Simone Joyaux Low Res e1585207137886
Boards and Fundraising

How Professional Help Can End Board-Member Burn-Out … and Keep Your Organization Alive and Well

Jeff Brooks is facing a problem — one that’s outside his area of expertise. He doesn’t know what to do, so he turned to the amazing Simone Joyaux for help. We thought you’d enjoy listening in on their conversation….

Jeff: Help me, Simone! I’m on the board of a small nonprofit. We are a community orchestra with an annual budget of about $100,000. Almost everything we do is done by volunteers, and the majority of the volunteers are board members. It’s always been this way. But board members are getting burned out. We’ve dropped the ball in serious ways a number of times. And we are so busy, we have little energy for actually doing the leadership role of a board. It’s stressful and discouraging. I want to escape! And I’m not the only one!

What can we do?

Simone: First, know that you’re not alone! This is a very common problem for board members of nonprofit organizations.

Board members are always volunteers in nonprofits. You go to meetings and have lots of discussions and make decisions. Then someone carries out the work. And oftentimes, that “someone” is volunteers. And sometimes those volunteers carrying out the work are also board members.

For example: Bob is an orchestra member. He also serves on the board. He has agreed to be the board treasurer. That means he is the lead board member on the governance work for finance. Bob also pays the bills, handles deposits, balances the accounts, files tax returns and other duties that would be done by the finance manager – if you had one.

Jeff: Simone, you have exactly described our treasurer! Are you a mind reader? Our “Bob” is super busy all the time with those finance director duties.

Simone: I’ll tell you something else about your Bob. He’s often confused. Because he’s wearing two different hats, and he probably doesn’t realize it.

There are two kinds of work to do in any nonprofit: governance stuff and management stuff:

  • “Governance” refers to discussion and decision-making done by the board of directors – together at board meetings. You set policy and oversee the work.
  • “Management” refers to what is typically done by staff, whether paid or unpaid. Like pay the bills, talk to vendors, etc.

So, which hat are you wearing when you’re doing what? That really matters. Clear distinctions between governance and management are critical. Everyone in the organization has to understand the distinctions and be very clear which hat to wear in which situation.

Jeff: Okay, I can see how that’s important. And honestly, I’d say all of us on the board have governance and management completely muddled in our minds, so your “two hats” rule will make us smarter about our jobs. 

But we still have to do so much work. It’s exhausting! Many board members cut and run the minute their term is up, and it’s hard to get new board members, because apparently they tell their friends not to join because of the workload! Is there anything we can do to change that?

Simone: I get it, Jeff. I see this all the time in nonprofits. Let me reiterate: First, you must recognize and apply the two-hat rule. That’s the first and ongoing forever thing. It really will help everyone if everyone does this!

Related to that, it really helps to be very, very clear about what the organization is asking someone to do. Distinguish between board member (governance) and volunteering for management activities. Be reasonable in workload expectations.

Tell each board member that the orchestra expects her to do governance and, at least for now, specific management-type duties as described in their job description.

During the recruitment process, tell prospective board members the same thing. They’ll be doing governance plus specific additional duties. Be specific! And do your best to match these duties to people’s skills and talents.

But wait! How about this? Suppose you’re talking to someone about being on the board, and she’s being hesitant about it … then you find out she’s a very good writer. See if you can get her to be your volunteer donor newsletter writer. And not be on the board! She might be ten times happier with that arrangement, and you’ll end up with a better newsletter — and one fewer burned-out board member.

Jeff: Wow, that’s interesting. In fact, we have a few people like that already. They refuse to join the board, but they do a great job at specific volunteer duties! We just need more of them.

Simone: That’s right. Diversify your volunteers. You want board members. You also want volunteers who are not board members, who will take on tasks. Wouldn’t it be wonderful to have bunches of volunteers – so none are so overworked that they cut and run and tell their friends to avoid serving your orchestra?

Jeff: I’m feeling better already. But I’m also feeling kind of burned out. I love making music, but I hate being on the board — even though I know someone has to do that so we can make the music. Is there anything else we can do to fix this?

Simone: Yes there is, mon frère! Drum roll, please. Here’s probably the most important thing you can do: GET MONEY. 

Jeff: Wait a minute. I’m constantly saying that. You’re turning the tables on me!

Simone: You work with a lot of different organizations. Tell me the truth: How often do you tell nonprofit organizations that they have to spend money to make money?

Jeff: About three times a week… or more…

Simone: So you already know what I’m about to tell you about your orchestra and getting money!

