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June 5, 2019
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June 20, 2019

Weighing the Risk of a Big Fundraising Bet

We have clients with big ambitious goals and we love that. But big ambitious goals often mean that an organization has to take on risk. That risk can take the form of investing resources into a new initiative, changing ways of working, or even making budget projections that are less of a sure thing.

We’ve found ourselves recently asked to assess an organization’s very big bet on foundations fundraising. The organization is projecting to receive a significant amount in revenue from several large foundations over the next two to five years as part of an effort to reduce its dependence on government funding.

Now this organization has good contacts in the foundation world, money to invest in fundraising, and a broad array of projects that could attract large grants. Still, having never raised foundation funds before, making a big bet is scary.

We recommended that this organization create a robust system to track its relationships with funders, something like the Donor Relationship Builder you’ll find in our Toolbox.

We also recommended a separate tracking system to assess probability of meeting goals along the way as relationships develop. This organization had a big two year goal, and it is critical for fundraising staff to evaluate risk from the beginning, rather than at the end of the two years.

There are two components to this risk assessment:

#1 The Stage of Solicitation: Where is the prospect in the Donor of Cycle Relations?

  • Identification: We know about this funder.
  • Qualification: We know this funder funds in our issue or work area.
  • Cultivation: We are engaged in a conversation with the funder.
  • Solicitation: We have submitted a proposal or request.
  • Acknowledgement: We are in the process of finalizing the grant details and thanking the funder.
  • Stewardship: We are providing the funder with information about the impact of their grant.

Keeping track of the stage of solicitation helps the organization determine progress of relationship building in the prospect list as well as the probability of meeting goal. If there are 30 foundations in the prospect list, but 20 of then are still in the identification or qualification stage, the organization has a long way to go to realize funding.

Note: You can find a copy of our Cycle of Donor Relations in our Toolbox

#2 Risk Assessment: What is the probability of closing this gift?

  • High Confidence: We have reasonably good confidence that we will receive the amount that we are asking for from this funder.
  • Medium Confidence: We have some confidence that we will receive this grant or something from this funder at some point.
  • Low Confidence: We think this funder is a long-shot for support.

By rating the confidence of each funder on the list, the organization can get a sense of the confidence in the overall prospect pool.

Combining these two factors together gives a clearer picture of whether the organization can meet its goals. If the list contains a significant number of relationships that are stagnant and have low confidence, the organization may want to adjust projections. If there are more relationships that have high confidence and are progressing through the cycle of donor relations, the organization can hold steady towards its big bet.

This kind of report can also be used for major giving or corporate prospects as well.

Do you have a big bet going on foundations or other large funders? See if you can get a clearer picture by evaluating the risk within your prospect list. And let us know how it goes!

Image by Klaus Neumann from Pixabay

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