Ready to dip your toe into the waters of individual giving?

Are we in a recession? Yes, no…maybe?...it’s coming…wait, no it’s not. 🤷‍♀️ Ya’ll, I studied economics in college, and I’m super confused (as are a lot of experts, it seems).

You know what, whatever. Whether we’re headed into a recession or we turn around and head the other economic direction, there’s always value in making your fundraising program more sustainable. If not to shore up your organization against any impending economic downturns, then because it gives you more flexibility and freedom to decide your nonprofit’s future. 

What we all know is that the foundation world is still not great at helping nonprofit grantees in the midst of economic uncertainty. While it would be amazing if foundations stepped up to plug gaps in their grantee’s revenues in times of economic trouble, we know that many of them give based on their investment earnings, which tank in recessions. (Vu Le is the master at picking this apart and advocating for change, so rather than dive into that myself, I’ll stay in my lane and send you over to his site to read more. Or you can take this piece from Chronicle of Philanthropy to ask your funders to step up during this downturn.)

But until that magical day comes, nonprofits need to be focused on growing other revenue, and especially unrestricted revenue. 

Let me tell you a tale of two nonprofits…

Nonprofit A had been warned repeatedly by their largest funder that the foundation was sunsetting. The funder, atypically and amazingly, had increased their giving to Nonprofit A for a five year period to help “tie off” their giving–telling them to use it to make sure they could replace their funding after five years. Nonprofit A poured the money into their program work (thinking impressive impact would grow their reputation and therefore attract more donors). By year four, they’d spent out their tie-off grant and were no closer to replacing the funding. So Nonprofit A went back to the foundation to ask for another tie-off grant. Rightly so, the foundation reps were pretty upset. Nonprofit A had had four years and extra cash to figure out a solution…and also the foundation was closing up shop, so it was pretty obvious that they weren’t going to stay open to keep Nonprofit A afloat. At the beginning of year five, and at the demand of the funder, they hired me to grow their individual giving program…a program they’d half-heartedly worked on in fits and starts, with donors they’d ignored, relying largely on annual-ish events (which netted almost nothing after you took out expenses). I was walking into a program where we had a very short runway, a lot of money to make up, and a bunch of angry donors. Did I grow their giving pretty quickly? Yes. Did it make up for the loss of their biggest funder in the next year? Barely. Because while I’m good, I can’t perform miracles–especially not when most of the donor base was clear they weren’t coming back. The good news is they haven’t had to shutter the nonprofit, but it’s taken a long time to build back. Finally, five years later, they are the same size as they were before losing their big funder.

Contrast that with Nonprofit B. Nonprofit B was also warned by a major funder that they were shifting priorities. Again, atypically and amazingly, the funder gave a tie-off grant to help Nonprofit B for three years before the foundation stopped their funding. Nonprofit B usually used this funder’s grants for program expenses…but given the funder put zero strings on this grant, Nonprofit B pivoted and looked for a new foundation to fund the program, knowing that program funding would be the easiest money to replace. They took the tie-off grant, and hired not one, not two, but THREE full-time fundraisers (one was me!). They gave these fundraisers clear job descriptions, and clear marching orders: replace $1 million in funding in three years before this tie-off grant runs out. When the three of us started, the organization had $1.2 million in revenue (80% from foundations). Three years later, it was a $3.2 million organization, with only 50% of funding from foundations and a nearly $1 million reserve fund. We’d been able to grow the individual giving program from $300k in annual revenue to $1 million in annual revenue. With more resources (and resources that were largely unrestricted), the organization staffed up (it grew from 16 staff to 32 staff). With more staff they could do more programming and demonstrate more impact. More impact and a rising profile meant more interest from grant funders. It was a virtuous cycle that is still paying off for that organization today.

Here’s what’s crazy…those tie-off grants were for the SAME amount of money annually. Nonprofit A had that same amount of money for five years and barely grew. Nonprofit B had it for three years and their growth exploded! Investing the same resources differently led to completely different outcomes.

Who do you want to be? Nonprofit A or Nonprofit B?

Nonprofits tend to default to investing in program when extra unrestricted cash comes their way. But I want to make a pitch for investing extra un-restricted funding into growing your fundraising capacity.

Having a robust, diverse, sustainable individual giving program can unlock incredible opportunities for your nonprofit. It puts your organization in the driver’s seat so you get to decide where your best program opportunities lie (not time and energy wasted on a mission-creepy program that takes you off-course just to grab a niche foundation grant).