Jeff: Okay, that’s embarrassing. I know what you’re going to say, but it’s advice I don’t feel ready for.

Simone: Don’t feel bad! The thing is, it’s hard to think clearly about money when it’s your own organization’s money. That’s true about you and me and everyone who’s reading this!

So what I’m telling you might be easy in theory when it’s someone else’s money, but a hard truth to grasp for your own organization.

Here’s that hard truth: You should contract with a successful fundraising consultant to provide advice and counsel. Maybe one day a week, three days a month — something. That’s how you can get over this barrier that’s making life difficult. (By the way, be sure you’re paying a flat fee or an hourly wage. Never, ever should you pay a percentage of money raised. That’s highly unethical.)

Jeff: But … but …

Simone: I know what you’re going to ask: How can you get money to hire that professional? You must distinguish between building your organization’s capacity and supporting your organization’s mission.

What’s capacity building? Developing the skills to govern, manage, fundraise, and market your organization well. The good news is, some foundations give grants to build capacity. These foundations understand that just funding programs is a dead end. The foundation wants to help the organization build its own capacity to operate a highly effective organization.  Some community foundations fund the first fundraising position. Some foundations fund consultants to teach an organization how to fundraise, do governance, whatever.

Or you might bring together several donors who understand the value of building an organization’s capacity. Ask them to put together a fundraising salary for a couple of years. Or ask several donors to put together a year’s worth of consulting assistance to build capacity. You might even borrow money to build your capacity… to hire an experienced and knowledgeable fundraiser or consultant.

Doing that will bring a fundamental change. It takes money to make money!

Jeff: What type of person is that professional? 

Simone: In my experience, small organizations don’t have separate fundraising staff. They typically have a highly effective executive director who is knowledgeable in governance, fundraising, general management, and finance. This executive director needn’t be an expert in your mission.

So find the money to hire someone to do that job. That is your best way forward!

But one last thing, and you might find this depressing, but I have to tell you. It’s possible your organization won’t survive what you’re going through right now. Maybe you can’t create the critical mass to ensure that the management work can be done by paid staff.

That’s the challenge of practically every single nonprofit organization: Do we have the money to pay for expertise to build our organization? If we hire a highly knowledgeable professional, can she help us build our orchestra? Even if she is marvelous and great, is our orchestra sustainable in our marketplace?

Just because you and I – or a few dozen or a hundred of us – think something is important… That doesn’t mean that there are enough people willing to give money and buy orchestra tickets.

Jeff: Yikes!

Simone: I only say this because it might be the case. Not every organization has a sustainable future.

But to circle back to your original question, you don’t really know if you are sustainable until you really get the management and governance of your organization right. And that means paying for professional help!

Nonprofit or for-profit… It’s all about the body of knowledge and experience and expertise. That’s what you need to keep in mind to run your organization for maximum impact… and maximum joy!

Jeff: Thank you Simone. We have some serious discussions in front of us!

Become a member of The Fundraisingology Lab by Moceanic and get access to Simone’s amazing workshops, Fundraising and Your Board: the Right Stuff — along with many other courses that can transform your fundraising life.

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Boards and FundraisingCoronavirus

This Nonprofit Leader Needs to Resign. Do You Have Someone Like That?

What I’m about to tell you is a true story. In fact, the story is still playing out, which is why I’ve changed some of the details to hide the identity of the players. You’ll see why pretty quickly.

A couple of weeks ago, a smart nonprofit did a COVID-19 Crisis campaign consisting of several urgent email messages.

They are not a “front line” organization working directly to help fight the health crisis or its economic fallout. They are a well-known and beloved organization. It’s likely you’ve heard of them. The challenge they face is widespread cancellations of their main programs. This has blasted a devastating hole in their revenue that threatens the viability of their program once they are past the “social distancing” phase. They were looking at wholesale layoffs of staff and other possible draconian steps just to keep the organization afloat.

That was the topic of the appeal. And they did a great job. That’s not just my opinion — their donors responded at record levels: Orders of magnitude more than they typically got from their fundraising campaigns. Enough revenue to free them from the painful budget cuts they’d been considering.

A resounding success.

But not everyone was happy.

A member of the executive team, a certain vice president, is furious. He says the crisis campaign was grossly insensitive, immoral and permanently damaged the organization’s reputation. He’s calling for resignations from the fundraising team.

I think it’s the VP who needs to resign.

