Plan B: What to do when the prospect says “No”
October 23, 2013
Small Steps, Big Gains
November 6, 2013

The Risk in Standing Still: The Perils of Playing-it-Safe Fundraising

266812708_6cc03ff946_zI recently came across this quote from Reid Hoffman, the co-founder of LinkedIn:

“Ironically, in a changing world, playing it safe is one of the riskiest things you can do.”

And yet, this is exactly what so many nonprofits are doing with their fundraising. There is a fear of failing that stifles risk-taking and innovation through new initiatives. Executive Directors are reluctant to hire fundraising staff or pump any new investment into fundraising. Boards are uber-conscious of the need to reduce “overhead” and fundraising costs.

And fundraisers themselves are scared of asking, fearing the “economy”, “donor fatigue” and the finality of a “no”.

Can you blame them?  There is truly no mechanism in most nonprofits for promoting risk-taking. No process for putting forth new ideas, even those that have the potential to make the organization more money.

Even the budgeting process is fraught with one obstacle after another to thwart initiatives that could create new revenue streams. Fundraisers are encouraged to bring as much gross income and as little expense as possible to the budgeting table and that’s it.

In fact, it seems like the job of most consultants – like us – is to come in and say, “You need to invest more in fundraising” to executive directors, boards, and to beleaguered fundraising staffs.

And while we appreciate the opportunity to know these wonderful organizations, most fundraising operations shouldn’t need a consultant to tell them to invest.

We need processes in place that encourage fundraisers to present their very best thinking on how to grow fundraising for the organization.  Not just making promises to do more of the same.  But, rather, a process that asks, “What new ideas do we have to grow and improve our fundraising? And what resources do we need to ensure that we are successful?”

How do you change the thinking in your organization?  A few thoughts:

Take investment off the taboo list: The key to curing the fear of risk-taking is a cultural shift that makes it OK for fundraisers to put forth new fundraising ideas that take investment to grow.  I say this as if it’s easy and it’s not, but it truly takes two things:  a leadership that advocates for this cultural change and a shift in incentives.  What if your fundraising staff was evaluated on more than revenue?  What if they were rewarded for new ideas, successful pilot initiatives, and innovation?

Put a little aside for investment: I was on the Board of an organization that had an investment fund that fundraisers could actually apply to for new initiatives. We had deadlines, investment parameters, and a committee set up to review “applications”. It was amazing how many innovative proposals – and how many new ideas were tested and developed – through the process of having a little put aside for new opportunities.

This may be too elaborate for your organization, but can you make the idea work for your sized operation?  Can you put aside a certain amount every year in the budgeting process for new ideas?

Encourage investment proposals as a part of the budgeting process: The budgeting process is key to building a culture of innovation.  Instead of thinking about how little you can budget for fundraising right from the start, begin the process by thinking of new ideas and opportunities in addition to improving the return on your existing programs.

Sure, some of these new ideas might not make it all the way through the budgeting process, but fundraisers have to be given the opportunity to put forth proposals for new channels, new programs, and new approaches that could make more money for the organization.  Actually, that should be part of their job.

Use a business approach to consider investment: New ideas are great, but turning them into action takes analysis and work. You have to be able to show a clear return on investment over a reasonable amount of time.

So for example, if you wanted to hire a major gifts officer, you would quantify the cost of hiring, travel, and other expenses and the potential revenue the major gifts officer could raise over a period of years.  How do you know how much money this new position will raise?  You don’t know for sure, but using your prospect list, a scan of the external environment, and the experience of other organizations, you can take an educated stab.

You can’t let the fear of uncertainty stop you from making these projections. You need to take your best shot and then revisit them over the agreed-upon time period. And for fundraising, that could be years.  A major gift officer, for example, could take 2-3 years to reach potential. We cannot expect every initiative to return within one fiscal year.  Most don’t.

Learn from success and failure: This sounds simple, but it is so easy to just turn our backs on something that isn’t working rather than really see what happened.  I’ve been a part of several very large fundraising operations, and without exception, every successful program I’ve ever worked on had a wobbly period or even failed once or twice before we found what worked.

There’s no scarier thing than being afraid to fail, afraid to try something that could really pay off.  That’s fundraising standing still.

photo by Hanna Horwarth

2 Comments

  1. Love this article Leslie. Fear of risk is the number one thing holding nonprofits back. It’s endemic… from the E.D to the board. What it really takes to make the change, sadly, is leadership. Where are these leaders?

    • frontrangesource says:

      Thanks so much, Claire! I agree – leadership is key. While it would be nice to try to convert board members to this thinking, I honestly feel that it is staff that have to drive the change by bringing the ideas for fundraising investment forward. I hear so many fundraising directors say, “They will never go for that! The Board will never approve that kind of spending on fundraising!” But how do we know unless we make the case? Even if the Board or executive leadership balks or declines the idea, they still need to hear the best thinking of their development team. It may help them to reconsider the next time!…Leslie

Leave a Reply to frontrangesource Cancel reply

Your email address will not be published. Required fields are marked *