Enough can never be said about developing relationships and cultivating sustained connections with donors. In this vein, I would like to continue the discussion of attracting and maintaining donor support. One issue recently brought to light in the media is about unethical donors’ behavior, such as tax evasion and money laundering. (In some cases, donors have used nonprofits to launder funds in order to contribute large sums of money to receive much of it back from the organization.) These kinds of stories make it harder for legitimate nonprofits to secure donations because it leaves a black cloud hovering over the philanthropic sector.
When organizations are seeking to expand their donor base and to introduce their programs and services to potential contributors, there must be complete transparency regarding their fiscal operations. The financial details of the agency’s operation must be an open book so that there is no hesitation in sharing information or responding to questions. For example, if an organization does not have the desire or the ability to freely provide their annual certified audit to people who are solicited for contributions then the nonprofit is not in a position to request funds from donors.
More importantly, if there is a question about sharing the annual audit then there is cause to have the fiscal policy and the financial situation of the nonprofit reviewed by the finance committee of the board. Of course, one must ask how the agency got into a situation where they were embarrassed or unable to show their audit to people in the first place. From the beginning of the nonprofit’s operating there should be checks and balances in place to prevent this kind of situation.
Once a question is raised about an organization’s fiscal functioning it becomes a warning light to donors to beware of contributing to the organization. It is easier for a nonprofit to develop a good reputation in terms of its financial situation from the beginning of its operation than it is to correct a negative reputation that it has for illegal and/or unethical financial dealings after the fact. Although the essence of a nonprofit is implementing its vision and mission, if the functioning of the organization’s bookkeeping is not in order it will not matter how innovative, creative or effective are its services. No donor or funder will risk getting involved with an organization that has questionable fiscal policies and financial practices. On the other hand, just because an organization has solid fiscal practices does not mean that donors will continue to support the organization. As was pointed out in a comment on last week’s posting, renewal of support is not automatic. Nonprofits must to have clear stated policies and developed practices that guide both the professional staff and the volunteer leadership to insure sustained support from donors. An excellent tool is using an annual campaign to develop a group of committed donors.
The campaign can be developed around a theme or a unique message the agency brings to the community. The strategic use of an annual campaign is especially fitting for small nonprofits because it can be spearheaded by volunteer leadership. Through their active involvement in soliciting the organization’s veteran supporters it communicates a sense of the community’s ownership of the programs and services of the nonprofit. Reaching out to the community at least once a year is a way of reminding donors of their past support and asking them to continue to make their contribution. It is also an excellent avenue for attracting new supporters who will be recruited through a solicitation process focused on the community.
It is important to think about the people you will call and the responsibilities you assign to them. As one reader pointed out, you want to make sure you do not waste the volunteer leader’s valuable time and that they are involved in an activity they both enjoy and can be successful in their carrying out their responsibilities. Thus, in an annual campaign, you have to think carefully about whom to ask to solicit contributions and who you would like them to approach in the community. It is a matter of knowing your leadership and being able to speak frankly and discretely with them.
Last but not least, you have to know when is the most appropriate time to solicit a donor for a new contribution or for continuing support. For example, if you are raising funds to support an educational program you do not want to wait until the student has completed the program to discuss the possibility of the student’s parents contributing to the institution or the program. It is a delicate subject and can be approached appropriately and diplomatically with parents while the student is benefiting from the program.
When we focus on formal educational programs it is most fitting to reach out and involve the parents in the school and when we think about short-term, one year programs it is best to have a sense of the parent’s satisfaction while the student is continuing to study. If the proper “seeds” are planted at the right time, then the organization can reap the benefits of the participant’s learning in the educational program. Waiting until the end of the program runs the risk of approaching the potential donor after the fact. It cannot be over emphasized that this is a delicate process that has to be approached as part of the strategy of cultivating potential donors so they do not feel they are being pressured but rather being given the opportunity to support a program that benefits their children.
Cultivating donors and soliciting contributions are essential processes to achieving financial sustainability. Utilizing strategic and thoughtful practices will enable nonprofits to engage people who will work for the financial sustainability of the organizations to which both sides are committed.
Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Nonprofit Management and Leadership Program and has a consulting firm focused on strengthening nonprofit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewish Philanthropy.