Nearly two months have passed since BoardSource — along with its partners at Guidestar, BBB Wise Giving, and AFP — released its new tool, Measuring Fundraising Effectiveness (MFE). In those eight weeks, we’ve seen an incredible amount of interest and feedback from the press, from nonprofits we serve, and from the philanthropic sector as a whole. It obviously hit a nerve! In my nine years here, I have never seen the type of attention and hunger from stakeholders as I have with Measuring Fundraising Effectiveness.

It is clear that funders and donors have been struggling for far too long to understand — based on the information provided — if an organization is making effective decisions as they relate to their  fundraising efforts and to measuring their fundraising “success.” And, it’s not hard to understand why this is. When you read about fundraising costs for nonprofits, one of two positions emerges: (1) Nonprofits should be free of restriction and allowed to spend at will to raise money, or (2) fundraising costs are too high and the percentage of dollars going “towards the mission” is the only metric that really matters. BoardSource believes that neither of these positions is wholly accurate and that there should be more nuance to the discussion.

That’s why we have created what we believe is a responsible and reasonable way of thinking about fundraising effectiveness. This framework emphasizes three essential measures of fundraising performance, and provides a conversation guide for boards and leadership teams to discuss their results, teeing up important questions such as:

  • Are our fundraising efforts delivering a strong return on investment?
  • Do we understand the risks or weaknesses of our fundraising strategy, and are we appropriately managing those risks?
  • Are we resourcing our fundraising program in a way that invests in our long-term growth and sustainability?

Judging by the feedback we’ve received since we launched this initiative, it’s apparent there are a lot of people of people in and outside of nonprofit organizations who agree with us and who are looking for a tool that helps nonprofits explain why they do what they do and what an effective fundraising strategy looks like.  You see, when an organization holds a fundraising event, such as a golf tournament or a large gala with an auction, it likely costs a lot to set-up, manage, and run the event. When looking at the numbers from an outside perspective, it may seem that the return on investment (ROI) is small and not worth the energy. And, the argument goes, if you are not making a lot of money, then the event isn’t successful. But, is that always the case? Recently, I attended a gala where I had a wonderful meal and left. I didn’t donate to the organization, and I didn’t bid on anything at the auction. But, I know that organization now, have made donations to it since, and have told others about the great things it is doing in my community. Was I a “value add” for this organization? I don’t know, but I do know that more people are aware of the organization now, and I open every one of its emails and I plan to give again. Broad-based fundraising strategies, like these events or direct mail, may cost a lot of money and manpower but they often open the organization to new donors and sometimes entirely new communities.

On the other hand, when an organization pursues large gifts only, it may land a few for a relatively low cost. But, what happens when those few donors are no longer available to the organization and there is not broad support beyond those targeted individuals? The organization will find itself having to scramble for new sources of funding. When we only look at immediate ROI, we fail to see the long-term impacts of a smart donor accumulation and retention strategy, and high ROI strategies often fail to take into account the risk of high dependency on relatively few donors. There has to be a balance.   The organizations with the most strategic and sophisticated fundraising strategies work to build a robust program that balances the risks and rewards of different fundraising tactics through a blended portfolio or strategy. They acknowledge that different fundraising tactics have different strengths, and work to build a cohesive strategy that matures and grows over time.

This is why it’s important to know that whenever you’re looking at an organization’s fundraising effectiveness, you’re looking at a moment in time, which doesn’t tell the story of how an organization might be investing in tactics to yield long-term results. It’s also dangerous to evaluate an organization’s fundraising strategy on the basis of one single tactic — an individual event or fundraising mailing. The interdependencies and building of tactics over time point to the importance of looking at results across the entire strategy or portfolio of tactics and over a reasonable period of time; we recommend three years.

But, of course, you already know this, and that’s why you’re here. You know that the press often get it wrong when reporting on “overhead,” and you know that many in the sector get it wrong by overspending and straying from a focus on ethics and mission. You, on the other hand, are confident that you are doing it right, and have been looking for a tool that helps you communicate that in the best ways possible. Not just a tool for you either. One that will allow others, like the board and staff to effectively communicate your fundraising strategy as they tell the story of your organization and its mission

As many of you have told us, the Measuring Fundraising Effectiveness tool is that tool, and we couldn’t be more pleased. But the story doesn’t end there. We want to do more, and we want to hear from you. Let us know how you’re leveraging this tool and how else we can help. Together, we can create a more informed donor, a more informed press, and a better fundraising environment for us all. If the numbers for this campaign tell us anything, we are already on our way.

Andy-Davis-BoardsourceAndy Davis
As BoardSource’s director of education, Andy Davis is responsible for creating and delivering the public trainings that BoardSource offers to the nonprofit sector, overseeing the BoardSource Certified Governance Trainer program, and aligning BoardSource’s educational offerings across departments. Additionally, as a BoardSource consultant and trainer, Andy works with the organization’s clients nationally, developing and delivering our respected consulting and training services.

Prior to joining BoardSource nine years ago, Andy served as a professional development coordinator for Quality Enhancement for Non-Profit Organizations (QENO) in Wilmington, North Carolina. He holds a master’s degree in public administration with a concentration in nonprofit management from the University of North Carolina at Wilmington. Andy also serves as the chair of the national advisory council of AmeriCorps Alums and is a charter member of the selection committee for the Center for Nonprofit Advancement’s Board Leadership Awards.

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