But before we fire up the petition campaign to remove him, let’s take a careful and rational look at his case: Was the COVID-19 fundraising campaign wrong?

The common fear we hear about fundraising during this crisis is that it is insensitive or exploitative. That the message may reach people who have lost their jobs, taken serious hits to their investments, or lost loved ones to the virus. Or that somehow it takes unfair advantage of the emotional turmoil so many of us are in to squeeze donations out of people who otherwise wouldn’t give.

It’s quite possible that the VP even heard a complaint from someone who was offended by the campaign in some way.

Let’s ask ourselves: If the organization’s reputation were damaged, what would be the signs?

  • Extremely low response to the fundraising? That would be a reasonable sign that they’d made a mistake by fielding this campaign. But that’s not what happened. They got an outpouring of support. And they are not the only ones. Organizations all over the world have been getting record-breaking responses to their crisis fundraising.
  • A massive public backlash? That could happen. But has it? We can assume that there were complaints. Strong fundraising can stir some to complain, even in normal times. You have to put complaints in perspective: If you got thousands of people saying YES with their money (as this organization did), how many said NO with a complaint? Does one complaint have the weight of ten donations? 100? 1,000? Wouldn’t you think it should go the other way, with one donation having the weight of many complaints? After all, it costs nothing to complain, but it costs something to donate. There would have to be an awful lot of complaints before you could call it a meaningful public backlash.
  • Maybe the damage is invisible — for now. Is it possible that some of those donations were somehow scammed out of unwilling donors who will eventually wake up to the mistake and never give again in disgust? To believe that, you have to think donors are incredibly sheep-like and irrational. Which strikes me as horrendously arrogant and disrespectful of the people who know and love and support the organization. They gave of their free will. Ask them if they want the money back. I can tell you what they’ll say: “Heck no! I gave because I wanted something good to happen!”
  • Or there’s an angry silent majority they will never hear from again. Even the strongest fundraising campaign only moves a minority of people to donate. But is there any business or any other human endeavor where you just assume that everyone who says nothing is united in some negative viewpoint? It simply doesn’t happen.

I think we can safely say that no meaningful damage has been done to the organization’s reputation or future revenue. Time will tell for sure, but if this emergency is like any of the other emergencies I’ve been through with nonprofit organizations, it’s almost certain that this campaign increased the connection and engagement of their donors, who are filled with gratitude that they could help make a difference for an organization they love.

They are stronger today than before the campaign. Plus they have revenue they would not have otherwise.

I’m calling this vice president for being irrational and negative, for a toxic mixture of arrogance and ignorance about donors and human psychology in general. If I were his boss, I’d be asking for a resignation — and not just “asking,” if you know what I mean.

The unusual thing about this case is that the attack on fundraising came after the fact. Far more leaders (and board members) have been preventing fundraising from happening in the first place, for basically the same reasons.

They are just as wrong. And unlike the after-the-fact executive, they are inflicting deep, possibly unrecoverable financial damage on their organizations.

And they also should resign. Their entire job is to make their organizations strong and healthy. They are doing the exact opposite.

If your fundraising tells your donors the truth about the situation, makes it clear what giving can do about it, and appeals to the better angels of their natures, your fundraising is not insensitive, exploitative, or reputation-damaging.

In fact, if your organization is doing something that matters — whether that is directly related to the virus and its impact or not — and you are not letting your donors be your partners in important work you’re doing — that’s terribly damaging in my book.

Do you really want to show up out of the blue some months from now when the crisis is behind us, saying, Hi! Remember us? We were hiding in a hole while you went through a major crisis. But now we’re back. Let’s pretend that never happened, okay?

Your donors love to donate. They need to donate, especially in a time of crisis. You are not taking something away from them when they give to you. They get so much back that you might argue they’re getting the better deal.

I hope you and your leaders are giving these issues good and clear thought. And if your organization is helping make the world a better place in the face of this frightening situation, I hope you are including donors as empowered, heroic people who are tackling the crisis and making a difference.

That’s what we’re here to do!

This crisis raises a lot of questions for a lot of us. Want some practical and experience-based help? Schedule a free 25-minute call  with one of our Moceanic Fundraisingologists. They will give you great free advice and help you identify which Coaching+ program might be right for you. Click here to book your call.

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Simone Joyaux Low Res e1585207137886
Boards and FundraisingCoronavirus

VIDEO: What Your Board Should Do During the COVID-19 Crisis

Simone Joyaux knows nonprofit boards.

She travels the world to meet with boards and help them be their best.

