"We need to raise money for these three programs and
for general operations! How do we do it?" That question
is the typical beginning of an odyssey that usually must go
backward before it can go forward.
Fundraising does not begin with recognizing a need for
money. It starts much earlier with the actual structuring of a
charitable nonprofit organization:
- by assessing the environment in which your group must
work
- by determining your constituents
- by assessing your constituents' needs and responding to
them through appropriately designed services
- by estimating the cost of those services over a term of
years as well as any reliable income for those services
It is at this point (about one-third of the way through
the planning process ) that fundraising goals and strategies are
determined.
Several more key steps need to occur before high yield
fundraising can begin. They include:
- designing communications to the world about your
organization
- re-examining the recruitment of board, staff, and
volunteers
- assigning the implementation of the organization's plan
to specific people
- creating a continuous market-testing system to monitor
the strategic fit between the programs and the
constituents' needs
The key to raising money is control, which is, in turn,
the summation of all management techniques within a particular
organization. Control stems from comprehensive long range
planning, which integrates every aspect of the charitable
organization into a master blueprint whose objectives are all
synchronized: a strategic organizational marketing plan.
The Role of Marketing in Fundraising
Marketing guru Philip Kotler says that marketing is the
analysis, planning, implementation, and control of the
organization's service programs to suit the needs of its
constituents well enough that two types of exchanges take
place: (1) the maximum use of the services and (2)
financial support to the organization.
If you give a party and no-one comes, you have made an
offering that no one wants. Therefore, the magnitude of the first
exchange, the use of programs, is determined by the
organization's commitment and ability to gauge constituent needs
and respond to them. Organizations which document their
constituents' enthusiastic endorsement to questions about service
program effectiveness are likely to raise more money than those
whose do not test the market. Those market tests, when organized
as the results of a survey, make an important accompaniment to a
grant application; they are proof that your group is analyzing
constituent need and responding to it. When negative market tests
arise, the organization knows that it must go back to the drawing
board before attempting high yield fundraising.
The second exchange, donations to the organization, also is
determined by constituent satisfaction; happy customers are
willing to pay the price. There are two kinds of potential
donors: (a) those who both use the service programs and donate
money, and (b) those who do not use the programs but donate
their own money on behalf of others who need the services. Often
the approach to each is different.
Defining your constituency to include a broad base of those
directly served and those who care about and can influence your
work is an important exercise in creating the target markets
that, eventually, will be approached for contributions.
Foundation, corporate, individual, and government donors are
considered constituents along with those receiving primary
services. Note: See Factsheet 7 for additional information
about marketing for charitable nonprofit organizations.
How Strategic Planning, Marketing, and Fundraising Fit
Together
Strategic planning, marketing, and fundraising are processes
with specific steps. All three used to be performed independently
of the other. Today, their integration into a single process is
exemplified by the following principles: (a) all fundraising
flows from strategic planning; (b) all strategic planning
should be done with a marketing orientation.
Strategic planning provides the framework within which market
testing and program designing can work and which generates
fundraising goals and plans.
The Process of Strategic Planning
A planning committee should be formed to develop the strategic
plan. The planning committee consists of key board members, the
organization's executive director, and other key staff members.
Planning strategically involves re-conceptualizing the
organization from the ground up, i.e., zero-base
con-ceptualization. It presumes that at the beginning of each
planning cycle (three years, five years), the planning committee
will not assume that the future should be a simple upgrade
of past services (step-planning). Instead, the committee will
walk through the following steps
1. Analysis of the marketplace
- Define your constituencies, primary and secondary.
- Examine the threats and opportunities in the external and
internal environment which can affect the organization's
future and make note of how to use that information to
plan its future.
- Select strategies to achieve your goals for the term of
the plan.
2. Create the case statement
- Write a case statement which summarizes conversationally
the needs your group will address and the strategies and
service programs it has elected to serve those needs. Add
information about your organization's past achievements
and its competence to deal with the issues in your plan,
a little about your board, and an indication of budget
size.
- Test the strengths and weaknesses of the case statement's
content with focus groups from your constituencies. (If
necessary, go back to the drawing board and then
re-test.) A positive reaction from the board means that
you may continue with the next few steps.
3. Create detailed program descriptions for each year
- Describe each problem to be addressed.
- Describe the actions to be taken (services you will
provide) to address each problem.
- Include people who will perform the actions/services in
the description.
- Describe anticipated results for each year.
4. Devise functional budgets for each year
- Use a spread sheet showing columns for administration,
fundraising, and each program across the top. Down the
side are income line items, as in chart A (below).
A. Summary Income Budget: 19??
Income |
Administration |
Fund Raising |
Program A |
Program B |
Program C |
Etc. |
TOTAL |
CONTRIBUTIONS |
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Individual |
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Corporate (regular) |
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Corporate (cause related) |
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Foundation |
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Other Non-profit |
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Government |
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EARNED |
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Interest |
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Sales |
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TOTAL |
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- Use a spread sheet showing the same column headings as in
Chart A ("administration," etc.) Down the side
are expense line items, as in Chart B (Below).
