Make your Nonprofit Business Plan volunteer-friendly and do math for fundraising/financial efficiency
I recently spoke with board leaders of a long-standing nonprofit organization who were seeking an executive director to run operations. This would be the first executive director ever hired by the organization and they had yet to develop a nonprofit business plan.
Through discussion, I found that the “operations” the board was most interested in having the new executive director run for them was fundraising. I asked for numbers: number of members, number of member-donors, revenue generated from members and other donors, and more – I asked for all the usual essential statistics.
The statistic that jumped out was total cost of mission. It became the key to my advice about their nonprofit business plan and strategy.
In the nonprofit world, the cost of accomplishing the mission is often an elusive number. You can usually assume the cost is, for all practical purposes, an infinite unattainable number. Missions just seem to grow larger as an organization’s finances increase. In this fashion, money never keeps up with need. There is always more mission to fund than there is money to do it.
Not so for this organization.
This organization delivered a specialized education service and its leaders had no desire for it to become something other than what it was. Good for them, I thought.
But I also wondered why they wanted to hire executive staff and pay for all the added expense that entailed. The projected cost of the new executive director almost equaled the total amount of money the organization needed on an annual basis to accomplish its entire mission. They would instantly become like so many other nonprofits: any funds raised would now go to cover fixed administrative costs first and mission last.
An executive director assigned to raise funds would first have to raise funds to cover his or her salary and operating costs, and then raise that same amount or more to fund the mission.
I assumed funds would have to come from the same members who had been donating funds over many past years.
I did simple arithmetic. The mission cost was not a large number. The number of members was not large either. But there were enough members so if only 10 to 20 % of members contributed a rather modest amount annually, they would be able to fund their entire mission. In addition, many of the members were at or near retirement age and fully capable of holding modest fundraising events in their communities. Just a few small reasonably successful events each year could cover mission costs. A reasonably well-developed nonprofit business plan would have revealed the numbers and ample opportunity.
I advised the leaders of my arithmetic. I told the leaders the organization had enough members from which to raise the amount of money needed to fund the mission. I didn’t see the total amounts needed to be raised for the mission to be much of a stretch. Doubling that amount to add staff and so on would be more of a challenge to raise from members.
NO, the organization’s leaders implied. We want our executive director to raise money from someone else. Not from us. We want to get foundations to pay for our mission, they said.
I suggested the best nonprofit business management decision was to avoid the costs of a paid staff and use volunteer fundraising techniques. I suggested they more effectively empower (and train) members and board members to become fundraising volunteers – I suggested they start by reading my book, Money for the Cause, which is all about empowering volunteers with knowledge and confidence needed to hold successful events and otherwise conduct volunteer fundraising. Plus it provides plenty of reason and all the directions necessary to build a nonprofit business plan.
Alternatively, I suggested leaders press the members a little harder for donations by doing a little networking and creating an annual volunteer-driven fundraising campaign. Either way, I suggested if the mission really was important to members, then funding the mission by members should be easily attainable given the number and economic status of the members.
“If members are unwilling to fund the mission how will the organization’s leaders convince anyone else to do it?”
Ultimately the organization’s leadership hired their first executive director. Their newsletter proclaimed the board can now switch from being a working board to just simply governing.
UPDATE: Within less than a year, a subsequent newsletter proclaimed the new executive director had departed the organization.
Effective volunteer empowerment in fundraising is key to cost efficiency in overall nonprofit business management and leadership for many nonprofit organizations. Some organizations simply do not have the volunteer base to roll out a volunteer fundraising strategy. For those organizations that do have member-volunteers, failing to empower this potential workforce ignores the most efficient and often effective fundraising strategy available to any nonprofit. Whether that be a charitable or social-advocacy organization, member-volunteers lie at the ready in plain sight, waiting to be activated.
Develop a board member- and volunteer-friendly nonprofit business plan for your nonprofit organization.
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Rudolph Rosen, Ph.D. is author of Money for the Cause: A Complete Guide to Event Fundraising Published by Texas A&M University Press.
(c) Rudolph A. Rosen, 2015