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What Every Board Member Needs To Know About Fundraising

If you’re a board member for a nonprofit organization, I bet you are dealing with fundraising issues more often than not.dollars and money sign

As a board member, you are voting to support (or not support) various fundraising strategies. You are probably allocating resources and making investment decisions about fundraising, too.

So why not know learn as much as you can about fundraising?

Here’s what every board member needs to know:

1. How Fundraising Really Works Today.

You might be surprised to find that fundraising is pretty well researched and professionalized these days. There’s lots of data now about what works and what doesn’t work to raise money.

Fundraising is no longer a guessing game driven by people’s personal ideas and preferences.  It’s now based on data and planning.

Many board members think that fundraising is “asking people for money.”  That has all changed.

Now we’re much more sophisticated in how we build long term relationships with supporters . . . . so that the asking is really easy.

2. Where Sustainable Fundraising Comes From

Every smart board member wants to see reliable cash flow from fundraising.

Give your donors fabulous customer service and they will sustain you for the long run.

Give your donors fabulous customer service and they will sustain you for the long run.

  • Where does this magic manna from heaven come from?

From developing die-hard loyal supporters who will stick with you in the long run.

  • How do you develop these amazing long-term donors?

By giving them wonderful “customer service” after they make a gift. Why? So they will give again.

  • What’s customer service to donors?

Well it’s outreach. . . invitations . . . . happy newsletters . . . . fun events for them. It’s cheerful personal thank you’s that open their heart. It’s something I call “Donor Love.”

Tending to CURRENT DONORS after they give is often the last thing on anybody’s list. But all the numbers are showing that it should be the FIRST thing on everybody’s list.

3. Where the Easy Money Is in Fundraising Today.

Learn the new language of donor retention and donor attrition. This is the new language of fundraising 2.0 today.

The data show that most nonprofits are losing about 50% of of their donors each year. !!!! (that’s Donor Attrition)

But your nonprofit is probably also bringing in tons of new donors.  So your reports show that the number of donors is stable.

Nobody even sees the huge problem that is happening in your fundraising program!

Are you losing your current donors like a leaky bucket?

Are you losing your current donors like a leaky bucket? Number of donors is stable.  Nobody even sees the HUGE problem that is happening in your fundraising program.

Renewing current and lapsed donors is the easiest money you’ll ever raise. Busting your butt to bring in new donors is the hardest money to raise.

4. Profit from Different Fundraising Strategies

Your organization probably employs several different fundraising strategies. They are not all equally profitable!

Events, for example, are the least efficient way to raise money.  They’re least effective use of your volunteer and staff resources. Why? Because costs eat up about fifty cents out of every dollar you bring in.

Cost Per Dollar Raised of Various Fundraising Strategies

Cost Per Dollar Raised of Various Fundraising Strategies

Your mailing program is more profitable than your events. It will cost you about 20 cents of each dollar raised.

The most profitable fundraising strategy of all is face-to-face asks of individuals, corporations, foundations, or organizations. That’s where the big money is today.

Many organizations are more comfortable with events and less comfortable with the personal networking required by major gift fundraising. Where does your nonprofit stand?

5. Fundraising has a Significant Return on Investment

This means that your organization’s fundraising staff and programs are NOT a “cost center.” Instead they are a “revenue generating machine.”

What’s best, when you invest more dollars in your fundraising program – by hiring extra front line fundraising staff, and investing in the back office,  professional direct mail writers and designers, or an upgraded data base system – you can expect to see an increase in new revenue.

You can expect a measurable ROI from investing in your fundraising program.

You can expect a measurable ROI from investing in your fundraising program.

You should be able to predict what your ROI will be from new investments in fundraising.

6. Your Own Organization’s Fundraising Strategy

Every organization has its own unique fundraising program, based on its culture, its history, and its opportunities. One organization may be oriented towards corporate sponsorships, another towards grants.

What strategy does your nonprofit follow? It’s vital for you to understand which strategies your own nonprofit is employing to bring in the funds.

  • How does your fundraising program work?
  • What’s the ROI of each different fundraising strategy?
  • Where are your challenges?
  • Where are your fundraising opportunities?
  • How much money are you leaving on the table each year because you don’t have the infrastructure to go after it?

7. Why It’s Important for You to Make Your Own Annual Gift and Planned Gift

Board members need to put their money where their mouth is. If they don’t support fundraising for their organization, you have absolutely no credibility to ask others for gifts. Period.

Every board member needs to make their own proud, personal gift each year. And they need to include a bequest in their will – or make their nonprofit a partial beneficiary of their IRA. Right now.

8. Your Level of Responsibility.

As a board member, you are legally responsible for your organization (!).  You do need to educate yourself thoroughly.

As a board member, you are legally responsible for your organization.

As a board member, you are legally responsible for your organization.

Be willing to ask the tough questions – especially when it comes to finances.

9. Whether Your Organization Has a Culture That Supports Fundraising (or Not)

I’m always surprised to find pervasive attitudes against fundraising inside the organization.

Often these notions are held by long time staffers on the program or financial side. Or even board members.  And they are totally debilitating to your fundraising staff. These attitudes wipe out motivation and energy for fundraising.

Wouldn’t it be wonderful if your entire organization supports philanthropy joyfully?

What could you accomplish if every single person thought that your donors were the most wonderful people on earth and did everything they could to do love them?

What would it take to accomplish this?

 BOTTOM LINE

Fundraising is a fascinating subject.  There’s much to learn.

You can refer to research studies and data to make thoughtful decisions about how and where to invest in your fundraising program.  And you’ll see significant profit from those investments. Good luck!

COMMENTS PLEASE!

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  • Cyrilla

    Board member giving is a taboo topic and the culture is sshh….. I have some who give joyfully and others who give nothing. How do I change this when I’m not supposed to talk about it.

  • gailperry

    Hi! Try these 7 Rules for Successfully Soliciting Your Board. They worked for me and maybe can help you?
    http://www.gailperry.com/2013/02/7-ules-for-successfully-soliciting-your-board/

  • Lisa Bergen Wilson

    Just sent this out to my fabulous board as encouragement! Fits in exactly with our board retreat follow-up. Thank you, Gail!

    I’m going to write an article about working for a healthy nonprofit and what that looks like. I’m in the most wonderful organization imaginable….great leadership, genuine board, effective strategic planning in place and underway for future, extremely efficient fundraising costs ($0.02 to raise $1.00!!), and the freedom to do my part well (have raised $450k from two donors in last 6 weeks!).

    It’s amazing how good it feels to be with a team that functions well and practices respect and trust! Hallelujah!!
    Lisa Bergen-Wilson
    VP of Advancement & Donor Relations
    Operation Finally Home

    Sent from Yahoo Mail for iPhone

  • gailperry

    Thanks Lisa! Congrats on working for such a healthy organization! When you have all that going for you, it’s easy to be successful in fundraising. Gail

  • AES

    One of the best tips got at a fundraising seminar is to circulate a list of Board giving (hiding the names – use Board Member A,B,C etc.) and a summary of how much they gave in the past year. I was told it would bring up the bottom real fast. It did! Also the low givers who really didn’t want to give, ended up dropping off the Board which turned out to be a good thing – they were not the ones who wanted to roll up their sleeves either. So this one worked out real good for us and we about doubled our Board giving in the last year by making it more transparent.