FUNDRAISING. High Divide Workshops Dillon, Montana February 6, Don Elder, TREC

Transcription

1 FUNDRAISING High Divide Workshops Dillon, Montana February 6, 2015 Don Elder, TREC

2 This morning s topics Building a healthy fundraising culture for your group Building the amounts and types of revenue your organization needs Projecting revenues responsibly This afternoon s topics Identifying major donor prospects Cultivating major donor prospects The Ask

3 I was in it for conservation, not fundraising!

4 I decided To do all the fundraising, so no one else had to do any To do just enough to keep the lights on, and get back to conservation work asap That if we did enough great conservation work, the money would find us

5 Some dangerous ideas aren t all wrong Great program works attracts money so focus on great program work Money, once attracted, sticks around

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7 Developing a healthy fundraising culture for your organization Don t go it alone. Steadily build your team. Lead by example, with enthusiasm. Start with those who are already willing. Gradually bring all the others along. Bring on fundraising calls Ask to help prepare or distribute materials Get help with events Get help with thank yous Etc Be persistent and patient culture change takes time.

8 Building reliable streams of revenue (of the kind your organization needs)

9 Seven basic types of revenue to consider 1. Events 2. Fees and contracts 3. Government grants 4. Foundation grants 5. Membership 6. Major donors 7. Bequests

10 Seven considerations for each type of revenue Size potential Effort Return on investment (ROI) Mission fit Flexibility Reliability Other

11 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement.

12 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times.

13 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times. Gvt grants L-H H M L-H L L Nice work if you can get it and if it is a mission and capacity fit. Almost always a lot of red tape, though.

14 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times. Gvt grants L-H H M L-H L L Nice work if you can get it and if it is a mission and capacity fit. Almost always a lot of red tape, though. Fnd grants M-VH M L-M L-H L-H L-M Some fnds will help launch new projects. Others round out existing ones. Others provide general support. Get to know your foundation friends and study their guidelines every year!

15 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times. Gvt grants L-H H M L-H L L Nice work if you can get it and if it is a mission and capacity fit. Almost always a lot of red tape, though. Fnd grants M-VH M L-M L-H L-H L-M Some fnds will help launch new projects. Others round out existing ones. Others provide general support. Get to know your foundation friends and study their guidelines every year! Members L-M M L H H H Also source of future volunteers, major donors, bequests, board members, and political clout.

16 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times. Gvt grants L-H H M L-H L L Nice work if you can get it and if it is a mission and capacity fit. Almost always a lot of red tape, though. Fnd grants M-VH M L-M L-H L-H L-M Some fnds will help launch new projects. Others round out existing ones. Others provide general support. Get to know your foundation friends and study their guidelines every year! Members L-M M L H H H Also source of future volunteers, major donors, bequests, board members, and political clout. Major donors M-H M-H M-H H H M-H Can be important source of political clout, board members, etc. May be best source for emergencies and great opportunities.

17 Revenue Streams: Pros and Cons Size Effort ROI Mission Fit Flexibility Reliability Other/comments Events L-M M-H L-M M-H H L-H PR, membership development, volunteer involvement. Fees and contracts M M M L-H L L Can round out revenue stream & keep key program positions funded in lean times. Gvt grants L-H H M L-H L L Nice work if you can get it and if it is a mission and capacity fit. Almost always a lot of red tape, though. Fnd grants M-VH M L-M L-H L-H L-M Some fnds will help launch new projects. Others round out existing ones. Others provide general support. Get to know your foundation friends and study their guidelines every year! Members L-M M L H H H Also source of future volunteers, major donors, bequests, board members, and political clout. Major donors M-H M-H M-H H H M-H Can be important source of political clout, board members, etc. May be best source for emergencies and great opportunities. Bequests M-VH L VH H M-H VL Can t possibly predict. But can stake odds in your favor over time with good habits. Great for reserves, endowments, strategic investments, etc.

18 Typical scenario: Restricted revenue YR 1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10 Fees/contr acts Gvt grants Fnd grants SUBTOTAL

19 $K Typical scenario: Restricted revenue Fnd grants Gvt grants Fees/contracts YR 1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10

20 Typical scenario: Unrestricted revenue YR 1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10 Events Members Major donors Bequests SUBTOTAL

21 $K Typical scenario*: Unrestricted revenue * For a group that makes growth of unrestricted revenue a priority Bequests Major donors Members Events YR 1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10

22 $K Total revenue 900 Total revenue RESTRICTED UNRESTRICTED YR 1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10

23 Developing annual fundraising plans that work Annual plans Every group should have one. It should not be an afterthought.

