Response to Association of Fundraising Professionals' Study: Fundraising Effectiveness

Response: Fundraising Effectiveness Study
AFP Fundraising Survey Response
By Norman Olshansky: President
      NFP Consulting Resources

In response to a request from my local Association of Fundraising Professional’s Chapter, to comment on the new National Fundraising Effectiveness survey, I have prepared this article .

Background:

For the first time in five years, results from the annual AFP Fundraising Effectiveness Survey reveal that charity respondents experienced positive gains in giving, but continued to lose donors faster than they gained them.  The 2013  report summarizes data from 2,840 respondents throughout the United States, covering year-to-year fundraising results for 2011-2012.  

•   Gains in gifts from new, upgraded and previously lapsed donors were offset by losses through reduced gifts and lapsed donors.  So, while there was a positive net growth-in-giving, every $100 gained in 2012 was offset by $96 in losses through gift attrition.

•   Gains of new and previously lapsed donors were offset by losses in lapsed donors.  This means that there was a negative growth-in-donors and every 100 new donors gained was offset by 105 in lost donors.

•   Performance varied significantly according to organization size with larger organizations performing much better than smaller ones. 

It should come as no surprise that over the past several years nonprofits have had their share of fundraising challenges, especially among mid and small size organizations.
A snapshot of the national trend for all nonprofits shows that, while overall giving had modest gains, the number of donors has decreased. Bottom line – fewer people are giving and nonprofits have become more dependent on their major donors.
I was asked to comment on the trends noted in the recent study based upon my experience as a fundraising consultant:

1.     While not realistic, nor appropriate, more and more boards and executives are looking for their development staff to bring in the “bucks” without adequate leadership involvement and support. Staff alone cannot be expected to provide magic bullets, especially in mid to small nonprofits.

2.     During the recession, many nonprofits cut staff to save on expenses and the remaining staff, especially those devoted to fundraising, were overwhelmed, and burnt out, causing high turnover and a multitude of other problems.

3.     Many nonprofits have continued to focus their fundraising efforts primarily on events, which have a low return on investment. Events have their place but need to be part of a broader fundraising strategy and plan that uses a variety of fundraising activities targeting multiple segments of one’s donor and prospect base.

4.     Development departments have ignored many of the basics when it comes to fundraising:

A. Keep in touch with existing donors and provide good communications and recognition. They are your most important donor segment. This does not mean sending out quarterly fundraising mass appeals, or only communicating when there is an “ask”. Nonprofits need to spend more
time on stewardship and recognition of existing donors. You can never thank a donor too often.

2.     Do not neglect the pipeline. Keep in mind (especially in Florida), we lose many donors to death, health issues, relocation and from feeling that their gift is not appreciated. In order to simply maintain your existing number of donors you need to add a lot of first time donors. Do not neglect to include new donor acquisition activities within your campaign plan.

3.     While there is a science as well as an art to fundraising, nonprofits are also corporations (businesses) that need to analyze, evaluate and conduct their affairs with an understanding of return on investment of human as well as financial resources. Have a plan that is prioritized to maximize resources and maintain metrics that can be evaluated.

4.     Leaders and staff within nonprofits tend to be crisis oriented and not strategically focused. Too often inadequate time is spent on vision, impact, outcomes and staying true to mission.

There are many axioms related to fundraising. One is that “it all starts with leadership”, (volunteers AND professionals). Analyze, ask questions and do not ignore the basics of professional fundraising. Only then will you be able to say that, “we not only reversed the trend” but also raised more money, retained more of our existing donors, added more donors overall, increased our average and median gift size, and engaged more fundraising leadership and volunteers with a lower fundraising cost per donor”. For more axioms related to fundraising go to: http://nfpconsulting.blogspot.com/2009/09/fundraising-axioms-simplified.html

http://nfpconsulting.blogspot.com/2014/02/response-to-association-of-fundraising.htmlAFP Fundraising Effectiveness Survey ResponseResponse to AFP Fundraising Effectiveness Studyhttp://www.nfpconsulting.blogspot.com/2014/02/response-to-association-of-fundraising.html

Fundraising Axioms: Simplified

10 Basic Fundraising Axioms: Simplified


Yes, science, technology and skill sets are necessary to be successful as a fundraiser for nonprofit organizations. However, there are also several very basic axioms which, if followed, will greatly increase your success.

