The Crisis in Development
We must have heard from over 30 nonprofits this spring who are curtailing their development efforts because their funding has been cut in the current geo-political environment. Many are confused and unsure of what steps to take. There’s obviously no silver bullet here. But we’d like to offer a few concrete suggestions that can help many nonprofits get through these tough times and make it to the other side in (hopefully) three years.
Realize this is likely not a long-term problem.
There’s a reasonable chance that things will be very different in three years, so set your sights on that time horizon. Keep investing in the prospecting and cultivation of donors. Donors are still meeting with nonprofits even though they may not be in the position to fund them right now. You can’t jump to the head of the queue when the tides turn; you have to already be there.
Rethink your programs vs. development allocation.
Wall Street funds do this all the time, shifting their proportion of stocks vs. bonds to optimize their response to financial shifts. As nonprofits, we should too. Take a typical nonprofit that invests 70% of its funds in programs but just 15% in fundraising. They should consider reallocation to something like 60% programs and 25% fundraising to help to replace shortfalls.
As Dan Pallotta states: “We’ve all been taught that charities should spend as little as possible on overhead… But if it’s a logical world in which investment in fundraising raises more funds and makes the pie bigger, then we have it precisely backward.” He continues, “overhead — of which fundraising is a key component — has become demonized. This is a mistake. Programs are the reason we do this work, but funding is the gas that makes the car go. Too many nonprofits are taking the position that, “I have to keep driving; I can’t stop for gas.”
Find more prospects. Do more Asks. Get more “No’s.”
No one likes to fail, but in these times, we have to adjust our definition of failure. Getting more funding will mean prospecting among donors and foundations you normally pass by. Have a goal this year to increase your pool of prospects by 33%. This means you’ll probably do more “Asks” than ever, which also means get more “No’s” than ever, too. But that’s okay—it’s a sign of success, not failure, on your way to replacing lost funds.
Double your Development Department (at no cost!).
Most nonprofits expect their (already overworked) Development Department to make up shortfalls. That’s a mistake. We believe in something we call “Bottom-up Fundraising,” where the Development Department is the entire nonprofit. Everyone from Interns to E.D.s is responsible for helping contribute possible prospects, giving donors attention, and doing the “Ask.” In practice, this means your regular newsletter highlights a funder; the program staff invites a donor to sit in on a program activity, someone in admin hears about a local foundation changing its priorities. Fundraising becomes everyone’s job. You need to flex muscles you haven’t used before (and your Director of Development will thank you!).
Rethink Cultivation.
It’s a lot easier to keep an existing funder than generate a new one. Re-energize your cultivation routine—make sure every donor is getting regular, “non-Ask” touchpoints and feels recognized. Run through that “Dead File” of lapsed donors and ask every single one to re-up their giving. If you haven’t done research on your current donors, consider doing it now – DonorSearch, Wealth Engine, iWave, etc. You will be shocked at how many donors you have who currently give you $100 who have the capacity to give $10,000 or more. And ask everyone—existing donors, inactive donors, board members, and foundations—for a one-time 3-year stretch gift to get to the other side.
You can do this. The money is out there. It’s a matter of bringing to bear bigger numbers and more effort.
