Financing & Loans – Page 5 – Management Library

March 15, 2016February 16, 2023

The Executive Director’s Role in the Development/Fundraising Process

There is an old saying in the development field, that a person soliciting a major gift can only ask for a gift equal to or less than the gift he/she has made … with three exceptions: a person of the clergy, a prominent community figure/politician and a nonprofit Executive Director (or whatever the title held by the CEO).

The Executive Director holds a unique position in a nonprofit. She must know and oversee all elements of: running the business aspects of the organization; the various programs, how well they function and who they serve; the relationships the NPO has with the community; the interactions with local, state and the national government; the relationships with the organization’s board; and, the relationships with the people whose (financial, moral, public) support makes it all possible.

Of all the people in an organization, even, often, including the board members, with whom would a prospective major/corporate/foundation donor rather have contact – the person who has the answers to the business/program/regulatory/financial questions – the ED.

Who would be the best person to speak to (potential) donors about the organization’s programs? …to explain the need for various items in the budget? … to be able to describe how much of a difference their contributions would make or have made?

Of course the ED doesn’t do it all by himself. There are others who identify likely prospects, cultivate them, create the relationship, and do the Asking. But, the ED brings a presence – a body of knowledge to the relationship, to the cultivation, to the Asking.

Having the Executive Director be part of the development process adds to the depth of the relationships. An Executive Director who won’t participate in Cultivating and Asking reduces what could be raised.

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March 9, 2016February 28, 2022

What is the Role of a Development Officer ?

A development officer chatting with their team

First, going back to the definition of “development,” it is the creation, nurturing, and maintaining relationships that (ideally) engender charitable contributions.

If that is a Development Officer’s basic role, how does that apply to the various roles that they play ??

So, let’s start with the Development Officers who function in a limited arena – and there are different titles/designations for the various functions.

The Grant Writer, doesn’t just sit and write grant proposals. S/he must interact with board and staff members to determine what programs need or may need funding – and, to be effective in that aspect of the role, there must be solid internal relationships.

The Grant Writer must then conduct research to determine which foundations have interest in and might fund the (proposed) needy programs. The next step is contacting the foundation, possibly a program officer, to determine what would have to be done to get the foundation to want to fund the program. That’s the part that involves creating and nurturing a relationship with foundation staff-and-or-board.

Whether or not a grant proposal is successful, the Grant Writer will want to maintain a relationship with the staffers/board-members of the foundation with an eye toward future funding.

A similar role to that of the Grants Writer is the Corporate Relations Officer. S/he needs to determine which Corporate Officers and/or Board Members would have an interest in the nonprofit’s programs, in supporting the organization, in being visibly associated with the organization and/or in having the corporation visibly associated with the NPO.

Again, it’s all about creating, nurturing and maintaining relationships. And, let me emphasize, the relationships are with people, not foundations or corporations.

A Director of Special Events (and this does not include so called “fund raisers) may be the expert at the behind the scenes logistics for events … working with venues and vendors; but, the people who make an event successful are those who can get others to attend/pay the ticket price, to support/contribute to the event, to lend the prestige of their social/business/political positions to getting others to want to participate/contribute/attend.

The Director of Special Events helps to create and nurture the relationships with the movers-and-shakers, without whom there would be no event.

Some organizations have a Development Officer in-charge of their Direct Mail Program; and this, too, is about relationships. It’s not about sending “junk mail” to people who wouldn’t even open the envelope. A major part of this person’s job is to identify who would respond positively to solicitation mail from his/her organization. It’s testing mailing lists; testing the content of the mailing pieces; and, testing the timing of how often people are sent a solicitation. All that is about determining who the people are that you can establish a relationship with that will result in ongoing support for the nonprofit.

And it is a relationship. Those supporters will gain great satisfaction at helping the people you help, at being part of your “family,” at getting the thank you, the recognition for helping make something happen, for being part of your “family.”

A Major Gifts Officer must (directly or indirectly) create/maintain/enhance relationships with (potential) major donors. I wont’ beat this to death, since I’ve written extensively on major gift fundraising. But, I hope, by now, you get the idea.

