Many nonprofits bemoan funding cuts and seek to increase fundraising. Yet the fact is that many nonprofits fail to successfully adapt to changing expectations and continue to struggle for financial viability. Leading sustainable organizations in today’s environment requires courage, skill and the ability to make a stronger “case for support” that will resonate with major donors and funders, compelling them to invest in your mission and programs. Let’s face it, funders and donors are “giving more” to those who do, and less to those who don’t.
In today’s environment, people are asking “per dollar spent on a program, are the benefits, outcomes and impacts worth it?” This economic test seeks to determine whether the amount of positive societal impact justifies the program’s expenditures. A program may demonstrate outcomes, but if the impact is not communicated or if the program costs too much, the donor or funder may feel it is not a good investment when compared with equally effective but less expensive alternatives.
To stimulate “major gift investment” in nonprofit causes requires a shift from “the way we have always done it” toward a more strategic approach. While many agree that change is necessary, nonprofits continue to struggle because they either don’t know how to articulate a case for support, or their board members are not engaged enough to understand their role in encouraging others to give; some are too afraid to even try.
Making this shift in thinking actually “begins” with the CEO and management team by working through a number of important board engagement, planning and cost accounting activities. Sadly, many nonprofit leaders don’t engage in these activities because they require a different way of thinking. The excuse I often hear is “the board members will never do it; it takes too much time and it won’t make a difference anyway.” Sadly, with this attitude, nothing changes.
The strategic activities most likely to help you make a stronger case for support include:
1. Determine your “true fundraising needs.” What are you (truly) attempting to fund? Many people focus on the “wrong thing:” they want money to “hire staff” or fund “operations” when they should be figuring out how an investment will actually “make a difference.” Do you need money to fund a program, to buy a piece of equipment or something else? This is an important first step.
2. Analyze and calculate all of the fixed, variable, direct and indirect costs associated with each program you wish to fund and set a fundraising “goal.” One of the key mistakes that nonprofits make is that they attempt to raise only the “direct costs” associated with a program. This often leaves the organization struggling to fund the administrative costs associated with the program. If the percentage of administrative costs are too high (over 11 or 12%), nonprofits should look to collaborate or merge to distribute fixed expenses over a larger pool of programs.
3. Identify the outcomes and impact and calculate the “return on investment.” This analysis should include answering the following questions:
a. How many clients will be served?
b. What will client’s lives be changed as a result of participating in or completing the program?
c. What evidence do you have that these outcomes are achievable?
d. What is the “return on investment” for each client served?
4. Set a Fundraising Goal for the Board. At a minimum, 100% of board members should make an annual “stretch” gift, based on their means. Cumulatively, the board’s goal should be a minimum of 10-15% of the overall fundraising goal. When each board member “invests” in supporting the mission of the organization, it becomes much easier for them to encourage others to “partner with us in our mission.” For many board members, some training, coaching and a little “peer pressure,” done in a supportive and nonthreatening way can increase their comfort level with fundraising.
5. Create opportunities to educate others and invite them to join in “mission support.” In recent years, media promotions and social media marketing has increased opportunities for “crowd funding,” (lots of people giving small donations), that has been effective for many organizations. Beyond that, stewarding major donors remains an ongoing and long- term relationship building activity, that is more about the donor and their interests and the type of impact they would like with their investment. Leadership breakfasts, lunch and learns and individual meetings are great ways to start to educate and engage potential donors and give your board members the opportunity to encourage others to join in supporting the cause.
Those who are willing to take the “leap of faith” and focus on major gift cultivation strategies by taking the time to plan and prepare for a major gifts campaign can achieve a great return on investment.