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Financing Not Fundraising: 7 Mistakes in Your Nonprofit’s Fundraising Plan

I can’t tell you how often I hear nonprofit leaders complain about how difficult it is to raise money, how tired they are of banging their head against the wall, how difficult this economy is. Well, there really is a better way. And it starts with a really good money plan for your organization.  But again and again I see the same mistakes being made in nonprofit fundraising plans, which is the topic of today’s installment of our regular Financing Not Fundraising blog series.

If you’re new to the series, our Financing Not Fundraising blog series shows nonprofits how to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities and instead work to create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.

Here are the 7 mistakes to avoid in your fundraising plan:

  1. Not Having A Plan At All. Yeah, not even having a plan is a huge mistake. It boggles my mind how many nonprofit organizations expect that money will magically appear at their doorstep. It takes an overall money strategy, what I call a Financing Plan, to effectively marshal your resources (staff, board, other volunteers, technology, materials) so that enough, and the right kind of, money comes in the door to achieve your goals.

  2. Creating Just A One Year Plan. You cannot expect to create a financially sustainable organization if you are only planning for money one year at a time. Your financing plan should project at least 3-years into the future in order to ensure that you have sound financial footing from which to operate. A true financial strategy takes a long view and plans accordingly.

  3. Including Only Private Dollars. Your money strategy must include ALL sources of money flowing to your organization, making it a Financing Plan. You cannot just plan for individual, corporate and foundation dollars, you also must plan for how government and earned income sources will flow, if they are appropriate to your model. And if you don’t have other sources of money beyond private dollars, you probably need to at least explore whether diversifying makes sense for your organization.

  4. Not Connecting It to Your Strategic Plan. Ok, I’m going to assume that your nonprofit has a strategic plan, even though many nonprofits don’t have one or they have a poor one. But once you have a strategic plan in place, you have to connect your money strategy to that plan. What good is it to have lofty program goals if you have no idea what those goals will cost (expenses) and how you will raise the money to make them a reality (revenue). You must have a multi-year financing plan that directly relates to your multi-year strategic plan.

  5. Ignoring Capital Goals. You can’t just raise revenue (the day-to-day money to keep the organization going), you also probably need capital (the money to build infrastructure, technology, systems) once in awhile. If you don’t include dollar goals for the amount of capacity capital your nonprofit needs, I doubt you will ever raise it. You cannot continue to operate with infrastructure, staffing, technology and systems that are inferior to your needs and goals. Determine how much capacity capital you need and include those goals in your financing plan.

  6. Not Giving Your Board a Role. You cannot leave the burden of raising money solely on the shoulders of your staff. One of the key responsibilities of a nonprofit board of directors is to ensure the financial viability of the organization they serve. So this means that the board as a whole and each individual board member must understand and play a role in the money strategy of the organization. So start by requiring each board member to give and/or get a certain amount (usually your major donor level) and then make sure your board “money committee” is active and engaged, and finally integrate money into every meeting and conversation your board has. Money MUST be top of mind for the entire board.

  7. Not Focusing On High Return Activities. Some fundraising plans include activities that a nonprofit has always done to bring money in the door without analyzing their effectiveness or expanding into new or more profitable activities. Start by analyzing the return of every money raising activity you engage in and then focus your money strategy on those that actually have a positive return.

I would love to see more nonprofits create a smart, long-term financing plan for their organizations. Because the reality is that those that do so will create more sustainable social change.

If you want to learn more about how to creating a financing plan for your nonprofit, sign up for our Creating a Financing Plan webinar.

And if you want to apply the other concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.

Photo Credit: Hiking Artist

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A More Transformative Corporate Philanthropy

Deloitte, the consulting firm, just released a new series of documentaries about the nonprofits they support. Two years ago they made a three-year commitment of $50 million in pro bono nonprofit work. They’ve already completed 200 projects, with many more in the pipeline. Their focus is taking the specific skills their employees have and applying them to capacity and efficiency constraints in the nonprofit sector. This approach is not new. New Profit, the nonprofit venture philanthropy fund, has enjoyed a 10+ year partnership with Monitor Group, who provides signficant pro bono consulting to the nonprofits in New Profit’s portfolio, which will total a $50 million commitment by 2012.

To promote their work, but also to encourage other companies to think about how they could do similar skills-based volunteering, Deloitte has made a series of short documentaries about their nonprofit projects. As Evan Hochberg, national director of community involvement for Deloitte said:

We made these films primarily to help our own people recognize just how much they have to offer, and to encourage others in the business community to embrace skills-based volunteerism. [We are] committed to helping advance the field of community involvement by focusing on volunteerism that achieves very tangible outcomes, and this film series is an opportunity for us to spark dialogue that makes people think about the value of their professional skills in a different way.

Sure it’s a public relations campaign, but I also think there is something interesting in the philanthropic commitment Deloitte has made and in the films they have created. The film below is about College Summit, a great organization that encourages high school students, who never viewed themselves as college material, to apply, attend and graduate from college. Deloitte has done a number of pro bono projects with them and has made a significant commitment to this organization. Take a look at the video that showcases a really great nonprofit and an interesting way for a corporation to make a much deeper, and more transformative commitment, than just writing a check.

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