In closing, I’ll talk about one other role, that’s the Chief Development Officer – whether it’s a Director of Development, a VP of Advancement, or other such title, that person must have the experience/expertise gained by having served in other development roles.

This person is all about relationships; and, in the planning of the various “fundraising” programs, must ensure that all development staff, other organizational staff, board members and volunteers are educated as to the importance of relationship building, maintaining and enhancing.

Next week I hope to address the Executive Director’s role in the Development/Fundraising process.

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Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what’s addressed in the series

March 2, 2016February 28, 2022

Why Staff Members Shouldn’t Be Fundraisers

Young woman making a stop sign with her hands

Note, I used the term “fundraisers” in the title, not Development Officers. It is an important distinction. Maybe, also, the title should be “Why Fundraisers Shouldn’t Be Staff Members.”

Development officers plan/design and evaluate development programs. They work with board members and volunteers to identify potential donors. They work to develop plans for the cultivation of those potential donors, and for the stewardship of those folks once they become donors.

Development officers work to design and implement structures that result in the creation and maintenance of relationships with (potential) donors.

The more skilled and experienced a Development Officer becomes, the more time he/she must devote to planning, evaluating and overseeing the performance of an organization’s development efforts.

Where one development officer, in addition to his/her planning/evaluating/etc. efforts, would only be able to cultivate-and-solicit a small number of (potential) donors, that same person could train-and-supervise a number of volunteers who could each cultivate-and-solicit a comparable number of (potential) donors – thus multiplying a development officer’s effectiveness.

Yes, I’m aware that there is a trend, in a segment of the nonprofit community, to hire “fundraisers,” not development officers. But, while those “staff fundraisers” might generate significant income, at some point they will move on.

“So what?” you say !!

Well, in order for those “staff fundraisers” to bring in the big bucks, they will have to create/nurture their own relationships with donors; then, when they leave to go to their next position at a higher salary, they take those relationships/donors with them – relationships that were not with the nonprofit organization.

Next week’s posting will address the roles of the various development officers and their relationship to the development and fundraising processes.

February 24, 2016February 11, 2022

What Do You Call The Staff Person In-Charge of Fundraising?

(This is a follow up piece to the posting What Do You Call The Staff Person In Charge of Raising Charitable Contributions?)

The title question is often asked by new/fairly young nonprofit organizations; and, depending on the age/size/mission/location/etc. of the organization, there can be many different answers.

As noted previously, the simple answer to the question is that “the staff person must have a title that is comfortable for (prospective) donors, unpretentious, (moderately) descriptive, appropriate for the organization’s age/size/etc, and satisfying to the Staff Person.”

So, where do you start ??

The first distinction that should be made is whether the staff person (1) is responsible for raising the needed funds or (2) is responsible for seeing that the money is raised !!

(1) Sadly, too many nonprofits are going the route of having staff members being the fundraisers. It’s sad for a number of reasons (see my discussion/posting next week), but people with that role aren’t directing or managing fundraising, they’re doing it.

They may be Donor Relations Officers, Major Gift Officers, or Constituent Relations Officers. The first two options suggest that “I’m/we’re only dealing with you to get your money,” the latter suggests that “I/we care about you and want to develop a real relationship.”

I would suggest that “Major Gifts Officer” would not be appropriate for a new/young organization … for the most part because those nonprofits don’t understand what a major gift is, and what is entailed in the process. (See: What is A Major Gift?)

(2) Staff members who manage and work with volunteers (including board members), where it is the volunteers who are actually doing the fundraising, have titles that could include “Manager” or “Director.”

These people should be planning the various aspects of the development program, overseeing and tweaking its implementation, and evaluating the previous years’ performance.

Their title should be specific, based on their areas of focus/expertise.

A Director of Special Events should have the experience/expertise to be able to work with volunteers to make an event special/successful.

Other titles, assuming the appropriate experience/expertise could be: Director of Foundation Relations, Director of Government Relations, Director of Corporate Relations; and, the person with the broad experience/expertise to supervise/coordinate all aspects of the development program – the Director of Development.

