As I’ve been working with organizations here in the United Kingdom, I’ve noticed that it’s common for nonprofits to create a risk assessment of each new initiative they undertake. In the US, I’ve seen many organizations worry about risk, but rarely do I see risk articulated in the same way.
This seems to me to be a very useful concept in fundraising planning. Risk is at the core of fundraising success. It’s a part of every solicitation and every new program. While I applaud the courage required to start new things and branch off into the unknown, it’s also best to do so with your eyes wide open, taking stock of what could go wrong, weighing options carefully and envisioning steps to reduce specific risks.
What does that look like in fundraising?
Here’s an example. An organization has been raising money almost completely through corporate gifts for the last 10 years. The staff recognize that they need a little diversity in their fundraising portfolio and want to start an individual giving program.
Let’s put a few of the risks of starting this program into a matrix that rates the impact of the risk, the likelihood it happening, and names an action that the organization will take to reduce the risk.
| Description of Risk | Impact | Likelihood | Action to reduce Risk |
| Operational: This organization doesn’t have the infrastructure to deal with an influx of individual donors. | HIGH | MEDIUM | Do an assessment of all the operational resources needed to service these new donors and create a plan of action to put them in place over time. |
| Financial: The organization is spending money on staff to fundraise from individual donors, when will it be able to see a return? | HIGH | HIGH | Create very specific financial goal posts for the performance of the individuals program and evaluate progress against those goal posts on a quarterly basis. |
| Strategic: This organization is worried about taking the staff focus away from corporate fundraising, which has been so successful in the past. | HIGH | MEDIUM | Determine specific objectives for work on both the corporate fundraising and the new initiative. Evaluate the ability of the current staff to handle the work or the need to hire new resources. |
| Reputational: Up to this point, this organization has been known for its excellent corporate support. What happens if this individual giving strategy fails? | MEDIUM | LOW | Talk with corporate donors about the new initiative and see if they have any input on creating a program for individuals. Involve your closest donors in the planning process. |
This risk matrix also helps to prioritize which risks to address first by rating the potential impact of the risk and likelihood that it will occur.
Risks are inevitably part of fundraising planning. In fact, if you aren’t taking risks, you can’t change your fundraising in any significant way. But if you know your risks, you can address them so much more effectively and integrate your new initiative in a way that is transformational and sustainable.
Can you use this risk matrix in your fundraising planning? If it works for you, we’d love to hear about it!