And now, with a crisis raging that threatens the mission — even the existence — of some nonprofit organizations, boards need Simone!

So I called her up to ask a few questions.

I think you’ll love what she has to say for boards. You might want to share this video with your board.

It’s a quick 17 minutes, but it could make all the difference in the world for your organization!

Want amazing quality training to strengthen your organization? Simone’s powerful online workshop, Fundraising and Your Board: The Right Stuff, is just one of the many great resources for members of The Fundraisingology Lab. Find out how you can join today!

Read Simone’s other posts:

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Pop Art Woman Fail e1561504698194
Boards and Fundraising

My Worst Fundraising Fail, and What You Can Learn from It

When Jeff suggested this blog topic my immediate reaction was, Um, no, I’ll look silly. Reality is we all make mistakes … and my best fundraising learnings have come from my fails.

So here you go …

In my early fundraising agency career I worked with a wonderful fundraiser, let’s call him Alan. Alan came to me looking for some analysis to understand what was happening with the fundraising program he’d just taken over.

Like many in his position, he discovered an ageing database. Retention was okay, but income was declining as no new supporters had been sought for many years. There were some tactics we could employ to increase income, but not enough to halt the decline.

Investment in acquisition would be required to stablise income and help feed the bequest pipeline.

We looked at the options together and built a business case to get the required investment. Direct Mail single-gift acquisition was the immediate opportunity… great appeals program to go into, strong inbound supporter services and outbound supporter care program, amazing stories of need and impact from the field, and a plan to develop a monthly giving offer that would convert newly recruited donors.

Alan sent me the brief. It included a request to include a monthly giving ask in the acquisition packs and use a new monthly giving product his team had developed.

What? Where did this come from?

On the phone I went and Alan and I chatted … a lot.

A board member, who had a marketing business, had taken it upon herself to develop a monthly giving offer to compete with Child Sponsorship, as the board felt that was where they were missing out. But here’s the important part: They didn’t have child sponsorship.

The monthly giving offer was not great for three reasons:

  1. It was developed in the absence of any insight around donors’ values or motivations for supporting. It was trying to replicate Child Sponsorship without any of the elements that make Child Sponsorship work.
  2. It had an incredibly generic offer.
  3. The whole acquisition strategy was based around recruiting single givers (because in the market at that time that was the best potential return) not monthly givers.

I expressed my concerns about the monthly giving offer and the change to strategy. I used analysis as evidence against the inclusion of a monthly giving offer in the acquisition pack – my experience was, and remains, focus on a single offer and evidence it well, don’t dilute with multiple offers (like a single gift ask and a monthly giving ask).

This was all received and understood by Alan … but his boss and the board member knew better.

I presented a reforecast of expected returns. Lower returns. It fell on deaf ears.

Alan was under pressure to acquire new donors and this is what he had to work with.

So we pushed on, trying to mould what we had to the new request. It wasn’t coming off … the pack wasn’t working for me, it was trying to do too much, messages were confusing and we simply could not implement the key tactics we knew would bring success.

I should have stood firm. I did not, because at this point the boss’s desire to proceed with the board’s blessing overruled my concerns.

The campaign was a massive failure. It did not reach revised targets, let alone the original ones. Alan’s organisation had spent a good chunk of the available acquisition investment on a failure.

In fundraising, we have to take risks to try new things … calculated risks. This was not a calculated risk, this was ego. The evidence was there that the move was wrong. We knew why the campaign failed … and we didn’t even learn anything — we already knew it from the outset.

My learning wasn’t about what the right acquisition strategy was. It was about standing firm when your experience and evidence suggest there is an alternative with a higher chance of success.

I haven’t seen Alan in years, but my LinkedIn stalking tells me he survived, just as I did. He has continued as a professional fundraiser in some fantastic organisations with successful programs. And the organisation … well, they have continued to shrink. After that failure, they deemed all acquisition to be “too risky.” A big mistake that will hurt them for years to come!

Want to know what really works in direct mail fundraising? Take our online course, 7 Steps to Creating Record-Smashing Direct Mail. It’s your hands-on workshop in what works, how to do it, and how to apply these truths to your cause! It’s available for members of The Fundraisingology Lab. Check it out.

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Boards and Fundraising

Help! My Board Won’t Listen To Me!

I promised we would work harder to help you with the challenges you have with your board – many fundraisers who did Jeff’s survey last month identified this as their single biggest challenge.

