Tag Archives: Kerry Olitzky

The Pros and Cons of Fundraising Campaigns to Reduce Debt

by Kerry Olitzky

Among the challenges that many nonprofits increasingly face are budget deficits and a rising amount of debt. This is especially true for membership institutions. To strengthen their financial position, many of these institutions mount campaigns as a way of mitigating their debt load.

There are usually two reasons why institutions undertake campaigns to reduce debt: a deficit budget that is hard to balance; and/or debt service (usually in the form of a mortgage).

In both cases, debt often overwhelms the operating budget and the ability to maintain vital programs and services. Not to mention the need to develop new programs as organizations evolve. If you are considering a fundraising campaign to reduce debt, here are some things to consider:

Cons (Common negative reactions to a campaign to reduce debt)

  1. Potential donors want to invest in a vision for the future, not just fix the past.
  2. Potential donors fear the slippery slope of debt (sometimes called “kicking the can down the road”) and may be reluctant to make an investment in an institution that is used to carrying debt.
  3. It is difficult to transform the goal of reducing debt into a strong case for giving.
  4. Supporting new buildings is more attractive to donors than paying off the debts on older ones.
  5. Donors don’t want their funds going to the bank—to affect debt reduction. They prefer that their funds support the good work of the institution.

Pros (Common positive reactions to a campaign to reduce debt)

  1. Potential donors want to free leadership of the burden of debt so that they may plan for the future.
  2. Campaigns are an efficient way to reduce or eliminate debt and strengthen the annual budget.
  3. Homeowners may appreciate a “burning the mortgage” campaign.
  4. Some potential donors, especially those with history with the institution, may be more interested in sustaining current facilities rather than raising funds for new buildings they see as unnecessary.
  5. Debt service is expensive with little to show for it at the end of a year. Donors want their funds to support the institution rather than service its debt. With that in mind, they may be willing to rid the institution of its debt. 

If you choose to initiate a campaign to reduce or eliminate debt, we recommend that you do so alongside an endowment or capital campaign—in order to prevent future debt from accumulating. This will also demonstrate to loyalists and newcomers alike that you are fiscally responsible with plans in place for a secure and successful future.

We can help you navigate a campaign, plan for future building and security while, at the same, time reducing your debt. If you would like to speak to someone about how we can help your organization call us at 800.361.8689.

Tis the Season for Galas and Donor Dinners

Galas and Donor Dinnersby Kerry Olitzky

It’s the season once again for galas and donor dinners. And, if staff members, volunteer leaders as well as supporters, were honest with themselves, they would admit how few look forward to these events. They consume staff time, volunteer hours and generally cost a great deal of money. Yet, they continue because they are a piece of the budget that no one wants to lose.

Here are some ways to maximize your income and exposure during galas and donor dinners:

  1. Stay away from served, sit-downs for food. They take longer, are more expensive, and limit interaction between guests. Opt for buffets or passed foods and drinks.
  2. Go easy on talking heads and frontal presentations. If you have a midweek event, most of the attendees will already have had a full day. They want to be entertained by the speakers, not listen to speaker after speaker after speaker.
  3. Stay on point. Every aspect of the program should focus on the organization and its work. That includes the entertainment, and tell a story where donors and funders are the heroes.
  4. While ad journals are effective fundraising complements for gala dinners, they are usually left behind at the event and have little “half-life” to them as a result. Some organizations and institutions have moved away from print materials to digital presentations for their ad journals. While they are ecologically friendly, they too have a limited staying power after the event. Consider developing a content-based journal that people will want to keep and use following the event. Remember to assign space on each page for donor endorsements and supporters. These content-based journals should reflect the work of the organization, as well. For example, a synagogue may want to develop a guide for daily spiritual meditation. Or, a family services agency may want to create a piece around “warning signs for opioid use and abuse.”
  5. Finally, calculate the direct and indirect time and money spent  to develop a true cost for producing the event and all its components. You may find your time would be better spent on individual donor fundraising and development where you can realize a higher yield rather than on a single event. Do keep in mind, however, the social value of creating community by such events.  In the end, it is a delicate balance.

If you choose to discontinue your fundraising event, make sure that you replace the income as well as the social, community-building element. Some donors use the event as the opportunity to make their annual gift. And, while the event  may not be profitable, those individual donors who love it may be only giving because of it.