“If I had a million dollars…” This is the catchy lyric in the ‘90s song by the Canadian band, Barenaked Ladies. If you know the song, you’re probably getting it stuck in your head right now (you’re welcome!).
If you don’t know the song, the lyrics have the singer imagining what he would buy his girlfriend if he had a million dollars … and it includes things like buying a house…and furniture for the house (“maybe a nice chesterfield or an ottoman”)…and a fur coat (“but not a real fur coat, that’s cruel”). Cue it up and give it a listen. It’s a great song.
The reason this tune has been playing on repeat in my head lately is because a version of this million-dollar question has been coming up in my conversations with nonprofit organizations—and even more so recently.
With donor files shrinking, and revenues showing signs of weakness on the horizon, smart nonprofit leaders are asking what they can do to reverse these trends and insulate their funding sources for the future.
So, here’s the question: What would you do—or, rather, what should you do—with a significant investment in your organization?
To fully consider this, you need to start with the fundamentals of why your nonprofit exists—what is your mission. If your mission can be fully realized with the added investment, then solve the problem and close up shop. But if you’re like most nonprofits, your mission is broad with many long-range goals. And for those to be realized, you need to plant seeds that will grow to fund your future.
Here’s some recommended Do’s and Don’ts:
- Do shore up your donor file.
Invest in reinstating more lapsed donors and acquiring additional new donors. This is the surest way to offset attrition and turn the tide on a shrinking donor file. Target your highest value donors and those you’re most likely to retain to build long-term growth of your fundraising revenue.
- Don’t start a new program that is not financially self-sustaining.
One of the most difficult challenges facing a nonprofit is striking the balance between spending for the mission today and having the funds to support the goals of the mission in the future. Other sources of funding, such as grants, are better designed to support new program initiatives. Invest funding windfalls you receive in expanding fundraising programs that will multiply your impact in the future.
- Do invest in your planned giving program.
Equip your organization with the right staff and the right tools to secure and properly steward legacy donors. Personalized relationships are key to understanding what motivates donors about your mission while also ensuring that existing legacy donors remain committed to their planned giving intentions. Remember that the average bequest size is between $50,000 and $100,000 (according to FreeWill.com) and typically 200 times the size of the donor’s largest annual fund gift, so it’s worth the added efforts. Putting a focus on planned giving today can future-proof your organization.
- Don’t spend all your new investment in one place.
It may be tempting to go all-in on one new idea or channel that has previously been financially out of reach but be cautious. Diversify seed money to test a couple of new channels or innovations to build knowledge and gain traction in a variety of areas for smarter investment choices in the future.
- Do invest in donor stewardship and cultivation.
Donor experience is one of the key factors in retention and upgrades. But let’s be clear, this does not mean sending more annual reports. Invest in additional staff to communicate with your mid-level and major donors. Data shows that the personal connection pays for itself almost immediately. Use technology–AI, digital, and on-demand printing–to scale a more personalized relationship. In one study, consumers indicated they were in favor of AI when it provided them with a better customer experience. This may take the form of trigger and automation marketing to meet donors where they are and recommend their next action. This can mean using digital printing technology to customize communications that acknowledge and recognize the donor’s relationship with the organization. Or it could mean scaling personalized communications, so the donor feels valued.
- Don’t put it all in the bank and save it for a rainy day.
As the saying goes, “the best time to plant a tree was 30 years ago, the second best time to plant a tree is now.” Assuming your organization is stable and has appropriate levels of reserves, aim to build for the future by investing now in ways that provide a positive return on investment and the best long-term value.
- Do put some money into R&D
Doing the same thing will continue to give you the same results, or worse. Advances in technology and AI mean innovation and opportunity are at an all-time high right now. Experiment with new technologies and communication channels to reach your existing and potential donors. It’s time.
Nonprofit leaders are forced to make hard choices every day when it comes to balancing the budget. There is never enough money to do everything the organization wants or hopes to do. So, make smart investments that will attract, retain and cultivate donors. Plan to invest in strategies that build a stronger future for your mission and you’ll be singing “million-dollar” songs for years to come.
Craig DePole is President of Newport One, a leading, full-service, direct response fundraising agency serving nonprofit organizations for more than 35 years. Craig can be reached at freshideas@newportone.com.
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