Can You Get Past Your Focus on Reducing Nonprofit Costs to Increase Your Fundraising Revenue?

Reducing Nonprofit Costs

Yesterday, the MJA team was on a Zoom call with a software marketing company. We were exploring a new way to help our clients with upgrading mid-level donors (and legacy giving plans but that will be in another article). While we could all see the potential, two of us had concerns. Would nonprofits (even the large, sophisticated organization for which this system is designed) have the capacity to manage the 500+ mid-level donors who raise their hands to increase their support that the system could discover? Would major gifts officers focus their energy on this targeted group?

As we learned more about the program, we were told that those 500+ people would need to be further qualified to find the 250+ true prospects. And then, those 250+ must be engaged in a way that will encourage them to upgrade their gifts. And the other 250 should not be ignored if you want to retain those donors and gifts.

Would any size development shop dedicate the resources to jump in and utilize this software? Would they need an additional person to focus on this?

Nonprofits are not known for adding staff on a whim (for good reason). Or, for increasing marketing and management expenses.

The question remains, big or small, if your main focus is on reducing nonprofit costs, can you increase fundraising revenue?

Reducing nonprofit costs and managing spending is incredibly important, but it can’t be the only priority when setting a budget. I am currently serving on a board, have served on other boards, and counseled even more about including fundraising into budgetary priorities. The same question is asked again and again. What do you do to balance your budget when you increase development costs?

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For smaller and medium sized nonprofits, this is often a chicken and egg question. How do you invest in capacity development when you don’t have the money for the additional resources? I have seen:

  1. Donors provide seed funding directly for capacity building (whether that comes as more staffing, training, or consultants)
  2. Re-organizing staff to prioritize fundraising
  3. Volunteers who work in development lead a new campaign and act as staff
  4. Re-organizing volunteers to prioritize fundraising
  5. Volunteers who don’t understand development take on fundraising

Now revisit this list. It is in the order that will offer you the best chance for success. If you invest in fundraising while making it an organizational priority, you will raise more money.

For larger nonprofits, it is often a question of priorities. There are any number of ways to spend the same dollars. If you received an unexpected $100,000 legacy gift, would you spend it on marketing and fundraising? That $100,000 should be spent on programming! Or re-painting the building! Or to decrease the mortgage! And, at a larger nonprofit, you have more people with input and more options to spend it on.

We often hear that colleagues/board members/finance committee members think development shouldn’t get additional money because they are not raising enough with what they have. What is the solution for this?

If this is the case, being able to predict ROI might help. Which coincidentally was the most exciting element of this new marketing platform. It can offer 10x ROI in the first year.

If you would like help turning mid-level donors into major donors or focus on legacy giving, send us an email. If you are a larger nonprofit, we can see if this software can help you. If you are a mid-size or smaller nonprofit, we can show you how to increase donor retention and upgrade this category of donors and/or create a plan for legacy giving through years of MJA experience.

Your programming budget in the future will thank you for your investment in fundraising revenue and capacity building now.