How Embracing Risk and Spending Money Can Help Nonprofits Make More Money
People come to me all the time saying things like:
We’re not growing.
We need more money.
We just can’t seem to get ahead.
Too often, the problem is that they haven’t considered if they’re spending enough money to equip their teams to make more money.
Here’s something I ask all of my clients and potential clients to consider: The revenue trajectory of your organization has much more to do with the leadership’s comfort level with investing in spending than with some of their revenue-generating ideas.
You see, when you want to raise more money for your nonprofit, not spending money is simply self-sabotage. Your results will also often yield mostly restricted revenue—a double whammy.
So, how can you secure more unrestricted revenue that you can invest in the growth of your organization?
Start with the numbers.
For example, how would you ever put together a fundraising plan—or know which activities you need to be doing all year long—if you don’t know you have a $14 million need? How would you ever raise enough money to reach a balanced budget?
Successful organizations and fundraisers know exactly what they need. Better yet, they know how to spend time with the types of donors who can actually fulfill that need.
It’s non-negotiable: You have to know your true budgeted need. Then you have to create a true financing plan that covers how you’ll hit that number. This is where fundraising teams go wrong. They don’t evaluate the numbers.
Invest in your people.
Many organizations I’ve worked with have an entire advancement team supporting their fundraising efforts. Often, these are team members who have risen through the ranks. They’re great grant writers and event planners. They’re experts at securing contracts and digital marketing mavens. Unfortunately, most of them don’t know how to scale an individual giving program.
If that’s the case with your organization, you need to invest in their professional development and skills development. Because, let’s be honest, it’s rare to find someone who says, “I went to school for major gift fundraising, and I know exactly how to do it.”
(Even though that would be the dream, wouldn’t it?)
Turn your fundraisers into high-revenue generators.
A lot of leaders I work with are in the mindset of “the sum of parts drives the whole mission.” They believe that the tactical activities like golf outings and galas or direct mail and digital marketing campaigns are working to bring in the big bucks. Instead, they should be looking at the overall financial and budget picture to strategize their operations.
With that in mind, ask yourself: Is everything you’re doing or budgeting for aligned with your business plan? Can you think about your budget as a financing plan that funds your organization?
Embrace risk and reallocate your funds.
It’s easy to give in to the status quo. We do it all the time in life, even when we know it’s keeping us from achieving our goals.
However, embracing risk is the great disruptor (in a good way, of course). This can come in many forms, but foundationally, it really starts with thinking about what you should stop doing and what you should start working on instead.
Start by asking yourself these two questions:
What’s not helping anymore?
What can we start doing that is different and beneficial?
If you’re dedicating 90% of your budget to programming but your revenue is only inching along, something needs to change. There’s no miraculous event that’s going to bring about a surge in revenue.
What if you embraced the risk of decreasing your programming budget to 75% for a season? Yep, 75%. That leaves you an extra 15% to direct to other activities.
When you make an investment in your organization’s growth—that’s an intentional year or two of investing in growth—you can actually double your revenue. My clients do this all the time!
Sherry Quam Taylor is Founder and President of QuamTaylor LLC, where she helps nonprofit leaders level-up their organization's annual revenue. Her consultancy releases the overworked ED from the day-to-day fundraising grind by helping them establish the core processes that streamline funding growth, identify the top donor priorities that lead to larger gifts, and then prepare them to present plans and financials their donors want to see from them during solicitations.