Even the best-run fundraising programs have a few leaks that need to be plugged. In this session, you’ll learn why and how to perform an audit of your fundraising program, and why it’s important.
In our day-to-day work, it’s easy to get caught up in achieving goals, pleasing volunteers, and acting on the concerns of our more vocal stakeholders. But that can lead us to getting off track. Are we really as donor-centric as we could be? Are we practicing donor love? Are we seamlessly taking our donors on a supporter journey that leads them to higher orders of giving?
It’s time to step back, take stock, and figure out what’s working and what isn’t.
A bit about my experience
Why Blue Canoe?
Have conducted many audits over the years for both small and large non-profits
They take many forms, but the fundamentals are the same
The issues that the audit uncovers are pretty consistent, too
Today I’m going to walk you through the ins and outs of conducting an audit
We’ll talk about what an audit is and why you might do one
We’ll then walk through the parts of an audit, step-by-step
I’ll then share with you the six big issues I most often uncover in an audit
We’ll talk about what you do with your audit once you’ve done it
And, finally, I’ll share some resources with you to help you get started
So why did you sign up for this webinar?
I’d love to hear about it in the comments so that I can be sure to address as many of your specific needs as possible
I expect that many of you have come across the term ’fundraising audit’ and are here to learn a bit more about what that is
Perhaps you’ve conducted audits and are hoping for some tips and tricks to try out the next time
Maybe you’re feeling like your program is stagnant, and are looking at an audit as a way to uncover the leaks in your program
These three questions are the big ones that every organization should be regularly asking themselves
Where we are now is where a fundraising audit comes into the picture
Knowing where you are now can help inform where you want to be, which comes out in your vision and strategic plan
How you’re going to get there takes the form of operationalizing your strategic plan: determining who’s going to do what, by when, and how much it’s going to cost… then of course, how you’re going to measure success along the way
Many organizations spend little time on the ‘where are we now”
They leap into setting strategy without knowing what’s worked in the past, how they compare to other organizations, and why their supporters give to them
They may do a SWOT and PEST analysis, and those are important to do, but they often don’t dig very deep
Too many organizations skip the audit entirely
[read definition]
In simpler terms, think of an audit as the first step on the ladder to fundraising success
Through an audit, you think about where you’ve come from (your fundraising history)
You determine where you are now and
You look at what others are doing around you
Why not?
You can only move forward and grow if you know where you’ve been
What I typically suggest is a full audit every two years, and Kpi every 12 months
Can help in your budgeting and planning process for each year
Important to do if you’re facing restructuring, growth, etc
This is a hard question for me to answer given that I’m biased, but there is an advantage to having an outsider conduct the audit for you
It can be hard to be really critical of your own organization… we’re often just too close to it
And an outsider can bring the perspective of what other organizations are doing, sector benchmarks and a range of best practices
The downside of hiring a consultant to conduct the audit is that it costs money
Perhaps there’s a trusted volunteer or board member who would be willing to lead the process
When considering cost, do some careful analysis of how many staff hours will be required to conduct the audit… put a dollar figure to it.
Consider what you’ll be pulling that staff person away from: for example, if your director of development is the best person to be doing the audit, by doing so will she or he need to cut back on things like major gift solicitations and grant proposals?
Hiring someone from outside might be a good investment after all
Throughout your audit process, your mission, vision and values should be top of mind
You need to know what you’re aiming to achieve as an organization, and your past and current activities should be viewed through the lens of mission/vision/values
If you don’t have a mission, vision or values, I highly recommending pressing the pause button on your audit and focusing on creating those
It’s best to start by looking at all the external influences that might impact your development program
Typically they’re factors that you don’t control
PEST (also known as STEEPLE, PESTEL, STEEP or PEST), is a really helpful tool to help organisations map the external trends or forces (the drivers) that may have a positive or negative impact on their organisation.
