Sunday, January 27, 2013

Is Fundraising a Fail? New National Study Paints a Pretty Dim Picture of Nonprofit Fundraising

"‘The most significant regret I have in looking over my 15 years as a leader of two big philanthropies is that while we thought a lot about sustainability at the Open Society Foundations and at the Atlantic Philanthropies, we rarely made grants to strengthen organizations’ fundraising in a way that encouraged innovation and democratization."  
- Gara La Marche
CompassPoint and The Evelyn and Walter Haas, Jr. Fund released a national study last week, which presents a pretty dim picture of nonprofit fundraising.  Underdeveloped: A National Study of Challenges Facing Nonprofit Fundraising, shows an industry in crisis with:
  • too few qualified fundraising professionals;
  • long vacancies for Development Directors at many nonprofits;
  • lack of appropriate fundraising infrastructure; and,
  • lack of a fundraising culture at many nonprofits.

Fundraising is HARD.  This is not news. 

What is news is that there are trends across charities that point to real difficulties in nonprofit fundraising as an industry, i.e. this is not an organization-specific problem.  (You are not alone!)

What is also news is that there are marked differences between high and low performing nonprofits.

If you are struggling with fundraising at your organization (and who isn't?), there are things you can do to improve outcomes for yourself and your organization.  See, in particular, pages 21 - 27 of the report.

Also, check out my thoughts below on what the industry needs to do to ensure that all fundraisers and the organizations and causes WE love have the money and donors WE need to succeed!

1) Show fundraisers some respect. - In the same way that sales is vital to the success of any for-profit enterprise, fundraising is vital to the success of all nonprofits.  No money.  No programs.  It's that simple.  However, in many organizations, fundraising is not given it's due both from a compensation and leadership perspective.  This is VERY short sighted.  In my view, fundraisers should be the highest paid people on staff, especially since they cannot receive commissions for their work - a common practice in for-profit sales.  Money isn't everything but if you want A-Talent on your fundraising team, be prepared to pay and let these folks lead.

2) Don't give fundraisers unrealistic goals. - Goals for fundraising are often set by the finance department and this is a BIG problem.  Sure, bills have to be paid but setting goals by determining your Expense Line is a bad practice because fundraising is about more than cash.  It's about building and stewarding relationships over the long haul and relationship management CANNOT be measured by financial metrics.

"Nearly one third of development directors in this study reported that they have been charged with unrealistic performance goals. All experts agree that goal-setting should be a collaborative effort inclusive of the development director from the start. Moreover, performance expectations defined in financial terms alone deny the reality of what it takes to get givers, not just gifts, as Kim Klein reminds us. Expectations might include, among other dimensions of performance, the development and maintenance of the development department, cultivation and stewardship of relationships, staff and board relationship-building, and contribution to the vision, strategy and overall leadership of an organization."
Goal setting for fundraising should ALWAYS start with an analysis of your donor database, be done FROM THE BOTTOM UP, and include Non-Financial Metrics.
To set REALISTIC fundraising goals, ask these questions.
  • How many donors do we have? 
  • What is our median gift?
  • How much attrition can we expect in our donor base this year, i.e. who will NOT give?
  • How many new donors can we expect to acquire?
  • What is our capacity to steward and close new and old gifts?
  • What is our fundraising cycle?
By building your goals and budget FROM THE GROUND UP (Yes, I'm saying it again!) you will have a much more realistic sense of what your organization can raise at this time, in this economic climate.  You will also generate BUY-IN from your fundraising staff, since they are the ones setting the targets!

3) Fix the fundraising system. - Ask any fundraiser how they feel about their fundraising systems and you'll get an eye roll.

Most of the fundraiser I know HATE (I'm not being hyperbolic here) their databases.  This is partly due to the fact that nonprofits are under capitalized when it comes to technology and IT.  It also reflects the woeful lack of competition in the market for affordable nonprofit databases/CRM. 

I'm not sure how to fix the sector's fundraising systems but it's important to acknowledge the vital roll that your fundraising structure plays in your fundraising success!  It's nearly impossible to build a seamless fundraising operation without tools that INTEGRATE, provide STRONG ANALYTICS and REPORTING, and AUTOMATE repetitive but necessary tasks. 

