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May 27, 2020

Revenue Projections During a Pandemic

Yesterday morning I should have been writing a post for this blog. But instead, I was wrestling with revenue projections for my fundraising team.

I can assure you that writing to you would have been way more fun, but I had a deadline and I thought maybe my work could help anyone trying to do their your revenue projections.

I didn’t start with the numbers. The first thing I did was to write down some things I was the most worried about, specific things like: What about that new staff position I was planning to hire? How will program activity change my year-end appeal? Are any in-person events going to happen in 2020?

Then I went looking for research to guide me. I was specifically looking for articles and numbers that could draw guidance from the Great Recession to make projections today.

Honestly, I spent quite a lot of time on this and I can tell you that there isn’t a lot of guidance out there. Yes, we have the numbers from 2008, but most researchers are saying that the trajectory is not the same and there are too many moving pieces to really draw a straight line from the behavior of giving from 2008 to today.

So, I needed to work this out myself. I broke my budget out by income line, which for me translates into donor audiences: foundations, major gifts, annual giving, events, etc. The I went by line by line and determined the best way to a projection on each budget line. For foundations we went funder by funder because that is a big number for our program and there are some large gifts that could tip the scales. We made projections based on our relationship with them already and what we had learned from them in this new landscape so far.

For major gifts, we also went donor by donor because we really know that file. But for general annual giving, I looked at a couple of things. I looked at last year’s performance as well as where the money was coming from. For us, Colorado Gives Day is a big line item, and I had to consider what that might look like this year. I had to think about the mail and what our capacity was to do a year-end appeal and the timing of that effort. You’ll have specific things of your own you’ll have to consider.

And there are events. We’ve got a big one and I think we have a good plan for it, but making a projection stymied me yesterday. It’s a brave new world! What I did do for this line item was to concentrate on the net rather than the gross income. I looked at our plan to make the event smaller and more virtual (it is in November) and I did a calculation to see what the gross income would look like if I kept the proportions of gross income, expenses, and net income the same with a lower expense number. So in my scenario, the net stayed the same, but both the gross income and expenses were lowered.

This should be an important dynamic in your thinking. It’s not all about the gross revenue. It’s above the net revenue you deliver to the organization. As you look at your program you’ll see places where cutting expenses would also cut revenue and you’ll need to watch out for that. For example, if I cut my mail expenses budget, my year-end appeal revenue will definitely be down.

But, there are some areas where I was able to cut expenses without having a corresponding revenue consequence. Think about things like travel and entertainment for events and major gift meetings that just aren’t going to happen. But also consider what you might need in terms of additional revenue to adjust to fundraising in this environment. New staff? Consultant assistance? Digital tools? Revenue projections are not all about cutting!

In the end, I didn’t present a spreadsheet to my ED and CFO, I started with a narrative of assumptions, key questions, and draft numbers for us to consider. We had a very productive meeting that gave me guidance for what to do next so that next week, I can bring numbers that are based on shared understanding.

It’s working for me so far. Look, I know this is tough. I know that no one knows what the future will bring, but if my professional life as a fundraiser has taught me anything it is that you must try to quantify as much opportunity and challenge as possible. You’ve got to put some numbers down to guide your organization. Even in a global pandemic.

Write me back and let me know if that was helpful! I’d love to hear from you.

 

 

 

2 Comments

  1. Ashley Rumble says:

    Thanks for sharing you process! My revenue projection process looked very similar–starting with research, looking back over historicals, going line item by line item. An early conversation with Ann was very helpful and gave me the confidence I needed to dig into this. Something you posted about earlier was also important–thinking in terms of scenarios. My organization is going to budget expenses based on conservative revenue projections, but then are thinking about mission scale-up opportunities if revenues turn out stronger. We are also thinking in terms of 3, 6, and 12 month increments, knowing most of our revenue comes in the fall.

    • Leslie Allen says:

      Thanks so much, Ashley. I love your thinking around making projections in increments. I am basically thinking about where we should be before the annual appeal and then after, but I like the idea of three and six month benchmarks. So happy that you are thinking about opportunity, too. There are slivers of silver linings out there for fundraising and it sounds like you’ve identified a few glimmers. Thanks to you, Ashley, for all you and EFAA do for the community!

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