The Eggs In One Basket Problem

It’s never been a good idea to have only one option in any situation. I learned that years ago when I found myself stuck in a nasty situation with no way out. What was the problem? I had relied on one path, one way, one option and decided it was irritating, frustrating and distracting to try to plan for anything else. I had all my eggs in one basket.
One reason I thought that way is that I could never imagine that the one path I had chosen would ever go bad. Kind of dumb, in retrospect. Really dumb. I mean, nothing in life is guaranteed.
But that’s how I thought.
I learned a lesson back then, and I can sum it up in one phrase: never just have one option. For anything.
And now I don’t. Every life situation I’m currently in, both personal and professional, contains a variety of options already planned out in quite a bit of detail.
Now, some would say that’s a little over the top. OK, that’s fine. You don’t have to go that far. For me it gives me comfort and security. But for you, you need to have more than one option (at least) for all of your life circumstances.
And if you’re a leader or manager in a non-profit, please hear me out. You DO need other options for revenue. And you need to work on it right now. Because, for many non-profits, this pandemic has proven that reliance on just a few sources of revenue is a perilous and fatal situation to be in.
But now you’re in it. And, in some cases, just scratching to get by. What should you do? Here’s what we suggest:

1. As Jeff recommended in his last post, purpose to move from transactional fundraising to relational fundraising. Relational fundraising is when everything you do in fundraising is about developing authentic relationships with donors, and you’re committed to fulfilling their passions and interests through your organization. We’ve written a lot about what this means and would be happy to help you do this. Now, don’t be brushing this advice away as if it’s a minimal or non-strategic point. It isn’t. This is a core belief that will assure your financial stability in the future. If you can’t grasp this, then we need to talk. Please don’t stay with your current mindset of transactional fundraising. It’s a dead-end street.
2. Diversify your revenue sources. This second point is a bit complicated and takes time, I know. But you must do it if you’re going to survive in the next few years. There are four steps you need to take to diversify your revenue:
   • Get familiar with the elements of the donor pipeline
   • Analyze your file to identify pipeline weaknesses
   • Analyze your current revenue streams to identify weakness
   • Create a plan to deal with weak pipeline areas and diversification of revenue

I’m going to talk about the first step now, then I’ll deal with the other three in the posts that follow.

Get familiar with the elements of the donor pipeline.

Here’s a graphic of what a healthy donor pipeline looks like. This graph, as it is, could be for all the individual donors on your file. You could also do another one for institutions and simply remove planned giving from that one.
Here’s the question. Are you fully functional in EACH of these areas in your organization? Do you have an effective strategy in each area?
If not, this is something to work on right now.
Many non-profits don’t have a strong enough donor acquisition program that feeds the pipeline with sufficient donors who are committed to the cause of the organization. You need:

1. Donor acquisition that feeds the pipeline with sufficient donors. Jeff and I have seen so many situations where the general file, the mid-level program and the major gifts program are suffering because there aren’t enough donors being acquired (i.e., put in the pipeline) to maintain an effective general file, mid or major gift program. It’s as if leaders and managers expect those programs to operate by themselves and the donors will just “show up.” Sorry, it doesn’t work that way. You need a solid donor acquisition program to make that happen.
2. Donors who are committed to the cause of the organization. This is about donor quality. You can have a ton of people coming to your event, but only a minor portion of them may really be committed to your cause. This is the problem with events. Most people are “doing the event” rather than attending because they’re truly committed to your cause. And it’s not only about events. It’s any form of donor acquisition that gives “donors” trinkets, things and benefits in exchange for their gifts, instead of finding ways to really bond them to the cause of the organization. This is a trap many non-profits are in, which is why their donor and value attrition is so high. You need to get the RIGHT donor in the door – that person who is passionate and committed to what you do.

The additional problem is that there is dysfunction and lack of effectiveness along the pipeline, causing donor value attrition and donor attrition. I’ll talk more about this in my next post, where I’ll give you a specific exercise to factually identify pipeline weakness.
So think about your donor pipeline. Is it healthy? It is fully functional? If not, there’s work to do. Stay tuned for my next post, where we’ll help you figure it out.
In the meantime, stay positive, healthy and confident. You’re in a good organization. Your cause is worthy of support. And there are good solid donors who will support you. You just have to have a good plan.
Richard