It’s a tale seemingly as old as time in non-profit fundraising: finance and fundraising departments entwined in a passionate yet delicate dance. The fundraising team is tasked with raising the money that keeps an organization operating and the finance department is responsible for managing those funds. It’s a constant balancing act between the needs of the organization and its mission, made even more intense under the hot spotlight held by conscientious donors.
For as long as we can remember, paying for core operational costs through fundraising has been difficult. In recent years, it’s become one of the single most important considerations on a non-profit’s scorecard. A full three quarters of Canadians believe charities overspend on administrative and fundraising costs, according to a survey by the Muttart Foundation. So these individuals give elsewhere, or worse, choose not to give at all. This is what we call the overhead objection.
The solution is to bridge the gap between finance and fundraising; to show that your organization is both financially secure and impactful. This type of transparency could increase donations by 50%, according to a report by Fidelity Charitable. While so many charities struggle, those that show investments in strong infrastructure and inspiration are the organizations that will survive. Non-profits with healthy reserve funds and strong leadership have the ability to tackle huge changes and hurdles before us.
In this blog post, we’ll share three actionable strategies that will help you connect inspiration and infrastructure to maximize your organization’s effectiveness—and finally impress the critics. You’ll learn how finance professionals and fundraising teams can work together by doing the following:
Finding inspirational non-profit fundraising priorities.
Communicating the full cost of a project.
Putting strong policy in place to guide fundraising projects.
Why is it important for finance and fundraising to work together?
While it’s true that finance and fundraising dance to different choreography—they often speak different languages and have different key performance indicators—they are both critical to the success of an organization. And in the eyes of their donors, it’s not the steps they take, but the way they move together on the dance floor that matters.
When researching an organization’s financial information, the top two things potential donors look at are financial efficiency (70%) and impact (59%), according to the report, The Next Generation of American Giving. They want to know their investment is sound, and that the organization will be able to maximize its impact in the communities they care about for years to come. That’s why finding the sweet spot between finance and fundraising is essential in non-profit fundraising. A strong and strategic relationship between the two can not only help you attract new donors, but also keep the ones you have—giving your organization a sustainable way to achieve its long-term goals.
How can finance professionals and non-profit fundraising teams work together?
Strategy 1: Find inspirational fundraising priorities.
It’s no secret that people support the causes and communities they care about. Working together, finance and fundraising teams can find inspirational ways to raise capital where core funding falls short.
For example, your organization may have a need to pay down debt. Rather than focusing on the output—a strong balance sheet—focus on the outcomes. This approach is a win-win for both finance and fundraising teams, because working toward a shared goal of raising money for programs and impact can free up core funds to pay down debt. This may enable you to expand cultural programming, increase outreach and collaborate with partners to amplify your impact. When your organization can focus your fundraising priorities on the inspirational front-line work you’re doing, your donors will surely note the difference.
So, before planning starts on your next funding priority, meet with your colleagues to find the inspirational stories that fundraising can leverage to fill the gaps and maximize potential revenue. Once you’ve aligned on needs, share your mission and vision with your entire organization. Effective non-profit fundraising requires everyone to know why they’re raising funds and how they’re going to mobilize supporters to help.
Strategy 2: Communicate the full cost of a project.
Finance and fundraising teams working together from the outset will not only ensure your next campaign maximizes opportunities for giving, but also that it is budgeted effectively and costed realistically.
For example, your organization may be seeking to commemorate the life of someone in your community with a memorial bench. The cost of commemorating a bench can vary significantly from a few hundred to a few thousand dollars. But if the price point is too low, the bench will cost more to install and maintain—and your donors may be unhappy with this. To communicate the full cost of this project, you’ll need to consider the cost to purchase the bench as well as the cost to install and maintain it long-term.
Finance and fundraising teams can can work together to answer key questions in the planning stage, like:
Have we included direct and indirect costs of the project?
Has donor recognition been considered in the full cost?
What is the plan to cover related fundraising costs?
What are the startup costs to consider to get this project off the ground and how will they be funded?
Covering these critical questions now can avoid potential conflicts later. When fundraising teams are equipped with the full cost of a project, they can help donors understand the full impact of their contributions—using the right language, tools, and stories to engage them.
Strategy 3: Put a strong policy in place to guide non-profit fundraising projects.
From tax issues and implications to non-profit codes of ethics, charities and fundraisers are facing increasing risks, regulations, and responsibilities.
Take for example, the comprehensive fundraising campaign that fell short of delivering the donor recognition wall that was promised. The organization lost credibility with its donors and as a result, impacted their ability to raise funds from those donors for future projects. To avoid this situation, projects must be costed realistically, funded properly, and backed by policy.
Working together, finance and fundraising teams need to consider whether policies include:
Your organization’s approach to beginning projects before they are fully funded
The requirements to include full costing in project plans and funding goals, such as donor recognition, planning, and overhead
Ensuring that strong naming and gift acceptance policies are in place
Finance professionals know policy. So, ensure that your fundraising priorities are supported by policies and procedures that protect your organization’s infrastructure. Finance and fundraising teams should be available to each other on an ongoing basis to help keep projects on track and steward the interests of the entire organization. The more you share and connect, the more effective you will be.
Improve impact by bridging the gap between finance and fundraising
Of course, trust and communication underpin all of these strategies. In any dance, the steps will only look effortless if both partners are moving in sync, confident in their own skills and in their partner’s strengths. Finance teams should be considered critical advisors to any campaign, and a solid sounding board. So, get out there and share your expertise and experience with the whole organization. With time, your friends in fundraising will come to rely on your strengths to help them soar.
In this post, we’ve given you three actionable strategies to align your vision and goals, and connect inspiration and infrastructure, to maximize your organization’s effectiveness and overcome the overhead objection. Building a strong relationship between finance and fundraising takes a concerted effort, but we’ve seen first-hand the benefit it can have in non-profit fundraising—and we’re here to help if you need it.
As dedicated consultants, we’ve helped countless non-profit and charitable organizations build organizational capacity. Learn more about how our team of seasoned professionals can help you improve impact by connecting inspiration and infrastructure.