Lately, I’ve heard several nonprofit professionals debate the value of longer-term forecasting for fundraising.
The world is changing so fast, they say, we don’t even know what the future will hold for the next year.
But, if you really think about it, fundraising principles have remained remarkably consistent for the last twenty-five years. Retention is still the key to sustainability. Relationships are king.
The channels of communications have diversified, but really none of them have gone away. Direct mail still lives. Grantwriting is a staple. And face-to-face solicitation is as effective today as any other time.
Sure, expenses could go up. The economy could soar or tank.
But that should not stop us from determining what we want our program to look like in the future and projecting out the financial effects of our decisions.
The benefits of doing it?
It gives you a vision and a rallying cry: You can get your organization excited about fundraising by painting an inspirational picture of the future that can be made possible by more engaged donors that are giving more to your cause.
Investment doesn’t pay off in one year: For individual donor fundraising in particular, the payoff could be as long as 24-36 months. If you can’t quantify that future income, how can you advocate for the expense?
You can’t do everything at once: You probably have a million ideas for how to improve fundraising, but you need to stage the implementation in a way that makes sense, and most of the time that’s over several years.
Your annual planning will be easier: If you have a longer-term financial framework – let’s say somewhere in the 3 to 5 year range — you don’t have to go back to the drawing board every year to plan. You know what you are going to do next year – it’s in the plan!
Now if you’re convinced (or were already convinced) that you need to do longer-term fundraising forecasting, what’s stopping you?
A sense of helplessness? You may think, “I have no idea what kind of revenue a major gifts program will generate or when” or “I don’t know how to determine what the monetary affects of increased retention are.”
These are indeed complicated questions but you can do it by adopting these 4 mantras:
Let your vision be the driver: Don’t even attempt to do longer-term fundraising projections without a sense of where you want to go. Do you want to diversify funding streams? Are you trying to update your fundraising communication channels? Are you starting a planned giving program? These are multi-year initiatives that should drive your assumptions.
Start with the easy stuff: Facing the task of creating a long-term fundraising plan can be scary if you look at it as one big wall. But if you start with the stuff you know you can project out, whether it be your grants or direct mail or your events, and build a solid base on which to build your more “creative” assumptions.
Break it down into bite-sized chunks: Anything can be quantified. You may not know the cost of an entire direct marketing campaign in 2016, but if you chunk it down into the cost of one letter, one e-mail, and one telephone call and multiply it by an estimated frequency and number of prospects, you’ve got a really good start. In most cases, the data for you to build your assumptions is right there in your organization’s past fundraising performance.
Go with your gut: You’re not going to know exactly how many major donors you’ll have three years from now, but you can use your intuition and past experience to make a solid prediction. And then do a gut test – does this feel right?
We’ve got resources to help you:
- Objectives planning template: Use this simple template to outline the strategic objectives, activities, and evaluation methods for your fundraising work.
- Three-year fundraising analysis: This simple set of reports will gather the information you need to plan for the future.
- The Leaky Bucket: If retention is part of your plan (and we hope it is), our e-workbook will help you determine your retention rate and make improvements.
And remember, your long-term fundraising projections aren’t stone tablets. They can be adjusted, refined, changed, and even discarded in favor of another version.
It’s a road map for you to sell your vision and get some investment to make your vision a reality.
So, leave your Magic 8 Ball behind, pick up your spreadsheets, and get going!