A development officer, who is the only person in the development office, who just works with fundraising events and/or writes foundation proposals cannot be a Director of Development !!

February 18, 2016February 28, 2022

The Feasibility Study Rears Its Ugly Head, Again !!

Professionals going through the feasibility study of their business

I got a note, recently, from a retired friend/colleague, as follows:

Our Retirement Community’s leadership has put out several RFPs to local consultants for a planned Capital Campaign Feasibility Study. The “cattle call” will be one day in March when the consultants will make pitches to several Community officials, none having much knowledge of capital campaigns, much less for feasibility studies.

So, yours truly has been asked to be part of the group to review and recommend.

How nice it will be to sit back and listen – and pounce when I know one or more will proudly trumpet how well they conduct interviews with stakeholders, asking them just where, on the gift table presented, those interviewees would consider giving.

I can recall at least ten nonprofits, during my consulting career, which had me come in following studies made by various consultants. The organizations were dismayed when, in each case, the final reports recommended a campaign goal much lower than what the organizations themselves could roughly assess as being attainable.

Each time, when they handed me the full report, I went right to the questionnaire used, and with no surprise, I saw that the interviewer did just what I said above. In one case, a million dollar prospect proffered that “you can put me down in the $25,000 category.”

What else could be expected? That prospect, in effect, was actually solicited when the exercise was supposed to be a study to see if such a campaign was feasible in the first place.

Why should he have committed big, when there was no case for support as yet, no leadership, and no known other givers – no campaign?

My friend then asked for my thoughts/reaction. So, in my opinion, there are three red flags that must be addressed.

There are problems inherent in the Request-For-Proposal process. Since most organizations that are hoping do to a capital campaign haven’t got the first clue as to what a capital campaign really entails, how can they create an RFP that addresses all their needs? Asking for proposals would put them at the mercy of whatever the “proposers” wanted to tell/sell them.

Better if they ask other “local” organizations that have successfully completed such major fundraising efforts what person or firm they used to help them succeed. That way, they don’t have to rely on their lack of knowledge and they don’t have to have the “cattle call” … with every one who responds to the RFP. In the long run they would probably do better just meeting with capital campaign counsel who comes recommended by people whose opinions they trust.

The misuse of the Gift Table is not unusual. As my friend noted, above, it would be counterproductive to ask someone at what level on the “pyramid” they envision their likely gift, when all that’s being done at the time is a study to determine if a goal is even attainable.

My friend also noted that you should never ask a prospect where they would peg themselves. You should ask interviewees to suggest the names of other people who would likely be able to give at the various levels … if they were motivated to do so.

He also noted that goal setting is based on the information obtained during the Study … so you can’t go to people with a pie-in-the-sky, unsupported goal figure, and a gift table based on that.

Then, there is my emphatic objection to any use of Feasibility Studies.

As noted in my posting of January 27 — A Planning Study over a Feasibility Study Every Time — I strongly suggest that Feasibility Studies are not only obsolete,they’re counter-productive/harmful. Let’s do Planning Studies or Research Projects, but no more “Feasibility Studies.”

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Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what you can find the series

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Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
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We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this resource alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
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February 10, 2016February 17, 2023

Major Gift Fundraising – The Basic Elements

The five basic elements in Major Gift Fundraising are Leadership, a Prospect Base, Involvement by Prospective Donors in various aspects of organizational life, a Donor Recognition Program, and someone to Guide the process.

1. Leadership includes the organization’s CEO, Trustees and (often) key volunteers. It’s their role to define the funding need, take their case to the public, and identify, cultivate and evaluate those most likely to make a major gift. It is, of course, also the job of the leadership to set the example and ask others to follow that example.

2. The most likely Major Gift Prospects are those individuals with the means to make a gift of the appropriate size, who know your organization, believe in its mission and that it is being run effectively, are accessible to your leadership, and have been substantively involved with your organization.

An effective major gifts program requires the active participation of your leadership in getting your prospects actively involved in the life of your organization. Please note, active involvement of prospects does not necessarily equate to attendance at special events.

