Clients often ask me what constitutes a healthy fundraising program. At first glance, the ability to raise the money you need seems to be the most important criterion, but that can disguise multiple problems. For example, suppose you have been able to raise all the money you need for four or five years from foundations. From 2002 onward, you will be in trouble.
Here’s why. Foundations are required to pay out five percent of their assets annually and are allowed to compute this on a five-year average. Right now there are three good years in terms of stock performance (’97, ’98, ’99) and two poor years (’00 and ’01). In 2002, foundation giving will probably be about the same as 2001, but starting in 2003 it will begin to drop precipitously. Income alone may give you a false sense of security. Similarly, if you have more donors every year, you may think you have a healthy fundraising program. But if you are spending more money acquiring donors than you are raising from them without an adequate retention and major gift program, you will lose money as your donor base expands.
Below are a few other “reality checks” to test your assumptions about your organization and the soundness of its fundraising program. How closely does your organization match?
You know your history. Staff and board are familiar with the group’s origins, accomplishments and challenges. Every year, the previous year is reviewed for lessons learned, achievements and needed course corrections.
You have an annual fundraising goal and a plan to meet it. I am amazed at the number of groups who, when asked for their fundraising plan, show me their budget and a list of foundations they will approach. This is not a goal or a plan. A plan is taking the time to examine income streams and set goals and deadlines.
You have three- to five-year fundraising projections. Only one five-year projection is necessary; every year after that you should evaluate the previous year and add a year, so that you are always five (or three) years ahead.
You have an easy-to-use database of prospects and supporters and other useful information. A database does the work of a staff person – it shouldn’t take a staff person to run it, nor require a struggle to access its data.
You know who considers your group a favorite and work with them regularly. Every organization has donors who provide their largest gift and other kinds of support. You need to know them and build their ranks through an intensive major gifts campaign.
You have an ongoing program to acquire, retain and upgrade donors. Every year you know how many new donors you need, what percentage of current donors you can reasonably expect to keep and who is going to be asked to give more. This information forms the backbone of your annual fundraising plan.
You use all fundraising strategies appropriately. Employ the strategies that fit your needs: special events to educate the public or build visibility, major gifts to raise large amounts of money quickly and direct mail to draw new donors.
Board members donate and most board members help raise money. The board members test the proposition that the group is worth supporting by asking themselves if they would support it; members set an example for the community to follow.
Organizational culture allows and encourages staff and volunteers to distinguish between what is urgent and what is important. The focus is on what is important as much as possible. Time spent largely putting out fires and dealing with crises creates an unhealthy organizational culture. Fundraising requires planning ahead, taking the time to think through all the details and sometimes waiting for returns. Be sure your organization rewards that methodical, thorough approach and does not encourage quick fixes and staying up all night to meet deadlines.
Your budget contains a line-item allowing staff, volunteers and board members to attend trainings and seminars. Professional development is both a reward for working in the group and a way for staff and board to hear from outsiders what they may not hear from those inside the group.
The organization is willing to spend money to solve problems. This may be the most telling characteristic of sound fundraising. Thrifty habits should not be discarded, but an excess of frugality can lead to “penny-wise and pound-foolish.” For example, low salaries or meager benefits are more costly in terms of high staff turnover costs, recruitment, interviewing and staff orientation than paying a proper salary. Trying to make an old computer work or struggling with an out-of-date software program is simply not worth it.
Every year the same number of people working the same amount of time raise more money. This is the ultimate evaluation of fundraising. It may not get easier, but it should get more lucrative over the years.
No one in the organization lies awake worrying about money more than once or twice a year. I’m not kidding. Worrying does not raise money. An organization that truly shares the work of fundraising will at least give hard-working staff and board the feeling that the burden is not on any one person’s shoulders.