Why Nonprofits Set Unrealistic Income Expectations and How to Fix It

At a recent workshop, the participants wanted magic wands to help them set realistic expectations. Who wouldn’t want a little magic to determine your nonprofit revenue?  Setting realistic expectations helps you personally and professionally plan for accomplishments, improve satisfaction, and reach your goals. Setting realistic nonprofit income expectations helps your organization stretch toward stability and practical, repeatable growth. While we can’t promise you a wand from Ollivander’s specialty wand shop, this article empowers you to set realistic expectations.

What are realistic expectations? They are expectations that forecast future achievements with reasonable accuracy. Realistic expectations represent moderate stretches and exciting challenges and create eustress, the right kind of stress.

Why We Set Unrealistic Expectations

The most common reasons, and the way they sound, include:

Misreading the task’s complexity. “Besides the mailing list and letter, we forgot that we need to design an envelope and pledge card for this annual appeal letter.”

Failure to dedicate time. “I was trying to launch this new service and prepare for our special event.” “I planned to contact the foundations this month. I never put it on my calendar, and the month just flew by.”

Not calculating for discouragement. “I made ten calls to donors this month; after the 10th call, I couldn’t think of anything ways to motivate myself to keep calling.”

Lack of resources and a strategy to get there. “No problem. We’ll increase donations by 50 percent to meet our expenses.”

Not anticipating fear. “Our nonprofit board said they were committed to developing individual donors, but so far, they have not given us any names of their friends.” “I was afraid to tell them that increasing donations by 25 percent was unrealistic, even with a plan.”

Setting Realistic Expectations

How can you establish a solid estimate for what can be done? This article focuses on the soft skills surrounding setting appropriate expectations in nonprofit organizations with examples.

1. Start Right. Setting realistic expectations begins with clear goals, strategies to reach them, with prioritized activities. Take, for instance, creating new donors. To generate more, you need to determine how you will meet them or if you will instead let them find you.

2. Get Specific. Know what you want to achieve. Keeping in contact with all donors, while desirable, is not specific. Keeping in touch with all donors with a monthly newsletter and the top 25 with a quarterly telephone call is precise.

3. Break BIG Tasks Into Daily Allotments. If you need 120 new nonprofit members, ten a month is conceivable, and once per day is “meal-sized.” Break down yearly, monthly, and weekly goals into daily disciplines. Schedule the essentials each day. Start small, celebrate little successes.

4. Set a Best Guess. Confirm with Data. Data collection helps you to generate realistic plans. “I expect to make ten calls in an hour.”  After three hours on three days, you make six, twelve, and eight calls, respectively. Therefore, you set a goal to make eight or nine requests in an hour.

5. Correct Midcourse. Just because you set a goal doesn’t mean you can’t change it. Learn by doing. You discover that a donor telling your development staff member, “No, I don’t want an appointment,” is quicker than a meeting.  Suddenly it’s not a problem to meeting whatever call goal you set. So you adjust your goal to measure appointments made—correcting mid-course for achievement and reality.

6. Study Achievement. Examine when you met or exceeded expectations. What helped? Why were you successful? Did Saturday’s event draw twice the number that a weeknight brought? Record and tally achievements. What was responsible for your success? What process did you use? Identify and then repeat successful elements.

7. Measure Right. Especially when you enter new territory, seek out others’ experience. What do your successful peers do? Does an industry-standard exist? Board members are often astounded to learn that direct mail to identify new donors often costs more than it earns. If you expected to make money on a mailing but failed to meet your costs, you may be suffering from unrealistic expectations even if you’re successful compared to industry standards.

8. Identify the Causes of Failure. Often expectations reveal themselves as unrealistic in hindsight. In this case, study the cause of the failure. What got in the way? Can it be avoided, or must it be accommodated?

9. Reward Consistency. If contacting five donors per day is the minimum activity necessary for success, and this requirement is completed regularly–reward it. Sometimes expectations are realistic, but without a reward, they diminish, and your plan fails. Check. Is the expectation realistic and the culture supportive?

10. Create an End. Your goal is often to raise as much money as possible. This goal is unreachable and unrealistic. You can always earn another dollar. You can always contact another potential donor. Determine what you need and then set a goal that’s 10 percent higher to cover unexpected expenses. Base your goal on 1) your needs, 2) what you raised last cycle, 3) your resources (i.e., will you have more or less time to devote to the effort this cycle?) and, 4) expected events. If you surpass your goal early and have more resources, raise it. In Winnipeg, St Boniface College increased its capital campaign goal to $15 million after meeting a lower goal in record time.

11. Learn the Facts Behind Others’ Expectations

Often others set expectations for us. When these appear unrealistic, understand how they were established. This takes courage. “I’m excited to work in increasing revenues this year by 50 percent. What is the plan to do that? Have we ever done it before? How did it happen? What activities are underway to make it happen? Has anyone ever done this here or in our field? Too many unrealistic expectations develop around nonprofit budgets because income is needed to balance expenses. You need a development plan that is a plan build on the skills and resources you have to pursue it.

Fortunately, you don’t need a magic wand to develop realistic expectations for your successful nonprofit organization. Realistic expectations take work, knowledge, and skills. With this article, you increased your magic power, so use this information to set realistic revenue expectations.

Do you need help with income planning at your nonprofit organization?  If yes, let’s talk. Call Karen.

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To learn the seven sources of nonprofit income, click here.

To learn how nonprofits earn income in the aggregate, click here and here.