Some non profits, especially smaller ones, may find themselves in a difficult quandary: how to increase fund-raising revenue when staff dedicated to that purpose is woefully underpaid, overworked and prone to turnover. Any increase in such salaries might expose the organization to a deficit situation, especially if, in the spirit of fairness, it means increasing salaries elsewhere .
Before I make a few suggestions to break out of this box, let me address the issue of the proper place of financial success in a nonprofit's mission. I once reviewed an organization's mission statement and was surprised to see that preserving its endowment was a major highlight. I am not sure a prospective donor would find this a compelling reason to give, although the objective is laudable. We have seen what happens to those who wantonly strip the endowment (cf. NY City Opera in my blog "Shutdowns" October 2013) . But if financial success is the overriding part of the mission, then opportunities for purposeful growth and greater service to the constituency may be lost.
Those opportunities are greatly aided through acquiring more financial resources, especially those of the contributed kind. I have written here about underfunding staff (cf. blog October 2012 "Duct Tape on The Carpet") and the propensity of some nonprofits to find themselves in a "poor little me" syndrome. Let's say you're a nonprofit with a annual operating budget of a bit under $1 million. The only staffer exclusively dedicated to development is part-time and paid by the hour. This "saving" may have helped see the year finish in the black, but think how much more might have been accomplished towards meeting mission if there had been greater investment in the fundraising function.
Neil Edgington, author of the excellent blog Social Velocity recently published a piece entitled "5 Fundraising Delusions Nonprofits Suffer." Number three on the list was: "Skimping on Fundraising Staff and Systems Saves Money." What this "saving" really means, as with my point above, is missing out on revenue. A poorly paid fundraiser working with, say, an outmoded data base and sketchy marketing plan, does not make for an effective development team.
Building that team requires investment in what Edgington calls "capacity capital." The key word is investment. A way out of the quandary (if we pay more, we might end up in the red ) can be found in the concept of Return On Investment (ROI in business lingo). Investors in the stock market or real estate do so hoping for a positive return. An issue is timing. The return takes time to materialize (if not, it's a "get rich quick" scheme and we know how they usually play out). But in time, the initial investment can be returned, and then some.
I am suggesting then investors be found to strengthen the needy development function of an organization, with the prospect of the return seen in increased contributions and long-term enhanced organizational capacity. But throwing money at the problem is not the solution. First there must be careful planning as to how a beefed-up development department - even if it is a single person- will operate. Is there sufficient administrative support? Is the board willing to be an active partner? What is the timeline for recouping of the investment?
Some years ago I was asked to submit a proposal to a nonprofit that was considering a capital campaign. What part might I play as a consultant? My response was first to recommend assessing the ability of the organization to mount such a campaign. You can design and implement feasibility studies, case statements, etc. But if the nonprofit doesn't employ the necessary human resources to effectively mount a campaign, then it's like a football team failing to get a first down on the series following receipt of a kick-off. I was not retained.
So where do you find the investors, or donors, willing to underwrite "capacity capital," which could result in a transformative change for the nonprofit? Among the prospects are individuals who already have demonstrated a commitment to the organization, and foundations or companies who are interested in supporting nonprofits' capacity-building. The appeal to them should be couched as a one-time investment, backed up by a careful plan on how the funds will be used. In a sense, it's like venture capital for the nonprofit.
Any nonprofit facing this chicken and egg quandary risks getting stuck. Every time someone, say a board member, asks - why can't we approach this or that prospective donor and the response is: "we don't have the time or staff, " the hole is dug a little bit deeper. Attacking the issue head-on will at least show some action and avoid the outcry: "Don't just stand there, do something!" A careful targeted appeal for investment capital is the "something." With risk, can come reward, even if the hurdle seems high.
Apologies to those who might have missed my blog, unusually issued monthly. As they say in broadcasting, there were "technical difficulties." I will strive to make up the deficit.
As always, I welcome comments on this, or any previous efforts.
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