How to Set Realistic Fundraising Expectations
Everyone at your nonprofit wants to earn more revenue and raise more funds. As you plan your fundraising, how much can be raised is always unknown, and setting fundraising expectations is fraught with potential conflict.
- Boards and CEOs seek to motivate staff and create momentum, so they set optimistic income goals.
- Development staff faces the challenges of raising money, starting at zero each year. They strive to set conservative fundraising goals.
The challenge comes from the gap. Left unexplored or even assigning a number to be raised without consulting everyone involved leads to stress, suspicion, conflicts, and, in some cases, resignations.
Moreover, you’ll face shortfalls if you build the budget around overly optimistic fundraising goals.
Can you bring your board’s high aspirations and staff’s fear of the unknown into sync? Moreover, can you use this divergent thinking to forge a better partnership to do the work of raising the funds?
How can you close the gap and set realistic expectations? Together, explore the whys behind your expectations and hopes. Get expectations out in the open and boost everyone’s understanding of how nonprofits grow revenue.
🔍 Fact-Finding
This post outlines fact-finding and some conversation topics to achieve these that will help you. It includes five topics to explore and two reality checks.
You might make this conversation the focus of a retreat. If time doesn’t allow, you can move toward syncing expectations in a focused, data-rich 60-minute discussion. (Watch 3 Board Fundraising Planning Musts that Get Remarkable Results to get your duck in a row on how the board can move the need regarding fundraising planning.) The conversation will save you, the development staff, and your board frustration.
To prepare, staff will want to gather supplies and information from the field and the nonprofit. Furthermore, do a run-through by answering the questions asked below yourself.
Get Your Fundraising Expectations in Sync
Guidelines for a Structured Conversation
To start the conversation, begin with your overall income goal. You might have everyone throw out a number. Or if much of your income is set, say by government funding, one income stream, such as individual donations.
Fundraising Planning: How to Estimate the Amount of Nonprofit Income You Can Raise
1. Experience
Explore the range. Which of the estimates represents moderate growth based on your experience? For example, in the last three years, you raised $95,000, $80,000, and $90,000 in donated income; a growth rate of 10 percent above the average (the three years added together, divided by three-plus 10 percent of the total), or $96,666, represents a fair stretch. Growth rates based on last year’s unusually successful year, or flat and arbitrary rates of 25, 50, or 75 percent, all other things being equal, tend to be overly optimistic.
2. Industry Standards
When you launch a new venture, you can’t use the experience as a guide. As a result, you’ll want to consider industry standards. When it comes to donations, giving trends vary by organization size.
However, even if your effort is ongoing, industry data is helpful. What income estimates represent the sector’s experience? For example, theaters traditionally earn about half of their income. How close are you to that number if you’re a theatre?
Therefore, consider the goals and growth rates in nonprofits and your sub-sector. Do you expect to obtain vastly different amounts? Do some or all of your expectations fit the industry? If you differ, why?
3. Is Growth Realistic?
Every nonprofit must grow long-term. However, income growth may not be a realistic expectation in a given year, especially after windfall years.
Some clients discover that their best approach to raising funds in the next period is to cement their current income. This means they will try to raise again what they raised last year.
After recent growth, estate gifts, and capital campaigns, income stabilization efforts are often practical.
On the other hand, if you haven’t experienced any growth, setting a goal to grow your revenue makes perfect sense. This is true, especially if you have been increasing your staff and board investment in donor stewardship and connecting with funders. You want to figure out what people will actually do.
Is it reasonable for your nonprofit to expect growth this year, or is it time to hunker down and perpetuate your success? As you set your expectations, confirm that the income you obtained last year is secure.
Which estimate represents income you are sure you can repeat? If growth is appropriate, what amount represents a good stretch?
4. Strategy
Do you have a realistic strategy to get there from here to there, that matches your expectations? A strategy is a course of action to reach a goal. That is, how you will win. It’s how you will win the fundraising competition you face (you have a lot of competition for dollars) and what makes your value stand out.
You can have all the pieces to make a ship model in a bottle, but if you lack the instruction sheet —the strategy that gets you from here to there—your pieces will gather dust. Likewise, you have great hopes for raising funds, but if no course of action exists, your hopes will gather dust. What strategies do you have to reach the low estimates? Are there other strategies to get to the high numbers? This part of the conversation narrows down the course of actions you will use and your expected revenue outcomes.
5. Resources
You can’t make a ship in a bottle without a bottle, glue, and ship parts. Does your nonprofit have the resources at hand to develop income? To make money, you must invest resources. These include skills, time, effort, and money.
A surgeon can be an expert at brain surgery on paper and have a whole hospital of resources, but would you let him approach your skull if he never operated on anyone?
There is nothing magical or unknowable about obtaining nonprofit income. Skills help, but experience is better. Both allow you to access more revenue with less effort.
Do you have access to people with skills? Do they have experience with success? Are they available now, or will they begin later this year? If they start late, will you reduce your expectations accordingly?
Creating Your Fundraising Estimate
At this point, you have the information to create a realistic fundraising expectation. Yet, things can still go wrong. You need to do two final bandwidth checks.
Double Check Your Fundraising Estimate with Reality
Many of us have exercise equipment and the know-how to use it, but it gathers dust and cobwebs. Owning resources and skills to use them is inadequate. One must also have the time and commitment to pursue income. You may have incredible prospects, such as a long list of wealthy widows with no children – but if staff and volunteers lack time to cultivate them, are your expectations realistic?
Nonprofits are frequently time-challenged. You may feel drained by the constant demands on your time and attention now, much less adding to the work. (See this article to save 30 days per year.) So, ask, which range of numbers reflects the reality of the effort you will have to invest in obtaining revenue next year?
Finally, you need money. The adage is true: to make money, you must invest money.
Obtaining income will incur transportation, communications, and supplies expenses. You will want to buy your donors’ lunch. Notecards will allow you to send a nice thank you to the person who donated boxes of items on your wish list. You will want to invest resources to do fundraising first class. Check your work. Have you invested resources to do a knock-out job of your public-facing fundraising efforts?
Your Fundraising Expectations in Sync
If you now lift ten pounds of weight, a realistic expectation this month is to increase this to fifteen pounds—not 100 pounds. Unreasonable expectations include too little stretch; you stay with the ten pounds, and too much, you expect a hundred. See this post about How to Deal with Unrealistic Fundraising Expectations.
In your nonprofit, too low-income expectations result in underperformance. Too high stress reduces performance. If the expectations are deemed impossible, there will be actions but no conviction behind them. To maximize your income, you need “just right” expectations.
Follow this link for more information about fundraising planning
If you want to know even more about fundraising planning, please don’t hesitate to reach out. I’d love to help you create a process to set realistic fundraising expectations and a dynamic plan to make your nonprofit thrive long-term. Schedule a time for a free discovery chat here.-Karen
