It’s the end of the fiscal year. Nonprofits total the results of their fundraising for the past year and calculate their revenue for the next.
I’ve been a major donor fundraiser or on a development team since 2004—working for organizations with up to 9-figure budgets, New York to Silicon Valley. And I’m here to tell you, there’s an approach to the equation for charitable fundraising success that many organizations are missing.
THE FUNDRAISING EQUATION
Let’s look at the two major factors in the fundraising equation: basic costs and time to ramp up. Basic costs include fundraiser salary, travel, “wine and dine” expenses, and cost of access to senior leadership.
The time it takes to “ramp up” is unique to each fundraiser. These are the levers that a development team needs to pull in order to connect with major donors.
- Exposure to the sector: Knowing the major players, trends, and language of the sector
- Exposure to the geography: Knowing who is interested in the cities, regions, or countries where the organization is working
- Exposure to the company: The ability to tell the organization’s unique story, articulate the details donors want to know, and bring colleagues into the conversation
- Exposure to existing donors: Knowing where deeper relationships with existing donors could accelerate referrals and other connections
- Exposure to new donors: A fundraiser’s own network of contacts, which can open new doors if there is trust and interest—assuming there are no non-compete clauses and relationships haven’t atrophied from over-asking
The idea is that a firm tries to hire fundraisers that can ramp up quickly—and attract funding significantly beyond what is needed to cover their basic costs. Almost always, the first year or two is break-even at best—and the organization may see minimal new giving above the threshold for basic costs.
This is the best case scenario. It doesn’t account for the learning curve when joining a new organization—or that the philanthropic marketplace is inefficient, and having good programs doesn’t always lead to funding. The reality that I see over and over again is that most organizations are not comfortable with this equation, and yet, they keep hiring using this same formula.
AN OVERLOOKED APPROACH: FILLING THE GAPS
Now let’s consider another angle of the equation that has potential for a fast payoff for an organization. Specifically, look at the “ramp up” factors and consider whether somebody already on the team might be as strong or stronger than a new hire in most of those areas.
Before making a new hire, assess your team. Are they strong in many of the ramp up factors? Are there areas where, with additional support, your team could increase their effectiveness? Even the best development teams often don’t have the time or capacity to research, analyze, and strategize.
Equipping your team to fundraise more effectively may not mean making a new hire—but rather giving them extra support. The overlooked approach is to give existing talent the deep intelligence they need, such as a list of donors funding similar work, guidance on how to speak to major donors, and a map showing how existing relationships can open doors.
WHERE EXTERNAL HELP CAN FILL THE GAPS
Knowing who funds your sector: What if you knew the exact people and organizations that would be the most likely to fund your work? In my experience, organizations rarely invest the resources to develop a quality donor landscape. Or, they invest the time to see the big-picture opportunity for funding, but haven’t made the deep dive into specific prospects.
Communicating what matters to donors: Donors often have a strategy for how they want to use their funding to support what matters to them in the world. As such, an organization has to understand how they fit into the donor’s strategy and be able to speak their language. A messaging map—and other tools—gives the team multiple pathways to customize the organization’s pitch.
Reaching new donors: A great prospect list and a custom pitch can still feel like a weak toolkit. This is where a relationship map is invaluable, as it shows how to leverage staff, board members, and friendly relationships to gain access to target donors. For organizations with limited networks, the exercise can greatly inform the creation of a marketing and awareness plan.
Using data to build relationships: Fundraising is an art, based on data. A database is the hub of the donor engagement cycle, supporting prospecting, cultivation, and stewardship. A good database gives an organization insight into current donors—such as the sale of a business that may affect future support—and allows an organization to see what’s working and what’s not.
WHY THIS WORKS
Fundraisers and development teams have to pull a number of levers to break through to the right major donors. By hiring experts to develop these critical tools, a lean team can get the support it needs to build a donor base. Even the best-staffed development team needs support—whether the organization seeks to expand its donor base, raise funds for a new initiative, or recover from a period of poor fundraising results.
While this approach requires an upfront investment, it can be less risky than the fixed cost of hiring another employee, while also avoiding the time spent to ramp up that person. For organizations in critical funding periods or looking to diversify their donor portfolio, investing in donor research and sharp positioning can be a very effective way to fundraise.