Tag Archives: Fundraising prerequisites

No Short Cuts to Meeting Your Fundraising Goal–Part Two

How do you report that your non-profit has not met its fundraising goal? Do you extend your campaign? Lay off employees? Close programs? Do more with less? Do you simply stop talking about the campaign and hope no one will ask about it?

Grappling with these questions and finding ways to answer them is part of doing business as a non-profit organization or institution. Knowing where the money will come from is vital to ensuring consistent operations and to implementing growth strategies, increasing impact, or financing new ventures.

Our last column discussed the University of Virginia $3 billion capital campaign. As you may recall they have extended their campaign and are seeking to raise the last $240 million by the spring of 2013.  Obviously UVa is in a unique position – very few organizations or institutions can forecast their ability to raise hundreds of millions of dollars in less than a year. But, regardless of the amount, realistically forecasting your fundraising is part of non-profit management.

At the heart of the matter is the question, “how do you know that you can raise the money you need?” And stepping backwards, “how did you come up with your fundraising goal in the first place?”

Our experience has shown that fundraising campaigns require a significant period of planning prior to campaign launch. Here’s a short version of the long list of typical pre-campaign activities. Determine fundraising priorities (how the funds will be used); develop case for support and test amongst potential donors and influencers via market research (“feasibility study”); revise case (including campaign financial goal) based on results of research; identify potential donors and the amount each could give; create campaign plan; solicit and engage campaign leadership; raise 40% – 60% of campaign goal prior to “going public…”

The amount of work can appear overwhelming. But, it is better to know what really goes into fundraising than to build an internal consensus that “we can do it” without knowing two important things: how the philanthropic market responds to your case, and the amount of fundraising capacity and infrastructure required to support your campaign.

When you find you have challenges in meeting your fundraising goal you are experiencing “campaign stall.” It’s not unusual. It occurs within many campaigns and is typically a time to review the campaign plan, reassess strategies, and huddle with campaign leadership. It’s time to see which components of the plan were implemented, which were modified and which were either consciously scrapped or unconsciously overlooked.

In the case for UVa they are rethinking the focus for the balance of their campaign, and looking to increase annual giving. How exactly do you plan to meet your fundraising goal, and what will you do if you are not on target to meet your plan?

No Short Cuts to Meeting Your Fundraising Goal –Part One

“Sadly, I have to report that I and we failed.”

That is not a good message to have to deliver. But it is part of life. The above quote is from a report given by Robert D. Sweeney, senior vice president for development and public affairs to The University of Virginia Board of Visitors at its meeting September 14th.  Sweeny was reporting on the progress of the University’s $3 billion capital campaign. According to The Daily Progress the campaign launched in 2004 and was to conclude at the end of 2011. To date UVa has raised $2.76 billion; the campaign has been extended. “We will be to $3 billion by the spring,” Sweeny said.

While the number of nonprofits launching multi-billion dollar campaigns is small, there are lessons to be learned from publicly available information regarding the UVa campaign.

Here’s what we know: campaign strategy and the economic downturn contributed to the campaign’s challenges. UVa was not exempt from the economic challenges of the past five years. Another factor was strategy.

The Daily Progress reports, “Sweeney said there was a ‘miscalculation’ on the part of UVa officials, who thought they could pull in enough gifts of $10 million and $20 million to offset not having one more $100 million gift… Some consultants had suggested they’d need such a gift but UVa officials had thought otherwise, Sweeney said.”

Obviously most organizations dream of receiving even one $1 million gift. What’s important is not the size of the gifts, but the underlying fundraising principles that were in place or overlooked.

While UVa worked with campaign counsel, it also chose to move ahead despite guidance regarding the number and size of gifts needed to reach the campaign’s goal within the campaign timeframe.

In our experience that is not an unusual decision. It is, however, a risky one. Your campaign goal should be realistic. It should take into account your financial needs, the market’s response to your case, and the number of campaign gifts or grants you can secure.

To raise $1 million you need to know where the money could come from. Who can give $100,000? $50,000?  $25,000? How many gifts of $1,000 to $5,000 can you secure? Ensuring you reach your goal means identifying three times the number of gifts you need to receive; if the first person you ask turns you down you know who else you can ask. If you need 500 gifts to raise $1 million, you should, in general, identify 1,500 potential donors.

As you can see, reaching a campaign goal requires a lot of work. Impatience, overconfidence or miscalculation can be expensive. Think about how you are preparing for your campaign. Are you taking the time you need to be successful or will you find yourself saying, “Sadly, I have to report that I and we failed.”

Vision Mission and Fundraising

Successful nonprofit fundraising doesn’t just happen. It takes planning and preparation. It also requires an understanding and agreement regarding the organization’s mission, vision, strategic direction, goals, and financial position. We know that many times people want to begin fundraising right away. “We need money; we don’t have time to do all that,” is a common cry.

That may be true. And, you may be able to raise money without going through the “trouble” of ensuring understanding and agreement on the above items. But, you can only go so far without doing this work. Here is what we have learned: understanding and agreement, or the lack of these, will inform your fundraising.

