For those of us who have spent years as development professionals, we’re generally revenue-focused people.
How many new donations came in this week? How are we trending toward monthly, quarterly and fiscal year goals? What do sponsorships, table sales and tickets look like for the big event next week?
No doubt, what’s “coming in the door” should be of paramount focus for a chief development officer. After all, if we’re not resolutely focused on revenue, who else will mind those philanthropy metrics?
At the same time, a great development leader should maintain an eagle eye on the expense side of their department as well. This is one of those times when we philanthropy leaders need to keep one eye on the top of the P&L (revenue) and the bottom line (net profit after expenses) as well.
Among the financial questions to ask yourself on occasion:
What is the cost-to-raise-a-dollar for a given campaign or event? Generally, special events have a higher CTRAD figure than does individual giving overall. Similarly, donor acquisition (securing first-time donors) is often more expensive than renewal/upgrade strategies with your existing base. And the method of solicitation (i.e., direct-mail letter v. telefunding v. direct-mail postcard v. major gift in-person asks) affects those calculations, and thus should be considered when deciding which solicitation tools to utilize in a given campaign.
What don’t I know about accounting? If you aren’t quite sure how to read your budget, how to understand the P&L or cash flow statement, ask for help. It’s not only ok to raise your hand, it also helps you be a more effective fundraiser! Interestingly, the overwhelming majority of board treasurers and finance department members I know and have worked with are pleased to take time and explain the tools to you. Frankly, I’ve experienced them being willing (and even honored) to take time and explain the financial reports, as this reflects your interest in and support of their area of work.
And don’t kid yourself: There very likely may be absolutely nothing wrong with spending money! The old saying “sometimes you have to spend money to make money”’ tends to ring true in philanthropy. For example:
If you’re going to spend $1,000 to buy ABC supplies and XYZ talent to raise $75,000 that may be an excellent ratio of spend-to-raise. Great work!
But yet, if you decide to increase by 25x what you’re spending ($25,000), but your (realistic!) potential raise is $2 million, why wouldn’t you at least entertain spending more to make more?
Said another way: If a development leader is so incredibly adverse to spending any money, it could be detrimental to growing the contributed revenue base. Don’t spend unwisely, but don’t hamstring yourself either.
There’s a difference between running a lean philanthropy program and running an effective one.
There often is, in fact, a good time in the lifecycle of an organization to add more development staff. Sometimes it does make sense to engage outside philanthropy help for a given need, deliverable or campaign. Spending what might feel like a salty $50 on lovely flowers and an hour of your sadly-scarce time to hand-deliver said flowers to someone who just signed a six-figure planned gift… well, that isn’t just good business, it’s a touching, personal acknowledgement.
Michael Pettry
Principal
Cape Fletcher Associates