Today we have invited our guru of all things board and author of Firing Lousy Board Members, Simone Joyaux to help you when your board won’t listen to you! I hope this helps, and please share your comments on the Moceanic Blog.  

Sean

– – –  

I thought you hired me for my expertise. 

Isn’t that why an organization hires a consultant? Isn’t that why an executive director hires a fundraising professional?

Dear colleagues, you and I have to stand up and speak out.

Fight, dear colleagues. Fight hard!

Remember this: Your boss and board members would not question the accountant. Your boss listens to the lawyer and the medical doctor. Your boss probably even listens to a plumber!

Remember this, too: They don’t have to know all this fundraising stuff. They don’t have to understand it all. That’s why they hired you. But they do have to respect your knowledge and expertise. They do have to listen and follow you.

Related Blog: How to Free Your Fundraising from the Destructive Power of Committees

Why don’t these people listen to us?

 Oh, the list is long! For example:

  • We picked people for the board, signalling that they’re special. Often they have lots of expertise and power in their own jobs and lives — and just don’t listen to anyone else. Including you or me! Their opinions win.
  • Many board members don’t understand what governance is — and how that’s different than management.
  • So much about fundraising is strange and often counterintuitive. “What do you mean emotions rule most decision-making? I’m your boss and I make rational decisions. I know lots of donors. I’m a donor! I don’t like that solicitation letter. And by the way, there are lots of grammatical errors!”
  • Sadly, too many fundraisers aren’t professionals at any level. They don’t even know the key players in our field. They don’t effectively lead their leaders.

Related blog: Why Commercial-Style Branding Will Destroy Your Fundraising

Related blog: Why Your Boss is Wrong: Long Letters Do Work Better In Fundraising

I could go on and on. But wait.

Please. Look in the mirror first.

You can learn everything there is to know about direct mail and fundraising events and how to solicit gifts face-to-face. You can be greatest fundraising technician around.

But ultimately, being a great technician won’t cut it. I’ve seen it over and over. You have to be an organizational development specialist, too. At least that’s what I call it.

We, fundraisers, have to understand organizational culture and behavior. That means we have to learn how and why organizations and people work well — or not. Things like:

  • Why people react the way they do — and how to facilitate conflict and its resolution.
  • How to anticipate barriers and manage them before those nasty barriers come out of the woodwork and ruin everything.
  • Developing your own competencies as a leader. Read and apply leadership theory.
  • Of course, understanding governance is central to good fundraising. Then you can help communicate boundaries and limitations between the board, board members, and management.
  • Great fundraisers design conversations by asking questions that engage people. Together you learn and only then can change happen.

How to persuade them

There aren’t any secrets or silver bullets. But here are some more tips:

  1. Be honest, genuine, authentic.
  2. Trust others and demonstrate your own trustworthiness.
  3. Learn! Read everything. Study and follow the research. Don’t tell me that you don’t have time. Make the time. That’s your choice. That’s what professionals do.
  4. Nurture a relationship with your boss. Nurture relationships with staff colleagues. Remember a relationship is two-way. Engage with them. Learn about them and their jobs. Share yourself and your job.
  5. Listen to your colleagues. Hear their stories, worries, and experiences. It’s not enough to be a good storyteller, you have to be a good listener.
  6. Share stories that illustrate good fundraising. Remember, people, learn through stories, not through facts and PPTs! Illustrate the things you want board and staff to know with recognizable and understandable vocabulary, anecdotes, and stories.
  7. Invite people in the organization to complain and whine about fundraising, and then show those same people a good, even better, way to do all that fundraising stuff.
  8. Share curious fundraising tidbits in all the right places … in staff meetings, at the board’s development committee meetings … at board meetings.
  9. Build allies — at both the board and staff level.
  10. Volunteer any time you can in your organization — on staff task forces; to help another department do something; to help the CEO.
  11. Meet regularly with the CEO. Insist on it!

And if you can’t persuade them…

Then you leave.

If you’ve tried and tried and no matter what you do they still don’t choose to learn… don’t choose to do the right stuff… don’t follow your guidance and leadership…

Leave.

You deserve better.

No one can tell you when that moment is. Mostly no one can tell you if you’ve tried hard enough. However, talking with colleagues and testing your expertise and experience and asking the advice of others can help you decide.

No matter what a great organizational development specialist you are…. No matter how much you know and know how to apply and keep trying to bring others along…

Sometimes change won’t happen.

It’s not you failing! It’s them. They’re choosing not to learn and change.

You deserve better. I hope you are able to leave.