Successful fundraising begins long before a fundraising plan is ever created. It starts with your organization’s vision and mission. These two items are at the core of nonprofit operations. It is the vision and mission that drive the strategic direction and goals. And it is the strategic direction that influences fundraising and the use of funds.

Defining the vision and mission can be a group process, but it needs to begin with the chief executive for your organization. He is responsible for ensuring board members, employees and volunteers understand these, and agree with them. He needs to live and breathe the vision and mission. He is also responsible for ensuring the organization’s strategic direction – as documented in the strategic plan – are rooted in the mission and vision.

Your vision and mission should be short and concise. One or two sentences at most, if possible. Your strategic plan can be as simple or as complex as your organization requires. We are partial to a short, clearly written plan that includes easy-to-understand and easy-to-measure goals and objectives.

Sometimes the vision, mission and strategic directions are documented, but they exist primarily on paper and are not the heartbeat of the organization. Things may have changed since they were written. For example, new board members or employees may have joined the organization and may not have participated in an orientation session that communicated these. Or, maybe the needs of the community have changed and the vision and mission need to be updated. You may have achieved the goals of your last strategic plan but not yet created a new one. These are good things to know – and to take action on.

If your vision, mission and strategic plan need revising, take the time to do so. Once these are in place, it is the chief executive’s responsibility to ensure they are understood, that the board and employees are in agreement with them, and that they are put into action.

Working in this way contributes to fundraising success, as fundraising goals need to tie to your strategic plan and its implementation.

For example, when you begin discussing how much money your organization needs to raise you should refer to your strategic plan to map out what you are seeking to achieve over the coming years. From there you can begin to map out costs and fundraising goals.

Here’s some more detail, some things to consider. When the leadership of your organization fully understands your vision and mission they are in a strong position to evaluate – and as necessary modify – the strategic plan. Understanding the strategic plan allows your leadership to make informed financial projections that impact programs and operations. An understanding of the financial position and projections informs fundraising. These can help ensure the organization is engaged in proactive fundraising instead of “emergency fundraising.”

Here are a few questions which can help define what we mean by the term financial position. Is your organization operating in the black? Does it run a deficit? Are there upcoming, required, but unfunded capital improvements or expenditures? Are programs being cut (despite increasing need) because of decreased funding? Does your organization have a pipeline of potential donors and funders who could be solicited should projected donations or revenue decrease? Are there multiple revenue streams, or do the majority of funds come from one source?

Take the time to ensure board members understand the implications of the financial statements they are asked to review. Encourage open discussion and questions regarding the organization’s finances. Discuss the variables that could impact your organization’s financial position, for better or for worse. Ensure that plans are put in place to address these possibilities should they arise. Review the size of the reserve fund and what expenses it could cover. If your organization doesn’t have a reserve fund, put plans in place to create and grow one. A reserve fund provides options for addressing an unanticipated increase in demand or services, or a decrease in revenue.

The economy may change without notice, and donors and funders may change their giving priorities – these are situations beyond anyone’s control.  But, with proper planning, they do not need to jeopardize your organization’s financial health. Consistent monitoring and assessment of finances contributes to organizational stability and growth.

Your organization’s vision, mission, strategic plan and financial position will impact your fundraising success. Take the time you need to discuss and review these and to ensure there is full understanding and agreement amongst your organization’s leadership. This is your starting point for fundraising. Special events, online giving and major donor appeals are strategies that will be impacted by your foundation – or lack of one. Take your time; be prepared.

Where’s the Money?

Fundraising is to nonprofits what sales is to business. It’s where the money comes from. In business the sales team secures revenue to cover expenses and generate a profit for shareholders. In nonprofits it is the fundraising team that raises the – money you need to deliver on your mission.

For example, increasing the number of local residents qualified to fill current, local job openings requires resources – including money. Partnerships with government agencies and businesses can provide resources needed to fulfill this mission, but money is also needed. The question for nonprofit leaders – both staff and board members – becomes “where will the money come from?”

Staying focused on why funds are needed is one way to change your relationship to fundraising. It is not about begging. It’s about making a clear case for why an individual, foundation or corporation should give to your organization. You need to know how much money your organization is seeking to raise, how it will be used, and what the impact will be.

Back to our example: if your organization seeks to prepare 100 young adults a year with the skills required to obtain a living wage job, you will need to be able to communicate what it costs to operate the program; which employers you are partnering with; what types of jobs you are preparing your students for; and what it will mean for each student, their family and the local economy when your students are employed.

You don’t have to come up with these answers on your own. You – as a board member – can help create a culture that encourages your fellow board members – and staff – to bring fundraising into the center of most conversations and activities. Here are a few examples.

When programs are discussed consider asking: how much does it cost to operate this program? Where does the money come from? Are we on track to secure the needed funds for this year? How can I help make sure we reach our goal? Can I accompany our director to meet with current or prospective funders?

