If you run a nonprofit, I don’t need to tell you that 2020 has proved to be overwhelming. This is especially true for those of you who are leading your organization’s fundraising initiatives. You know this better than anyone! Since the spring, many organizations have scrambled, adapted, and struggled. Perhaps, this time has made you face the fact that your funding model was too dependent on government funds, large foundations, program revenue, or event donors.
I’ll let you in on a secret right away: A lot of the things I’m recommending now are the very same things I recommended to my clients before COVID-19. That’s because the way that many nonprofits were taught or told how to approach fundraising wasn’t sustainable, even when there wasn’t a pandemic. With 91% of nonprofits in the US never breaking $5M, there was a lot about the status quo that already wasn’t working. [The Urban Institute’s Center on Nonprofits & Philanthropy (2018)]
Another little secret: My students who shifted their fundraising in the ways I’m talking about are weathering this uncertain period really well. They’d built up strong reserves and were in close relationships with their top donors, and weren’t wasting their time on fundraising activities that didn’t yield sufficient results.
So what were they doing, and what should you do moving forward?
1. They Spent Money on Fundraising and Admin
I hear it all the time:
“The board wants us to spend every available dollar on programs.”
“No one wants to fund admin.”
“We should try to spend as little as possible on fundraising.”
That is a losing game. If you’re not spending an adequate amount on admin and fundraising, your fundraising won’t grow! When your budget allows you to invest in the things that grow your revenue (like fundraising and admin), you will raise more money, which you can then spend on programs.
If you could spend 2-5% more of your annual budget on training that would teach you how to raise hundreds of thousands of dollars of unrestricted donations, doesn’t it make sense to spend that? Most people agree it does, but most nonprofits flinch at spending anything on fundraising.
We must shift this misconception.
In a growth year (or your bounce-back year in 2021) start adjusting to the idea of spending at least 10-20% of your budget on Admin/Fundraising. When you invest in raising money, you’ll have more of it. Ultimately, this still gets you more money for programs.
2. They Raised To Their True Need
How much money do you need to raise to do what you want to do this year?
This is the first question you should ask when you’re making your budget. Unfortunately, a lot of nonprofit folks start with, “What did I raise last year?” They add a little “stretch” onto that number, and consequently, never have enough money to do the good things they want to do.
If your current budget doesn’t account for a reserve fund, salaries for the staff you’d need to actually make things happen, or the support systems to execute these activities well, you probably need to set your sights higher. What’s that actual, honest number?
When you know your true need, you can make an income plan that helps you figure out how to raise it. Even more importantly, you can communicate your true need to your donors. Don’t assume they understand what you need and why you need it. Lead with the top-level need number, and then show them how it fits into programs, admin, and fundraising.
Don’t be scared to admit that you need money for admin and fundraising. When you explain, most people will understand that you can’t operate your organization without that kind of funding. You may find that investment-level donors don’t even need that part explained–the for-profit world understands needing to spend money to make money.
3. They Didn’t Stop Cultivating or Soliciting
“Everything is up in the air, of course, we can’t solicit!”
Not so fast.
Organizations are still soliciting donors during this period of upheaval. In fact, some of my clients are getting the biggest gifts of their careers, right now, over Zoom. Literally, one of my students is fully funded at month six of her fiscal year – and her mission is not considered “front-line”.
Now and always, I advise nonprofits leaders to focus on their “Top 30” largest, unrestricted donors. At least 50% of your revenue should come from them, and consequently, at least 50% of your fundraising time and effort should go to them.
When you’ve properly developed these relationships, you’ll know whether or not it’s a good time to solicit. These are deep, intimate connections, so you’ll know what’s happening in their lives. Keep the conversation going, whether it leads to an ask or not.
Too often, we make decisions for donors before we even get in the room (or Zoom, now). We decide to ask for less than their best gift, we assume it’s a bad time, or we decide not to ask at all. If you’re feeling that impulse (“I know they could probably give $20,000, but I’ll ask for $5,000 because…it seems nicer.”) check to see what’s really behind that. It’s often a lack of confidence about asking, or you haven’t yet built the donor relationship or pipeline to justify the ask.
If you haven’t developed a major gifts strategy, you must start today!
Closing is Not the Only COVID Story
I don’t want to minimize that things are hard for a lot of organizations right now. But closing doors are not the only thing we’re seeing. We’re also seeing some organizations receive a tremendous outpouring of support. Individuals have been incredibly generous. Organizations are finding new ways to work together and collaborate. Leaders are bravely learning new things and taking risks to grow their organizations. This is a remarkable sector, where we can hear stories like that, even at a time like this.
As part of Bloomerang’s Content Donation Program, $100 was donated to Laura at Albums of Hope.