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Nonprofit Mastermind Podcast
5 Questions You Should Ask During Your Annual Fundraising Planning
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Brooke Richie Babbage
As we wrap up the year, you're probably thinking about how to craft a fundraising plan that not only keeps you stable in the coming year, but maybe also drives growth. Which would be awesome. So this week I'm sharing the five key questions that you really need to ask during your annual fundraising planning process so that you make sure you have a plan that will get you where you want to go. Welcome to the Nonprofit Mastermind podcast. I'm Brooke Richie Babbage. Been in the social impact game for 25 years as a social justice lawyer turned two time nonprofit founder and leader turned growth strategist and coach for leaders around the country. I grew my nonprofit from me and an intern in a tiny closet to a high impact seven figure organization. And along the way I learned so so much about how to build an organization that has real impact and how to do it without burning out. In this podcast I share the nuts and bolts of all of it so you can do that too. We dive into the mindset, strategies and tactics of how to scale a high impact organization and how to do it in a way that's truly sustainable. Now I'm building off of last week's episode on annual work planning and I'm spending time on this theme of annual planning because intentional planning is just so critical. Making sure that you have a strong plan upfront is how you avoid scrambling later in the year. This is a drum that I will beat all the time, every day as we head into the end of the year. And also I talk about it during the year. Also I have a mid year webinar where I talk about planning. In September I start talking about preparing to plan. I'm a big, big advocate for careful planning. And I know because I have been where you are working in nonprofits, leading nonprofits, as a board member of multiple nonprofits, I know how much work there is to do and how it can feel like slowing down or even pausing to plan. It can feel like that is taking your foot off the gas, right? It's not, as my husband would say, rubber on the road. And that can actually make people feel a little panicked in the work that I do inside of my program. One of the toughest kinds of conversations that I have, sort of wearing my coaching hat, is around slowing down to plan. It always works. We always wind up in a place where the person, the leader that I'm working with feels better after we have crafted a plan. Because that sense of crushing, sometimes overwhelm, of confusion, of chaos, of balls in the air and you can't quite Figure out how you're going to make sure they don't drop. That's often fueled by clutter. Right? There are big rocks of really important things you need to move forward, mixed up with pebbles, which are important, but smaller, and lots and lots of sand. For those of you who are familiar with the big rocks approach to planning, all of those things get jumbled up in your head and you're holding all of them. And even if you know back of the envelope, these things over here are more important than these things over here are more urgent or will have more of an impact on where we want to go, you might know that, but your brain doesn't necessarily process things that way. And so until you get things out of your head and organize them strategically, meaning weighing pros and cons, looking at different factors, making sure that you are integrating what you know about your strengths, the resources available, your weaknesses, the threats on the horizon. Until you do that thinking, all of that clutter just stays in your head. And every week and every day, you are navigating it in real time. And that is where the overwhelm comes from. So again, I will say I'm spending some time this time of year talking about how to do good planning, because that is how you will have a good year. So the first question that I recommend is are we raising the right amount of money? Do our fundraising strategies reflect a budget that's based on the true cost of our planned work? So this is important because if you don't have a budget that is a true representation of your work, you won't raise enough money for your work. So this is not an episode about true cost budgeting. I have had lots and lots of conversations. I've done lots of posts, I have written emails. I also have episodes about true cost budgeting and I will link to them in the show notes. So for those of you who don't quite want to hear me go into, go go through my rant on true cost budgeting, I won't. What I will say is that it is really important that you raise the money you need. And that may feel scary because you may not know how to do it, but the how are we going to raise the right amount of money? Is a strategic question. It's a strategic question you can never answer correctly. If that number at the top of the page is wrong, if you aren't aiming for the right amount, if you're not aiming for the amount of money that will cover the cost of your actual work, the salaries, the benefits, the space, the rent, the overhead, the program costs, the stipends, all of it. The professional development. If you don't cover those costs, then you risk falling short and underfunding critical priorities. When you underfund yourself, when you set out with the wrong goals, with goals that won't get you where you're going to go. What can happen is, in addition to overwhelm and burnout, many organizations will realize that they start cutting corners. Not intentionally, but they cut back on things that actually they don't want to cut back on. It's usually not programs, but it is things that are really critical to the health of the organization. Things like benefits, things like professional development for their team. Organizations also can feel like they're constantly scrambling to patch budget gaps. So this feeling of sort of feast or famine, right, the money comes in and then a couple months later we've sort of spent it down and we're just on the edge of our seat until the next foundation check or donor event, right? The next influx of money comes. That absolutely fuels