Non-Profit Deep Dive 4: What takes a non-profit from good to great?
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NPO Deep Dive Part Four: Good to Great in a Culture of Poverty

I have been a professional fundraiser for 19 years and in that time working in four different countries, I have worked in all sorts of non-profit organizations; the good, the bad, the ugly and the great.

The great are not as common as they should be, but are such a joy to get to work at. Having been lucky enough to work at a few great ones I have dissected all of the organizations and looked for what was the differentiating factor that makes a non-profit great. I am a firm believer in only working at organizations whose mission I am passionate about, so that wasn’t the indicator. Every organization filled me and the donors with the amazing sensation of good feelings when seeing someone or something benefit from the charities impact, so that’s not what made the great organizations great.

Instead, I trace the distinctive factor of great non-profits as those that were properly resourced. To be clear, these are not the organizations that had the best endowments or revenues, but rather those organizations that acutely understood the funding mix required to be great. Those that had management teams and staff that struck the balance on the budget of what was required to deliver amazing programs and what was required to fuel the back office of fundraisers, communications staff, administrators and finance professionals.

In a sector that is held to strict standards and donor accountability of the “cost to raise” a dollar, it is all too easy for management teams to slash back office staff and up-to-date tool sets to do their job well. The sector actually encourages it — lauding those that give maximum resources to program delivery. Up until 2010 the Canadian Revenue Agency (CRA), Canada’s governing body for charities legislation, demanded an 80/20 expenditure requirement and the national average is still about 20 cents to raise a dollar. Having worked in the non-profit sector for a long time, I understand that these expectations exist for a number of reasons, and not least from keeping fundraising gala committees from spending all the profits from a special event on Cristal and rare orchids for table centrepieces.

So what do the non-profit organizations that have moved from good to great and still keep within cost to raise a dollar rations do with their financial planning? Great organizations:

Realize That Activity Drives Dollars

Non-profits that have the wherewithal and toolsets to record rolling averages of fundraising success will always have the upper hand. How many prospects need to be cultivated and solicited in order to obtain a donation?  These equations will be different for every charity but as soon as an organization can accurately forecast how many prospects they must have in “the hopper” at any time and how many donors calls and interactions are required to move the relationship along to get the gift, they can understand the investment required. Non-profit best practices recommend arriving at these averages by using three to five years of data. Is the non-profit organization you work at doing everything they can now to collect, store and use this data today?

Understand the Fundraising Pyramid

The donor pyramid which has been around since the 60s when it was defined by Robert and Joan Blum, illustrates how donors engage with a charity, with the base of the pyramid being the first gift, moving up to annual gifts, upgraded gifts, major gifts and then ultimately a gift included in a will.  Now, while it would the most cost effective if every gift to a charity was a bequest coming through a will, this isn’t how fundraising works. Charities need to ensure they have resourced adequately for each of the levels on the pyramid, appreciating that acquiring donors will be the most expensive, yet a necessary process to identify supporters who will ultimately move up the pyramid. Striking the balance and allocating appropriate resources for each fundraising strategy associated with the different levels on the pyramid requires sophisticated financial management which is integrated with fundraising activities.

Are Nimble to Respond to Financial Changes and Pressures

No different than diversity in an investment portfolio, charities must have a number of different irons in the fire when it comes to the type of support they receive. We have all heard the stories of charities doing good work that have had to close after their government funding was cut.  Great organizations are able to reallocate resources to ramping up other fundraising streams should it look like a particular revenue stream is going to be negatively impacted. Strategizing plan B, C, and D is much easier when there is accurate and easy to use financial reporting tools at hand.

Are Organized

It isn’t a secret that many supporters to an organization make “test gifts” a first gift to see how a charity will treat them as a donor. For example, the time it takes a charity to acknowledge a gift, issue a tax receipt, accurately report on the gift in the annual report all represent actions that show a donor how organized you are. If your charity is struggling at any of these steps it is unlikely a donor will renew or give a significant gift. Large non-profits are often able to obtain large gifts because they have high priced needs but also because donors know their money is safe with them, that they have the capacity to look after the gift properly. Small and medium sized non-profits should always be asking themselves if they have the tools in place to be able to look after a donor’s gift in the best possible way. And yes, perhaps a small charity can track a gift using a shoe-box and a calculator  -but what is going to make a donor feel better? Probably a sophisticated financial management system.

Communicate

The term “working in silos” plagues non-profits because of the specificity required to do the various required roles of fundraiser, finance, administration and program delivery. However, the great non-profit organizations have pushed over the silos and turned them into information super-highways where finance people understand the fundraising process and fundraisers understand the needs of the program delivery staff and vice versa. In a busy fast paced environment it can be a challenge to ensure everyone who needs to know, knows, however great organizations have tool sets such as donor databases and financial management systems, plus useful, easy to access reports that make communication easier. While these toolsets do require an investment, they just might be the catalyst that moves your organization from good to great.

Interested in talking more about this. Get in touch!

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