In our weekly column, consultants with decades of nonprofit experience answer your questions about fundraising, boards, strategy and more. To ask a question and be featured (anonymously!) in the column, email your questions to firstname.lastname@example.org.
This week’s question will be answered by Anne Smith.
As an Executive Director, I don’t have time to fundraise. We also need to increase our contributed revenue. I am thinking of hiring a Director of Development and would like to set our fundraising goal projection for new gifts at 4 times their salary within the first year. Is that reasonable?
It’s not uncommon to get this question or some version of it. The desire to find a simple way to set fundraising goals makes sense; however, this question presents a couple of assumptions that are not based in reality and therefore stand in the way of fundraising success.
1) When you hire a Director of Development, the Executive Director and Board will fundraise MORE.
We often hear questions like these from Executive Directors of nonprofits. Typically, they feel stretched too thin and see the need for more staff to “take this fundraising off their plate.” This is the opposite of what will and should happen. A Director of Development is going to increase amount of fundraising and focus the Executive Director and Board on targeted activities such as calls, signing more letters, going on solicitation visits, and assigning portfolios of prospects to cultivate. If you are hiring a Director of Development, be sure to set clear expectations and understand that you should be included and ready to work.
2) Setting a fundraising goal based on the salary of the Director of Development is problematic.
A formula approach can set unrealistic expectations and isn’t based on how your organization is positioned. Your fundraising expectations should be based on the following:
- How much do you need and why?
- Do you have a compelling case for support and budgets for your increased areas of need?
- How fast must you grow? Why?
- Do you have a clear mission and vision for your organization?
- Do you have a strategic plan that supports your fundraising goals? Are you willing to adjust these goals based on a deeper look at your donor pool, degree of readiness and infrastructure?
- Depth and breadth of your donor pool
- How have your sources of contributed revenue (individual, board, corporate, foundation, etc.) been performing over the last 3 – 5 years?
- How have your appeals (holiday, matching, spring, etc) been performing over the last 3 – 5 years?
- Where are you seeing the opportunity for growth?
- How many prospects have been cultivated and are “ready” to be asked? (It takes a new Director of Development an average of 6 months to close a “ready-to-ask” prospect.)
- How many qualified prospects are in your file based on affinity, capacity, and personal knowledge?
- Dedicated development administrative and communication staff
- Do you expect the Director of Development to carry out detailed daily tasks such as manage the database, process gifts, reconcile fundraising totals with the finance department, generate acknowledgement letters, lead the direct mail campaigns, write the newsletter and pull reports? (If you are, I recommend you consider hiring administrative staff, such as a Development Coordinator, before hiring a Director of Development.)
- Board Readiness
- Have the majority of your Board members been recruited with clear expectations around fundraising and friendraising responsibilities?
- Do they fully understand and embrace these responsibilities as part of their role as a Board member?
- Are they already sufficiently activated and educated?
- Are they willing to identify and cultivate donor prospects from their own network? Do they follow through?
- Are they willing to consider increasing their personal support to give what they feel is a “meaningful” amount consistently each year?
- Development Processes and Systems
- Do you have a clean database with systems established or will your Director of Development need to establish this?
- Is the staff trained and functioning in a positive culture of philanthropy with professional development opportunities?
- Does the program department, finance department and Executive Director understand their roles in supporting development and collaborate effectively?
- Are you willing to invest in the increased activity, research, tools and potential staff needed to reach your goals for growth?
When you do the work to answer these questions and determine where attention should be focused, you will be able to gain a realistic understanding of how much you can expect to raise within a certain amount of time. Some rules of thumb:
- If the Director of Development is addressing or investigating a lot of these questions, you should set a lower fundraising goal to account for the time needed to establish these best practices. Your evaluation should always include more objectives than how much money has been raised. Establishing these best practices is key to the organization’s ability to fundraise long-term. This approach will make it much more possible to increase fundraising goals significantly in the future.
- If many of these best practices are established, you can expect a higher level of fundraising activity such as face to face visits, special major donor events, and increased stewardship. However, the outcome of their efforts will be based on how many donors have already been cultivated and “ready-to-ask” vs. donors and prospects that need cultivation from the ground up. The average amount of time to see the full fruits of their labor is 12-18 months. Along the way, you will see growth but not at full capacity.
Building relationships and getting your house in order takes time. If you hire a Director of Development when you’re “hungry,” you will be tempted to rush relationships and skip important procedures that serve as the foundation of a healthy and successful development program. Avoid the temptation of a formula for goals based on salary. Embrace your role in fundraising as the Executive Director. Your organization will reap great reward from this approach to setting fundraising expectations.