that sense of overwhelm. So, first question, are we raising the right amount of money? Second question, do we have strategies that are aligned with the money we need? Right. Are our strategies the right ones to raise the money we need so we know the right amount of money? We've checked that box. Now we want to make sure that we're doing the things to actually that will be effective to get us there. And not all fundraising strategies are created equal, and not all fundraising strategies are right for all organizations. So things like big galas or investing in five figure major donor relationships, these are things that are going to play out differently for different organizations. And this is a place where, and this is another rant that I've been on. It's really important for organizations not to look at other organizations, at what they're doing well, and try to reverse engineer their success. You have to have your own plan, your own strategy that is internally aligned with your priorities, with your strengths, with your understanding of what resources you have at your disposal and what you don't. So as you're thinking about which kind of donors you're going to build relationships with, how you're going to build those relationships, which kinds of grants you're going to apply for, and the kinds of foundational relationships you want to build, when you're thinking about the events and campaigns you want to schedule throughout the day, they all have different costs, right? Different timelines and different returns on investment. So you want to make sure that the strategies in your fundraising plan actually align with Your existing donor base and with your capacity. So the consequence of not really engaging with this question is just wasting time and money, right? It's wasting time and wasting resources on either low ROI return on investment activities or the wrong activities. Activities that don't raise the right amount of money cost more to raise the money that they bring in. That's a big one for certain types of events. I've worked with so many organizations that when they first start working with me, somewhere on their fundraising calendar is some version of a gala, and we actually break down the return on investment for that gala, they realize that they are spending $90,000 to raise $95,000, you know, or to raise a hundred thousand dollars, at which point I always ask at least are you bringing in an influence of new donors? Right. So maybe the return on the short term return on investment for that event, that in person live event that cost you $80,000 is low, right? There's a low monetary return, but the lifetime value of the new donors makes up for it. That is often not the case. So thinking really critically and strategically about the activities that you are planning to raise the money you need. Next question. Do we know who we're talking to? Do we know who our funders and our donors actually are? Understanding your supporters, their motivations, their dreams, their preferences, that is how you tailor your messaging and your outreach. That's how you build relationships, intimacy, shared affinity with your donors and supporters. When you know who you're talking to, when you know your audiences, you can communicate more effectively and inspire deeper connection and greater giving. So especially as we go into the next year, I think this has always been really foundational for any organization that wants especially to build your funding base with foundations and with individuals, talking to the right people, knowing why they care about your work, what is the nature of their affinity? That's always been important. But I think as we move into the coming year, particularly post election, being really clear about who your people are and why they are your people, why they are motivated to be in your space will be extremely important. So as you are thinking about your plan for next year, making sure you know who are our donors, right? What are the donor profiles? Who are our funders? Why do they fund us? What is that sort of nexus of affinity? Right. Fourth question. Do we have the systems in place to support a fundraising engine, not just a collection of activities? So this is a big one, because systems, strong systems, are how we scale and they are how we scale sustainably. Most of my work is focused on helping organizations go from Point A to point B. Point B being more impact, right? That doesn't always mean a bigger organization, more impact. Growth isn't always measured in more kids, you know, more programs. It means that there is greater transformation taking place because of your work and your efforts. And so what I do is help organizations craft plans and strategies that go from where they are to that next level of impact. And how do you make sure that you are building an institution that can help change the world more, right? Not stay stagnant. So really, really key to that are systems. At a certain point, you can't just do more work. So you have to systematize, you have to invest in operations. And so as you're thinking about fundraising through the lens of systems, you want to ask, do we have the systems in place to support an engine? Right. Sustainable fundraising requires robust systems like a good donor database, streamlined, often automated processes of communication, of cultivation, clear workflows. As your fundraising engine gets more sophisticated or more complex. Now, the reason I keep using the word engine is because as organizations grow, one of the most common trajectories is to go from a collection of activities. You look at a calendar and you have cultivation activities, things that you will do, events, ways that you will build relationships. You have asks, right? Campaigns, events, one on one asks. And maybe depending on where organizations are in their development, right? In their stage of growth, maybe you are also focused on what I call top of funnel, right? How you will bring new donors who've never met you, don't know anything about you new potential donors into your world. Top of funnel. So you look at your calendar and you have top of funnel, sort of identification and acquisition, an attachment, events and activities. You have