Issues Raising Funds — Part II

February 5, 2021

Last week, I wrote about golf and fundraising — the advent of the graphite shaft amplifies your golf swing (good or bad), just as COVID has amplified fundraising (good or bad). In last week’s posting, I shared three issues in raising funds that you may encounter, namely staff turnover, the rainmaker, and the organization’s financial stability (here). This week, I continue with another three issues.

Issue Raising Funds #4: Lack of Vision

Most organizations have a Strategic Plan. (Hopefully), all organizations have some sort of a Business Plan that (should) refer to the overarching Strategic Plan. I would suggest that nobody saw COVID-19 coming and incorporated that into their 2020 plan — business or strategic. However, many organizations have become paralyzed and have no idea how to succeed during this pandemic. Some don’t even know what success would look like. As I mentioned in last week’s post, this pandemic magnifies both the positive and negative issues.

Those charitable organizations that don’t have a vision shared with the staff and the community are likely having a tough time coming up with a unique value proposition during the pandemic. (I wrote about the unique value proposition here.) Food Banks, for example, have flourished over the last year. The worldwide financial instability has just put a huge magnifying glass on some of society’s most vulnerable people. And there is something that people can do about it. The case for support boils down to Problem – Fundraise – Solution. It is not as evident with some other charities. I wrote about the Fundraising Effectiveness Project and fundraising’s future outlook here.

The vision traditionally comes from the Board, in cooperation with the CEO. It needs to be succinct and well defined. It needs to be easily transmitted to the base of support for the organization. Everything in the vision statement may not necessarily come to fruition, but supporters want to see that the organization has a path that they are forging. Merely being reactive is a recipe for failure. People invest in visions. Without a clearly articulated vision, you will definitely have issues raising funds for your organization. (HINT: Organizational survival is not a vision.)

Issue Raising Funds #5: Unclear Roles

There is always a push-pull dichotomy between boards and senior staff. Many organizations are unclear as to where the priorities are set and who oversees the execution of the priorities. I have been involved with organizations where the board met quarterly, and I have been involved with organizations where the board met monthly. If the board is meeting monthly, there is likely a lack of trust or faith in the senior executive to ensure that the organization is on track for success. Far too often, boards equate meetings with oversight. While I am sure that these boards have the best intentions, it creates a never-ending cycle of reporting, leaving little time to implement or alter the course. To be clear, the board sets the organization’s priorities, and it is the staff who execute those priorities.

Going into the staffing of the organization itself, look for defined reporting lines. Who is accountable and for what? Is the organization collaborative or hierarchical? (HINT: A matrix organizational structure [where there are multiple reporting lines/having more than one supervisor] rarely work.)

Issue Raising Funds #6: Depth of Donors

If your organization isn’t capturing data, shame on you! But, if you are capturing the data and analyzing it (I wrote about utilizing your database here), there are a few warning signs to look out for:

  1. If the vast majority of your financial support comes from few sources (whether it is an individual, foundation, or corporation), you are likely exposing your organization to tremendous risk. If just one of those mega-donors stops supporting your organization, how are you going to replace the lost revenue?
    • Examine your data for the age of your donors. If the vast majority of them are over 80, you will have a definite long-term issue. You need to be constantly renewing the “pipeline.”
    • If you haven’t yet introduced a Deferred Giving program (bequest), start now. It is never too late. This pandemic has many people reexamining their estate plans.
  2. What is your donor retention rate? If you get many new donors, but they only donate once, you have a retention issue. But it would help if you explored why there is a retention issue. That is one of the keys to understanding the fundraising culture of the organization.
  3. What percentage of the donors give the same gift, year in and year out? How many decrease their gift? What percentage increase? This gets to the heart of donor engagement, and I would surmise the heart of fundraising. Have the donors been inspired enough to increase their gift?

Conclusion

The competition for charitable dollars will heat up once again. Donors will look at charities through a very critical lens. How have these charities fared during the pandemic? How was my donation used? Is the organization more or less stable than before? I have been reading about some substantial gifts being made in 2021 (and it’s only February), so there is still a desire on the part of donors to have a major impact.

But what about the vast majority of fundraising shops (with a handful or less of staff) and a more modest operating budget? How have they fared, and have they adapted to the new normal? Have they taken the time to be strategic, or are they just putting out fires? I surmise that those who have been able to be deliberate in their thinking, planning, and hiring will be those charities that survive this pandemic. Everyone has issues raising funds, but the question is whether you have the strength to look internally first and make the necessary adjustments.

As it is my youngest son’s Bar Mitzvah next week, I’m taking the day off of posting. Check out my next post in two weeks.

L’chaim,

jack