year or a period of several years. And foundation guidelines change all the time.
The most cost-effective fundraising strategies are individual major and legacy giving. If you’re not making individual fundraising a priority, you’re putting your organization’s survival at risk.
6. It’s more important to prioritize acquisition than retention.
The reality per the Fundraising Effectiveness Project is nonprofits, on average, renew only 32% of first-time donors. Once these folks have been renewed, however, they’ll renew the next time at a rate of 61%. So paying attention to donor retention is critical!
It costs money to acquire a donor. This is money you’ll never make back unless you renew them over a period of years. Merely bringing in a donor, once, will not serve you well. In fact, for every 100 donors acquired last year nonprofits lost an average of 99.
The key to fundraising effectiveness is keeping your donors long enough to reap a lifetime donor value that exceeds your investment.
REAL Nonprofit News
If you want to succeed with fundraising, you must do the opposite of each of the 10 aforementioned things. Instead, focus on these fundamental fundraising pre-conditions:
1. Before you hire a fundraiser, put in place a culture of philanthropy.
You don’t have one if your values and leadership aren’t aligned. Are they? Probably not if you have any of the following dynamics in play (learn more about these dynamics here):
- Angel / Devil Manager – wears a different face outside than inside.
- Patronizing Manager – believes no one else can do anything right.
- Clueless Board – think fundraising is someone else’s job.
- Hypocritical Management Team – internally don’t enact the values you express externally
The first order of business is to get everyone in touch with your mission, vision, and values. Ensure everyone sees themselves as part of that noble, positive culture. Learn how with my free Nonprofit Culture of Philanthropy Checklist, published on the Bloomerang blog.]
2. Consider who may be your most natural donor constituencies.
Your best donors won’t be mysteries and they won’t come from a list you make from scratch. They’ll be folks who already have linkage to you, interest in what you do, and ability to give.
- Constituents on your mailing lists – current donors, volunteers, program attendees, clients and their families
- Friends, family and colleagues of your insiders – i.e., board members, volunteers, staff, major donors, affiliated community leaders
- Donors to similar organizations – g., within the same field or community
Be prepared to share these names with your newly hired fundraiser so they can research them, meet them and put in place a plan to cultivate and solicit them.
3. Give your fundraiser a realistic timeframe before expecting them to make a significant difference in your fundraising bottom line.
It’s totally reasonable to expect them to (1) build important relationships; (2) put together a 3-month, 6-month and 18-month development plan; (3) become conversant with your vision, mission and values, and (4) generally breathe new energy into your fundraising program. It’s not reasonable to expect them to raise their salary, or more, during their first year. If they do, consider it icing on your cake.
Be prepared to invest money to get results. Like anything else in life, you get out what you put in. It costs money to make money. But it does work! In fact, ultimately you can expect to raise $3 – 4 dollars for every dollar you spend. In other words, whatever you don’t spend will diminish the amount you raise by 3 – 4 times that amount. With major and legacy gift programs, you’ll ultimately be able to raise 10 times what you spend. So don’t be pennywise and pound-foolish.
4. Invest enough in your development program to get meaningful results.
Talk to other organizations tasked with raising a similar amount of money and ask them how many staff they have, what they pay, and what the rest of their budget is for fundraising, marketing, database and other infrastructure. Ask them how long it took them to yield a positive return. Put aside enough of an investment to get yourself to a similar place.
If you fail to invest sufficient resources, staff won’t have the skills, experience and support you and they need. Sadly, they’ll leave before your investment in training them has time to pay off. Groundbreaking research from Penelope Burk found that average turn-over of development staff is just 16 months, and 48% said they left their last position to “seek a higher salary elsewhere.” Replacing these professionals averages $127,650 in direct and indirect costs. Amplifying this cost is the fact when someone leaves other staff must step in to fulfill their responsibilities, causing their own work to suffer.
Fundamentally, effective fundraising is about building donor relationships. This clearly suffers when staff leave.
5. Make individual major gift development a priority.
It’s the most cost-effective form of fundraising and it’s key to your long-term stability. Plus, donors today give larger ‘impact’ gifts to fewer charities. 43% of donors ages 35 to 64 are contributing to five or fewer causes, compared with 25% of people 65 and older. If you don’t become one of your donor’s ‘favored’ charities, you may not become one of their charities at all.
6. Prioritize donor retention.
Just a small change in retention, up or down, can mean thousands of dollars. In fact, a 10% increase in donor retention can increase the lifetime value (in dollars) of your donors by as much as 200%. Retention won’t happen on it’s own. Put in place a “Donor Love and Loyalty Plan” that lays out all your donor-centered communications strategies throughout the course of the year. Put someone in charge of seeing this program through to fruition, and hold their feet to the fire. Reward folks for improving donor retention rates, rather than simply for bringing in new donors.
Want to Learn More Fundraising Truths?
Check out the 7 Clairification Keys To Unlock Your Nonprofit’s Fundraising Potential. This Guide includes a wealth of materials to help you take some time to develop the necessary mindset, and supporting infrastructure, to show donor-investors what’s in it for them to affiliate with you. What value do you offer? And why is it better than what anyone else is offering?
As with all Clairification products, this comes with my 30-day, no-questions-asked, 100% money back guarantee. So you really can’t lose.
To your success!
Image courtesy of Wokandapix from Pixabay.