B. Summary Expense Budget: 19??
Expenses |
Administration |
Fund Raising |
Program A |
Program B |
Program C |
Etc. |
TOTAL |
Salaries |
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Benefits |
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Professional Services |
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Rent |
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Printing |
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Travel |
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Etc. |
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TOTAL |
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- Subtract expenses from income for each column and perform
a benefit/cost ratio analysis to allocate surpluses and
devise a final fundraising goal (FR Goal) for each
column, as in chart C (Below).
C. Benefit to Cost Ratio Analysis
Benefit/Cost
Ratio Analysis for XYZ Organization, 1977 |
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Income (b) |
Expense (c) |
Fund Raising Goal (b-c) |
(b/c) |
Program Name |
Benefit |
Cost |
Net Benefit |
Benefit/Cost |
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Note: this list can be as long as needed.
"Administration" and "Fundraising" can be
treated as "programs" for this analysis and often
are found as the last two listings in the "Program"
column. After surpluses have been allocated by the board to
cover costs of key programs, the "FR Goal" column
["Net Benefit" or (b - c)] must be recalculated to
set the final fundraising goal for those service programs
still showing deficits.
5. Create the financial resources development plan
- This involves setting up charts for contributed income
targets as illustrated in chart D (Below).
Program Name: |
Year: |
Amount to be Raised: |
Funder |
Amount |
Board Contact |
Due Date |
Proposal Form |
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D. Potential Funders
The chart allows you to use your board contacts well and to
calendarize due dates so that you do not miss proposal deadlines.
The financial resources development plan also includes earned
income plans, such as interest income from savings or endowment,
sales of promotional items, proceeds of special events, unrelated
business income, etc.
6. Design the human resources development plan
- The previous five steps have generated a need for staff,
board, and volunteers.
- Write job descriptions for each area
7. Submit material related to steps 3 to 6 to board for
approval
8. Decide on organizational changes to accommodate
steps 1-7
- If structural or systemic changes are needed, this is the
time to design them. This may involve bylaws, management
systems, and policies.
- The decision to publish those changes in the strategic
plan is largely a matter of organizational culture.
9. Submit step 8 to the board for approval
10. Create a communications plan
- A critically important step, the communications plan sets
up the methods your organization will take to transmit
messages about its work to a wide variety of target
populations in order to facilitate the two key exchanges
(1) servuce program use and (2) financial support.
- This plan must include specific responsibilities of
board, staff and volunteers and contain deadlines.
11. Write the implementation plan
- Another critically important step, the implementation
plan assigns responsibilities to specific officers and
staff to be certain that the entire strategic plan is
carried out accurately and on time.
- One key responsibility includes notifying the board
chairman if the plan is not proceeding well and calling
the strategic planning committee back into session if
adjustments are needed.
12. Set up a continuing market evaluation plan
- Strategic planning may be the only function in the
charitable management field which justifies going around
in circles, i.e., we are back to the beginning. The
environmental analysis done by the committee at the
beginning of the planning process will be repeated on a
smaller, more leisurely scale by the board's marketing
committee during the term of the plan.
- It amounts to spot-checking the strategic fit between
service programs and constituents' needs during the term
of the strategic plan. New information affecting that
relationship is captured for use in the new planning
cycle, which will commence at the beginning of the last
year of the current cycle. [It takes about a year to
do a strategic plan with allowances for proper timing to
accomplish work with a minimum of stress.] Dramatic
change in the environment will,of course, trigger
re-assembly of the strategic planning committee.
13. Submit the remaining sections of the plan to the
board for approval
14. Publish enough copies for the board, staff,
advisory committees, potential key funders, and any policy-makers
who are important to your group
Summary
While the foregoing is not a precise formula for strategic
planning, it fairly represents the order in which the steps
should be taken to build a pyramid of plans that lead to a solid
strategic plan.
There is a corollary to the two basic planning principles
mentioned on page two: There should be a moratorium on
all pre-conceived thoughts about programs and priorities while
planning is taking place.
This may be the most difficult aspect of planning
strategically because human nature inspires a desire to hang on
to what is pleasing about the past. Justifiable existing programs
will be recreated and reconfirmed naturally as a part of the
process. Zero-base conceptualization requires an open mind if the
planning process is to have credibility with potential users of
services and potential funders. Tip: Be flexible
when setting completion dates for your strategic plan. It may be
necessary to avoid tying the completion of your plan to a public
presentation, such as an annual meeting, national conference,
etc. The process requires flexibility to achieve the best
results.
Produced by the ARCH National Resource Center and reprinted with permission.
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Beverly R. Hoffmann has taught nonprofit
management and fundraising at The New School for Social Research,
Seton Hall University, Princeton, Rutgers, George Washington
University, and the Foundation Center of Washington, DC.