By Guest Blogger: Sherry Quam Taylor
Consultant, QuamTaylor LLC
Nonprofit organizations are often staffed with sacrificial leaders striving hard toward achieving admirable missions, full of passion and great ideas to make an even greater impact in the world. At the same time, many are struggling to grow beyond their initial successes. Research indicates that 74% of the 1.4 million charitable organizations registered in the U.S. never reach the $500,000 mark in revenue, and most of these never hire more than five employees (Source: Urban Institute’s Center on Nonprofits and Philanthropy).
This begs the question: Why is the $500,000 mark such a sticking point for revenue generation? The same development approach, tactics, and methods that once served the organization well during start-up will not act to propel them to the next phase of growth. Something must change.
I’ve found it often it takes an outsider’s perspective to bring clarity to problem areas and processes that may have worked at one time but aren’t working anymore. Often the solutions are not that far out of reach, but leaders are too overwhelmed or in too deep and blind to the issues.
So what are some of the most common areas holding back organizations from growing past this funding threshold? Don’t worry, most executive directors in this funding pocket voice similar challenges and concerns about this growth plateau. As you lead your organization through the year, there are a few practices you need to consider:
1. Are you presenting your actual and real financial need to donors? The worst thing you can do is base this year’s budget solely on last year’s performance. The leadership needs to establish the overall programmatic need first, then determine the actual funds the organization needs to achieve this mission. Lead with mission when presenting your budget. Donors need to know your overall funding plan and their critical role in it. There are many ways to articulate the budget so that it can enhance your development strategy. Always extract the budget into the IRS Report 990 standard categories. (You know how to read and present your 990, right?)
2. Have you also projected your budgeted income per month for accountability? Within small organizations, there is rarely one dedicated individual who is working full-time on development. Because of this, the leader must not only create job descriptions for the staff and board members – but also provide accompanying metrics and goals for each member. For each team or person, the financial goals per month should be forecasted and tracked within the budget and reported on the P & L in your monthly development meeting. (You are hosting a monthly development meeting, right?)
3. Are you treating all your donors the same? Each of your donor groups have different needs. A constituent that gives a $10,000 annual gift and one that gives $25 per month need to be treated differently to ensure retention. Is it time to invest in software to help you plan and track donor engagement? Are you customizing each donor’s experience with your organization? If you are not, then you will likely see donor retention fade. On the other hand, committing to deep engagement, reporting, and expressions of gratitude will remind donors why they gave to your organization in the first place. (You’ve invested in software to track your donor’s touchpoints with your organization, right?)
4. Do you exceed your donor’s expectations when thanking them for their gift? This biggest mistake nonprofits make is the step after the initial thank-you letter has been mailed. Wait! You are not done! You need to track and report how their gift was actually used. This is perhaps the most important step in deepening the donor’s interests to your mission so that they continue to invest. Donor acknowledgement looks different for every level and size of supporter. Investing in relationships doesn’t have to look like power-lunches and gift buying. But it should look like investing in ways to get their attention and knock their socks off—like creating a quick, exclusive video snippet for your largest donor to show him/her the impact of the gift. Or creating a special report for a financial-minded donor to express the ROI of that gift. (When was the last time you went above and beyond to simply thank your donor?)
If these topics and concepts are already in your daily management process – awesome work! Keep on doing what you are doing and you will succeed in growth!
QuamTaylor LLC focuses on growing the charitable revenue of small and mid-sized nonprofits. Walking hand-in-hand, Sherry provides development and organizational strategy, coaching and tools to help growing or plateaued organizations meet their greatest potential. After years of nonprofit work, she has identified hurdles and challenges that are common to every organization and whittled them down into a 12-Step process that guides your organization through the narrow path to growth.
