“Nearly all of our funding goes directly to our programming.”
Sound familiar? We’re taught to repeat this line in the hopes that it and beautiful associated charts showing our slim administrative margins will convince donors that their money goes where it’s needed most and is well spent. The smaller our budget line for “operational expenses,” the greater victory we claim, and the more funds we envision securing towards the execution of our mission.
This thinking prevails perhaps most commonly among young organizations that identify as grassroots. As the Board Chair of a small and growing nonprofit, I’ve felt this impulse firsthand. We guard our limited funds vigilantly, and rightfully so! We remember how clearly we fought for that first line of funding, the hours spent courting donors, and editing grant proposals. If a yearly budget is around $100,000, spending $20,000 on development support can seem like an insane use of funds that could be spent on programming. We know what $20 can mean for an individual impacted by our work.
Sure, you might be thinking, but this just seems responsible. What’s the problem?
The trouble with “bootstrapping” 👀
When we restrict our spending to programming, we refuse to scale, and we limit our own impact.
We must treat our nonprofits like a business with a mission of doing good, and strong and healthy businesses invest. We wouldn’t expect a business that never hires a salesperson or purchases essential software to grow, and yet we shy away from these expenses. Successful, growing organizations invest in useful technologies, capable, top tier staff, and results-driven services, and they do it with a long term goal in mind.
The Harvard Business Review keenly assesses this thinking’s impact on nonprofits that are small or just starting out. “While small may be beautiful, size matters when it comes to having a substantive impact on society’s pervasive and complex problems.” This, we certainly know. We aspire to great impact! We understand that “by leveraging economies of scale and management talent, large nonprofits can deliver improved services at lower cost,” but we fail to take the leap to achieve that end by investing in our development.
When we do invest, we often don’t shake the feeling we’ve made a mistake. We get cold feet, and unintentionally heighten the risk by under committing or backing down too soon. The Stanford Social Innovation Review offers a prime case study of an organization’s decision to hire a development staff member on a three month trial period. This investment required using a significant percentage of funds and was the “less risky” alternative to a long term hire. After the staff member failed to close any major gifts within the trial period, the Board let her go. The author laments. “Fundraising takes time,” he writes, and “we weren’t willing to risk our established means of success in search of future reward.”
Making the leap 🏃♀️
It can feel scary! But there are 5 key steps you can take towards developing your organization responsibly, strategically, and impactfully.
👀 Create a long term plan. If you haven’t already, create a multi-year strategic plan that includes investing in key areas, and stick to it. Establish clear metrics for success and benchmarks along the way. Most importantly, be realistic about your timelines, and resist the urge to create an overly ambitious short term plan.
🤝 Hire top tier staff and consultants. Though it can seem tempting to restrict funds allocated to personnel or offer a role to the lowest bidder, that’s often a one-way ticket to a wasted investment. Strong businesses search for hires that are the best at what they do and are willing to pay to get and keep them on board. You must be too. If you’re a Givebutter customer, check out its new verified partner program, which includes top nonprofit consultants and agencies like Parkes Philanthropy.
⏰ Give fundraisers time to succeed. Rome wasn’t built in a day, and your organization won’t be either. Resist the urge to panic if you don’t see short term results. Instead, look to pre-established timelines that are realistic about the medium and long term impact of your team’s work and the requisite groundwork to get there, and continuously evaluate progress on this basis.
👂 Listen to your staff. Ask team members to be vocal about the resources they need to meet their fundraising goals. If you’ve chosen the right people, they know what it takes. It’s up to you to be confident in your hire and trust them to get you there.
💻 Invest in technology. Streamlined and effective fundraising tools like Givebutter that reduce barriers to giving are essential to growth. Invest in the donor experience, just as you invest in your staff. Similarly, CRMs and project management tools matter. If you aren’t organized, you’re setting yourself up for failure and an inability to evaluate your progress effectively.
Abandoning the scarcity mindset 🚀
In Summer of 2017, I sat in a Board meeting where we took a vote on whether or not to dissolve our nonprofit. Years of financial bootstrapping, limited human resources, and constantly increasing demand for services had pushed us to the edge: we could not fund our basic programming through the end of the year.
Fortunately, we voted to remain active. This moment was, however, a wake up call to change our approach entirely. We had to abandon the scarcity mindset, and invest in top tier staff with development experience to survive. Since then, our budget and associated impact has grown nearly 75% in the last three years.
It isn’t always easy, and it’s almost always terrifying, but it’s worth it.
Anyone can say they align with a well-formulated, do-good mission, but true investment in your organization’s future must extend beyond simply enacting programming. It requires strategic thinking, data driven decision making, patience, and above all else, faith in your ability to achieve impact.
Anna Fuselier is COO and Senior Consultant at Parkes Philanthropy, a social impact consulting firm empowering nonprofits, businesses, and individuals to do good. She is the Board Chair of the BEST Foundation.