Many non-profit organizations that Richard and I encounter are struggling with how to grow.  Demand is up, yet the resources are not there, whether human or financial, to meet it.
I hear non-profit leaders constantly saying, “We need more new donors.  We need more people on the development team.  We need more program people to serve the growing demand, but we just don’t have the money to do it.”
And they’re stuck.  Are you or your leadership in a similar position?
Over the years, Richard and I have worked with several organizations that have been in this situation and we’ve helped them come up with a solution to jump start growth and begin to expand their services.
We find specific major donors to fund the growth.  Yes, right now there are at least 2-3 major donors on your file who, if you pitched a well-thought out, long-term plan to them, would “invest” in the growth of your organization.
These are not just any donors.  In fact, 99% of the donors on your file would not consider providing you with this kind of investment.  The donors I am talking about either have great capacity, have been with you a long time, love your mission and have a strong relationship with leadership and/or are extremely business savvy.  They understand that it “takes money to make money.”
In a sense, you’re asking a donor to do what a good private equity firm does – invest in companies to help them expand and expect a good return on his investment.  But, instead of personally benefiting financially from it, the donor is benefiting by seeing the organization he cares about expand its reach into the community and around the world.
Here is how it works:

  1. Identify the right donors — Spend time going over the major gift caseloads and have the MGO identify donors who may have the ability and inclination to invest in something like this.
  2. Start initial discussions with these donors — Sit down face to face with a donor to provide a high-level overview of what you are trying to accomplish with your organization and why.  This requires that you have done some preliminary number crunching and forecasting as to what type of investment you will need.  The objective is not to get the donor to commit, but to find out if he/she would be willing to consider a “capacity building” investment in your organization.
  3. Build a five-year strategic “capacity-building” plan — This means bringing leadership from all areas of your organization together to create a long-term plan that details how growth will happen, what it will cost and what you will be able to accomplish because of it.  The more detailed the plan the better. Remember, business savvy investors want to know exactly how their investment will be used and what the risks are.  They will want to know if you’ve done your homework.  Capacity building investments take an extreme amount of planning because you are asking donors to give you money to make more money, whether it’s by directly acquiring new donors or hiring staff to bring in more revenue from current donors.
  4. Create evaluation markers — Built into every capacity building plan must be a set of evaluation markers.  Perhaps this is a quarterly or bi-yearly review that will allow the donor-investor to help you evaluate progress.  Richard and I would recommend that, if possible, you bring the investor(s) in at least yearly to discuss progress on the plan, along with written monthly updates.  Also, we believe you should offer the donor/investor a seat on your board of directors, or at least a place on a committee, if he or she would feel comfortable serving in this capacity or request such.
  5. Don’t leave emotion out of it — Non-profits can make the mistake, when approaching donors in this way, of leaving out the emotional aspects as to why you need to grow.  To forget this would be a monumental mistake.  Remember, the donor-investor is NOT making a financial return on her investment in your organization.  She is getting an “emotional return” on her investment, or, an EROI, if you will.  The higher the EROI, the greater the satisfaction for the donor-investor.
  6. Present the case — We recommend that you either meet in the boardroom at the donor’s office or at your office.  You will practice your “pitch” before the presentation.  Your case statement will be sent a week in advance of your presentation.  At the presentation you will have spreadsheets, graphs, etc., and all the numbers will be clear and understandable.  You’ll have a story to tell that is emotionally gripping.  Then you will ask the donor for a specific gift (investment) over that period of time.

Seeking an investment from your donors to grow your organization is not easy.  But, with the right preparation and thought, it has the ability to transform your organization, and your donors.  And that is what it’s all about.
P.S. If you are interested in discussing how Veritus Group can help your organization with capacity building investments, please reach out to Richard Perry.  One of Richard’s fortés is helping organizations seek long-term investments from donors.