Raise these questions in a spirit of open inquiry and wanting to be part of the solution. They can open the door to meaningful activities. For example, if you want to go with the director to visit a donor, staff will need to help get you prepared. This will create an awareness within staff about what board members need in order to be effective advocates and solicitors. Providing board members with information and materials that support fundraising, can help reduce board members’ reluctance to fundraise. Talking about the realities of how much money you need and where it is coming from (or not coming from!) brings board members into the process of securing the resources needed to deliver on your mission. And, at the end of the day, that is what fundraising is about. You can make a difference.

Setting Your Fundraising Goal

What is fundraising without a goal? Most campaigns have one. The question is: how do you set it?

Over the years we have observed different methods. We present them for your consideration. Which will work best for you? Which is similar to the way your organization sets its fundraising goal? How might you want to modify the method you use?

A common method is to pick a number out of the sky. This is an emotion-based method of goal setting. It can be a good starting point and can create inspiration. When you believe a number is achievable, and feel your organization rise to the occasion, you can serve as a catalyst and motivator. But, be careful – this is also the riskest way to set your goal. Your goal may “feel” right, but that is not always the same as an achievable goal!

You may choose to base your goal on what a similar organization has been able to raise. “If they can do it, so can we,” may be your rallying cry. A good starting point that can motivate a deeper analysis of similarities and points of difference. A comparable organization may raise more money because they provide more extensive – or more expensive – services. They may have a strong annual giving program in place, a corps of major donors, and multi-year state or federal contracts. They may raise more money because, over the years, they have set their sights higher and built the capacity and talent needed to meet their goals.

You can base your goal on the needs of your institution. A review of projected income and expenses may show a “gap” that becomes an institution’s fundraising goal. A charter school, college or university may look at all revenue sources and operating costs, identify the gap that needs to be filled and set that as a fundraising goal that will help the institution operate at the highest level. The gap is real, but does it represent a realistic fundraising goal?

Other methods include basing your goal on what you have been able to raise in the past with a modest increase; responding to pressure from board, alumni, volunteers or community leaders; accepting a challenge grant from a donor, designed to encourage increased giving; or seeking new funding from a foundation for programs that are in line with your mission.

Wherever you start with determining a fundraising goal you need to come to a point where you evaluate the proposed goal and your ability to meet it.  This evaluation should include a sound analysis and assessment of your organization’s impact and role within the community; the strength of your board and their willingness to engage in fundraising; market research such as a fundraising feasibility study or survey; and your fundraising capacity. Whether you serve as an executive director or CEO, a board member, or a fundraising volunteer it is always wise to ask questions about fundraising goals and methods.

Preparing for a Year of Promise

We’ve been hearing whispers that 2012 may – just may – be a more prosperous than 2011. There may be more jobs, less unemployment, and more good circulating throughout communities across the country. We believe in preparing for the best of times, placing stock in the adage that luck favors the prepared. In term of fundraising – securing funds for non-profit organizations and institutions – preparation is always the bedrock.

While money may have appeared to be flowing to organizations in the past, a more prosperous 2012 will most likely not bring a return to the days of “easy money.” In the recent past many organizations and institutions benefitted from the general prosperity that many throughout the country appeared to be experiencing. But many did not, and despite the current economic challenges, many organizations are attracting major gifts and investments. That’s the odd thing about the non-profit sector – all boats don’t rise and fall at the same time or in the same rhythm. Some are more favored simply because of “who” they are. Here we are referring to the fact that churches, hospitals, colleges and universities are historically the largest beneficiaries of gifts from individuals. So, if you are a grassroots arts organization or a reading program within a small rural community your organization may not attract as many donors as nationally recognized St. Jude’s Hospital. Likewise, colleges with alumni from middle class and wealthy families who have pursued lucrative careers may find they receive larger and more frequent gifts than colleges whose students came from less affluent backgrounds and who may have pursued less well compensated careers.

But nothing is written in stone. What we do know is this – prepare for fundraising success. Put in place the policies, procedures and actions that support a culture of accountability and transparency. Put fundraising front and center as a priority. Understand the balance between emotion and fact – use both when communicating with your current and prospective donors. But always be prepared to demonstrate good stewardship of funds. A fundraising campaign that tugs at the heartstrings can turn people off when word gets out that there is a big difference between what you say and what you do.

Over the years we have identified what we refer to as Prerequisites for Fundraising Success. Over the coming weeks we will focus on a few of these to help you prepare for increased fundraising success in the coming year. And we will return to these in columns throughout the year. What we know is this: a well managed nonprofit organization – regardless of size – benefits when the leadership (board, executives and staff) are in alignment, focused on its mission, working from a strategic plan, and engaging with donors and supporters in a proactive, market-tested manner.

© Copyright Saad & Shaw.  Mel and Pearl Shaw are the owners of Saad & Shaw. They help non-profit organizations and institutions rethink revenue sources. They are the authors of How to Solicit a Gift: Turning Prospects into Donors. Visit them at www.saadandshaw.com or call (901) 522-8727