"Fundraising?! We'll Get Around to That."

One of the first fundraising mistakes that a founder/executive of a nonprofit is likely to make is to start out using a spreadsheet to enter donor contributions and report these gifts to the board. Sure, it's cheap, easy and doesn't take much time to work with a spreadsheet.

With a little thought, the founder/executive could see ahead a couple of years to the time when there would be a need for a real donor database. These contributions could just as easily be entered in an Access database, so that at some point they can be massaged correctly, and later could be transferred rather easily to some form of donor management software. But spreadsheets are easy and quick, and that's just what most any founder/executive needs to lighten the daily burden.

Right along with this is a tendency I've seen in my practice for these founder/executives to spend much more time with the nuts and bolts of running the operation than to be out with the community building the base of individual donors and soliciting friends, family, colleagues and acquaintances for significant, multiple-year gifts. Most of the founders/executives who end up getting in trouble neglect this work because they are not, essentially, oriented to being with and nurturing people as donors and supporters.

It's fairly easy to avoid this detailed management responsibility and stay with the grants and special events, hoping, each successive year, that these sources will hold out just a little while longer. Meanwhile the tasks of running a growing organization multiply, stress builds and, eventually, the founder/executive simply has neither the time nor the inclination to cultivate and solicit major individual gifts. "Fundraising? That would be nice, but we'll get around to that later, when we can afford more staff."

In fact, the fledgling organization has no chance to arrive at the point where it can handle more staff if it can't raise money! The problem is that foundations fall away after a while. They're interested at first, but may not see themselves in a continuing relationship with any charity. They derive more press and satisfaction by spreading their money around to get the most bang for the buck. Foundations seem to try to become involved with many different charities, give a little help here and there and everywhere. The result is that the foundation pool dries up within a few years. The community foundation and a few individual foundations around town, maybe several larger ones, too, in the larger cities, run their course with the start-up, and then the money dries up.

Looking at special events, these fundraisers tend to take on two characteristics rather rapidly: first, they get old and have to be freshened up, and, secondly, they involve increasing amounts of time and money to keep them new and fresh. Consequently, the founder/executive and whatever staff there are find they are beating a horse that only returns about thirty-five cents on every dollar invested, and that's not counting the hundreds or thousands of volunteer hours involved in putting on these events. The cost of fundraising is escalating. The return on investment is decreasing. The ability of the young nonprofit to invest in fundraising is practically non-existant. Trouble is brewing.

Couple this with the fact that direct mail donors, especially in this day, expect a lot more information and nurturing than ever before. But the founder/executive just doesn't have the time or staff to do that, while board members generally eschew such tasks; after all they're friends of the founder, so they should be treated in this special way that lets them off the hook.

So the contributions from direct mail tend to decrease as the years roll along, not to mention the fact that the list of people isn't being increased from year to year with new prospects. The fundraising infrastructure doesn't exist that will keep a continuing stream of prospects coming into the non-existent donor and prospect database. So, as gifts go down, and the number of people mailed decreases, the "take" from this method of fundraising dwindles and the cost of mailing may well exceed the revenue coming in. More trouble.

That's when they call in the fundraising consultant. We like that, but it's hard on everyone at the new nonprofit.

More tomorrow..