by Angela E. White, CFRE, senior Consultant and CEO, Johnson, Grossnickle and Associates
The pandemic caused many nonprofit organizations to respond to urgent needs. Now nonprofit teams are emerging, ready to take stock of what they learned and determine how best to serve their constituents and deliver on their mission. This opportunity for reflection and planning presents a great time to consider the role of philanthropy at your organization and conduct a fundraising check-up.
What is a fundraising check-up? A development audit or assessment is a tool to measure capabilities of your fundraising program and help you identify opportunities to grow philanthropic support. It provides an objective view on assessing your current fundraising outcomes, setting realistic yet aspirational goals for future performance, and identifying areas for additional investment to be able to perform to your full potential. And, importantly, this tool will assess how well you have embraced a unified culture of philanthropy among your board, staff, and across your institution.
When should you conduct a fundraising check-up? There are some specific times when it is particularly beneficial to conduct a development audit. If your organization is going into strategic planning, an audit can help you determine a realistic plan to raise more money to fund your strategic initiatives. As new leadership comes into an organization, there are often new priorities that need to be funded or an opportunity to reflect on the staffing and structure of the organization.
Many nonprofits saw dramatic shifts in their revenue sources during the pandemic, either from an influx of new donors, the addition of new government funding, and/or potential shifts in corporate or foundation funding. As you identify these shifts in revenue, the audit can provide your leadership with an opportunity to dig more deeply into the trends to determine if it is a blip in the radar or something you can capitalize on for future growth.
National trends are also warning of a shifting donor base, with fewer households donating to charity. An audit can help you look at the implications of these trends within your organization and the mechanisms that could help you engage and keep new donors.
How do you conduct a fundraising check-up? We believe it is good to have an outside firm conduct an audit to provide a level of objectivity. However, you may be able to employ many of these methodologies if you wanted to undertake this type of check-up yourself, using your own analysis and reports.
Prior to undertaking an audit, it is important to communicate to staff and volunteers that you’ll be conducting an audit. Lesson any anxiety they may feel by sharing how you will use the information. An audit is not punitive. It shouldn’t be thought of as a way to find problems or mistakes. It is an opportunity to strengthen your development program and boost your fundraising results.
Before starting the audit, identify who you may want to engage to help you conduct objective interviews, compile data and resources, and assist with scheduling. Take the time to compile complete and accurate data and resources.
What data do you review in a fundraising check-up? First, review qualitative data sources to understand where you are and where you might be able to improve. Look over printed resources, such as your strategic plan, policies and procedures, and collateral materials. Conduct interviews with key staff members, board members, leadership, department heads, and volunteers. These conversations bring light to the numbers and data you will collect elsewhere.
Examine your development systems and structure to ensure you have the right resources and procedures in place to support the development operation. Are there resources the development department needs that are not being provided? Are you using your donor database to its full potential and are you able to track the kinds of metrics you need?
Next, examine quantitative data. We recommend looking at five years of fundraising data to identify trends. Look at the drivers of philanthropic revenue. Are you overly reliant on one source of philanthropic revenue that might put your organization at undue risk, for instance if there was a cut in major grants or government funding?
Compare your development expenses, including staff time and direct costs, to your philanthropic revenue to calculate your cost to raise a dollar (CRD) and the return on investment (ROI). This snapshot of your performance can be compared to peer institutions and national trends.
Using benchmarking data in an audit can help you gain an understanding of how well your development effort is performing as compared to your peer and aspirant institutions. The annual Giving USA report is an excellent benchmarking source.
How do you use a fundraising check-up? Once you review the quantitative and qualitative data that you have compiled, present those results along with your recommendations to your leadership, board, and staff for review and discussion. Following this review, develop an action plan and timeline for implementation of your recommendations.
Taking the time to conduct a development audit is a worthwhile way to capitalize on what’s going well and understand where you can expand and invest to raise even more funds for your organization in the future.
Angela E. White, CFRE, serves as Senior Consultant and CEO of Johnson, Grossnickle and Associates (JGA). Angela is a faculty member at The Fundraising School at the IU Lilly Family School of Philanthropy and serves on the CFRE International Committee on Directorship.