Tag Archives: Organization and Development Assessment

Should Your Nonprofit Spend Endowment Principal to Cover Budgetary Shortfalls?

For those looking for a five-minute escape, grab a friend and play MJALibs! Fill in the blanks to play. Or just jump down to the next headline to read the rest of the article.

The endowment dream – an MJALibs fill in the blank game

MJALibs to help with budgetary shortfalls

Raising an Endowment

When thinking about an endowment, the possibilities seem endless. Will you have an additional $50,000, $120,000 or even $200,000 every year? Will you be able to cover budgetary shortfalls or expand your services and/or the number of people you serve? Will monetary stress disappear from staff and board meetings?

The Realities of Having an Endowment

For many organizations, having an endowment – whether inherited by the nonprofit’s current staff and board or raised in recent memory – is essential. Most of the time it does what it is supposed to. It helps the budget by providing operating revenue to be used on an annual basis. But, when the organization has a budgetary shortfall – like organizations may be experiencing or expecting during this pandemic – it can be tempting to take principal from the corpus of the endowment. Consider this a warning, it is a slippery slope.

Well, from an MJA new business perspective, it’s a great idea! Organizations often engage us to raise money after they have reduced or depleted their endowments. But, we also give advice to our clients to prevent this from happening. In fact, this is blog post based on an exchange I had with a client just this week.

The Slippery Slope

It starts with an unusual need. A new roof or, let’s say, a pandemic. You need to cover $100,000 one time.  So while it feels wrong to take out principal, it may be urgently necessary. But, once you start taking out principal for the annual budget, it is then easier to go to the well again and again for capital needs and budgetary problems. It is much simpler to get board approval to take out more money than spend time and/or money on a real self-examination. That would require looking at the organization, it’s mission, the current needs of the community, reducing expenses, the annual fundraising, etc.

The reduced endowment is a future problem when the lack of annual funding is current problem.

Before long, instead of $75,000 a year towards the budget it is $40,000 – causing a larger annual deficit/budgetary shortfall every year. And then you must spend money to engage us to help you raise funds to increase your endowment. It’s a vicious cycle we are committed to assisting you to avoid.

If you do decide to take out principal, “just this once,” make sure there is a Finance policy in place. To ensure this does not happen again.

So, if you are confronting financial challenges that have you looking at the balance in your endowment as an easy answer, what do you do? It may seem hard to fundraise in this climate. It is different – but not impossible. (Here is a webinar that will give you some tips). Consider a self-examination (we offer a special Organization and Development Assessment to our clients which we can tailor to your needs).

Want Your Own Endowment?

And of course, if you want to raise an endowment, click here to schedule a time to talk. Yes, we are still raising endowments during the pandemic. Our world still needs nonprofits. Nonprofits still need funding. And donors, still have money to donate – maybe not all donors – but many still can, and want, to give.

Are Your Fundraising Goals Somewhat Too Low, Just About Right, Or Somewhat Too High?

Do you think your annual fundraising goals are:

In last week’s blog, I explained what it means if your fundraising goals are “Way too high,” “Way too low,” or “N/A.” This week, I focus on the more moderate answers to one of my favorite questions from our Organizational and Development Assessment.

Fundraising Goals Somewhat Too Low, Just About Right, Or Somewhat Too High
  • Way too low,
  • Somewhat too low
  • Just about right
  • Somewhat too high
  • Way too high
  • N/A

If your answer is:

“Just About Right” fundraising goals – your organization probably falls into one of the following:

  1. Created realistic fundraising goals with a plan on how to get there. Love to see this!
  2. Spent time to understand your donors. Congratulations! You were able to predict what you would do for the year and how your donors would respond.
  3. Set the goals to be exactly the same as last year and planned on replicating last year’s plan to achieve the same amount. Much less impressive. While you may have achieved the same results, relying on the same strategy year in and year out is dangerous. Donors are not automatically giving to the same organizations again and again. We are all approached by more organizations in a more personalized way. We are asked by friends for more and more donations. And, we see more nonprofits who could use our donation for amazing work.  You have to continue to tell them why you are the best organization for their philanthropic investment.

“Somewhat too high” fundraising goals – your organization probably falls into one of the following:

  1. Set fundraising goals without a plan on how to get there. Often there is pressure from the executive director or the board to increase the amount you plan to raise. But just because it is in the budget, doesn’t make it a reality.  You need a plan on how to achieve those goals. If they are encouraging you to increase your goals, explain what you need to be successful (e.g. better software to track your donors, more volunteers, more support staff time.)
  2. You had a major change that you were able to recover from but set you back. Maybe someone was out on sick leave or left your nonprofit. Or maybe you had a planned turnover of a valued volunteer leader that you hoped would not affect your annual fund as much as it did. No matter the reason, let’s hope it was a one-time occurrence.
  3. Set the fundraising goals to be exactly the same and planned on replicating last year’s plan to achieve the same. This strategy can result in the same results, but it can also result in a slow decline that will eventually turn into a major shortfall. The time to reassess your strategy is now!