I’m not faulting Nonprofit A for wanting to invest in program, but as Nonprofit B proves, investing in CAPACITY can ultimately drive significantly more funding for program than an initial investment in program would.

What is really interesting is to be Nonprofit B, you don’t even have to go to the extreme of hiring three fundraisers. I’ve helped stabilize clients that didn’t hire a single fundraiser, they simply invested in fundraising training and coaching for the executive director or marketing coordinator so that they could at least be making the right moves to grow their individual giving base.

Whether we are headed into a recession or not, the time is ripe to start making the pivot into unrestricted revenue generation and individual giving. And it’s critical that you do it right.

Here are the five keys to getting going correctly:

1. Invest in sustainable fundraising, not event-based or campaign-based fundraising.

Too long have nonprofits thought “individual giving = events.” Actually, events are TERRIBLE at growing individual giving programs. First of all, you spend a lot of what you raise (if not in direct expenses than indirect expenses like salaries for staff-time spent). Second of all, because the event drains everyone’s energy and pulls staff into the event that have other priorities, nobody wants to deal with donors until the next time you run the event. Third, you’re training donors to expect something in return for their donation…that’s not a donation, that’s a transaction. Instead, you need to create a sustainable individual giving program that grows over time with regular, warm touches with your donors and prospects. (It’s a marathon you have to build the stamina to keep growing, not a sprint that you run at all-out effort and then collapse 100 yards later.)

2. Think about the lifetime value of your donors, not what you can get out of them today.

How to Lose a Donor in 10 Days: go in with the hard-sell up front. One of my newer clients came to me because the new Director of Development realized that her predecessor had basically raised funds by getting board members to strong-arm friends into giving. None of those donors wanted to come back, and none of those board members wanted anything to do with fundraising ever again. So while the prior Director of Development had exceeded her revenue goals, the new Director of Development was screwed because none of those donors (or board members) wanted anything to do with her. Yikes! She’s now setting a new standard for fundraising in the organization, and things are going really well. It’s growing more slowly, but it’s all based in mission-centered fundraising where the donors feel like partners to the organization. She’s building relationships now that will pay off over many years instead of right now.

3. Don’t scrap individual giving when the first campaign doesn’t go the way you want it to.

Just because a first campaign doesn’t go well doesn’t mean you’ve “tested” individual giving and it didn’t work. One of the first direct mail campaigns I ran for a newer organization completely flopped. The Executive Director concluded direct mail wasn’t for our organization. The next year we tried again, and we raised twice what we’d expected. Was it a modest amount? Sure, but it was good enough to tell us we were on the right track. A sample size of one isn’t a representative sample…but too often we try something once and decide it won’t work.

4. Make individual giving the top priority of one of your staff members.

When I see clients doing individual giving well, it’s because they make sure that it is the top priority of at least one staff member. To be fair, at nonprofits we tend to wear multiple hats, and that’s fine. BUT individual giving is a long game, and I see people try to grow a program in fits and starts, and it just won’t work. By the same token, I see organizations “share” the fundraising role between 2-3 staff members (one runs the annual event, one does the year-end campaign, one handles major donors). That doesn’t tend to work either because everyone is going rogue and doing their own thing…and they end up stepping on each other’s toes. So ONE person owns the program and has primary responsibility for driving results…and they need to be given the time to prioritize it.

5. Don’t wait to get started!!!

Here’s the thing, your program won’t grow if you don’t start growing it. So the power is in your hands. I usually see a massive uptick in nonprofits wanting to work with me in September and October because they want to get in on year-end giving. If you’re coming to me in October, you’ve missed the boat. Try again next year because you can’t build a program that will yield much of anything between October and December. (I mean, I can give you some campaign ideas, but you’re not going to love your results.) At the latest, you need to start working on your program in September so that you have a warm base of donors by November. Even better, reach out to me now to see what you need to do to get started so you have an even longer on-ramp. It can take 12-18 months to see decent results from a brand-new individual giving program, so you won’t have a “knock it out of the park” year end campaign NEXT YEAR if you don’t start right now. 

Need help with that? We’ve got you! Schedule a discovery call today to see if we can bake up a better fundraising recipe for your nonprofit so this year’s bake can rise to new heights!