The mnemonic PEST is widely used to help us remember the key categories or headings used when carrying out strategic analysis, that is the: political; economic; socio-cultural; technological
Sometimes it’s represented as PESTEL (the E and the L stand for Environmental and Legal) or STEEPLE (with the addition of Ethical) or STEEP (including Economic and Environmental but without Legal).
Political Factors:
Political factors impacting on fundraising might include government attitudes to the nonprofit sector and recent or forthcoming legislative or regulatory changes that might affect the fundraising environment or fundraising performance e.g. privacy legislation, changes in Estate Tax or additional fiscal incentives to increase giving. It may also include a consideration of the activities of government agencies, notably in the context of fundraising, the United States Postal Service.
Economic Factors:
Economic trends are relevant primarily as predictors of future donor behaviour. Trends in wealth, employment, tax, consumption and disposable income impact on all categories of funders from corporate givers and foundations through to individuals.
Socio/Cultural Factors:
Key data here will include data on demographics and social attitudes, plus evidence of likely behavioral changes or significant shifts in societal values that might occur over the duration of the plan. For example, trends in levels of civic participation, changes in the formation of families, in levels of trust and confidence in the nonprofit sector and in patterns of working would be considered here.
Technological Factors:
Critical here will be factors such as the likely impact of developments in technology on the nonprofit sector and on fundraising techniques. Developments in web communications, mobile phone technology, automated bank payments and interactive TV would all, for example, fall under this category.
Much can be learned from the activities of other organizations
1. Industry leaders:
The fundraising team will undoubtedly be aware of those competitor organizations that they regard as particularly outstanding in their fundraising activity. From these industry leaders it may be possible to learn a great deal about successful fundraising practice and to borrow exciting new and innovative ideas in respect of the best ways to solicit funds. These nonprofits may be working in the same field, but could equally be working elsewhere in the sector serving entirely different needs. They are thus selected purely on the basis of the quality/originality of the fundraising they undertake.
2. Other Nonprofits Serving The Same Cause:
Some nonprofits will assess the strategy and performance of those charities that they perceive to be in direct competition with themselves since they serve the same broad category of need (e.g. children, animal welfare, environmental defence). The goal here is to gather sufficient data to benchmark the activities of the focal nonprofit against those of similar organizations. The nature of the activities undertaken, the quality of the promotional materials produced and the estimated or actual cost effectiveness of the fundraising undertaken, will all be of interest.
3. Nonprofits of a Similar Size:
A further strategy employed by some nonprofits is to look at organizations of a similar size to themselves irrespective of the category of cause served. The problem with option (b) is that other organizations working in the same field might be a good deal larger or smaller than the focal organization leading to inappropriate comparisons. A better approach might be to examine what is being achieved by organizations of a similar size. Once again, the auditor will want to look at the forms of fundraising undertaken, the promotional materials produced and the performance achieved. This can all be used to assist in benchmarking the performance of the focal organization and in highlighting areas of weakness.
Gather information on financial performance; competitor objectives and ambitions; past, present and future strategies
Review annual reports and websites
Make a donation
Check charity navigator and similar websites
Get on google and look for case studies, case statements and fundraising plans… you’ll be amazed at what’s out there
The nonprofit marketplace is complex and crowded, with many organizations competing for a limited pool of support.
Gathering this information can help in identifying what can be learned from the activities of others.
Gather data in respect to the the various donor markets your organization is addressing
Useful information sources to identify market trends include
Association of Fundraising Professionals Fundraising Effectiveness Project;
Association for Healthcare Philanthropy (AHP) an annual look at trends in giving in the USA and Canada. It also provides an excellent benchmarking study allowing participants to compare the costs of their fundraising with others in the sector.;
Council for Advancement and Support of Education; Partnership for Philanthropic Planning/CAGP ;
Giving USA Foundation and Giving Institute – Giving USA, the leading study of giving in North America is produced by the Giving Institute, as is the Annual Yearbook of American Philanthropy.
