The reality of nonprofit fundraising is that circumstances and needs change from year to year. The fund development office is an important function for any nonprofit. As these changes occur, a restructure of this department is sometimes necessary. So, how do you determine when to restructure and where to begin? There are common industry examples of when this need arises, as well as recommended analysis and follow-through once the decision is made.
Based on best practices, outlined below are the recommended steps for evaluating and restructuring your fund development office of your nonprofit organization:
Strategic Planning for Nonprofit Fund Development
Step #1 – Begin your process with putting into practice a periodic analysis of various functions and processes for all departments across the organization. I recommend completing this on an annual basis, at a minimum. The fund development function is especially important as this is a major driver of revenue for any nonprofit.
Step #2 – This analysis should initially include strategic planning and the development of a case for support. The intent is to identify areas of need that would require focus. The case for support should provide a clear message and rationale for fund development. And, buy-in should be sought from across the organization’s leadership team, the board, and others with a vested interest.
Step #3 – Depending on where things stand that year, a more in-depth analysis might be necessary. When situations and needs change, whether external or internal, the impact can range from significant to minor. Major changes might occur as a result of structural changes to the organization at large, such as a merger. Changes in funding sources may result in budget cuts or, conversely, increased revenue. This could drive changes in the funding strategy. A thriving organization may bring on new development leadership, thereby needing a re-evaluation of the roles of development staff. All of these things should be considered to determine next steps.
Step #4 – In the case of major changes, an internal audit is recommended. This can be completed by a third party consultant for an objective view of the structure and processes of the organization. This information will be critical in determining the future direction.
Step #5 – Such an audit would include more in-depth cost analysis of the fund development function. Financial goals would be established. In order to determine these goals, a review of the income statement should be completed to understand the revenue streams. Incurred expenses as a result of fund development operations should be examined. A comparison of these results to the industry is extremely useful to see how the numbers measure up with similar industry nonprofits. Use these results to make decisions about future strategies.
Step #6 – These results will also help to audit your existing staffing structure. Determine where modification is necessary to better align your fund development goals with the sources of income for your organization. Consider the strengths and weaknesses of the structure currently in place as you review the skill and knowledge base of your staff. Does the existing staffing structure still fit? Does it still make sense? Also, consider external people resources, such as consultants, for certain roles.
Step #7 – Use the staffing review to restructure the development department. It is extremely important to align with Human Resources during the restructuring process. Ensure that communication is open and frequent so that staff can be prepared for changes. Practice fair and equitable treatment for termination of employees. Recognize that this cultural shift will take time to settle.
Step #8 – Based on the development audit results, design a restructuring plan. Leverage the expertise of professionals, mentors, and peer networks. Take this information and apply it to what makes sense for your organization. Develop a fund development budget and use this plan and budget as a tool for the development department.
The above steps have been applied for work with my own clients. I have successfully improved the effectiveness and efficiency of fund development efforts. Rely on these steps to determine the future direction of your fund development office. And you, too, will be able to grow and thrive your development function.