moneygrowing 2015-Apr27
Today, I’m talking specifically to three audiences: Executive Directors, Development Directors and Major Gift Officers.
Now more than ever, nonprofits are struggling not only with investing properly in their development programs, but also with where to actually spend it within development.
Unfortunately, Richard and I see many nonprofits not doing either of these things well. Underfunded fundraising programs cause turmoil with development staff. “Everyone is stressed out” is a common plea we hear when development directors talk to us.
But beyond just the overall program being underfunded, we see some crazy budgets where money is spent on strategies that have nothing to do (or hardly anything to do) with building relationships with donors.
I’m talking about spending development budget money on crowdsourcing when there is no budget to enhance a mid-level program. Or money spent on social media when there is literally no major gift program in place. Or even spending a ton of money on peer-to-peer fundraising when there is no planned giving program.
Then, of course, there is all this money being spent on events – usually the largest “time suck” for any development team – spitting out low return on investment (ROI) of resources, and not much in the way of building relationships. Yes, I know you can argue about the importance of getting donors to your event, and it’s a great cultivation tool and all that, but really, I’d rather have a full-time MGO building a relationship and sitting in a donor’s living room, than slapping that donor on the back thanking him for coming to my event.
But getting back to my point, I’d like to ask you two questions: 1) Have you reviewed each of your fundraising strategies lately and figured out the ROI for that strategy? 2) Of those strategies, how many are about truly building a relationship with a donor, rather than just getting cash in the door?
Look, I know there is pressure to get cash flowing into your nonprofit. But if that cash comes in at the cost of bringing in new donors, building those relationships and thinking long-term value, you’ll always be chasing cash and not creating relationships… relationships that would be much more valuable in the long run.
The other day I heard a story of a nonprofit hiring a new development director. The first week, the director of development tells the staff that she wants to focus on bringing “Millennials” into the organization. What? Yep, she wanted to focus her fundraising budget on that group of donors because the donor file was “getting old.”
You may be laughing at this, but Richard and I hear this kind of story so often, it would make your head spin.
If you’re not laughing at this I’m worried about you. Millennials have NO MONEY. It’s the Boomers who have the money, yet we keep thinking that younger is better, and we spend money on strategies to get their attention. Because we certainly won’t get their money… not yet, anyway.
Here is the really sad part about this story. This is a nonprofit that had no mid-level program, a weak major gift program and nothing in the way of planned giving. All programs that build relationships with donors… all at a high ROI.
Instead, this development director wanted to spend a bunch of money on crowd-sourcing, social media and hip, cool events.
That person lasted 4 months…
If you are an executive director, I would like you to think about these few things:

  1. Do you know how your money is being spent on your fundraising program?
  2. Do you carve out at least 40-50% of your time to be in front of donors?
  3. Have you created a culture in your organization that puts donors first?
  4. Are you chasing cash, or are you building relationships with donors?

If you are really leading your organization, you will be able to say yes – you are building relationships because you think that is how your nonprofit will flourish. If you have to say anything less than a full-throated yes, I hope you can reexamine your fundraising strategy, because you are going down the wrong path.
If you are a development director, I want you to think about this:

  1. Do you know the return on investment of every one of your fundraising programs? Do you have a long-term revenue/cost strategy to build your overall program over the next several years?
  2. Is your mid, major and planned giving team fully funded and robust?
  3. Are you spending more of your time on processes, or on how to build better relationships with donors?
  4. Are you empowering your team to build relationships with donors, or are you stressing them out to bring in cash?

If you are a major gift officer, I want you to think about this:

  1. Are you out of the office and in front of donors at least 50% of your time?
  2. With the remaining 50%, do you spend more than 10% dealing with administrative work?
  3. Does the majority of your donors’ gifts come from a direct solicitation from you?
  4. Are you able to “fight off” the “powers that be” when they pressure you to “get the money,” and instead calmly show them you have to build relationships first?
  5. Are you successful because of the relationships you have built with your donors?

Answering YES to all five of these questions means you are focused on the right stuff. You are most likely creating a fantastic ROI for your organization.
You see, not only do we need to fund our development departments properly, but we need to spend that budget on the right things. I know there is all this pressure to do the “cool stuff” and be innovative. But unless your development team is fully funded and you have exhausted all those good strategies that create good ROI and develop relationships, then you can’t spend it on the cool stuff.
Invest in building relationships with donors. They will pay you back.