It Takes Money To Raise Money

Our client had a conundrum.  His organization needed a better landing page.  The one they had was unattractive, not intuitive and difficult to navigate.  However, he knew that most people who went online to give had already made the decision to support the organization; online was just a method that seemed easiest to them.

“Should I,” he asked, “be spending our donors’ money for a better giving page?  Wouldn’t they rather their money go directly to programs and not to what is essentially overhead?”

So we are told.  But if a better landing page made giving the joy we want it to be, isn’t that value added for our donors?

Another client feels strongly that her development director needs an assistant, but the money for that would come from unrestricted charitable gifts—and shouldn’t that money go to support their mission rather than making things easier for staff?

We see this daily.  Nonprofit managers agonizing over how much they can spend on the things that make fundraising better.  Should they have a well-designed brochure, or one that is less expensive?  More staff to provide more personal touches for donors?  Better tools for research, design.  Salaries that actually pay a living wage and reflect the job the staff is doing?

To me, the answer is a clear yes.  Or rather, YES!  Raising money isn’t cheap.

Interestingly enough, those who rail against spending money for overhead or operations never seem to have the same qualms about the cost of a special event.  That, they seem to think, is only giving donors their due.

But suggest that we give our development director a raise, hire someone to assist the marketing manager, get new software, and all of a sudden percentages are trotted out.  For reasons I don’t accept, we are supposed to spend a minimum of 75% of our budget on programs.  Without considering how much more of a budget we could have if we spent the money to raise more money.

You just have to look at the numbers.

Every year, the Fundraising Effectiveness Project (FEP) points out that donor attrition is huge.  In 2016, for example, every $100 gained was offset by $95 in losses.  For every 100 new donors, 99 were lost through attrition.  The nonprofit sector, clearly, is on a treadmill, running very fast to stay in place.

But drill down further and you note that the larger the organization, the less the problem of donor attrition.  Organizations with gross revenue over $5 Million grew by over 14% in gifts while those under $100,000 (which is where a huge percent of nonprofits sit), lost over 10%.

Size matters because the larger (in terms of fundraising revenue) your organization, the bigger your staff, the more your resources, the more you can be effective.

To us that signifies that instead of focusing on what you are doing, you should be considering what you could be doing.  If one development officer can bring in $200-300,000 a year, how much more could 2 or 3 be adding?  And if that development officer had administrative support so most of his or her time was spent in identifying, cultivating, soliciting and stewarding donors, how much of a financial difference would that make?

Huge, we think.  And our thinking is very informed by experience.

Almost anything worth doing has a cost.  Raising money for your organization is definitely worthwhile.  But doing it on the cheap will not have the kind of results that will transform your organization.

To raise money, you need to spend money.  You must think big.  You must be bold.  And you must invest enough to make a real difference

Janet Levine 

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