In the identification and initial evaluation process, involvement by leadership is absolutely essential. It is they who must have access to the wealthy, before the wealthy can be considered prospects. Your leaders must know your prospects and their interests well enough to identify the best means for involving them with your organization.

3. Involvement is an ongoing process that ranges from asking the prospect for advice – in one-or-more areas, to having that person serve on a committee – for an event, to help identify/evaluate prospects, to add expertise on a project, etc.

Involvement can also mean working with you to help provide the service that is the mission of your organization. It can also be speaking for you – to community groups, corporations, the press, even one-on-one with other prospective donors.

There is no time limit for involvement, it depends on the prospect. By definition, you ask for the major gift at the point where the prospect is likely to respond, “Of course. What took you so long to ask?” That’s why, since it’s not always easy to identify that point, the people doing the cultivating/involving must know the prospect well enough to make that determination.

4. In a major gifts program, Donor Recognition is not about names on a list or how a donor fits a category, it is about what will satisfy each donor’s needs. Their needs can be satisfied by a range of activities … from a handshake with the right person, to a publicity piece in the newspaper, to a name on a building or program.
Recognition in a major gifts program must focus on the individual; and, you won’t be able to determine what the appropriate recognition will be for each donor until you’ve established a solid relationship with them, and get to know their needs.

5. The fifth element is the person who will hold the process together, and be sure that all concerned do what’s needed, when needed. That’s your Director of Development – a person with the experience and expertise who can direct your development program.

February 3, 2016February 13, 2023

Capital Campaigns – An Overview

By definition, a Capital Campaigns is an intense effort to acquire sufficient commitments to add up to a specific large sum, for a specific valid/urgent purpose.

The word “Capital” refers to the money needed to erect/expand/renovate a building, the funding needed for the purchase/installation/overhaul of (major) equipment and the funding to create/expand an endowment.

The term “campaign” has it’s origin in a military context — although it’s rarely used that way today. It referred to the actual period of time that the troops were in the field, engaged with the enemy. It was/is a period of action/activity that, ideally, had been planned very carefully. In this context, it is the period of time in which most of the needed dollars are solicited/pledged.

The “intensity” of the effort refers to having board members, staff and other volunteers commit the (additional) time and energy necessary to achieve the dollar goal in a specific (relatively short) timeframe. The typical campaign was designed to take 12 months – but, these days, it tends to be shorter.

Typically, a capital campaign solicits pledges – significant dollar commitments to be paid over an extended period. Fifteen/twenty years ago, the period was five years, but considering the societal changes and people’s reluctance to commit to that long an obligation, three years is now typical.

The “specific sum,” the goal of a campaign, is an amount that will allow the organization to pay for the “project” that is outside its normal/ongoing budget requirements. This cannot be an arbitrarily chosen dollar figure voted on by a board or committee, it must be one that has been determined through a very careful and detailed process.

“Valid” means that it the nonprofit organization was asked to justify why the project was needed, the NPO could clearly explain/demonstrate that a real need exists in the community and that the project would address that need.

“Urgent” excludes any project for which the NPO could accumulate the funding over an extended period of time without the need for a special fundraising effort. It would also exclude any project for which there is not a demonstrable need for the service(s) that will be made available because of the project.

• A capital campaign is not a “fundraiser.” It is as far beyond a dinner event as building a motorcycle is beyond building a skateboard.

• A capital campaign is not for the faint of heart. In conducting a capital campaign, an organization puts its credibility and its future on the line.

It is one of, if not THE most important and risky things a nonprofit organization will ever do !! Should a campaign fail — as many do (because of poor planning, lack of long-term preparation, inadequate fundraising skill and/or insufficient campaign experience), an organization’s credibility and future fundraising prospects can be harmed, irreparably.

• A Capital Campaign is not (for the most part) about the needs of the NPO. It’s mostly about the needs of the potential donors. The question is, in essence, “What will the donor get by gifting/committing a large sum of money to support a specific project?

• A Capital Campaign is not for Public Awareness … until you’re ready to announce the campaign. And you don’t announce a campaign until (at least) 60% of the goal has been reached – 80% is better, 100% is best. You don’t even discuss the possibility of a campaign outside of the organization’s leadership.

