Mythbusting Fundraising

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By Jayson Morris, Peery Foundation

(Original post here.)

Last week, I sat down with Jane Leu – founder of one of the first social entrepreneur models, Upwardly Global, and current Founder & CEO of the social enterprise services organization Smarter Good – to have a general catch up, but the theme that quickly took hold was the common misconceptions that we see in our jobs daily. Jane and I both spend many hours every week talking to nonprofits, including numerous conversations that revolve around the same challenges – debunking myths around fundraising and hiring that seem to plague many of our partners and friends in the field. As part of our prep for this blog, Jane uncovered a fantastic study that just came out entitled Underdeveloped: A Study of Challenges Facing Nonprofit Fundraising,[1] which enriched our perspective (and provided the supporting graphs).

Here are a few of the myths that we felt most strongly about:

Myth 1 – Your First Development Hire should be a Development Director.

Many younger organizations default to hiring a Development Director (or equivalent senior fundraising specialist) as the first step in expanding beyond the Founder/ED handling the fundraising singlehandedly. This can work for some, but the reflexive notion can be problematic. Dev Directors are expensive (at least $100-125k often with a $30k search firm fee to boot), very tough to find – as evidenced by the graph below, and at times are much more than you need.

Rather than default to this mode, take some time to really think about your fundraising strategy for the next two years and what your specific needs are.  Your first hire could be a Development Associate (my personal favorite because a good one can do the grunt work and more mid-level stuff… and grow into a more senior role), a Major Gifts Officer, a Grant Writer, even an Executive Assistant – it all depends on what you need most right now and in the next 6-18 months.

A common response is: “I need the Development Director to devise this strategy first.” That indeed can be valid for some, but it might be a limited perspective. When pressed, the ED can often articulate the top fundraising priorities for the next year or so (there’s your strawman fundraising strategy). At times, hiring a consultant to help with the strategy is a cheaper, more immediate alternative and gives you the confidence to hire for what you really need.

We are not saying “don’t hire a Development Director.” Just think about what you truly need and be realistic about how long it might take to get this person in place.

Myth 2 – You Can Find a Unicorn.

Not only do most nonprofits default to hiring an expensive Development Director, they expect this person to be able to do everything – which is both unrealistic and unfair to everyone involved. Expectations often include most or all of the following:

1)     secure major gifts from individuals

2)     work seamlessly with corporate and foundation partners;

3)   be a compelling grant writer as well as write emotive newsletters and annual      reports;

4)    be great with numbers;

5)     do both strategic work and grunt work;

6)    be a visionary with overflowing passion;

7)     have strong managerial skills…. etc. etc.

So let me throw this out there – unicorns actually do exist… I’ve seen them! But they are exceedingly rare. They can take upwards of a year plus to find – and typically do not leave their existing roles to simply join another organization to do the same thing. More than likely, you will have to prioritize what is most important to you in terms of fit and strengths, and invest in developing the other aspects that may lacking.

Here’s the thing – you really should go in with these grounded expectations rather than believing in unicorns. The Underdeveloped study showed that: nearly one in three executives are lukewarm about, or dissatisfied with, the performance of their current development directors and more than 25% of ED’s fired their previous Dev Director, usually due to poor performance or lack of a cultural fit.[2]  A good portion of this is certainly due to lack of clarity on what you really need and unreasonable expectations of what can be delivered, as well as something we will get to below – a conducive fundraising culture.

Understanding what your organization’s unique needs are for the next couple of years and figuring out your must-haves ahead of time will save you a lot of pain adjusting the job description months into the hiring process, waffling on candidates, wasted interviews, and mis-hires. And maybe you decide you must have the unicorn, but be prepared to look for ~12 months and still make sacrifices somewhere.

Myth 3 – Seasoned Fundraisers from Universities or Large NGOs are Ideal

Younger/smaller organizations often salivate when they see resumes from experienced development professionals that have raised millions at Stanford or with Save the Children (insert any university or NGO here). However, the transition from a well-oiled fundraising machine to a roll-up your sleeves, do-everything nonprofit rarely seems to work. Behind the big numbers on the CV, you have to look at the whole team behind the ask (and who actually made the ask), the caliber of the donor pool for that org, and the candidate’s willingness to truly give up all the support staff to become a one-man band. I have seen a couple Major Gifts Officers make the transition to social entrepreneur orgs that already have a Dev Team, but not when they lack support staff.  Unfortunately, we’ve both witnessed this wishful thinking fail a number of times and set the org back 6-12 months.

Rather than be wooed by numbers, you should look/listen for her role in the process, what are the most challenging funds he raised, his grit and tenacity, and what her passion is for your specific mission. To me passion and connection are the most important pieces, as they will separate the hired guns from those who are deeply connected to the mission – and more likely to stay… and as you can see by the graph, the shelf life for a typical Dev Director is remarkably short.

To test for passion and connection, the question that I always ask is for the candidate to give me a one-minute elevator pitch based on what they know (you would be baffled at how many seasoned fundraisers with fantastic looking resumes either have a tenuous connection to the mission, an inability to speak passionately about the organization, or both).

Myth 4 – The Rolodex.

