Now Is the Time to Invest in Fundraising

April 6, 2020 | Laurence A. Pagnoni

“Invest in fundraising now more than ever.” That sentence (and variations of it) haunted me when I read the Chronicle of Philanthropy some 40 years ago at the start of the HIV/AIDS pandemic.

Fortunately, for the nonprofit that I led at the time, and for the very ill clients that we served, I did heed its warning. Back then, I was the CEO of a major AIDS service organization, and diverting funds to fundraising efforts instead of direct care was unthinkable, much like it probably is for many of today’s nonprofit leaders.

However, during some of the darkest times of the HIV/AIDS pandemic, we invested in our development program, hiring our first four fundraisers, a terrific grant writer who was an expert at securing federal funding, and a prospect-researching service to learn more about our current donors and new potential supporters. We even established a planned-giving society.

Today, that HIV/AIDS nonprofit is thriving because we were able to do both: deliver urgent care services and expand our revenue programs. You don’t have to choose between the two.

The crisis we face now requires us to advance our fundraising programs more than ever before. Don’t be timid. After all, our field is called “advancement” for a reason; we should not retreat.

Investing now in your fundraising staff and operations will give you the capacity to talk more with your donors, to cultivate and solicit more institutional grants, and to apply for and use government financing for immediate relief.

Think Deeply Before Acting

As a fundraiser, you are likely built for action. You probably already know that the fundraising profession is essentially a practitioner’s craft. However, I encourage you to step back from the press of the pandemic and think deeply.

You must ask and answer question like this right now:

  1. Will our organization emerge from this scourge with a stronger revenue program than before it?
  2. Has withholding investments in fundraising hampered our response to this pandemic?

In the face of the novel coronavirus, nonprofits face many challenges. Social distancing is breaking down the volunteer safety net nonprofits rely on. Nonprofits that rely on service fees are losing revenue as clients stay away from trainings, screenings, meals, and so on. Human-services and arts-and-culture organizations have lost their lifeblood: human interaction.

Keeping your nonprofit’s doors open is, of course, your first priority. But you’ll have to move beyond that and raise significant emergency funds to, among other things, increase your technology infrastructure so you fully operate virtually and to secure the discretionary revenue your agency needs right.

As Hard as It Is, You Must Think Long Term

Simply put, nonprofit executives are charged with thinking about, preparing for, and designing the future as much as the present. We must tend to both. President Lincoln once said, “We cannot escape the responsibility of tomorrow by evading it.”

A deep articulation of these critical issues can be found in my just-issued book, Fundraising 401: Masterclasses in Nonprofit Fundraising That Would Make Peter Drucker Proud. Here are several steps to take, as described in the book.

Assess your total revenue needs, and express them to funders and donors. This two-pronged step is so important because of the “principle of proportionality” — the reality that major donors give in proportion to the goal. During this crisis, you’ll likely be tempted to under-ask. Remain aware of the principle and state your real needs to avoid that pitfall.

To assess your total revenue needs in a time of crisis, ask your finance person to help you go through a standard budgeting exercise, but instead of constructing it based on your current revenue, allow yourself to list what you need to truly thrive. A few things you must do:

  1. Be sure to include the losses you may face.
  2. Involve your whole staff and board in this exercise.
  3. Move with speed and accuracy.

It does not have to be a perfect assessment; aim for near perfect.

At the firm where I work, we call this an “opportunity budget,” as contrasted with an “operational budget.” The more ambitious budget is based on the premise that fundraisers seize opportunities while financial staff generally seek budget compliance. Remember, an educated projection will suffice.

To communicate your needs, create a one-page document that summarizes the opportunity budget. I’d be glad to look at your drafts and give you feedback if you’d like to confidentially share them with me. This exercise can also form the basis for your urgent direct-mail/email appeal.

Reach out to your key supporters. Once you’ve crafted your opportunity budget and the summary, then it’s time for action.

  1. Call your funders to start talking about what you need.
  2. Share the opportunity budget with them.
  3. Write them to ask for a video conference to discuss the matters.

It is wise to coordinate your exercise with your peers at other nonprofits to ensure you are not offering the same services in response to the crisis.

Next, cut costs as much as possible, but beware of underfunding your development office. The goal is to make your fundraising team a revenue generator, not a cost center. Underfunding the development program is the main cause of organizational stagnation,  instability, or both, and it’s ignored at your own peril. Currently, underfunding stunts the growth of 73 percent of U.S. nonprofits that have an annual budget of $250,000 or less.

Lastly, increase the number of times that you ask for support. The national recommended average is eight times a year, but larger nonprofits go far beyond that benchmark. (In contrast, smaller nonprofits usually solicit their donors once or twice a year!)

If you don’t ask for support, people don’t give. We’ve all heard this a hundred times, but development professionals tell me consistently that they are under-resourced and cannot manage the number of requests they know they should be making.

So many online systems exist to automate your solicitations, even to integrate them with a “moves-management” program, which enables you to suggest a higher giving amount based on a donor’s last gift and overall history of giving.

A preset annual direct-mail/email schedule should also be in place along with a well-maintained donor database. Strong fundamentals such as these are the foundation upon which a resilient organization stands.

Laurence Pagnoni is the author of “Fundraising 401: Masterclasses in Nonprofit Fundraising That Would Make Peter Drucker Proud.”

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