Over the 25 plus years I’ve been working in fundraising there is one pattern that continues to present itself over and over again. That is, whenever a certain type of non-profit, i.e. faith-based or relief and development or educational or social service or health related non-profit, experiences a potential tightening of revenue, instead of using their brains, leadership makes an announcement to the entire organization that it needs to cut a certain percentage from their budget across the board.
“We’re sorry, but every department has to cut 20% in expenses next year.” This undoubtedly includes development. Yes, the very department that raises revenue!
Have you experienced this?
Currently, it’s the health-care industry that is experiencing this. Health care institutions across our country are really frightened about all the changes that are happening related to the Affordable Care Act. In preparation for these changes they are massively cutting costs in their institutions by up to 25-30%!
Those institutions that have a weak culture of philanthropy are also cutting their development budget by the same amount.
That’s right, the budget of the department that actually has the ability to help make up for some of the lost revenue these institutions may experience is being slashed as well. When I speak with some of my friends and colleagues in this sector, they tell me the administration just doesn’t understand the ramifications of what they are doing.
They blame it on the fact that the institution doesn’t understand the role of fundraising and that there has always been a disconnect with what the institution does and how fundraising supports it.
Does the word disconnect resonate with you and your own experience with your organization?
This is not something that has affected just the health care industry. It rises up in all sectors of non-profits when things get tight financially. And, inevitably, leadership makes “sweeping” cuts across all areas of the organization.
Now, Richard and I will always be advocates for efficient, high-producing development teams. This means that leadership should annually evaluate the effectiveness of the development department, making sure you have the right processes, systems and people to be most effective.
However, we just don’t understand what goes on in the heads of leaders who cut off the hands that feed them. Is it easier to just cut everything so it seems fair? Are leaders afraid to do the hard thing and make strategic cuts? Or are they just clueless?
I want to go back to two things: culture of philanthropy, and the word disconnect.
Who is responsible to build a culture of philanthropy and work to bridge understanding in an organization?
I really believe it’s the leadership of development and philanthropy in these organizations. Now, if leadership is leading, they are constantly trying to build a culture of philanthropy within the entire organization. They are reaching out to their colleagues in program, finance, executive leadership and the board to help the entire organization understand the purpose of philanthropy and how it’s part of the mission.
This is the part of being a development leader that Richard and I feel is way underdeveloped in our industry. Development leaders have been so busy “getting the money” that not only are they not developing relationships with donors, they are not even developing relationships with their executive colleagues.
If this is NOT happening in your organization right now, you too will experience budget slashing in your development department the next time it comes around.
Bottom line: I know it’s easy to blame the CEO or the board when budget cuts affect development departments, but I believe the real problem is with development leadership. That’s right…we need to look at ourselves first.
Are you doing a great job of creating a culture of philanthropy throughout the entire organization and helping everyone understand its role in the mission? Do folks understand that philanthropy is the lifeblood of the organization?
These are the questions to ask now – not when finance comes knocking at your door. Then it’s way too late.
Jeff
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Great post. Have so been here. And I don’t know that you can truly blame the fundraisers easier. My middle name is “culture of philanthropy”. In good times, I’ve been able to make great inroads. But it can be a three steps forward, two steps back process. When all is said and done, them that hold the purse strings win. And when times get tough, a lot of people instinctively tighten up on those purse strings. It happens in for profit businesses at well. Marketing is one of the first things to get slashed. It’s tragic, I agree. Cutting costs is a short-term strategy that may lead to death (reminds me of when my Dad used to prune our trees; inevitably, there would be times he got just a bit too carried away… those trees didn’t spring back). Ramping up revenue generating strategies takes the same amount of work as cost cutting, but instead they lead to growth and life. I don’t know why this isn’t intuitive for people. After all, we know for our own bodies that once we stop growing we begin to die. Why do you think?
Claire, I totally agree with you. It’s sad, but a reality. I just feel that we as development leaders have to do everything we can to instill that Culture of Philanthropy. If we do that, then we are equal partners in decision making when times get tough and the slashing begins. Thanks for writing.