cultivation or middle of funnel activities and you have bottom of funnel or ask activities and they're in your calendar and you're going to do them. An engine means that each part of your funnel flows from and reinforces the other parts of your funnel. These are not standalone activities, right? They are deeply interweb related. There is automation, there is a streamlining of movement from one part of your funnel, right? From when you first come into your world to when you give. That's how you know that you are building a fundraising, a set of fundraising activities that can over time become flywheels and perpetuate themselves. Amazing donor experiences perpetuate new donors. And when you have a way, for example, for donors, and I'm just highlighting this as one example of an engine or of what an engine produces, when you have donors that are just raving fans of your organization and you have set up ways for them to communicate how much they love what you do. That can be on social media, that can be at events where you highlight them, that can be bringing them into cultivation activities so that it's really them building community that can be activating donors as ambassadors out in the world, bringing in new people, right? When you've thought about that and systematized that, then some of the top of funnel work of finding new people to bring into your world, because it's the only way you grow is if you have new people, if your world, if your community is growing, finding those people is done in part by the people currently in your community, right? When you've systematized that, that work becomes less for you and your team, right? So that's the benefit of an engine. And so as you're thinking about your plan for next year, are you thinking in terms of setting up systems at top of funnel, middle of funnel and bottom of funnel to begin to build or if you have one, support your fundraising engine. And then the last question is, are we allocating enough resources, and by this I mean time and money and staff people power, actually staff and board, right? People power. Are we allocating enough resources to donor stewardship and to funder stewardship? So to cultivating, continuing to cultivate relationships with people who have already given. So stewardship is the key to retaining donors. It's also the key to turning one time supporters into these raving fans, right? These lifelong advocates. It is the key in the institutional funding realm to turning a one year gift into a multi year gift. I just had a wonderful, exciting conversation with one of the women in my coaching program who trans transformed a set of one year gifts, right? So she's gotten one year gifts from her supporter for the last three years into an upgraded three year commitment, right? That's stewardship. That's deepening relationships with people that already love what you do and have raised their hands to say I'm in, in some way. It is far more cost effective to keep a donor than to, than to find a new one. Far more cost effective, right? So as you grow and you think more and more about return on dollars spent, one of the things you want to track is return on fundraising dollars spent. So what does it cost me to bring in a new donor and what is the lifetime, the estimated lifetime value of that donor? And you want to do the same thing for funders and you want to make sure that it's not costing you more to bring people in than you are getting in Donation and support. So if you can bring the cost down on the front end, then you get more bang for your buck on the back end, right? You're able to reap more benefit from every donation given. When it costs you less to get that donation, it costs you less to get a donation from an existing donor. So you want to really think in your plan for next year about stewardship, right? It's year end fundraising. You're going to be bringing in new folks, new supporters, existing supporters will give at this time of the year. Really think, especially in Q1, about how you are thinking them, how you are reflecting back the value of what they've given. This does not have to be personalized notes to everyone. This can simply be an email sequence where you say you know people who gave in a certain range, get a video note from the executive director, from a board member, from an impacted community member saying you gave and it matters that stewardship. And so thinking about those little and sometimes big ways that you can thank and reflect back the value, the third reason it's important is because it will make the ask better. It'll make it easier for you to ask earlier in the year and more frequently and you're more likely to get an upgrade. So stewardship is really, really key. So those are the five questions that I recommend. I'll recap them again. Are we raising the right amount of money? Are the strategies that we've identified the right ones to raise the money we've said we need? Do we know who we're talking to? Do we know who our people are? Do we have the systems in place? Or are we building them to support a genuine fundraising engine, not just a collection of disparate activities? And are we allocating enough resources to donor stewardship now? These are not just a checklist. I have identified these questions because there are lots of questions you can ask. But these questions in particular are really a roadmap for creating a fundraising plan that aligns with your goals. It builds the organizational resilience of your institution and makes you stronger as a result of your plan, right? If you adhere to the plan and hopefully it will position your organization for growth, sustainable growth, in the coming year. So that's it for this week. I will see you back here next week for more Mastermind. Thanks so much for joining me this week. If you enjoy this podcast, I would love for you to leave a rating and a review. I read every single one and they really do matter. I also share extra tidbits and resources building on what we talk about. Here in my newsletter, Leadership Forward 321. You can sign up by texting the word impact to 66866. And finally, definitely check out the links and resources that I mentioned this episode@brookerichybabbage.com podcast see you next week.