“If We Build It, They Will Come”: The Magical Thinking Syndrome
Let’s spend this week diving into a story.
Three years into a stalled capital campaign, an arts nonprofit finally engineered bond financing in order to build the facility that the then-executive director and the board were determined to have. A consultant was hired, changes were made, but despite all that, the campaign wasn’t completely successful. Now, with the building built and five years removed from the campaign, the organization is saddled with bond debt and the board has decided that another campaign is called for – to retire the bond debt from the first campaign.
When do you think the last time the development office did a full screening of the organizational database? Eight years ago, because the board won’t authorize money in the budget to do so.
What is wrong with this picture?
The board in question is relatively high-performing. Most have given six-figure gifts toward the new effort. But the board expects the development director to go back to prior campaign donors for more donations and somehow magically keep the annual fund on a growth path, all without additional resources. What’s worse is they now have a thriving membership program but have no idea about the capacity and inclination of their members.
We have seen it time and time again here at WealthEngine. It’s like the movie “Field of Dreams” – but without the happy ending.
A board, or a president, or an executive director thinks, “If we build this facility, we can serve more people.”
Or, a board will say: “Well, if we have all given a six-figure gift to this cause, then there will be sixty other people in town who will do the same,”
Or worse: “We just need to find 1,000 people to give us $1,000.”
They will disregard a feasibility study that warns against an ambitious goal, launch a campaign, and double the goal for good measure, then blame the fundraising team for not achieving the impossible.
This is magical thinking.
Unfortunately, it’s so common, that we call it the Magical Thinking Syndrome.
Does your organization have the ability to absorb the additional operating expenses a new facility will incur – even if you successfully raise the entire amount you need? It costs money to pay additional staff, keep the lights on, pay for upkeep and additional supplies, add insurance costs, etc. Your board is undoubtedly made up of hard-working, generous, well-meaning individuals who are correct about one thing: Of course there are likely to be people with high capacity. But do those people share the board member’s inclination to give a gift to a particular organization? Are they one of the “usual suspects” in the community to whom every nonprofit, large, medium and small, goes with their hand out? And, quite frankly, where is a fundraiser to find 1,000 people willing to donate $1,000 to a particular nonprofit?
Boards and visionary executives aren’t the only ones complicit in this dilemma. Some fundraising professionals take the “glass half empty” approach and won’t advocate for themselves or their staff to be given the resources with which to do their job. They spend their 60 and 70 hour weeks packing more and more things into their schedule with the same results.
Without screening donor data, fundraisers have no actionable information with which to work. It’s like throwing someone deep into Carlsbad Caverns, turning off all of the lights, and expecting her to find her way out — in less than an hour.
The mountaineer, Eric Alexander best known for leading his blind friend, Erik Weihenmayer to Mt. Everest’s 29,035 foot summit, wouldn’t consider setting out without a map, a plan and a strategy for meeting all the possible scenarios.
Neither should fundraisers.
And boards (or senior staff) shouldn’t expect them to.
Even before embarking on a traditional feasibility study, a data or wealth screening, along with a major gift model and planned gift model, should be conducted. Wedding the best of data analytics with personal conversations can provide lasting return and insight on where your organization stands in the community and where it ranks in your donors’ philanthropic priorities.
The return on investment for a data screening can easily outweigh the modest cost. To learn more download WealthEngine’s white paper, Measuring Fundraising Return on Investment and the Impact of Wealth Intelligence.
In fact, think about including it in your board packets for the next meeting.
A few questions to ask when considering a capital campaign:
- Can our nonprofit absorb the additional costs of a larger facility, including furnishings, fixtures, overhead, additional salaries, insurance, utilities, upkeep and more?
- Is there an endowment in place to provide a financial cushion for these items? Or, is an endowment part of the proposed campaign goal?
- Can you spend money to raise money? (In other words, is there a commitment from the board and key leadership to create a campaign budget, including additional staff, data screening, donor recognition and other essential elements?)
- When was the last time you did a thorough screening of your constituent database?
- Have you had major gift and planned gift models run?
Do you have a similar story to share? Let us know in the comments below.