The $5 Million Dollar Chocolate Bar
For much of the country when they hear the word fundraising they think of those fundraising chocolate bars people sell for different causes-especially for schools. I am an old guy, so I remember when they were size of a brick for a dollar. Now they're the size of a thick pencil. Ok, that’s an exaggeration, but you get the point.
Those chocolate bars are a great analogy for what most small- and medium-sized nonprofits are mired in when it comes to "fundraising". Auctions, galas, crowd funding, sales and many other gimmicks and fads—that’s top of mind for far too many of us. With all the hype about crowd funding, I still haven't seen the kind of game changing campaigns that are needed to raise millions. Crowd funding is a great way to create attention and make people feel included but the central question is if you have limited staff time for fundraising, is it the best use of that time?
Crowd funding fits our transactional online world we live in. It's relatively easy and there is the semblance of community. But if you want a $5 million dollars in new giving you’re going to have to build relationships with actual non-virtual people. You’re going to have to look them in the eye and say an amount. The same question goes for galas, auctions, and sales etc….is this the best use of your time? Is there a solid return on investment? Are you building relationships? Here are two ways you can spot that you’re wasting your time with a bad fundraising strategy:
Why do people continue these methods? Because it's all they know. Sometimes all they have are volunteers who are reluctant to ask for money, and with some of these smaller, faddish activities like galas and crowd funding, you don't have to have the challenging, intense responsibility to ask for large amounts of money. People say to me it doesn't cost me anything I use my volunteers. I ask them what if they trained their volunteers to be a major gifts team?
I believe even nonprofits with a one-person development department can have a major gifts program. The essential components are research/identification, qualification, cultivation and stewardship. Asking your friends for $1,000 each isn’t a Major Gifts strategy. Prospect Research is crucial knowing exactly who can be your stakeholders making fundraising easier.
I was thrilled to see a recent survey/study by the software company Bloomerang about this exact subject. https://bloomerang.co/blog/data-the-2015-state-of-major-gift-fundraising/ I get that it’s not a scientific study, but a survey but the data was compelling. It lines up with my 30 years of observation so I am betting it’s probably “spot on” as the Brits would say. The survey of 727 nonprofits has a couple of alarming numbers, namely that close to 60% of participants have no Major Gifts strategy. Those of you who have read my articles before know this is my soap box. I would argue that a sound, well supported Major Gifts strategy, properly staffed, is the most cost effective way to raise the most amount of money. Please understand I say this whether a Major Gift for your organization is $1,000 or $50,000.
The main reasons people didn’t have a major gifts program was lack of investment (75.2%)and lack of time (48%). So the question is what are they investing in? What are they spending their time doing? The answer is they are investing in lots of the strategies I just mentioned, with the bells and whistles of crowd funding or galas. Most are focused on the relatively small pool of foundation money out there. Most nonprofit folks feel very comfortable writing a grant and crossing the fingers. Yet the fact is that between 78-82% of philanthropy comes from individuals. Asking individuals for their actual money is just considered unseemly, dirty by many. Let’s face it. The more detached the fundraising method is from actually asking someone for money, the more popular it’s going to be. How many times have we heard someone say and shudder “I could never do what you do for a living”!? I love what I do for a living.
Let’s honor and embrace fundraising. Fundraising is beautiful.
I just had coffee with a young woman starting a nonprofit around domestic violence. Very compelling and powerful work. She hasn’t worked in the nonprofit world before but her advisors were telling her to do an auctions, sponsor designer showcases and do other “fundraising”. They raised her nothing, but she spent her money and time. My advice was simple. Get a prospect researcher to find you the wealthiest philanthropists who are passionate, not interested, passionate about domestic violence. End of story. Get to them, cultivate them, ask them for game changing gifts. From there you can build staff, broaden your fundraising.
There is no $5 million dollar chocolate bar we can sell and raise that money. Take your passion for what your institution does and show it to the right people who share that passion. It’s magnetic and happily it’s contagious. Let’s go raise some money!!
For much of the country when they hear the word fundraising they think of those fundraising chocolate bars people sell for different causes-especially for schools. I am an old guy, so I remember when they were size of a brick for a dollar. Now they're the size of a thick pencil. Ok, that’s an exaggeration, but you get the point.
