Paying for Fundraising—Fast, Cheap, and Good?

Paying for Fundraising

By Laurence A. Pagnoni, MPA

Jim Jarmusch once explained: Fast, Cheap, and Good… Pick two. If it’s fast and cheap it won’t be good. If it’s cheap and good, it won’t be fast. If it’s fast and good, it won’t be cheap. Fast, cheap, and good … Pick two words to live by.”

Many nonprofit executives still struggle with how to pay for fundraising. That’s a shame because fundraising done well pays for itself. Yet the dilemma is real and persistent. Below I suggest a few ways to break out of this impasse.

Over my 35 years as a professional fundraiser, the majority of nonprofit CEOs and Board members I’ve encountered seek a fundraising program that could be described by all three of Jim Jarmusch’s characteristics–fast, cheap, and good—despite the irrationality of that.

Most end up with fast and cheap, but not good.

If that’s what you want, at least be clear about it. As a stopgap solution at times, it’s better than nothing. Yet it’s not a place to stop at.

Some nonprofit leaders inquire about “commission-based fundraising” which is strongly rejected by the fundraising field. I explain why in this related post.

The Long Game

Advanced fundraisers by definition play the long game. The long game is all about deeper donor and funder relationships, with a laser focus on legacy or planned gifts because these are vastly more lucrative than cash donations within a donor’s lifetime. Yet most nonprofit organizations focus almost solely on their current annual revenue needs and invest little on fundraising programs and the required development infrastructure.

Yet, lest we be distracted, let’s focus on how the best and the brightest nonprofits roll, the ones that earn high returns from their fundraising programs and don’t hesitate to pay for fundraising because they understand its value.

The Best and the Brightest Choose Fast and Good

Bread for the World. United Jewish Appeal. Habitat for Humanity. The Salvation Army. Covenant House. Amnesty International. Just to name a few of the best charities. Recognize them? Their names convey substance, quality, and longevity. Their donors and funders don’t just give once, but over and over again. Why? Because all of these organizations invest in fundraising and in fundraising’s children: marketing and communications.

The leaders in the nonprofit world choose fast and good—fast, because they choose to be nimble and poised to seize market opportunities; good, because they won’t compromise their commitment to their mission with anything less. Of course, they built themselves up over the years to enjoy the privilege of taking that position. It didn’t happen overnight.

In their early days, these nonprofits raised unrestricted support. General funds allowed them to pay for prosaic expenses that were not strictly program expenses, but building up unrestricted reserves indirectly helped their programs to flourish.

Three Top Ways to Pay for Fundraising Costs

I’ve relied on these methods hundreds of times to help my nonprofit clients break through to the next level of organizational advancement.

The number one way to cover the costs related to fundraising is to build the development costs into your project or organizational budget. They should be seen as part of the cost of doing business just like the fees related to an IT contractor, architect, or attorney. Yet most of the capital campaign or annual- fund-drive budgets that I review for LAPA’s clients exclude development costs. This is an easy fix. When you build the fundraising expenses into your cost of doing business, your goal will be higher and that helps you secure larger major gifts.

A second way to pay for fundraising is to draft a fundraising plan, show the plan to a funder or thoughtful major donor, and have a conversation about why this is a tipping-point investment for them to make. The goal is to ask the funder or donor to underwrite the plan. Explain to them that nonprofits that realistically invest in their fundraising program are more sustainable than those that underinvest in or ignore it. Most development plans first analyze an organization’s current fundraising capacity and then explore its future fundraising goals and the development capacity required to succeed. I often conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of both the organization and its development program, and then assess the current development team and their ability to meet the organization’s fundraising needs. I’ve found that many funders interested in capacity building become engaged when they see a real plan.

A third way is to set aside a portion of any new funding or donations you receive for fundraising costs. I generally urge a 10% set aside. Those set-aside funds build up fast. This method is successful for incremental growth. I’ve used it alongside the two ways mentioned above, and, in fact, I recommend using all three coordinated together.

What’s your experience of advancing beyond this impasse? I welcome your comments and questions.

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