It’s always amazing to Jeff and me how the donor pipeline, as a strategic element of fundraising, is either ignored or mismanaged in most non-profits. The reason we know this is that we cannot see the pipeline in the organization structure of the non-profit.
Here’s what I mean by that.
At a macro level, when you think of the purpose of a non-profit and the ideal structure that supports the efficient and effective structure of that purpose, it comes down to these four core elements or categories of activities:
- Program — This is the delivery and execution of the mission. This is the “product” of the organization.
- Resource Acquisition — This is the function that secures resources to fund the mission. Call it “sales” if you want. It is the fundraising function. For a university or educational institution or arts non-profit, say, an opera or performing arts organization, it includes fundraising and the acquisition of students, sales of tickets to fill seats, a YMCA membership fee for the fitness function of that entity, etc. The point is that one is acquiring resources through donations and earned revenue. You also might put GIK (gifts in kind) in here. It is also a resource that needs to be acquired.
- Marketing / Communications — This is all about brand maintenance, promotion, and enhancement. This is marketing and communication activities that help the desired publics of the non-profit understand and become attracted to the mission of the organization. Marketing, for instance, plays a key role in attracting students to an educational institution. Events and PR would also fall into this category.
- Operations — While the three functions above are for the most part outward-facing, this category of work is inward facing: HR, Finance, I.T., Operations etc. – everything needed to “run” the non-profit.
In our judgment and experience, these are the four major categories of work of any non-profit. There are a lot of nuances to each of these categories and different ways of expressing them in an organizational chart – but when you boil all the complexity of any non-profit down to the essential TYPES of activities, they fall into one of these four.
Now, to be able to “see the donor pipeline in the organization chart” you need to take the resource acquisition function by itself and break that down into the two types of revenue sources.
Here is what they are:
- Individuals – everything that happens as related to resource acquisition from individuals.
- Institutions – everything that happens as related to resource acquisition from institutions of all types: corporations and businesses, places of worship, foundations, other non-profits, other organizations, etc. GIK is primarily sourced from institutions so I would put that here.
Now you’re ready to look for the donor pipeline in your structure. If you took either of the two types of revenue categories and each of their subcategories, you should be able to see the donor pipeline in how the organization is structured. Here is what you should see:
- A donor and/or buyer acquisition function – By buyer we mean the earned revenue piece: ticket buyer, student acquired, fitness center (YMCA, KROC Center) member acquired, etc. The acquisition of these people or institutions.
- A donor and/or buyer cultivation function – Where the donor and buyer are retained and “cross sold” which means if they are a donor, they are presented with buying opportunities, and if they are a buyer, they are presented with donating opportunities.
- A donor and/or buyer upgrading function – On the donor side, this would be the mid-level function where donors are intentionally migrated from the general cultivation pool up into major giving. On the buyer side, the upgrade would be towards the person consuming and paying for more services and presented with options to give as well.
- A major gift function – Self-explanatory on the donor side. Greater purchase of services on the buyer side and presented with opportunities to give as well.
- A planned gift function – Self-explanatory on the donor side. Greater purchase of services on the buyer side and presented with opportunities to give as well.
- A capital gift function – Very high giving to capital projects and greater purchaser of services and substantial giving as well, as the donor / buyer is presented with options to give and purchase services.
If you can’t see these functions in how a non-profit is organized, it’s because the organization is not organized for efficient and effective performance. And the most common reason it’s not organized properly is because the authority figures either have lost their way on remembering that resource acquisition is a critical and strategic function in their organization, and/or they don’t know how to make the donor pipeline elements function in the organization.
The net of all of this is inefficiency, lost revenue, and discouraged and ineffective talent.
This is why it’s important to understand the role of the donor pipeline in a non-profit and to organize properly so that the pipeline actually works. And if you don’t do this, you can’t expect to have a very good future because your economy will suffer along with the staff who are trying to manage it. Take some time to look at your structure and see if you can find how the donor pipeline fits throughout each area. If you can’t, take steps to do something about it. In my next blog post, I’ll be sharing how to “feed and care for” the donor pipeline. Stay tuned.