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Why You Can’t Afford NOT to Invest in Fundraising
45 Plays1 month ago
Many nonprofit leaders hesitate to invest in additional fundraising staff—often out of a scarcity mindset. But what if that hesitation is actually costing your organization the opportunity to grow?
In this episode of the Abundant Vision Fundraising Podcast, Tom Dauber breaks down how to make the case for hiring fundraisers, development officers, and donor-facing staff. Whether you're a CEO, CDO, or senior development leader, you'll learn:
- Why fundraisers are revenue generators, not cost centers
- How under-investment leads to missed major gift opportunities
- What board members and CFOs often misunderstand about fundraising ROI
- Why staff burnout and turnover erode donor trust
- How to scale impact by scaling support
If you're trying to grow your mission, you can't afford to under-resource your fundraising team. Let’s talk about how to change the conversation.
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Transcript
Introduction to the Podcast
00:00:05
Speaker
Welcome to the Abundant Vision Fundraising Podcast. Whether you are a seasoned professional or a first-time fundraiser, we have the advice you need to take your next step toward major gift mastery.
00:00:18
Speaker
I'm
Host Introduction - Tom Dauber
00:00:19
Speaker
your host, Tom Dauber, President of Abundant Vision Philanthropic Consulting.
00:00:27
Speaker
Today I want to talk about something that A, I've had a lot of success, so I know a little bit about. But something also that I find is a common struggle for those of us in leadership positions and nonprofits.
Challenges in Nonprofit Fundraising
00:00:44
Speaker
And whether you are a fundraising manager, like a senior director of development or a chief development officer, or whether you're a CEO of a small nonprofit,
00:00:56
Speaker
you're probably going to find yourself in a case where you need to persuade your board or whoever else manages you when you need more fundraisers. So how do you do that?
00:01:13
Speaker
Well, and let me add this, not just fundraisers, but... i'd I'd say development or advancement staff. So would include, you know, stewardship officers. That could include administrative assistants. That could include program managers, grant writers, any number of things like that.
00:01:32
Speaker
It's frequent that I encounter people who
00:01:38
Speaker
are at organizations that have lots of potential, but they don't have all the staff to fully take advantage of the opportunity they have in front of them.
00:01:51
Speaker
let's talk a little bit about that.
Scarcity Mindset vs Investment Perspective
00:01:54
Speaker
First off, and this goes for fundraising, and this goes for fundraisers and nonprofit leaders as well, but scarcity mindset is a real problem.
00:02:05
Speaker
I mean is if if owned a for-profit business and I said to you, hey, if you'll spend a quarter million dollars, I will get you $2.5 million in profit.
00:02:22
Speaker
A CEO of a for-profit company is going to take that deal all day long. However, It's not uncommon for nonprofit leaders or board members even to look at an opportunity to make a quarter million or to make a million dollars.
00:02:40
Speaker
That would only cost them 10, 20% of that amount, either in the salary of someone or maybe in some consulting to help them. And they'll turn that down all the time.
00:02:53
Speaker
And really, when you analyze why, really does come down to a scarcity mindset. They're thinking to themselves, oh my goodness, we could never raise that much money. is an expense we can't afford.
00:03:06
Speaker
Well, I'll tell you, it's an expense that you can't afford to be without. That's really my observation. But why is that? Why is spending money on fundraising...
00:03:19
Speaker
so scary that that we don't do it. What is the problem with
Fundraisers as Revenue Generators
00:03:22
Speaker
fundraising? Well, part one of this is that accountants, sometimes board members, COOs, CFOs, a lot of times they don't understand that a fundraiser and even a fundraising consultant is a revenue generator, not a cost center, right?
00:03:49
Speaker
When we look at our budget, a lot of times fiscal individuals especially in situations where the money being raised is not discretionary.
00:04:01
Speaker
Let's say a lot of it's going to scholarship or other things, right? They're going to look at that fundraiser as someone who costs them $80,000 or really
00:04:14
Speaker
doing the math to see that, oh yeah. So if this fundraiser raises money for a facilities repair and improvements, so if if they raise half a million for that, right?
00:04:33
Speaker
That's half a million that doesn't have to come of my general budget.