In the context of public awareness, a capital campaign should be pretty much completed before there is any groundbreaking or other visual sign that there is or will be a need to raise money. Beginning the project that the campaign will fund, before the campaign begins, (strongly) suggests that the organization already has most-or-all of the needed funding.

• Capital campaigns cannot be an excuse to raise a lot of money – there must be a goal that relates to specific URGENT needs.

• A capital campaign is not an effort that should be taken on by the inexperienced, even after reading my ebook on the subject. ☺

Capital campaigns are a synthesis of everything else we do in development; but, because much of it takes place in a relatively short time frame, and because so much more is at risk, the skills and experience required to design and implement these efforts must be at a level much higher than those needed for ongoing fundraising.

January 27, 2016February 16, 2023

A Planning Study Over A Feasibility Study, Every Time

A business team coming with a plan for work

For the last 60-70 years, a Feasibility Study has been “required” before planning and/or implementing any major fundraising effort, and its basic concept and structure hasn’t changed in all that time; and, it is my contention that the Feasibility Study is not only obsolete, it’s counter-productive.

Now don’t get me wrong. I’m not saying that we shouldn’t first determine the feasibility of acquiring leadership for and attaining the goals of a major fundraising effort.

Of course we must interview prominent members of the community, prior donors and prospective leaders/example-setters. Of course we want to determine if success is likely, even probable. Of course we want to begin the education and cultivation of those who will be campaign leaders and major donors.

But feasibility studies are designed to ask interviewees if they think the goal is feasible, if they think there are any individuals who could lead a campaign to its goal, if the “community” will support the effort. A typical question is, “With your knowledge of the community, do you think/believe that ‘this’ goal can be achieved?”

If you’re asking people if they think you can succeed, you give them the impression that you might not. Why plant the seed of doubt? In fundraising, a “Study to determine Feasibility” is really bad psychology.

Never ask if an interviewee thinks the goal is attainable? Avoid asking “if,” but rather work to create the impression that success is a given. Get people to buy into that success, then you’re more likely to succeed.

Want to create a Major Gifts Program, a Bequest Program, a Special Event, a Recognition Program, a Capital Campaign ??

The most important information you’d want to have is whether your (prospective) constituents/donors will agree with what you want to do, and what would motivate those folks to want to support and/or participate in your activity.

The best way to get the best answers to those questions would be to ask. And, the best way to ask would be by means of a “Planning Study.”

That the “Study” is for “Planning” purposes suggests that you’ve not committed to taking a particular action and/or to creating a specific kind of program – even though you may have!!

When you ask someone to participate in this kind of “Study,” you are asking for their advice and saying that what you do (or don’t do) will be impacted by what they say (or don’t say).

Unlike the obsolete “feasibility study,” with all its “baggage,” a “Planning Study” asks in-depth questions about a broad range of subjects. Then, based on the study’s findings, a nonprofit will be able to proceed with programs/activities it knows will be supported by its constituents.

And, by the way, the reason the “Planning Study” is “almost always the first step” is because it is a strong means of cultivating the folks you hope will be your leaders and donors … when you do whatever it is that you’re “planning” to do.

When you ask someone’s advice, they’re more likely to look upon you favorably … because you were smart enough to know to ask them ☺

To quote an old fundraising saying: “If you want advice, ask for money; if you want money, ask for advice.” And a “Planning Study” is a great way to ask for advice.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what’s in the Third book in the series –
“Guidance for the New Nonprofit, Executive Director and Board Member”

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Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
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To keep this resource alive, we need your
questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions
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January 20, 2016February 28, 2022

Ensuring A Nonprofit’s Future – With Major Gifts

Most non-profits don’t live on grants from corporations, foundations and governments, or from event generated income.

Roughly 80% of contributed dollars come from individual donors or their estates. And the common wisdom is that at least 80% of that amount — or about two-thirds of all contributed dollars – come as major gifts from individuals.

Planning-for-the-future, therefore, involves identifying potential sources of funding sufficient to ensure continuation or expansion of the programs that satisfy the needs of the people and the communities being served.

