Development Planning from Scratch – Mind the Gap

22 Nov Development Planning from Scratch – Mind the Gap

Happy Thanksgiving all! Gobble, goggle.

Back in August I started a series of posts about planning for development entitled“ Development Planning from Scratch.” With this morning’s post, I’ve come to the end of the thread. It assumes that you have started with a clear fundraising goal needed by the program, that you have built a credible plan of attack based on real information from your real donors and donor groups, and that there is an (inevitable) gap between the two. This post describes several strategies for dealing with that gap.

Before I start, let’s revisit several of the highlights:

• We should always start planning by “asking what the Program-side needs us to raise for them,” and “what MUST we do now that will position us to be able to meet the program needs of the future?”
• Program-side will have answers to these questions because “they’ve done the legwork necessary to fully actualize the Strategic Plan – including understanding how much it will cost to pull it off. (The truth is that I rarely see this.)”
• Now “imagine that all of our actual donors were all together in a large room. Conceptually, we clearly define a particular subset group, or segment, and pull them out of the room.” In this way, no-one is double-counted. The segments I typically start with are:
  • Board members
  • Top 100 donor prospects
  • Annual Giving leaders
  • Foundations
  • Businesses
  • Current donors (Most Recent Gift in the last 12 months)
  • Lapsed donors (MRC between 12 and 24 months ago)
  • Potential donors (MRC more than 24 months ago or never
• For all of the Board Members, Top 100 Donor Prospects, Annual Giving Leaders, Foundations, and Businesses, we list each one – each prospect – individually as ROWS on a spreadsheet. We use the COLUMNS to itemize everything that donor will actually see from the organization including newsletters, event invitations, renewal solicitations, personal visits, grant requests, and so on. (You will potentially have LOTS of columns.)
• For all of the donors in each of the above segments, we will also establish individual ask amounts. And for each ask amount, we will assign a probability of success. We will start with 80% and adjust them, each-by-each, based on our own internal gut-check. (NO ONE gets 100% – ever).
• We will assign one line each to Current Donors, Lapsed Donors, and Potential Donors – each considered in the aggregate.
• For Current Donors we will estimate that the money we receive next year will be the same as the money we received this year (because we will have “siphoned” off the best donors into the other segments.)
• For Lapsed Donors we will estimate that they will give one-half of what they gave two years ago as a group.
• For Potential Donors, we will NOT EXPECT ANY SPECIFIC RETURN FROM OUR RECRUITMENT ACTIVITY.

Now we add the column of estimated returns from our activities. If it adds to 120% of what the Program-Side needs us to raise next year, we’re good to go. But it rarely happens that easily. Instead, there’s usually a GAP.

Dealing with the GAP

Strategy #1 – Revisit our estimating assumptions. Have we been too conservative? Perhaps that foundation that has supported us with a $50,000 grant every year for 10 years could be estimated at 90% or even 95% instead of 80%.

Strategy #2 – Ask for more money. Are we being too timid in our solicitation planning? Could that business that has underwritten the banquet event with $1,000 grants these last three years be asked to underwrite for $2,000 this year? Or perhaps even $5,000?

Strategy #3 – Increase the number of prospect individuals, foundations, and/or businesses pulled out for special attention. Could we be more aggressive with foundations we have never solicited? Are there other individuals who may not be giving much now but have capacity and are warming to the organization?

Strategy #4 – Jettison an activity with a low Return on Investment (ROI) for one that has a higher ROI. Perhaps it’s time to say goodbye to that special event that takes all our time for three months to net $20,000 for another activity that has more potential.

Strategy #5 – Put several discreet budget items “on hold” until certain benchmarks have been met. For example, until we hear back from a specific grant funder, or until the banquet has netted more than a specific amount. We might even earmark proceeds from potential donor mailing to a specific Program-side budget item.

Strategy #6 – Negotiate with the Program-side to reduce the expectations this year. This is the least attractive option to be sure, but one that may need to be taken if fundraising can’t keep pace with program opportunities. Program-side is often more understanding if we share with them plans to increase the fundraising potential within some definite time frame.

One specific issue to consider, because it frequently comes up, is to fully understand the relationship between how much the organization spends on fundraising and how much it raises for program. I always found it difficult to be told that the organization would be cutting the draft budget by 15 % across the board to help manage the gap.

If we assume that the line items in the Development budget are carefully considered to enable specific positive ROI outcomes, arbitrarily cutting 15% should have consequences for the ROI as well. In other words, cutting 15% from Development has the potential to make the gap WIDER. Again, it is important to be looking farther out that just one year. If fundraising investments now mean that we will have a bigger budget next year, that investment might be easier to swallow.

A great example of this is with direct mail marketing for new members. It costs money to recruit new donors, and the amount could be substantial. But if, ten years from now, we can show that the ROI on that investment is $800 or more per new member recruited (not including planned giving), the costs are easier to appreciate.

Now seen as a whole, I’d love some feedback on this planning sequence. Has this been helpful?

Cheers,

-da

Photo by Kace Rodriguez courtesy of Unsplash.com.

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Fundraiser’s Almanac
Here’s what I’ve been thinking about for November. What are YOU thinking about?

Fundraising Planning for 2017

For me, November is my planning month. My appeal is long gone, my grants are out, and the few personal visits I have left are scheduled and happening. It’s time to set the stage for next year.

Last year, about this time, I posted on how to grab a first take on what might be a reasonable goal for next year based on this year’s work. You can find that post here: Annual Giving. I also posted on using a Planning Calendar, and a fanciful Dream of Board Fundraising – Getting board members started building relationships with donors next year. (Hint: start by asking board members to call people making gifts this year to say Thank You.)

Giving Thanks

If you’ve managed your work well this year, you should get to spend a great deal of time between Thanksgiving and the Superbowl party writing Thank You letters. Here’s a refresher:

• Remember that your thank you letters can and should carry your annual communications theme, too.
• Get your thank you letters out right away. My aunt used to say that the value of a thank you note is reduced by half for every day that goes by. Aim for either the same day or the next day.
• Mention the specific amount of the gift unless your organization will be sending a separate receipt. And if the actual gift was not cash, always describe the actual gift rather than assigning or declaring a value for it. Thank them for their gift of “100 shares of XYZ stock,” or the “twelve conference chairs,” or whatever.