00:04:37
Speaker
They don't see that. And so to them, a a fundraiser is simply going to be somebody else costing them money. And really, there's a lot of value.
00:04:48
Speaker
If you take the time to ah really look at it closely, there's a lot of value that comes from fundraisers. many times, it's not even stuff that
00:05:00
Speaker
a lot of times...
Value Beyond Money: Building Goodwill
00:05:03
Speaker
the benefits of the fundraiser, it goes a lot more deep than how much money they're raising for you. For example, fundraiser may fail to get some corporate gift, right?
00:05:16
Speaker
But in the process of trying to negotiate and explore that opportunity, they may build a relationship that leads to other types of business opportunities.
00:05:29
Speaker
they might bring internships into your program at your school, for example, that adds value to your students and allows you to actually attract more students.
00:05:42
Speaker
Or they may be able to to leverage that gift into discounts, discounted goods, or even gifts in kind that you may not be counting because they're not dollars, right?
00:05:57
Speaker
So are lots of things, well, including goodwill.
00:06:02
Speaker
You know, if you've got a good fundraiser who's out on the road a lot talking to your constituents, and and if they're working concert with your CEO to really promote a message, they can generate a a lot of goodwill for your organization in ways that are really more powerful than standard marketing.
00:06:25
Speaker
As a fundraiser, if I were to see someone, I could personally make the case as to why new leader was a great fit for the job.
00:06:35
Speaker
And I could answer lot of questions that maybe otherwise skeptical outsiders might raise. and And for each person you do that, there's a ripple effect because they're talking with their friends. They're talking with their peers and colleagues saying, oh my gosh, you you won't believe somebody from this organization actually came over and they told me these things.
00:06:58
Speaker
And they're hearing it direct from the organization. So there's a lot of power in
Building Donor Relationships
00:07:01
Speaker
it. So there's a lot of value to the work fundraisers do, even beyond fundraising.
00:07:09
Speaker
But like I said, fundraising does increase revenue. And so you really shouldn't be looking at them as cost centers. You really ought to be looking at them as profit centers, right?
00:07:21
Speaker
So the next thing to think about is that every opportunity you miss costs your organization something. You know, you're leaving money on the table.
00:07:34
Speaker
you know, let's say you're at an organization and and let's say you only have a thousand constituents or 2000 constituents, right? Well, I don't know what percentage of them are giving. I'm, I'm, I'm guessing it's, it's a smaller number, right? Maybe, maybe 20% or so, but for each one of them that you don't ask, you're actually losing a bit of money.
00:08:00
Speaker
Let's say you have a single fundraiser or let's say you have CEO who's carrying the bulk of the the fundraising work, right?
00:08:09
Speaker
Well, obviously, if you're doing that in addition to being the CEO, CEO, um you're certainly going to be overextended.
00:08:20
Speaker
You're certainly not going to be able to put the time into relationships that you need to keep them strong. I mean, when I think about ah a major gift prospect under management by a professional, my expectation would be that that major gift prospect, that potential major gift donor, would be having meaningful relationships contact with the organization that moves the relationship forward about once a quarter.
00:08:53
Speaker
So about three to four times a year, really. Now, when I think about the average CEO who's managing a whole team of people, maybe has a fundraiser that's reporting to them, putting out fires, trying to make sure that the mission of the organization moves forward,
00:09:12
Speaker
You know, many of those people really only have time to see a donor couple times a year. Well, just do the math on that.
00:09:25
Speaker
If I'm only seeing a donor once or twice a year, well, what am I doing? Well, I'm probably being the guy or the gal who only shows up when I need something.
00:09:38
Speaker
I'm not deepening the relationship with them. I'm treating them like an ATM. you know So I'm not probably spending enough time with them to build the relationship in a way that's going to lead to deeper investment and further engagement.
00:09:53
Speaker
Tom Dauber here for Abundant Vision Philanthropic Consulting. Fundraising can be hard work, and it can be hard to mentally get into the place you need to be in order to see new opportunities. Everyone struggles with it. We are like the fish in the fishbowl who just can't see the water they're swimming in.
