Three Things Your CFO Needs to Know About Fundraising
1 Fundraising is predictable.
2. Fundraising is built on relationships with people who are donors.
3. Donors are not ATMs.
Right now, our fundraising community is feeling tremendous pressure and getting many conflicting messages.
Where is the pressure and mixed messaging coming from? Much is coming from organizational Chief Financial Officers and board members.
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Why? Because often these are the two groups – who have much power – who often have the least understanding of fundraising.
Some boards are demanding their organizations stop fundraising right now because they think it is unseemly. And CFOs are slashing their fundraising staff and budgets to save short term money. Wow.
Penny wise and pound foolish?
Don’t get us wrong, we know just how difficult these days are and that many nonprofits are suffering from significant loss of revenue. And, yes, cuts to expenses are needed to stay afloat for many nonprofits.
But you need to be strategic and think about the future as well as today. In other words, it does not pay to be penny wise and pound foolish.
We recently talked about how boards should respond in this crisis.
Let’s take this moment to talk about the Chief Financial Officer and the accounting team.
Fundraising = Revenue Stream
The fundraising program in any nonprofit is a key source of revenue – basically a profit center. Fundraising creates a steady flow of cash into the organization.
By severely reducing it or eliminating the fundraising program all together, you are ensuring that your organization will lose fundraising revenue not just now — but well into the future.
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The spigot of cash flow is turned off. Money doesn’t just walk in the door – someone has to make it happen.
Three things CFOs need to understand about fundraising before slashing and dashing.
Fundraising is Predictable.
We can pretty easily anticipate how much revenue will flow in from donors.
How? Because based on our donors’ past behavior, we can calculate and anticipate how much they will give in the future. It’s our “fundraising by the numbers” analytical approach that we teach our clients.
This means we are always tracking how, when and how much our donors give.
Your organization’s fundraising strategy is set to capture that behavior, so it recurs – over and over.
This includes our direct mail, giving days, major gifts, and digital channel strategies. We add new strategies (make new investments) to increase donor response and/or capture new donors.
Key takeaway: Without fundraising strategy giving will stop.
Fundraising is Built on Relationships.
Fundraising represents the relationship between the donor and your organization. Donors give because they feel aligned with your organization’s mission – your work.
There’s an emotional component at work here. They want to help because it feels good.
Good fundraising maintains this emotional feeling and connection that your donors have with your organization. If you stop communicating, you lose that connection. Then the donor drifts away and stops giving.
Key takeaway: Giving is dependent on the relationship.
Donors are not ATMs.
How many times have we heard CFOs use terms like “accounts receivables,” “invoice them,” and “fill the budget gap” when talking about fundraising? Too many.
Donors are just that: donors – they are making a gift, not paying a bill. They do not owe your organization anything.
In fact, it is more the other way round. You owe your donor gratitude, empathy, care and concern. See point two again – fundraising is built on relationships.
Key takeaway: Donors who feel unappreciated and taken for granted will stop giving.
By the way, donors ARE giving now. They DO want to hear from your organization.
If you have cut back your fundraising staff, who is talking to your donors?
Who is checking in on them? Who is politely asking them to help?
I can tell you – it is the organization across town who has invested in keeping their fundraising efforts going.
When things get better, and they will at some point, you don’t want your organization to have to start over in the fundraising arena.
That will cost you a lot in both money and time.
Our advice to all CFOs is talk to your Director of Development. Look together at the fundraising strategies that work now and drop those with low return on investment now.
Look toward the future too. Make donor retention your top priority now.
Bottom Line: Maintaining your investment in fundraising will set you up for the future.
It will shorten the time it takes for your organization to recover financially from this crisis.
