OK, this is definitely the quote of the week for me:
“Most organizations held their investment in fundraising steady in 2010. However, those that increased expenditures, staffing, or volunteer engagement were more likely to see increases in funds raised. There is also a relationship between failing to invest in fundraising and failing to meet goals. That is, investment doesn’t guarantee increases, but decreased investment is associated with not meeting goals.”
This paragraph come from the 2010 Year-End Survey of the Nonprofit Research Collaborative. There’s lots of juicy bits in this survey, but these four sentences say it all in terms of what I’ve seen since the recession started in 2008. If you don’t invest in your fundraising program, you practically guarantee a flat or decreasing return.
But what does “invest” mean? Does it mean you need to have the money to go out and hire tons of staff and start new programs? No! It means looking at your fundraising program to determine where opportunities are best to cut costs to save money, maximize net income, and build long-term value.
Cut costs: I think the word here is efficiency. You want to be more efficient about your fundraising. Look at any costly events and make sure that they are providing the return you are looking for. If they aren’t, get rid of them or scale back. Do more segmentation in your mailings so that you mail to those that have the best possibility of return. Leave long-lapsed donors out of special appeals and renewal mailings and save them for acquisition campaigns. Take a look at your publications and communications. Do you need that glossy, printed annual report or will an on-line report do?
Maximize net income: Use the money you save from the cost cutting to invest in those things that are providing you with the best return on investment. Depending on your fundraising strategy that could be anything from more staff to more mail to more on-line communications.
Build long term value: Don’t pass up any opportunity to build better relationships with your donors. Don’t skimp on acknowledging your donors. Recognize your most loyal donors. Get to know your donors through surveys and personal interactions so that you can tailor your approach to them. All of these efforts build donor loyalty, which leads to retention, which leads to better fundraising return. It’s a long haul, but it’s worth it.
It’s crucial to balance all three of these pieces rather than picking one strategy. If you just cut costs, you are most likely passing on opportunities to make more money and you may hamper your organization’s ability to thrive and grow. But if you don’t cut costs, the extra fat in the operation will not go unnoticed when your finance director or board member reviews a request for more fundraising investment.
Now, go up to the top and read that quote again. Where is your organization on the investment spectrum?
p.s. Know your data! Whatever lousy or fantastic database you have, you need to be able to determine Return on Investment for each of your fundraising programs. If you don’t know how to calculate return on investment, reply to this blog and I’ll send you the formula right away so that you can get started!
