Common Mistakes Nonprofits Make That Hurt Their Fundraising Effectiveness
Working with clients for 18 years now, Hammond & Associates has encountered a set of common mistakes that some nonprofits tend to make. Raising money is almost always a very challenging proposition and mistakes can make the task all the more difficult. Here are a few of the mistakes we have seen over the years:
- Oversimplifying Fundraising. One mistake is a tendency to over-simplify the process by assuming that fundraising is simply a matter of getting appointments with wealthy people, well-endowed foundations or big corporations and asking for the gift. With this attitude comes the belief that my nonprofit’s cause is supremely worthy and that surely well-heeled individuals and institutions are waiting to be asked to support it. This mindset turns fundraising into a matter of simply having the will to call on people and ask for the order.
- Goal Setting. Another all-too-common mistake typically occurs during the nonprofit’s annual budgeting process. The CFO and Finance Committee of the board budget for revenue and expenses and find that there is a shortfall. To cover the gap, they assign the needed dollars to the Development Department saying, in effect, “It’s up to you to make up the difference.” Never mind that the Development Department already has a revenue obligation for the year, they simply need to try harder and raise more money! This “gap strategy” also ignores best practices in fundraising revenue projecting and budgeting based on a careful examination of historical donors, attrition rates and untapped potential.
- Assuming Donors Give on the Nonprofit’s Timetable. In a similar vein, a related mistake is to assume that donors will make a gift to our nonprofit when we need it – or on our timetable, rather than the donor’s. This often occurs when a capital campaign needs commitments and cash to achieve the goal by a date certain or to keep the design and construction of a new or renovated building on a cash flow schedule. Anyone who has worked on a campaign knows that some donors can be maddingly slow in making a decision, but we also tend to ignore the fact that they have other financial commitments, including pledges to other nonprofits they are considering or paying off at the same time!
- Expecting Fundraising Consultants to Raise the Money. It is also a mistake for a nonprofit to expect that their fundraising consultant will raise the money for them – to meet a campaign or annual fund goal, for instance. This expectation stems from the belief that consultants are “hired guns,” that they bring a rolodex of wealthy donors to the table and “broker” these relationships on behalf of the client. Consultants can, of course, be the difference between success and failure in a fundraising initiative, but they accomplish this by providing strategic guidance and years of experienced know-how. It is always a “red flag” when any consultant claims that they can introduce a client to wealthy prospects that will be open to making a gift based on the strength of their relationship with the consultant.
- Launching a Capital Campaign Without a Feasibility Study. Sadly, an all-too-common mistake is to launch a capital campaign without first doing a feasibility study. There are exceptions, of course, especially when a nonprofit has a strong board, a solid Chief Development Officer and fundraising team and a tradition of successful prior campaigns. But if the campaign dollar goal is the largest sum ever contemplated by the nonprofit, it almost always pays to bring on a competent consultant to conduct the feasibility study and “test” the campaign with your closest donors and stakeholders. Plowing ahead without a study is often the product of the tendency to oversimply fundraising as alluded to earlier in this blog. Put simply, a feasibility study will increase the chances of success in a capital campaign because an organization can plan for the obstacles it might encounter ahead of time, rather than be caught short mid-campaign.
- Failing to Look at Fundraising Holistically. Finally, all nonprofits should look at fundraising holistically, understanding that it is but one element in building organizational capacity. Raising more money may be the fuel, but the long-term strength and sustainability of any nonprofit depends on building a strong staff and infrastructure, as well as a board with stellar leadership consisting of committed advocates, influencers, door openers and, of course, donors. At Hammond & Associates, we see too many nonprofits caught up in raising more money for facilities and programs, but not building their board and staff at the same time.
As we continue the dialogue with you, we welcome your thoughts. And, if you need help or have questions, just let me know. (I can be reached on my cell at 248-310-4560.)
Thanks for caring.