Donors Give to Success Not Distress

by goldenburggroup

Donors Give to Success Not Distress

by goldenburggroup

by goldenburggroup
Everybody Loves a Winner

In 2013, the Houston Astros lost 69% of their games, resulting in the team’s worst season history. That year, the team averaged just 20,394 fans at each home game. Just four years later, the Astros won 62% of their regular season games and enjoyed average attendance of 29,675.  That’s a 45% increase in average attendance as a result of the team’s 2017 winning season (which included winning the World Series).   It’s a simple fact: sports teams experience better paid attendance when they have a winning season.

Just as baseball teams have more fans when they are on a winning streak and fewer fans when they are on a losing streak, your not nonprofit organization has more financial supporters when you demonstrate successful programs, sound management, and prudent governance.  The reverse is also true: your charity has fewer financial supporters when you communicate that your programs, management, or governance is in distress.


You Might Be Saved But You Won’t Be Respected
Every few years, I will see a fundraising letter that starts “If we do not raise $25,000 by next month, we will be forced to close our doors”, and these letters stab my heart with pain. The solicitation letter tells me that a financial crisis is endangering programs, but the letter rarely provides a forthright examination of (a) how the organization reached the point of crisis and (b) the organization’s long term plan for overcoming the crisis.

This desperate plea for help may raise the $25,000 necessary to keep the doors open but it does not improve the long term prospects of the organization. In fact, the nonprofit is quite likely to be in the same position during the next cash crisis. Additionally, once major donors and foundations make contributions to prevent bankruptcy, it will be many years before they will . . . .
. . . . consider the organization a prudent investment for capital gifts
. . . .  feel comfortable making undesignated funds
. . . . include the organization in their estate plan


If You Really Are In Trouble

If your organization has a sudden need for $25,000 to remain viable, it is okay to approach major donors and foundations for support if you follow these rules:

#1: Create a plan
The plan doesn’t need to have the complexity of a full strategic plan, but it should thoroughly and candidly outline the factors causing the crisis, the proposed steps for overcoming the immediate crisis, and the plan for avoiding a similar crisis in the future.

#2: Carefully select the people to solicit
This is likely not the appropriate time to broadly solicit donors by mail or email. Instead, brainstorm the major donors who might be willing to consider a gift and develop a gift pyramid. If you need to raise $25,000, for example, your gift pyramid may look like this:

Keep in mind that you probably need to brainstorm twice as many prospects as gifts at each level. As an example, in order to get two gifts of $5,000 each, you may need to start with four donors that have the capacity to give at that level.

In selecting these prospective angels, choose people who care deeply about your mission, will keep your solicitation confidential, and are willing to provide candid and honest feedback.

#3: Meet with the prospect
Meet with the prospect, and treat them like a major investor in your organization (because they already are or you are about to ask them to become one). Be forthright about the organization’s strengths (such as strong program outcomes) and the weaknesses (perhaps fundraising or cash flow management). Treating them like a major investor also means you will share the plan and ask for their candid feedback. It also means you will listen to their advice and consider ways you can incorporate it into the actual plan.

Like a major investor, the prospect may point out how some of the assumptions in your plan are unrealistic. While this may be incredibly difficult to hear, don’t get defensive about it. Instead ask the prospect how they would change the plan’s assumption and resolve the pending crisis. It’s a tried-and-true fundraising maxim “If you want advice, ask for money. If you want money, ask for advice”.

Toward the end of the meeting, ask the prospect if you can share the revised plan in a week and gauge their level of support.

#4: Incorporate your prospect’s advice
Using the free consulting advice received from your prospects, incorporate their advice into the plan and develop a final document.

#5: Solicit your donor
When you share the revised plan with the donor, it is also time to solicit them. Since you are asking the donor to help the organization during a difficult time, clearly state how the organization will operate differently to avoid another crisis and share how you will report progress back to your donor.

#6: Follow through on your commitments
Call or meet with your donors at the intervals promised to give them frank updates on the organization’s progress.  Since all plan implementations face obstacles, also share those roadblocks and ask for advice on navigating around them. By the end of the six or twelve month plan, you will have a stronger organization and even better relationships with your major donors.

  • Detail how your organization reached this point
  • Detail the proactive steps your organization will take to fix the underlying issues
  • Project your organization’s success in overcoming adversity
  • Remain Positive
  • Ask major donors and foundations for feedback on the plan
  • Act on their advice before soliciting them

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