Simone Joyaux

P.S. From the Moceanic team… The more you know about fundraising, the better equipped you’ll be to lead your leaders. Make Moceanic your source for learning the ins and outs of fundraising! And you’ll want to find out more from Simone too.

Please share your experience by leaving your reply below. Simone, the Moceanic team, and our community of smart fundraisers would love to learn from your experience.

 

 

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Pop Art Woman Glasses OMG
Boards and FundraisingTrends

Shocker: The Biggest Problem in Fundraising

You spoke, I listened, and you freaked me out a little!

I’ve been in the fundraising space for a long time — approaching 30 years. That’s enough time to get married, have a couple of kids, and raise them into productive adulthood. Which is exactly what I’ve done during that time.

I thought 30 years would also be enough that I could legitimately say, I’ve seen everything.

Turns out I hadn’t seen everything.

They past couple of days, I’ve been reading survey responses from our recent Contest to give away some of my time to deserving organizations in the form of free 90-minute online Coaching+ sessions. To get a chance to win a session, we asked folks to fill out a quick survey about their organization, including a description of the main issues they struggle with — and most need help on. Nearly 300 people took the challenge.

Here’s where it got interesting. The most frequently cited area of trouble was this:

Bosses and/or boards who don’t get it and won’t allow us to do effective fundraising.

Whoa.  Think about that.  Our biggest perceived problem is the people who are supposed to be leading and empowering us!

I wasn’t born yesterday. I’ve been here long enough to know that bosses are often a problem.  I might have placed it in the top five problems.  Maybe as high as #2 or #3.

I know enough about surveys to know that lot of people saying something in answer to a question does not show us absolute Truth. The important thing as far as I’m concerned is that a lot of people perceive that their top problem is their boss.

So here’s my pledge to you:  I will help you overcome the “Boss Barrier.”  Either directly via our courses or Coaching+ at Moceanic … or indirectly because we’ll be talking up this issue and maybe get through to a few more people. Your own bosses, maybe!

Poor leadership is not unique to the nonprofit sector. (Oh boy is it ever not unique!)  But maybe we can tackle it here in our own backyard.  Let’s make it a priority.

Best wishes for non-interfered-with fundraising and we’ll be announcing the winners of the free 90-minute Coaching+ sessions later this week so stay tuned.

If you would care to share your experience with bosses and boards, please comment below!

Want some practical and experience-based help? Schedule a free 25-minute call  with one of our Moceanic Fundraisingologists. They will give you great free advice and help you identify which Coaching+ program might be right for you. Click here to book your call.
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Pop Art Money grows on trees 123rf e1526372270378
Boards and FundraisingDonor PsychologyTrends

Which Pile of Money Would You Rather Have?

Dan Pallotta couldn’t have been more right with his TED talk ‘The Way We Think About Charity is Dead Wrong.’

But he wasn’t just trying to explain the importance and good that ‘overhead’ does for charities to the public and media.

It’s also the charity staff who really need to stick up for themselves and not be ashamed about their non-program costs. We shouldn’t excuse, apologise for, or try to be creative with our numbers.

If a charity claims that 90 percent (or occasionally 100 percent!) of my donation will go straight to ’programs I can think of only four scenarios:

  1. They are a group of volunteers with no staff costs, no accounting or legal costs, no building, no compliance costs and no training costs. This could be a group of wonderful people donating their time and successfully be talking others into doing the same. They are almost certainly small in terms of their public fundraising income.
  2. They are stretching the truth. Perhaps a donor is donating the costs of administration and fundraising. Technically, this should be reported as income and the costs are still costs.
  3. They have a big endowment or fund that covers the cost of administration and fundraising. Same thing as if a donor is covering the cost, there should be income and expenditure reported for this.
  4. They have no desire for growth, and don’t want to raise more money– maybe they don’t need more. Nearly all organisations can grow their income by spending more on fundraising.

In fact, when you look at growth in net income – that is, the money you can spend on your programs – the number one indicator of growth is always the amount spent on fundraising.

Spending more on fundraising is often a good thing!

Efficiency is important. Waste is always bad. But net income – the amount to spend on beneficiaries – is the most important outcome.

Here is a simple example.

If you were a charity fundraising in South Africa, which of the two piles would you prefer to spend on your beneficiaries?

RandRand e1526372218307
The left-hand pile has 3,000 Rand, the right-hand pile has 150 Rand.

Easy isn’t it?

The left pile will help more people.

