How Nonprofit Boards Can Make Good Decisions -- Part 7 of 12

Now, for our Example #2, we’re going to do an analysis of a more complicated board decision: the decision whether or not to give some major resources to bolster the organization’s fundraising infrastructure. That means this series on Board Development, where we're dealing with how boards can make fair, wise and practical decisions, will be extended to 12 parts rather than seven.

First, let's do a short review, just in case you've joined us recently and haven't had a chance to read previous posts on this subject:

In a previous post, Example #1 concerned a Board making a decision about enhancing its own level of giving to their nonprofit organization. What we dealt with there was a set of psycho-dynamic factors that make it literally impossible for a board, or any other group of more than 2 or 3 people, to do deliberative thinking. And we've tried to describe the kinds of effects these psycho-dynamics have in the context of this decision about the board's own giving.

We've had a few digressions along the way, but, ultimately, I think the best way to help a board do what it does best – which is to brainstorm and tell stories – is to be prepared to do most of the work on any serious issue coming before a nonprofit board in the background, outside the board meeting, but in a way that involves board members and takes seriously their various kinds of input, needs, wants, values and their points of view.

Now, in Example #2, this decision about whether to invest in fundraising infrastructure, and how much, we are going to see an additional set of factors that, once again, make it impossible for a board or any group of people to do deliberative thinking.

Previously, we enumerated the following elements of the psycho-dynamics affecting each board member's ability to do deliberative thinking:

Factor 1: my view of myself,
Factor 2: my view of you,
Factor 3: my understanding of how you view me,
Factor 4: my grasp to whatever degree on the image of me held by the group, and
Factor 5: my desire and strategies for changing, to one degree or another, either your view of me or my image within the group.

The effect of these, for each member around the table, tends to overpower each person's ability to do deliberative thought on a complex issue or problem facing the group.

Now, we're going to see how some additional factors come into play in a decision about funding fundraising infrastructure. As you can see, when we combine the psycho-dynamics of the board's process with additional factors, this is going to get a little complicated. But that's precisely why we say "boards can only do two things: brainstorm and tell stories." Let me set up the situation as I have seen it many times over the last 27 years of fundraising.

It's budget time, once again. The Board of Directors for Do-Good Charity is assembled for a regular meeting of the board, in which the budget discussion has been given a generous 2-hour slot. Typically, for this board, and many others, items are given 15 minutes. But today the CEO has something special in mind.

There's a proposal, represented in significantly adjusted budget figures for the fund development department, to expand fundraising infrastructure by purchasing new donor software and hiring a person to do both data entry and data retrieval. This will, as the CEO believes – and rightly so – facilitate the stewardship of donors and the start of a major gifts program that will cultivate and solicit a whole new group of donors for major 5-year commitments to the institution.

The CEO plans, over time, to turn this little investment in infrastructure into a $5.5 million increase in revenues for the organization through multiple-year commitments. Got the picture? You've probably seen it yourself, either as a fundraising professional or as a volunteer serving on a board.

You think $5.5 million is impossible? Not at all. We recently helped a client find that much in their present donor database and start cultivating and soliciting major five-year gifts. And that client was doing about $30k per year in direct mail and another $500k in special events along with a substantial grants program. Pretty elementary, yet they had enough friends to whom they had not been attending carefully but whose potential amounted to that much.

Your organization may similarly be missing the boat by not carefully analyzing the giving patterns of your donors. It takes time, it takes some investment; above all, it takes organizational commitment to fundraising. But if you don't do it, you're leaving a ton of money on the table. This CEO in our example is taking the budgeting step necessary to make it happen for Do-Good Charity.

We continue our example tomorrow.