Nonprofit Fundraising 101. Heyman Darian Rodriguez

channels and tactics, enabling you to make informed decisions when creating your fundraising plan. But before you dive in, remember to take stock of what you have going for you and your cause, and to look at what you’re already doing successfully if you’ve already launched the organization. Your plan is a living document wherein you’ll spell out your proposed recipe for success, and its goal is helping you focus on your strengths, while challenging you to identify new opportunities. Be mindful of the resources you have and don’t stretch them too thin, but also bring an open mind to considering assets you’ve underutilized or ignored and look at how you can put them to work.

      To learn more about the basics of creating a nonprofit fundraising plan, I sat down with Andrea McManus, president of the nonprofit consultancy The Development Group, and she outlined the six things you need to know to succeed when creating an effective fundraising plan.

Critical Skills and Competencies

       1. Understand the Big Picture

      Creating a fundraising plan means answering two basic questions: How much money do you need to raise? and Who do you plan on raising it from? In your plan, you’ll create realistic program goals based on the expenses of running your programs and organization today – assuming you have some past experience with the work – as well as aspirational goals that inspire your team by clarifying exactly what kind of additional impact is possible if you secure even more resources and support.

      Your plan will also be a vehicle for detailing your sources of revenue and how much income you expect from each, whether it’s individual donors, corporations, foundations, the government, or earned income. It is critical to have multiple, diverse sources of revenue, so that if you unexpectedly lose one, you still have others to rely on.

      Once you’ve identified your revenue sources, perhaps benefiting from the rest of the book to determine which channels are most appropriate for you, you’ll articulate your strategies and tactics for each source. If you plan to raise money from individuals, will you be cultivating and asking major donors, running an annual fund, doing direct mail, online fundraising, or utilizing other approaches? Will you be soliciting businesses and corporations for gifts of cash or in-kind donations? While many of the remaining chapters of this book, especially those related to marketing and donor communication, propose a “less is more” style, when planning for success, the more detailed your vision, the more likely you are to succeed.

       2. Know Your Finances

      Now that you have a sense of everything your fundraising plan is meant to accomplish, and some of the various sections it will include, let’s get into it. Knowing how much money you need to raise starts with good financial planning. You can’t create a fundraising plan without a budget. How much does the work you do cost? What are your programmatic, fundraising, and overhead expenses? Once you know your expenses, you need to figure out how you will pay for them; in other words, how will you raise the money to pay for them? And don’t forget that fundraising itself costs money. You can’t raise money without spending money.

      Dispelling the Overhead Myth

      At least in the United States, the IRS dictates that all nonprofit expenses be classified as either program, fundraising, or administrative. This adds not only an extra layer of bookkeeping, but also creates some difficulties with fundraising, since some donors and funders will ask for their contributions to be allocated only for programs. Others still will want to know whether more than 80 percent of the funds you raise go toward programs, a common industry benchmark.

      Part of your job as a fundraiser will be using the tactics outlined in this book to convey the importance of not just some of your work, but all of it. Just as you cannot provide medical attention only to the lungs and expect someone to stay healthy, you’ll need to refine your ability to make the case for “general operating support” or “unrestricted gifts,” both of which are discussed in detail in the sections on individual donors and foundations.

      For now, we’ll focus on dispelling the notion that staff payroll, rent, and utilities should all be categorized as overhead. Not true: the staff time spent implementing programs is a program-related – not an overhead – expense. The way to calculate overall payroll allocations, which are also used for rent and utilities, is as follows:

      • Have staff members break down how they spend a typical week in a spreadsheet. No need to get too specific; simply create 8 to 12 “buckets” for their time, for example, client meetings, fundraising calls, answering email, etc.

      • Assign a time estimate for how many hours of each week is spent on each bucket; an average over time is sufficient.

      • Allocate each bucket: What percentage of that activity relates to programs, versus fundraising, versus purely administrative details?

      • Based on this, you can use a fairly simple spreadsheet formula to figure that employee’s overall allocation, that is, what percentage of his or her time is spent on programs versus fundraising versus administrative duties.

      • After doing this for each paid staff member, you can factor in each person’s compensation to weight his or her personal allocation, and then combine everyone into an overall staff allocation.

      • Use this same allocation for staff-related expenses, such as benefits, rent, utilities, and so forth.

       3. Create a Process

      Developing an effective fundraising plan cannot be done in a silo by the fundraiser alone. Involve your executive director, senior staff, and board members. Assemble your team and outline the process you’ll go through to create the plan, so everyone knows what to expect. Here are the steps McManus suggests:

      1. Assess your environment, both internally and externally. Internally, look at things like organizational priorities, programs, and resources, including staff, technology, and capabilities. Capabilities should include expertise in fundraising, marketing, and other key areas. Externally, discuss things like fundraising trends, best practices, industry benchmarks, and how peer organizations (those doing similar work with similar budgets) are succeeding at fundraising.

      2. Assess your donors, both current and aspirational. What kind of support can you conservatively expect from your current donors and prospects? What does your current donor base look like, and what do you want it to look like? Gaining a realistic sense of how much money you can raise from your base, combined with other potential strategies, will enable you to determine the feasibility of the financial goals you’ll tackle later in the discussion.

      3. Outline your goals. In order to achieve the impact your organization envisions, what kind of fundraising infrastructure and results are needed? A couple examples are included below to help kick-start your discussion, but don’t just think about financial targets from different channels, although those are certainly crucial. Consider also the kinds of capacity that you as an organization need to build to thrive, for example, increasing board participation in fundraising and contributions; launching your first successful crowdfunding campaign, etc.

      4. Identify your objectives. What are the three or four (or more) things you need to accomplish in order to achieve the big-picture goals and strategies you’ve outlined? Break down the goal into the elements required to ensure it happens. Again, some examples to get you thinking are below.

      5. Identify your tactics. This is where you get into the nitty-gritty details, breaking down each objective one more step. In other words, the who, what, when, where, and how. Who will you be raising money from, and how? What are the concrete actions that need to occur to achieve your objectives? Be very specific and include measurable goals, such as: We will apply for six grants from private foundations by the end of the second quarter.

      6. Identify your budget and resources. How much will it cost to raise this money, and who will do it? Do you have the necessary tools in place, including a CRM platform, staff, subscriptions to foundation or donor prospecting databases, marketing and communications support, an online fundraising platform, etc.?

      Once you’ve outlined your process, assign