Fundraising Foundations: Infrastructure for Fundraising
By Shirley Trauger, Vice President
Having a strong infrastructure for fundraising means an organization has the internal capacity it needs to develop philanthropic resources. As in any other organizational activity, you need the right tools – and people who have mastered those tools – to do the work of fundraising.
Generally it is unquestioned that someone on staff will be “tasked” with fundraising. A strong infrastructure for development operations, policies and procedures – including functions as basic as gift acknowledgment and prospect assignments – is vital for stewarding constituents who expect a certain level of treatment from a nonprofit organization they have invested in. What’s more, internal accountability – demonstrating the development department’s return on investment – is becoming more important, and having fundraising machinery that hums along can make the operation more efficient and effective.
Keys to Fundraising Infrastructure
When Schultz & Williams consultants evaluate an organization’s development operation, we examine several elements of infrastructure:
- A professional staff is essential to an organization’s fundraising infrastructure. While fundraising is rightly described as a “team sport,” it’s vital to have someone in the organization who is responsible for making fundraising happen, including facilitating the development work of volunteer leadership and the CEO. With an appropriate level of support, this development professional designs a calendar of strategically driven development activity and keeps it moving.
Infrastructure questions to consider include: Is the size of organization’s development staff appropriate to its fundraising goals and the program elements needed to reach those goals? Are jobs clearly defined? Are the right people in the right jobs? Do staff members have the necessary skills and resources to carry out their mandate?
- Another critical internal element is communication and collaboration between the development staff and other departments in the organization. The CEO – the key leader whose strategic plan and vision for the organization attracts philanthropic supporters – commits a significant portion of his or her precious time to interacting with key prospects. Development professionals also need to work collaboratively with their finance officer, program people and other senior organizational leaders, who can help define funding opportunities and needs and serve as important resources for engaging donors.
- Fundraising professionals use a variety of tools and resources, including systems that help keep track of gifts and pledges as well as of the information and activity surrounding donors and prospects. Whether using a constituent management database or a simple spreadsheet for timely gift tracking and recording, gift acknowledgement, opportunities for upgrading donors, and cultivation and stewardship efforts, it’s important that the system be able to efficiently and accurately track and report on the information needed to monitor the success of its development work, internally and externally, and convey the evolving relationships between donors and the organization.
- Nonprofit organizations also need access to prospect research: good information about prospects and donors is critical to effective plans for developing them as donors. The quality of this information is a key indicator of the depth of the relationships critical to donor development.
- Communications with donors and prospects are essential to move relationships forward: cultivating, soliciting and stewarding constituents. How compelling are the organization’s publications in engaging prospects and acknowledging donors? What tools are used to provide fundraising reports to donors? Are the most up-to-date electronic media being used to reach people with timely, frequent messages that match their interests instead of depending on one or two printed pieces that go to everyone on the same annual schedule? Does the website make it easy to donate electronically or engage in other ways (e.g., volunteer, use the services)? Are donors’ email addresses captured?
- Policies, updated regularly and approved by the Board, exist for both the organization’s benefit and the donor’s. Ideally, an organization’s policies clarify rules about what kinds of gifts can be accepted, how endowment is invested and spent, and what the guidelines are on naming opportunities.
- Well-documented procedures should be in place for gift processing, data entry, reporting and other functions to ensure that the development operation can run smoothly despite staff transitions or to provide clarity when unusual circumstances arise. Colleagues in the finance department should be consulted to make sure that proper cash handling practices are observed and that the reports generated by development match up with accounting results.
All of these elements are defined and tracked in annual fundraising plans and are resourced through the budget that an organization assigns for development work. Does the organization have an intelligent, practical fundraising plan with the right mix of components to meet goals and make the best use of resources? Who is responsible for implementing each part of the current plan? Does the plan look – and move – forward systematically to reach the fundraising program’s goals and support the organization’s strategic directions?
Development operations cover a wide range of areas – all of which, when strong, make for a more effective fundraising effort. If possible, an organization should have staff dedicated to handling these important “back office” elements. When that isn’t feasible, it is important to devote appropriate resources and energy to making operations as simple and efficient as possible, so that all staff have more time for cultivating and soliciting donors.
TRENDS: New Frontiers in Development Infrastructure
Many trends affecting development infrastructure stem from the for-profit marketplace, whose best practices are being adapted for the nonprofit sector, but development professionals must take care that their decisions about development stay true to proven, donor-centered fundraising principles.
- Organizations are recruiting development staff with more varied backgrounds and skills than has been typical in the nonprofit sector. Those with sales or other profit-sector training are now considered valuable because of their experience focusing on the bottom line. There may be a risk that this trend will lead to poor matches between new employees and the nonprofit arena, which is based on intangible values and driven by mission as well as margin.
- Development professionals are increasingly making use of wealth screening tools for identifying and cultivating prospects. While these services have become more prevalent and are easier and cheaper to use than ever before – making them more available to smaller organizations – their results give a less than complete picture that should be supplemented by more personal methods.
- Organizations are using data analysis to better understand donors – even the smallest of them – and appeal to them accordingly. Models can be developed based on an organization’s own donor trends, and then matched or compared with information about behavior of donors with similar characteristics. The challenge here is in interpreting and acting on the large amount of data now available at ever-lower cost.
- There is an abundance of new options in constituent relationship management systems, including online software as a service tools. The advantages of these “cloud” systems are that they are scalable (and therefore potentially more cost-effective) and can be accessed remotely. Nonprofit organizations should be aware, however, that some of these systems require customized implementations which can take time and add costs.
- Like their corporate counterparts, nonprofits are exploring ways to incorporate social media, using it to interact with constituents in ways that have the potential to bring a higher level of engagement – and of giving – than traditional methods of direct response. It behooves charitable organizations to learn how to use these new tools strategically and thoughtfully in order to maximize their effectiveness.
- Many nonprofit Boards now demand more documentation of fundraising’s return on investment. They may look at the cost-per-dollar raised through development efforts and may base decisions affecting future fundraising on those financial results. Unfortunately, dependence on this type of measurement can lead to simplistic conclusions or may produce skewed results if they are based on atypical events, such as a single large bequest. And some kinds of fundraising – for instance, special events or mail acquisition of new donors – typically have higher costs-per-dollar-raised than major gifts or grants. Organizations must take care that emphasis on numbers does not favor short-term results over long-term impact.
Whether an organization is expanding its fundraising activities, looking to improve results or maintaining an already-successful program, a careful look at infrastructure will ensure that all activities are maximally effective.
Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.