This week, I’m talking about leaky buckets. Fundraising buckets to be precise.
Fundraising is one of the challenges that keeps many Executive Directors of charities up at night. As the competition for funding increases and as donors become more focused on the demonstration of charitable impact, we all have to work harder at keeping them engaged and on board.
So why do our fundraising buckets spring a leak? And even if our funding is stable right now, are we at risk? Having worked with hundreds of organizations of all shapes and sizes, here are some of the most common reasons we have seen why fundraising starts to fail.
Having a poor culture of philanthropy
What does it mean to have a strong culture of philanthropy? As explained in a previous blog post, to have a culture of philanthropy means that you are in an environment where fundraising is not just tolerated, but it is respected, appreciated and celebrated. While this kind of culture might seem like an obvious benefit to many of us, in reality it is more elusive than you might think. In so many organizations fundraising is treated as a “necessary evil”, where fundraisers are not seen to be carrying out the “real work” of the organization. It is also where fundraising is poorly understood by Board members and non-fundraising staff, and donors, rather than being valued, are treated as nothing more than bank accounts.
In organizations like these, is it really surprising that fundraising struggles to thrive?
Significant staff turnover
Not only does the struggle to retain fundraising staff come as a result of having a poor culture of philanthropy, it also creates a massive hole in your fundraising bucket.
One study highlighted in the Chronicle of Philanthropy found that the average amount of time a fundraiser stays at his or her job is only 16 months, while the direct and indirect costs of finding a replacement is around $127,650 (USD).
It’s an impact I’ve seen myself, many times. One organization I knew had four fundraisers in five years. What this meant was that their managers were spending considerable amounts of time on-boarding the new staff rather than fundraising. Donors were not being stewarded effectively so they were leaving. Direct mail appeals were being sent late or not at all, and they were regularly missing grant deadlines. As a result their fundraising program was decimated and they found themselves in considerable financial trouble.
Lack of fundraising strategy
Having the right fundraising strategy can help to fix a number of holes in your bucket. Some of the biggest holes include:
Poor prioritization: Sometimes we, or our managers, feel that we have unlimited capacity. We see opportunities all around us, so we keep adding activities thinking it will mean that we will raise more money. While fund diversification can be very healthy for a fundraising program, it is also true that you don’t have unlimited time, unlimited resources or unlimited energy. By choosing to do one thing, the reality is that you are not doing something else that could potentially getting you better results. Are you being really honest with yourself about how much you can actually get done within the time you have to do it?
Not having a healthy fundraising budget: There is no doubt that poor budgeting decisions lead to a leaky bucket.
How many of you have walked into a job to find that your salary IS the fundraising budget? That means there is no money to deliver your programs, to steward donors or participate in any professional development. There is certainly no money for testing new ideas or innovation!
Even the way that you look at your budget can also have an impact on your success. For example, do you have a money in, money out approach, where you are only thinking about the bottom line? This can be risky in a couple of ways. For example, perhaps you are thinking of cutting an event because it wasn’t raising enough money in comparison with other streams, but what if this event is the best donor acquisition strategy you have right now, or is playing a crucial role in donor retention? Are you cutting off a strong opportunity for growth? Alternatively, what if your budget is looking healthy, but only because you received a large one-off gift, like a bequest or grant, that was making up your shortfall?
Poor system for asking: Of course, you don’t have a fundraising program if you don’t have a system in place to ask people for support. This includes asking:
- the right people: Are there people within your community that you aren’t asking for support that could be ideal prospects? How about your Board, your volunteers, or even your beneficiaries?
- in the right way: Are you asking people in a way that is most effective? How well are you using donor segmentation to tailor your ask to match donor potential and interests?
- at the right time: Have you cultivated your donors enough before you ask? Do you have a schedule of asking that is interspersed with strong stewardship? Or are you ONLY ever asking?
- for the right amount: How are you using the donor’s giving history, or prospect research, to determine how much to ask for?
- for the right project: Is what you are asking for in line with your donors’ interests? Do you even know? What can your research and data tell you about what your donors like to give to or care about?
Do you know how to ask for donations from your community in the most effective way? What could you be doing differently?
A weak Case for Support
The backbone to a strong ask is having a powerful Case for Support. I’ve talked about this before, but what I see too often are Case for Support examples that are all about process, where organizations are looking to educate, rather than persuade their donors. The decision to give is an emotional one, and when you go into explaining process in relation to your programs, while it might even be very interesting, in effect you are causing people to use the logical part of their brain than the emotional part. As a result, you lose the connection to their passion, and therefore possibly their motivation to give.
Click here to read the top mistakes people make with their Case for Support.
Poor donor stewardship
Given that it costs five times more to recruit a new donor than to keep an existing one, you can’t afford to do donor stewardship badly. Yet, donor cultivation is something that many organizations do not budget for or allow time for, and is something that many fundraisers are doing off the side of their desks.
Donor stewardship is all about earning the right to ask for support, and often we don’t do that too well. According to Bloomerang, 53% of donors that stop supporting a charity do so because of how the organization treats them. That means more than half of the donors that leave are doing so because of reasons that are within your control. If that’s not a reason to improve your donor stewardship, what is?
Next time: How you can go about fixing your leaking fundraising bucket.