24 Key elements of a good annual fundraising plan A comprehensive list of current donors, organized by category (can be an attachment to the plan) A projection of revenue results (for each major category of revenue) An ambitious fundraising goal and a reasonably conservative budget recommendation A memo explaining the assumptions and rationale behind the projections A list of key responsibilities A list (perhaps in calendar format) of key activities

25 Revenue Projections

26 How do households budget?

27 How do businesses budget?

28 How do agencies budget?

29 How do most nonprofits budget?

30 How do most nonprofits reconcile differences between projected revenues and expenses?

31 Problems that result

32 Nonprofit realities Uncertainty about revenue. Varying requirements of restricted revenues.

33 Consequences of underestimating revenue Unnecessary cuts Loss of momentum Loss of confidence

34 Consequences of overestimating revenue Green light for spending Delay of hard decisions Setup for fiscal crisis

35 Ten Good Practices To guide revenue projections. To explain them. To keep them current.

36 Good practice #1: Begin early!

37 When the budget process gets rushed.

38 Begin revenue projections early! Working backwards Revenue projections developed. Rationale documented. SEP OCT NOV DEC JAN Expense budget developed. Key options and decisions identified. Decisions made. Draft budget balanced. Staff presents to Finance Committee. Board approves budget New fiscal year begins

39 Good Practice #2: Break your revenue projections into major categories. Foundations Individuals Businesses Fees and contracts Events TOTAL

40 Good Practice #3: Develop an 18-month view FY15 FY16 MONTH JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $K

41 THE 18-MONTH REVENUE VIEW Going forward, to simplify your life and improve your projections, update at least quarterly FY13 FY14 MONTH JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $K FY13 FY14 FY15 MONTH OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR $K FY14 FY15 MONTH JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN $K FY14 FY15 MONTH APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP $K FY14 FY15 MONTH JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $K

42 Good Practice #4: Be clear and conservative with your assumptions. No rose-colored glasses!

43 Good Practice #5: Run your revenue projections at least three different ways

44 Four methods to consider Select and adapt according to your situation: Simple macro-level projection Renewals + new gifts Handicap method Projections by subcategory

45 Simple macro-level projection Step Consider overall results for last three years. Identify special considerations. Project next year s results. Example We raised $400K overall two years ago, $550K last year and $500K this year. Last year we received a onetime $100K gift. Excluding it, our results for the last three years were $400K, $450K and $500K. If recent trends continue, we should be able to raise $550K this year.

46 Renewals + new donors Step Example Result Identify renewable gifts. Multiply by reasonable renewal rate. Determine reasonable expectation for new donors. This year 50 donors made gifts totaling $500K. Of those, 10 totaling $80K were one-time gifts. The other 40 totaling $420K were gifts to our annual fund that we have a good chance of renewing. Our renewal rate for these types of gifts in recent years has been 80%. To be safe, we will assume a renewal rate of 70% next year. Our results for new donors for the last three years have been $70K, $85K and $100K. We expect the pace of growth to increase this year due to a major new campaign beginning now. We believe we can raise $125K or more next year, but to be safe we will assume only $115K in our budget. $420K x 70% = $294K $115K TOTAL $409K

47 Handicap method Donor Ask Likelihood Projection Jane Doe $100,000 60% $60,000 John Hancock $60,000 50% $30,000 Mary Green $50,000 70% $35,000 Bill White $25,000 90% $22,500 Etc (All other major donors and prospects) $1,100,000 $531,000 $100-$249 donors $60,000 80% $48,000 $1-$99 donors $40,000 90% $36,000 TOTAL $1,435,000 $762,500

48 Projections by subcategory Individual donor category (# current donors) This year (projected year end) Projection for next year $100K & up (1) $100K 0 $25K-$99K (5) $175K $225K $10K-$24K (12) $150K $180K $1K-$9K (25) $35K $70K $250-$999 (75) $25K $35K $1-$249 (600) $15K $20K TOTAL $500K $550K

49 Good Practice #6: Express projections in terms of confidence levels

50 Three confidence levels 20% 50% 80%

51 Suppose we: Renew all our major grants and get three new ones (+3 net) Odds Results ($K) 20% 600 Increase our membership renewal rate to 85% 20% 170 Increase our business revenue by 50% 20% 150 TOTAL 20% 920 Renew all but one of our major grants and get two new ones (+1 net) 50% 500 Maintain our membership renewal rate at 75% 50% 150 Increase our business revenue by 25% 50% 125 TOTAL 50% 775 Renew all but two of our major grants and get only one new one (-1 net) 80% 400 Renew at least 70% of our members 80% 140 Increase our business revenue by 10% 80% 110 TOTAL 80% 650

52 Good Practice #7: Make a clear distinction between a budget recommendation and a fundraising goal

53 Budget recommendation vs. fundraising goal LIKELIHOOD 80% 50% 20% Individuals <$250 $18,000 $20,000 $22,000 Individuals $250 & up $40,000 $60,000 $100,000 Businesses $25,000 $30,000 $40,000 Events (net) $10,000 $12,500 $15,000 Foundations $250,000 $300,000 $600,000 TOTAL $343,000 $422,500 $777,000 Budget recommendation Fundraising goal

54 Good Practice #8: Support ambitious fundraising goals with solid fundraising plans

55 Good Practice #9 Be prepared for some give and take in the budget process

56 Good Practice #10 Provide regular updates as your projections are refined over the course of the year.

57 Recap: Ten Good Practices for Better Revenue Projections 1. Begin early and start the budget process with your initial revenue forecast. 2. Break your revenue projections into major categories. 3. Develop and maintain an 18-month view. 4. Be clear and conservative with your assumptions and document them 5. Run projections at least three different ways. 6. Express projections in terms of confidence levels. 7. Make a clear distinction between a budget recommendation and a fundraising goal. 8. Support ambitious fundraising goals with solid fundraising plans. 9. Be prepared for some give and take in the budget process. 10. Provide regular updates as your projections are refined over the course of the year.

58 May your revenue ride become less like this

59 And more like this -- a pleasant float down a beautiful, placid river!

60 Questions? Discussion? Requests? Don Elder