Center on Philanthropy at Indiana University The Center offers a range of research data and publications
Chronicle of Philanthropy –
Nonprofit Times –
Credit to Adrian Sargeant for this list
Look at all the revenue for your organization: donations, grants, sponsorships, earned income (like ticket sales and merchandise), membership fees
What percentage of your revenue do each of them make up?
Are you over-reliant on any one or two revenue sources?
There’s no hard and fast rule for how revenue sources should be distributed, but the diversity of sources is important
Look at this information over the past three or four years… how have things changed and are they heading in the right direction?
What revenue has gone up?
What revenue has gone down?
Why?
What’s been working well and what hasn’t?
What clues are there for where you should go next?
Donor segments:
Are you speaking to donors from where they’re at?
Are you segmenting and targeting all your fundraising efforts?
Do you have a system to flag when a major donor is about to lapse? Or when an annual donor becomes a prospect for a legacy gift?
Processes:
How is your database holding up? Does it do everything you need it to do? Are you using all its functionality?
What about gift acknowledgement and receipting?
These processes will include donation processing and handling, mechanisms for dealing with donor communications and queries, internal co-ordination of strategy with departments such as press/public relations/campaigning and mechanisms for dealing with data/privacy issues.
Structure:
Do you have the right people in place to do the kind of fundraising you need to do?
What’s the best use of the financial and human resources you have right now?
Do you have an amazing website (be a secret shopper)
Tip: add paypal
Should the team be structured by the form of fundraising undertaken (e.g. direct marketing, events, corporate), by the key segments of donors addressed, by region/county/state or by some combination of these? The split between the use of paid staff and volunteers might also warrant investigation. So too might the roles undertaken by both categories of individual. Volunteers form the core of a lot of fundraising activity and providing them with the optimal levels of support and encouragement is essential.
Free
lead sponsors of the Fundraising Effectiveness Project are the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute.
providing nonprofits with tools for tracking and evaluating their annual growth in giving.
Growth in giving is the net of gains in giving minus losses in giving.
Nonprofits raise more money by investing more money in growth-oriented fundraising strategies that both increase gains and reduce losses.
The FEP is focused on “effectiveness” (maximizing growth in giving) rather than “efficiency” (minimizing costs).
FEP conducts an annual survey, provides useful growth in giving performance measurement tools and publishes gain(loss) statistics in a yearly report
FEP Annual Reports The groundbreaking annual Fundraising Effectiveness Survey, piloted in November 2006, collects fundraising data from nonprofit organizations beginning with data for 2004-2005. The Fundraising Effectiveness Survey enables participating groups to measure and compare their fundraising gain and loss ratios to those of similar organizations.
FEP Fundraising Fitness Test downloadable Excel-based FEP Fundraising Fitness Test that allows nonprofits to measure and evaluate their fundraising programs against a set of over 100 performance indicators by five donor giving levels.
Performance indicators include: donor retention rates (new donor retention, repeat donor retention and overall donor retention); donor gains, losses and net; dollar gains, losses and net; growth in giving ($); growth in number of donors; and donor attrition. Gift range categories are $5,000 & up, $1,000 to $4,999, $250 to $999, $100 to 249 and Under $100.
In addition, the seven GiG Reports in the downloadable Excel-based FEP Growth-in-Giving (GiG) Reports template (revised and simplified) provide concise, yet informative pictures of fundraising gains and losses-growth in giving and attrition
Do you know why people support you?
Have you asked them?
Surveying your donors can be a great addition to your audit
Ask them what inspired their first gift?
What programs are particularly meaningful to them?
How do they feel they’re being treated?
Are they getting enough information on impact?
Are their tax receipts arriving in good time?
Do they feel appreciated?
Ask them what you could do better?
At the same time, ask them for their stories
Bonus: when you need money, ask for advice; when you need advice, ask for money
Really think about the return on investment in fundraising
In fact, go through each tactic (DM, events, planned giving) and calculate the ROI including the human resources/volunteer hours
Are you focusing your energy in the right areas?
For example, are you spending 60% of your time and resources on corporate sponsorship when it only represents 10% of your income?