But what about when you realise that the left pile was the ‘profit’ of a fundraising activity that raised R5,000, and the right pile raised R150?

That means the left pile comes with a cost of fundraising of 40 percent (since the event raised R5,000 and R3,000 went to projects, the cost must have been R2,000, and R2,000 divided by R5,000 = 40 percent).

The right-hand pile has a cost of R0. So therefore zero percent cost of fundraising.

In this case, the pile on the left after a cost of fundraising of 40 percent will do more good than the pile on the right after a zero percent cost of fundraising.

So where is the limit?  For example, 80 percent costs from £10,000,000 (£2,000,000) leaves more to spend on your cause (£2,000,000) than if costs were more than 30 percent of £1,000,000 (leaving me £700,000). But the first ‘pile’ can do nearly three times more ‘good’.

If I had a business turning over £10,000,000 with a 20 percent profit margin, it would be a more valuable, likely more secure and generally a ‘better’ financial model than a business turning over £1,000,000 with a 70 percent margin!

Dan talks a lot about why it is unfair that we in the charity sector have to behave differently to businesses, and whilst it ‘feels’ wrong to generate huge amounts of revenue at a high cost, surely the point is always ‘what is the net good?’

I don’t like the idea of 80 percent fundraising costs either. We should never waste money, or undertake ineffective fundraising activities. But a high cost of fundraising can be perfectly justifiable, particularly during a charity growth phase or an event where only a part of the cost of the event is actually expected to go to charity.

The problem with explaining the cost of fundraising is not usually donors or even the media, but often internal perceptions of what donors may think.

One charity I know grew from $500,000 income to $8,000,000 per annum in about six years. In the first year of a strategic fundraising growth plan they had about $400,000 to spend on their cause. By the sixth year of that growth strategy, they had about $5,000,000. Their cost of fundraising went from 20 percent to 37 percent. Fine by me.

However, in the second and third year of their growth plan, their cost of fundraising was around 80 percent. This was because of the cost of acquiring new donors. And it is those people now contributing to their annual income of $8,000,000.

That charity even got hammered in the press for a short time. Despite fears internally, donors were not put off by the media and continued to give, and the charity grew significantly. By being brave and sticking to their plan they transformed their entire organisation and had a much, much greater impact on their beneficiaries.

Ask most donors if the cost of fundraising is important, they say yes. Ask the same people what the cost of fundraising of the charity they donate most to is, they generally don’t know. They think and believe it is important – but in the end, they are just lovely people who want to help a cause they care about.

Please, don’t let an obsession with the cost of fundraising hold you back from helping more people, animals or the environment.

What is your biggest challenge with the cost of fundraising within your organisation? Please share in the comments, I’d love to hear your experience.

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Don’t Send Your Board Dan Pallotta’s Brilliant Video

Please DON’T email Dan Pallotta’s brilliant TED talk to your board.

Recently I posted a Seven-Point Guide for Ensuring Respect of Fundraising and quite a few people got in touch to talk about their frustrations in this area.

I had suggested that fundraisers ask their board to watch the video of Dan Pallotta presenting Why the Way We Think About Charities is Dead Wrong’ at a TED Conference.

Ted Dan Pallotta

It is a cracking – and necessary – view for anyone who:

  • Is a fundraiser
  • Wants to be a fundraiser
  • Wants to hire a fundraiser
  • Has any authority over a fundraiser
  • Works closely with a fundraiser
  • Is involved in legislation about charities in any way whatsoever
  • Is a board member of a charity that is thinking about fundraising

My previous article suggested that you email the video to your board. (By extension, email it to the list above too.)

It turns out a few fundraisers contacted me to say they did send it to their board, but hardly any of the recipients watched it.

Darn.

How else do we get Dan’s big picture messages – which are absolutely crucial if we are to truly grow our sector – across to board members?

My suggested solution:

Present directly to your board (and senior management). Having you introduce the video, playing it and then discussing the points could have massive positive repercussions for your cause. Much bigger than most other thirty-minute board or team agenda items.  It also gives you a rock to refer back to.

Dan did the sector a huge service by recording one of the most important and profound twenty minutes in the history of fundraising.

Oh, if you haven’t yet watched the video, please do! It helps you get a realistic budget and maybe even a pay rise.

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Boards and Fundraising

Your Seven-Point Guide to Ensuring Respect for Fundraising

These days I work with boards, CEOs, CFOs (and North American equivalents like VPs) as much as I do with fundraisers. These people rarely have a fundraising background. The success of the organisation tends to depend on whether these non-fundraiser leaders, who have responsibility for fundraisers, respect their fundraisers and recognise the gaps in their own knowledge.