Better systems would alleviate a lot of frustration in most development shops.  They would also allow for more time to FUNDRAISE.

4) Incentivize fundraising performance. - One of the real differences between for-profit sales and nonprofit fundraising is that incentives are not always aligned with performance.  For example, in a for-profit context, you can incentivize acquisition or prospecting by paying higher commissions on new deals. In a for-profit, you can also push revenue by providing healthy year-end bonuses. Fundraisers don't have the same incentive structure, i.e. often there is no upside (or downside) for performance and this is another problem for our field.  I'd like to see more nonprofits use creative, albeit ethical, incentives to reward fundraisers based on performance.

4) Create a fundraising budget. - It takes money to make money.  Again this is true in for-profits too.  The challenge is that in many nonprofits, 90% of the budget for fundraising is tied up in staff salaries.  This is maddening.  Fundraisers need marketing dollars to tell people about their organizations, travel budgets to visit donors, technology budgets to build solid operations (see 3 above).  Without these investments it is very difficult to scale your fundraising operation.

5) Make fundraising a team sport. - In the same way that you don't expect a single Program Manager to plan, manage, execute, analyze and report on your nonprofit program, you cannot expect one person to do Development.  Fundraising is a team sport.  Develop a culture and PROCESS where everyone can take part in pitching the organization, finding and stewarding donors, and "making the ask."

"The development director’s success is inextricably linked to staff, executive director, and board success. One of the tenets of a culture of philanthropy is deep and passionate engagement across the organization, which translates into shared accountability for the organization achieving its fundraising goals. Executive directors should consider setting clear expectations for staff other than the development director—identifying specific activities in which all can participate. One simple mechanism to reinforce accountability is to include development goals in the annual performance evaluation process for staff. Just as important, boards of directors—with strong leadership and modeling from the chair—should include fund development goal-setting as part of their own annual work planning and monitor their own performance regularly.
Again, fundraising is not easy but it is vitally important to the success of ALL nonprofits.
By identifying critical challenges facing most nonprofits and offering solutions for improving the nonprofit fundraising, we can enhance results for our field.

I hope that you will read the report, discuss it with your colleagues, and start improving your fundraising operation today.

Warmest regards,


Sunday, January 20, 2013

On Greatness

As we head into Dr. Martin Luther King, Jr. day, I can't help but think of all the martyrs and saints in our lives who inspire us to GREATNESS. Who live boldly in spite of personal sacrifice and threats. Who stretch to serve others. Who feel that this one wild and precious life is and should be more than a personal project.

Skeptics are fond of saying that we can't all be bold or great.

"We can't all be Ghandi, Mother Teresa, John Kennedy, or MLK," they say.

I disagree.

I believe that greatness is everywhere.

It's in every feeding ministry where people are breaking bread. It's in every park where loving parents and grandparents are looking after treasured children. It's in every home where adults care for aging parents or pets.

Whenever and wherever people are serving and loving others (and themselves) - greatness is imminent.

If you are lucky, history and culture may conspire to make you famous but greatness just takes the right action and perspective.

Be great.

Surround yourself with people who inspire you to be big, honest, and free.

Forgive and cleanse old wounds.

Play with children.

Ask for help and give it in return.

Stretch your heart and mind and remember that there are always many sides to one story. Stay curious.

We need our prophets and sages to show us the way. But we also need regular human beings, like you and me to live boldly.



Tuesday, January 1, 2013

To Being a Warrior

Happy New Year to you and yours!

I am wishing you much peace, love, and joy in 2013.

Here is my aspiration for you (and me) for next year and always.  It is from The Places That Scare You: A Guide to Fearlessness in Difficult Times by Pema Chodron, one amazing woman who inspires me.

Warmest regards,


"May the roots of suffering diminish.
May warfare, violence, neglect, indifference, and addictions also decrease.
May the wisdom and compassion of all beings increase, now and into the future.
May we clearly see all the barriers we erect between ourselves and others to be as insubstantial as our dreams.
May we appreciate the great perfection of all phenomena.
May we continue to open our HEARTS and our MINDS, in order to work ceaselessly for the benefit of all beings.
May we go to the places that scare us.
May we lead the life of a warrior."