You don’t get - if you don’t ask
Being good at providing services and programs does not automatically bring in contributions. It’s relatively easy to identify prospects who care about your mission, have great capacity and are knowledgeable about your organization. However, they are not going to become donors until they are asked. Asking can be in many forms. For major gifts, a personal “face to face” request to a prospect, to consider a suggested gift amount, provides the best return on investment. However, grants, group meetings with a general request for donations, events and direct mail, can also be utilized as a method to make an ask.

Connect to hearts and minds before you connect to wallets
People are not going to make significant contributions to an organization that is of no interest and about which they have no personal connection or feelings. The ability to secure a gift and the size of the gift will be enhanced if the donor is educated about the organization, “feels” the importance of what is being accomplished and has a relationship (directly or indirectly) with the organization, solicitor, project or program. Cultivation of those relationships provides added value to the donor and organization.

Fundraising is both art and science. Success requires both.
There are definite processes, sequential steps, ethics, legal guidelines, tax laws, accounting and other requirements that need to be followed to be successful within a nonprofit engaged in fundraising. This is the science of fundraising. Just, if not more important, is the art of fundraising which focuses on relationships, personality, leadership, engagement and follow through.

The 80/20 rule is now 90/10 and applies to fundraising.
80% to 90% of funds raised typically comes from 10%-20% of donors. Most nonprofits obtain the largest share of their philanthropic income from major gift donors. Time spent on major gift solicitation provides the greatest return on investment of nonprofit resources both human and financial. However, the most important annual funds will come from existing donors.  Do not neglect them or the importance of their gifts.  Major gift activities should not be at the expense of retention of existing donors or of the importance of new donor acquisition.

The quality of a gift is directly related to the quality of the relationship between the solicitor and prospect

Major prospects deserve personal attention. People give to people. Your relationship to the prospect has a direct impact on their gift. The more they know and trust the solicitor, the more comfortable they will be making a major gift. They need to know that they are getting accurate, current and reliable information about the organization and the impact of their giving. They also will be more comfortable knowing that the solicitor, with whom they have a relationship, is likely to be more familiar with their background, interests and abilities than would a stranger.

Avoid the ready, fire, aim temptation
Too often the desire - need to raise funds creates a sense of urgency which translates into volunteers and staff wanting to get started and solicit as many people as they can, as broadly and quickly as possible. Fundraising without a plan, organization, and discipline is an invitation to failure. There needs to be proper organization, leadership, communications, marketing, budgeting, back office systems and a well defined case for support. A campaign fundraising plan is critical and should be integrated within the overall business plan of the nonprofit. Fundraising should be conducted sequentially (top down and inside out). Initially the campaign should focus on the largest potential gifts and existing leadership of the organization. Events, group meetings and mass appeals should not be utilized until major gift solicitations have been addressed.

Leadership sets the example.

Before making their commitments, many major donors, corporations and foundations want to know that the leadership of the organization has demonstrated its fiduciary responsibilities, not only through stewardship of funds and budgets but also as donors. Early in any fundraising effort, Boards and leadership within the organization should be asked to participate as donors, to the best of their abilities. Full participation is as important, if not more so, than the total dollars raised from leadership.

You can never thank a donor, volunteer or staff member too often. They are your keys to success.

Whether it be stewardship, public recognition, ongoing communication, personal thank yous, gifts, member benefits, etc………the more you are in touch with donors, volunteers and staff in a way that demonstrates your appreciation, the more likely they will be there for you when you need them in the future.

Donors expect and deserve a good return on their charitable gifts/investments

Treat your donors as if they were major stockholders. They deserve to know how their investments in your organization are working and if the funds they have donated have accomplished the purposes for which they were given. The more you can demonstrate a good return on their investment, the more likely they will contribute in the future, and be a positive advocate for your organization in the community you serve.

Don’t do anything that you wouldn’t want to read about on the front page of the newspaper.
Nonprofits must conduct themselves ethically and appropriately if they are to maintain the trust and confidence of their supporters and those they serve. When faced with difficult decisions, nonprofits should take the moral high ground and work diligently to ensure that a culture is established that promotes ethical behavior at every level within the organization. Challenges will occur. Whether related to gift acceptance issues, donor requests for special treatment, financial management, reporting, disclosures, personality conflicts or other issues, every nonprofit will have to confront delicate and potentially controversial problems. How problems and challenges are addressed is a true test an organization’s strength and effectiveness.