00:10:12
Speaker
That's when
Consulting Services for Nonprofits
00:10:12
Speaker
having outside expertise comes in handy. For 25 years, I've been helping nonprofits analyze the challenges, discover new ways forward, and develop clear plans that lead to greater fundraising revenues.
00:10:26
Speaker
Now I am available to help your organization develop the abundant vision it needs to inspire new levels of philanthropy at your nonprofit as well. Check out AbundantVision.net to start your journey toward greater fundraising success today.
00:10:40
Speaker
Now, back to the show.
00:10:43
Speaker
So if that's how I'm treating my best relationships, my current relationships, well, then certainly I'm not discovering new opportunities. Who has time for that?
00:10:54
Speaker
And frankly, prospecting work is hard. It takes a lot of time, right? So if you have a a limited number of personnel hours focused on fundraising,
00:11:05
Speaker
but but Well, then you're not going to be bringing in the revenue that you need to increase your budget and grow the mission of your organization.
00:11:17
Speaker
Because what you want to be doing is fully leveraging the giving potential of your constituency. And that takes time and focus and strategy.
00:11:29
Speaker
Now, it
Major Gifts vs Annual Gifts
00:11:30
Speaker
can be done part-time. And if you have a coach like me, for example, I could help you do that. That's something that I do professionally. And if you can't afford a full-time fundraiser, I could probably get you the point where you could.
00:11:45
Speaker
But it's going to take some time really to focus in on that.
00:11:49
Speaker
So the thing with major gifts is that they're not transactional.
00:11:56
Speaker
I mean, when you think about what a major gift is, right? It's a gift, oftentimes, that's really coming from... um the accumulated wealth of the individual.
00:12:06
Speaker
This is not an annual gift that's made out of my annual income. This isn't, oh, I've got an annual budget for giving and once a year I give to your organization.
00:12:17
Speaker
Those gifts are great. And those gifts from very wealthy individuals can be very, very large. I'm not dissing those types of gifts at all.
00:12:27
Speaker
But if somebody, even if they're giving you a million dollars a year, and that's just part of their annual budget, for them, that's an annual gift. That's not a major gift, right?
00:12:38
Speaker
If you want to be able to tap the illiquid wealth, for example, or the accumulated wealth over time of a donor, lot of times this would be non-cash. This might be...
00:12:54
Speaker
appreciated stock, or it might be a percentage of an estate, could be any number of things. But it really takes trust. It takes trust to get there.
00:13:05
Speaker
And back to what I was saying about fundraisers being you kind of marketers for your message.
00:13:15
Speaker
If your fundraiser is out meeting with people, spending time, building relationship with your organization or building relationships with the donor on behalf of your organization, that's what you're doing is you're building trust.
00:13:29
Speaker
And it's that type of trust that lets you move from the annual gift or even the very large annual gift into the transformational gift that's really going to make your organization go to the next level of service in whatever field they're
00:13:47
Speaker
The other thing with the type of trust that's built with one-on-one interactions and relationships, right, is that it helps prevent donor attrition.
Donor Retention Strategies
00:14:00
Speaker
was looking at some numbers the other day, 40%, 45% is you average retention rate in the nonprofit world in the US.
00:14:14
Speaker
That means you're losing 55, 60% of your donors every year. That's expensive. because it costs far more to get new donors than it does to keep the ones that you have.
00:14:27
Speaker
And the best way to keep the donors that you have is personal attention, trust building and relationship building. And again, that's what fundraisers do for your organization.
00:14:40
Speaker
So if you're talking to your board chair, if you're talking to your CEO, need to come to them, not just with the facts I'm sharing, but with real numbers to them understand, okay, we may very well lose 60% of our donors next year and 60 the next year and the year after that.
00:15:01
Speaker
That would be the average thing, 55% to 60% each year in the US, right? If we want to keep them, if we want to grow our base, we need time and intentionality and focus on our donors to build the trust and to keep them engaged, right?
00:15:22
Speaker
And then you need to make some projections off that. Like if we can reduce that,
00:15:29
Speaker
if we can increase our retention rate, well, what does that mean for our numbers? And making the case like that is how you do it.
00:15:40
Speaker
Now, on the HR side, when you think about people that are overworked, and there's a lot of a my friends in the fundraising world, in the nonprofit world, who are really overworked, right?