On the other hand, maybe you’re spending 20% of your time on grant applications, but grants represent 80% of your income
Try to balance your long-term financial objectives with short-term cash flow need
I’ll often see organizations cut acquisition and/or legacy marketing from their budgets because they need cash
But what long-term impact does that have?
When looking at acquisition, look at the long-term value of a newly acquired donor… not just the one-time investment it takes to bring them on board
How efficiently are you running your fundraising program?
Are staff given the authority to make decisions?
Are things reviewed by committee?
Limit the number of cooks in the kitchen
Who can you partner with to the advantage of everyone?
partnerships may open up access to new sources of funds, new markets or simply allow the partner organizations to take advantage of economies of scale and thus lower their costs of fundraising.
It may not be economic, for example, for smaller nonprofits to undertake corporate fundraising on their own.
Forging an alliance with other ‘complementary’ or related nonprofits can create a pool of shared resource that would facilitate fundraising from this potential new audience.
consider examples of where organizations have collaborated successfully in the past and the factors that led to that success.
The nonprofit should look to see what it could learn from these collaborations and whether there might be any way in which it itself could work in partnership with others.
What are the strengths of the organization?
What is the organization good at?
Does it have access to a donor segment that is not reached by competitors?
Does it have a strong database system/great support agencies/high local awareness?
A charismatic leader
Ability to measure impact
What are its weaknesses?
In what ways do competitors typically outperform the organization?
Are there weaknesses in terms of internal support or structures?
Are there barriers to future development in some areas?
Lack of stories or need for confidentiality
Lack of brand awareness
What are the main opportunities facing the organization?
Are there new fundraising techniques to test,
new audiences to attract?
Are new developments within the organization likely to present extra opportunities for fundraising?
What are the major threats facing the organization?
Is a major competitor likely to launch a new capital appeal?
Will economic changes impact on certain core funders and leave them with less to give?
Are planned changes to legislation likely to curtail fundraising activity?
What if your charismatic leader leaves?
Include board members, other volunteers and staff in this discussion
This is simply a matter of selecting key information from the audit, analysing its implications and presenting it under one of the four headings.
The important word here is ‘key’.
It is important that some filtering of the data gathered at this stage is undertaken so that the analysis is ultimately limited to the factors of most relevance for the subsequent development of strategy.
Donors aren’t giving to you
They’re giving through you
The institution has no needs… the cause does
Is your donor giving to you so that you can buy a new mammography machine? No, they’re giving to you because the new mammography machine will mean their loved one’s breast cancer will be caught earlier and therefore be more treatable
Essential to have a case for support
Why do you exist?
What need are you meeting?
How can a donor be the hero of your story?
Focus on the why, not the how
A good case for support helps focus on the cause, and ensures that all your stakeholders are singing from the same songbook
I’m happy to share examples of great cases for support… watch for my email at the end of the presentation
Keep track of key performance indicators
Lifetime Value of Your Donors.
New Donor and Existing Donor Retention Rates. No use pouring in all those acquisition dollars only to have them flow out the bottom of a leaky retention bucket.
Second Gift Conversion. How long did it take and how many first-time givers make that all-important 2nd gift
Upgrading/Downgrading/Revenue Trends. How did you do in 2017 compared to 2016
Lapsed Donor Reactivation. Every organization has some leaks in their retention bucket, but few pay as much sophisticated attention to re-capturing/restoring donors to active and continuing involvement and commitment.
Donors give from their hearts, not their heads
So they give when you connect with their emotions
The best way to do that is through telling stories
In fact, stats will depress response
In fact, the story of more than one person will depress response
Are you actively gathering and telling stories?
On your website?
In donor communications?
In appeals?In grant proposals and sponsorship applications?
Thanks to the great work of Adrian Sargeant and Guy Mallabone
Now what?
Summarize your key findings and include recommendations
Share it
Develop a clear action plan
Who will do what and by when?
Make sure all your actions have owners and completion dates
This is a good time to go into a strategic planning exercise