I can’t tell you how many ED’s have told us that their board wants a fundraising professional with a big rolodex. Jane and I racked our brains and could only come up with a couple of examples of where a fundraiser actually brought a relationship that led to a meeting or proposal, and none that actually led to a grant. Why? Because there are so many other elements to the equation: the interest areas of the donor prospect, whether they have additional funds to contribute beyond existing commitments, how much the new organization and its leadership resonate, the size and geographic scope and impact fit, etc. etc. etc. I was just talking to a former colleague from Room to Read who went to another young social entrepreneur start up org and had the same experience I did when I tried to convert existing relationships into donors to her new org. She said: “they all just told me that they were excited that I landed in a new and interesting place [and none expressed interest in partnership with the new org].”

If anyone out there knows of the rolodex strategy working, please comment. We would love to be wrong on this one.

Myth 5 – The “Do-it-yourself” Development Director 

“All too often, nonprofit organizations pin their hopes and dreams for fundraising on one person—namely, the development director…. Fundraising can’t be a priority for just one individual. It has to be a priority, and a shared responsibility, for the board, the executive director and the staff alike.”

– Underdeveloped Study

ED’s and Boards often hope their first Dev hire will handle all of the fundraising, freeing the ED from this burden entirely, operating as a lone wolf in the organization, and absolving the board of the need to help. The reality is far from this. Big funders/prospects will ALWAYS want to talk to the ED and the ED will likely need to make a lot of the asks (unless you become a big org), a Board should always be a key component of fundraising, and all staff should share some awareness and even ownership to support the fundraising goal. According to Underdeveloped:

Development experts have long cautioned that having a skilled development director is not enough. Beyond creating a development director position and hiring someone who is qualified for the job, organizations and their leaders need to build the capacity, the systems, and the culture to support fundraising success. Among the signs that an organization is up to the task:

1)     It invests in its fundraising capacity and in the technologies and other fund development systems it needs;

2)    The staff, the executive director, and the board are deeply engaged in fundraising as ambassadors and in many cases as solicitors;

3)    Fund development and philanthropy are understood and valued across the organization; and

4)     The development director is viewed as a key leader and partner in the organization and is integrally involved in organizational planning and strategy.

 The study goes on to say that 41% of nonprofits surveyed do not have this type of organizational culture that supports fundraising, which contributes to the failed expectations and high turnover in the role.

Thus it is important to set appropriate expectations for everyone contributing to development, and for the ED and the Board in particular to realize that there is a role for them to continue to play… BEFORE you hire your Development Director.

Myth 5 – The Field of Dreams: If you build it, they will come.

Orgs come to of us with plans to significantly diversify their fundraising base to include new sources such as major donors, retail, or corporate… sometimes all of the above, all at once. Often the diversification strategy gains steam at the time of a development staff hire, and this expectation is layered on the new Dev hire.

When asked about diversification strategies, my first question is “why?” quickly followed by “what indicators do you have that show this is feasible?” The first question is usually either due to ED concerns of long-term sustainability (very valid) or a board mandate (at times valid and at times random). Before investing significant capital or time in developing these diversifying strategies, consider what existing data you have that shows it is plausible:

Want a retail strategy à Do you have tens of thousands of email addresses in your database? Are you going to be on Oprah or have some other viral media hit that will get you these followers? Are you the first mover into an exciting new market (like Kiva was to online micro-lending)?

Want a major gifts portfolio à Have you looked at your existing donor base to see if you have a handful of capable major donors (however you define it)? Is your board ready to open their networks (if they have them) through events/intros? How else are you going to find and connect with donor prospects?

Regardless of the idea for new funding, if you are going to try to diversify, start with little bets to test out the viability and potential costs before going all in. Try to bring in one corporate donor before declaring you are going to make corporate giving a strategy. Plan one major donor event with one of your board members and see what gifts/leads come out of it before committing to blowing out a major gifts program.

Myth 6 – A New Hire Will Bring in the Money in 6 Months.

Both Jane and I have seen numerous ED’s set aggressive, at times ludicrous, goals for a new Development Director, expecting huge returns in 6 months. Sadly, the donor cycle just doesn’t move that fast.

The best we think you can hope for in this time frame is for the new Dev person be handling the existing relationships, progressing the irons that you already have in the fire towards an outcome, and to have a good pipeline of new prospects that he/she is systematically moving through. By the 12-month mark, you are hopefully seeing the return on investment, and if not you need to dig into to exactly why, as there are legitimate reasons for slower growth. However, before that, it’s as important to see the right processes in place, the leads that have been cultivated, and the asks made as it is to see the money coming in.

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There are more myths we uncovered – including the value of submitting cold LOIs – but didn’t explore because this blog is already long enough – thank you to those who stuck it out!

Let us know if you think this is at all useful, what you disagree with, and if you would like to hear more myths like this. Perhaps we will write a part 2.

 

[1] Underdeveloped: A Study of Challenges Facing Nonprofit Fundraising. A Joint Project of CompassPoint & the Evelyn and Walter Haas Jr. Fund. Written by Jeanne Belle & Marla Cornelius

[2] Underdeveloped: A Study of Challenges Facing Nonprofit Fundraising

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