I am also on the board of two charities – ChildFund New Zealand and WWF Australia.

sean wwf 7 points

This Panda wasn’t as excited as me when I became a WWF Australia board member this month.

Unlike law, accountancy, medicine or other professions, fundraising DOESN’T tend to command the same level of respect, and many bosses think they know how fundraising works when, put bluntly, they don’t.

For example, imagine a senior management or board meeting…

  • A legal issue comes up. In the meeting, the group asks management and the relevant specialist pertinent questions. An agreement is reached.
  • A financial process issue comes up from management. In the meeting, the group asks management and the relevant specialist pertinent questions.  An agreement is reached.
  • A research project issue comes up from management. In the meeting, the group asks management and the relevant specialist pertinent questions.  An agreement is reached.
  • A fundraising issue comes up from management. In the meeting, the group asks management and the relevant specialist pertinent questions. They then all disagree, add lots of ideas like ‘we need younger people’ or ‘we should mail less often’ or ‘I don’t like these long letters’. Everyone seems to know how to fundraise. The fundraising staff must go away and reassess their plans.

Does that sound familiar?

As fundraising professionals, we need to be challenged and pushed – but we are also working in a job that has its own body of knowledge with plenty of best practice, test results, books, magazines and training available.

How do we fundraisers fix this?

My Seven-Point Guide

1) Know your skill gaps.

Make sure you, dear fundraiser, know what YOUR gaps are. Acknowledge what you don’t know.

Do a list. Here’s what to do if the list of what you know is bigger than what you don’t: Add in the what you don’t know list “I really don’t know how much I don’t know!” No credit to Donald Rumsfeld but I know there is more you don’t know than what you do know!  It is the same for all of us.

2) Don’t make fundraising up.  Fill those gaps.

Read, go to courses, webinars, and conferences.

Fight for training budget – and if you fail two budget rounds in a row to get the training you need, quit because your charity will not meet its beneficiaries needs effectively. If they are not investing in you, you are in the wrong job. Even if you are a volunteer or for a small charity, your cause MUST invest in learning.

3)  Demonstrate the body of knowledge.

Demonstrate that if people want to argue, they are not just arguing with you, but many other experts too.
Please DO NOT interpret this to mean you shouldn’t be challenged! Just show what you have learned.

In papers, proposals, budgets put in references to bodies of knowledge.

For example, from a digital strategy fundraising paper:

‘Our fundraising creative needs to demonstrate need, clearly and immediately. We cannot be portraying nice and happy pictures all the time – we have to show the truth (See Jeff Brooks, Sean Triner, Tom Ahern…)’

4) Circulate learning to those who make decisions about your budget.  For two reasons.

  • Because while it would be good if they did watch / read something, if they don’t at least you can counter with ‘I do appreciate you are busy, but the video/book/magazine I sent a couple of weeks ago summarises it. Would you like to meet out of this meeting and I can take you through this?(This will help – but only if you don’t come across as arrogant, with a ‘don’t challenge me’ attitude – personal skills are important!)

5) Constantly demonstrate there is a body of knowledge.

Have actual books with little post-it/ markers in key areas and refer to them in meetings.

Offer to lend books to other staff and even board members, and try and fill a bookshelf in your board or senior management meeting room with fundraising and relevant non-fundraising books. They will browse when waiting for meetings to start.

6) Talk to donors a lot.

Don’t underestimate the power of being able to say “I was speaking with Philippa, one of our long standing planned giving donors and she said…” Anyway, you should be speaking with donors often for other reasons so this is no extra work.

7) Get an experienced fundraiser on the board. 

Preferably one from an organisation the board would respect, which usually means someone from a bigger organisation, in a similar area of work but not too similar.

Lobby your board chair / appointment committee, or if your board is elected at a members AGM lobby fundraisers to stand for election. Put serious effort into this and get your boss(es) with you. Don’t think you can’t influence this. Bring it up every time.

There are probably more than seven tips, so I would love to hear from you about others – or any stories of how you have been respected (or not) as a fundraiser in board or senior management discussions.

Sean

PS – I don’t know anyone better at understanding charity boards than Simone Joyaux. Check out her article on this topic here. A cracking read and a good book to have lying around in your board and meeting rooms is Simone’s  Firing Lousy Board Members: And Helping The Others Succeed.

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