Those chocolate bars are a great analogy for what most small- and medium-sized nonprofits are mired in when it comes to "fundraising". Auctions, galas, crowd funding, sales and many other gimmicks and fads—that’s top of mind for far too many of us. With all the hype about crowd funding, I still haven't seen the kind of game changing campaigns that are needed to raise millions. Crowd funding is a great way to create attention and make people feel included but the central question is if you have limited staff time for fundraising, is it the best use of that time?
Crowd funding fits our transactional online world we live in. It's relatively easy and there is the semblance of community. But if you want a $5 million dollars in new giving you’re going to have to build relationships with actual non-virtual people. You’re going to have to look them in the eye and say an amount. The same question goes for galas, auctions, and sales etc….is this the best use of your time? Is there a solid return on investment? Are you building relationships? Here are two ways you can spot that you’re wasting your time with a bad fundraising strategy:
- 1. What’s your “True ROI?” This means how much does that strategy cost you? Does your gala cost $600,000 and you raise $1,000,000? Most importantly did you count staff time? Most people trumpeting how much they raise with these strategies rarely count staff time. Harder to measure is what if that same staff time was used for a more lucrative strategy? How much are you actually raising now, or even losing?
- You’re creating only superficial, one-dimensional relationships. Great fundraising is simply building powerful relationships. If your fundraising isn't building relationships, you’re not fundraising at your true capacity. There is nothing more valuable than a strong real relationship with a major donor for your institution. That’s simply a lot harder to build online. If you have a successful Major Gifts program and some transactional fundraising to complement it, then fine, good for you. But the most important investment is in long-term major giving leading to transformational gifts.
Why do people continue these methods? Because it's all they know. Sometimes all they have are volunteers who are reluctant to ask for money, and with some of these smaller, faddish activities like galas and crowd funding, you don't have to have the challenging, intense responsibility to ask for large amounts of money. People say to me it doesn't cost me anything I use my volunteers. I ask them what if they trained their volunteers to be a major gifts team?
I believe even nonprofits with a one-person development department can have a major gifts program. The essential components are research/identification, qualification, cultivation and stewardship. Asking your friends for $1,000 each isn’t a Major Gifts strategy. Prospect Research is crucial knowing exactly who can be your stakeholders making fundraising easier.
I was thrilled to see a recent survey/study by the software company Bloomerang about this exact subject. https://bloomerang.co/blog/data-the-2015-state-of-major-gift-fundraising/ I get that it’s not a scientific study, but a survey but the data was compelling. It lines up with my 30 years of observation so I am betting it’s probably “spot on” as the Brits would say. The survey of 727 nonprofits has a couple of alarming numbers, namely that close to 60% of participants have no Major Gifts strategy. Those of you who have read my articles before know this is my soap box. I would argue that a sound, well supported Major Gifts strategy, properly staffed, is the most cost effective way to raise the most amount of money. Please understand I say this whether a Major Gift for your organization is $1,000 or $50,000.
The main reasons people didn’t have a major gifts program was lack of investment (75.2%)and lack of time (48%). So the question is what are they investing in? What are they spending their time doing? The answer is they are investing in lots of the strategies I just mentioned, with the bells and whistles of crowd funding or galas. Most are focused on the relatively small pool of foundation money out there. Most nonprofit folks feel very comfortable writing a grant and crossing the fingers. Yet the fact is that between 78-82% of philanthropy comes from individuals. Asking individuals for their actual money is just considered unseemly, dirty by many. Let’s face it. The more detached the fundraising method is from actually asking someone for money, the more popular it’s going to be. How many times have we heard someone say and shudder “I could never do what you do for a living”!? I love what I do for a living.
Let’s honor and embrace fundraising. Fundraising is beautiful.
I just had coffee with a young woman starting a nonprofit around domestic violence. Very compelling and powerful work. She hasn’t worked in the nonprofit world before but her advisors were telling her to do an auctions, sponsor designer showcases and do other “fundraising”. They raised her nothing, but she spent her money and time. My advice was simple. Get a prospect researcher to find you the wealthiest philanthropists who are passionate, not interested, passionate about domestic violence. End of story. Get to them, cultivate them, ask them for game changing gifts. From there you can build staff, broaden your fundraising.
There is no $5 million dollar chocolate bar we can sell and raise that money. Take your passion for what your institution does and show it to the right people who share that passion. It’s magnetic and happily it’s contagious. Let’s go raise some money!!