Worded another way, “Ensuring future funding requires minimizing the risk of losing a large percentage of your income.”

A major gift program is easier to design/implement and more cost effective than direct mail and the vast majority of events. Major gifts are also a more reliable source of long-term charitable funding than all others.

So, what is a Major Gift ?

Many Non-Profit Organizations (incorrectly) use the term “Major Gifts” to refer to those that are larger than the usual range of gifts that arrive in the mail. Typically, $1,000 is the magic number.

But, unless an organization’s budget and/or the amount to be raised via the fundraising process is unusually small, gifts of $1,000 won’t significantly aid in pursuing financial goals.

A Major Gift is not based upon exceeding a specific dollar figure, but requires:

1• Amounts that will significantly help to attain fundraising goals
    — 1% or more of the goal would be significant. If your goal is
    $1,000,000, at $1,000 each, you’d need 1,000 gifts; and, unless
    you have the prospect base with that many donors who have given
    at that level in the past, that’s not very likely. Realistically, for a goal
    of that size, gifts of $10,000 and up are necessary.

2• That prospects be cultivated and solicited on a face-to-face basis.
    Consistent with the concept/practice of “development,” in order to get
    donors to want to make “major” gifts, there must be a relationship
    between the donor and the person doing the asking. And that person
    must also be one of the people, in not the person, doing the cultivating
    and educating of the prospective donor.

3• Ask amounts that are well thought out and well researched.
    When asking for ANY gift to a non-profit, it should always be for a
    specific dollar figure. For a major gift, it should be a figure based
    on the donor’s ability to give. And, you should always be able to
    give the donor a good reason “why that amount” … including how
    making that gift will satisfy his/her needs.

4• The development and implementation of an individual plan,
or strategy for getting each potential donor to the point where s/he is
ready to make the gift you want him/her to make.

January 13, 2016February 14, 2023

Does Your Organization Have a REAL Director of Development?

Ideally, from day one, an organization should have someone who knows/understands the NPO, its mission, its leadership, and its hopes and aspirations. This person like the Director of Development should have the experience and skills to help the NPO plan for next week and next year.

This person should have input at all levels, should be able to guide/train the board members and the CEO, and should be able to bring to staff awareness and understanding of how they affect the development process.

A large organization, with a large development staff, must have someone to coordinate the various programs and be sure that they support, not conflict with, or duplicate each other. Sadly, the vast majority of new/nascent NPOs don’t have the money to hire a person with the requisite experience and capabilities.

Smaller organizations that live on grants need a grants officer. If much of an NPO’s income is from events, then an event coordinator is needed. If one person can do both, all the better.

To hire a staff person to focus on one or two activities, and give that person the title of Director of Development, is to lie to that person, to that person’s next employer, and to the board and staff of the NPO doing the hiring.

You’re kidding yourself if you think that by hiring a person and giving them that title you’re actually getting all the experience/expertise that comes with a real director of development.

The director of development is a critical hire for an organization. The right person can greatly help ensure an organization’s future….

So many non-profit organizations are hiring Directors of Development without really knowing/understanding what “development” is supposed to be about and how a DOD is supposed to function.

The misunderstanding is the belief that “Director of Development” equates to “income generator.” So many NPOs hire DODs with the belief that they’re getting someone who will raise the needed funds; and, the sad thing is that so many NPOs hire DODs so that organizational leadership (board and other senior staff) won’t have to be involved in (or even think about) fundraising.

Hire a person to raise the money, and the amount of money that can be raised is limited by the time/effort that one person is willing/able to give to the process.

Hire a person to create and/or direct a development program and there’s no theoretical limit to how much money can be raised … considering the person’s level of experience and expertise.

A Director of Development creates and/or plans for and directs a development program … an effort that incorporates many (if not all) of the elements of the development process: mass solicitation (mail or telephone), grants (government, foundation, and corporate), events, major gifts, bequests, donor cultivation, etc….

How many organizations do you know of that have a Director of Development who isn’t !!??

If you’re reading this online, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.