00:15:54
Speaker
Well, we don't want that. Because if people are overworked, the likelihood that they're going to leave goes way up. And what we want is fundraising staff stability so that those relationships are preserved and so that trust is maintained and donor confidence increases.
00:16:16
Speaker
Donors notice when you have turnover in your fundraising position.
00:16:20
Speaker
Donors notice when their development officer doesn't have time for them, doesn't get back with them. frankly, that that can be really offensive for donors.
00:16:32
Speaker
High-performing fundraising shops demonstrate consistency, professionalism, and follow-through. Burnout, turnover, communication gaps.
00:16:45
Speaker
They send the opposite message they can erode trust, especially amongst your top donors. Because they're thinking, oh my gosh, here's another one.
00:16:55
Speaker
Here's another person walking through the revolving door and out the other. Why would I want to take the time to get to know them? Because I know they're going to be gone in a year.
00:17:07
Speaker
So there's opportunity cost when we don't aim enough resources at fundraising, not just in the people that we don't solicit, but in the the trickle-down unintended consequences that happen when we're overworked and we don't provide the level of customer service that our top donors expect and deserve, frankly.
Strategic Growth through Fundraising Investment
00:17:34
Speaker
Now, most nonprofits, I would say, exist because they want to make impact. And they want that impact to grow. You don't start a nonprofit because you're like, eh, maybe we'll get around to something. Maybe we'll do a few things that are good and help a couple people. But it's not really a big deal for us.
00:17:54
Speaker
No, want strategic growth. Well, you can't have strategic growth without strategic investment. If you want to scale your impact, if you want to increase your impact, you've got to scale the support for fundraising.
00:18:09
Speaker
New programs, campaigns, geographic expansions, they require corresponding growth and fundraising capacity. If we're serious about vision,
00:18:21
Speaker
And my regular listeners will know I'm all about vision. We must equally be serious about resourcing the staff who will fund it. It is not enough, CEO.
00:18:34
Speaker
It is not enough, board chair, to say, fundraiser, go out and double our fundraising this year. It doesn't work like that.
00:18:46
Speaker
You know know depending on what part of the fundraising sector you're in, the nonprofit sector you're in, you know, it's probably going to cost you about 20 cents for every $1 $1 that you raise.
00:19:00
Speaker
In some sectors, I've seen it as low as 10 cents, but that seems a little low from my perspective. But let's say it's 10 cents. I'll just give you that, right? Well,
00:19:11
Speaker
If I'm spending $100,000 on fundraising, well, then it would be reasonable that I should expect a million dollars in fundraising revenue, right?
00:19:23
Speaker
In that same vein, if I want to grow my fundraising to 2 million and and every million dollar organization would love to be at 2 million,
00:19:34
Speaker
it follows that I then need to increase my fundraising budget proportionally. I need to spend $200,000 a year if I want to raise
Scaling Fundraising Support
00:19:43
Speaker
$2 million.
00:19:44
Speaker
So unless you're ready to increase your fundraising investment,
00:19:51
Speaker
don't go telling your, your fundraisers that, that you need to radically increase the amount of money that, that they're raising. Now, I am making an assumption. I'm making an assumption that you've got good fundraisers who are properly trained, that work hard, and that are doing their job.
00:20:12
Speaker
In some cases, you can increase your fundraising simply by having better people or training your people better. Or Shameless plug here, hiring a good coach.
00:20:26
Speaker
Somebody can come in and work with your folks. that isn't your skill as a manager to help coach fundraisers into success, I'm the guy for that. You can hire me much less than $100,000, by the way.
00:20:40
Speaker
Just a fraction of that, really. But what I'm saying is if you want to scale your impact, you've got to scale your support for fundraising.
00:20:50
Speaker
That's all the time we have today, but be sure to tune in next week to hear the next part of this exciting conversation. Now, if you've enjoyed this podcast, please be sure to subscribe and give us a five-star rating on your podcast provider.
00:21:04
Speaker
I'm your host, Tom Dauber. Thank you for joining me as we journey together towards major gift mastery on the Abundant Vision Fundraising Podcast.