“Somewhat too low” fundraising goals – your organization probably falls into one of the following:

  1. Underestimated the results of your development plan changes. Some people like to under-promise and over-deliver. It’s understandable but have confidence in your plans. It will allow your programming team to benefit from your strong development skills.
  2. Made changes without using analytics to consider the impact. It’s hard to be precise, but there are a lot of tools that can help you predict growth (or loss) based on your previous donor retention rates. Once you understand where you are and where you have been for the past few years you can decide which area you will focus on this year. Contact Mersky, Jaffe & Associates to help you develop specific benchmarking for your development program. It can help you get closer to your budget reality.
  3. Didn’t realize you would be working with Mersky, Jaffe & Associates so you didn’t account for the increase in annual funds raised. We help organizations raise more money – when we are focusing on a capital campaign, we work to secure your annual funds before we turn to anything else.

If you would like help creating your fundraising goals, understanding your organization through MJA’s Organizational and Development Assessment or simply want to say hi, email me today to set up a time to speak.

Are Your Annual Fundraising Goals Are Too High, Too Low, or Just Right?

Do you think your annual fundraising goals are:

  • Way too low,
  • Somewhat too low
  • Just about right
  • Somewhat too high
  • Way too high
  • N/A

This is one of the questions we ask when we conduct an Organization and Development Assessment Survey which we ask clients to complete when we begin engagements. Depending on the client, there are between 60-90 questions on the survey that help us understand an organization’s current situation, and its potential for improvement.

Off target fundraising goals

But I love this question.

This question shows an organization’s optimism, how well it tracks its gifts and whether it understands what their goals could or should be.

Based upon the answer to this one question, we can help improve outcomes, but that is another whole article.

The facts are clear. According to a recent article by Zach Shefska of MarketSmart, only 43% of organizations met their major gift fundraising goals in 2019. Unless there were unusual, unexpected circumstances, 57% of nonprofits need to improve their goal setting along with their fundraising capabilities.

To treat this subject with the detail it requires, this will be a two-part article with the “extremes” today, and the middle ground next week.

If your answer is that your fundraising goals are:

Way too low” – your organization probably

  1. had an unexpected windfall (that new $200,000 gift or a one-time stellar event with great honoree(s) you weren’t expecting) that skewed your results;
  2. experienced an expected reduction in staff during the year which led to extremely conservative goal setting; or
  3. pulled a number without a plan.

If it’s the new, and very large donation, I hope you have your stewardship in place. That will be essential to make that person(s) feel great and hopefully give again.

If you had a staff change, consider that you were likely to have a decrease in annual money because

  • you didn’t want to pay appropriately
  • weren’t willing to invest in executive search to fill the post (which seems like a poor trade-off), or
  • you didn’t think you could hire right away.

Remember that staff turnover costs money. Investing in your staff’s satisfaction is essential.

If you just pulled a number without a plan, I hope that you have since corrected your mistake and created a fundraising plan.

Way too high” – your organization probably:

  1. had a senior officer—without real development experience or knowledge of your donors—set a high goal without a plan on how to achieve it
  2. unexpectedly lost one or more major donors/cancelled an event
  3. had a change in fundraising staff or volunteers

Setting goals without a plan is more common than people like to admit. It is a practice that leads to trouble for the organization. If you are not working on a detailed plan to improve donor retention, move donors from mid-range gifts to major gifts, or create new strategies and stewardship for major donors, you should not be increasing your goal. A big goal may make the leadership feel good in the short term, but the reality will harm both staff and volunteer leaders’ morale and confidence in the long-term.

Unexpected losses are unfortunate. A one-time occurrence of this kind, if at the wrong time of the fiscal year, is virtually impossible to overcome. But, more than once, then it is the organization’s fault. Consider diversifying annual fundraising. It may be easier to have one $100,000 donor than 10 donors at $10,000 but losing one $10,000 gift will have less of an overall impact.

Over-reliance on events can be catastrophic when an honoree gets sick or a last-minute snowstorm postpones your organization’s largest source of income. It’s great when the event works, but when it doesn’t, your goal may end up “way too high.”

Did your volunteer fundraisers leave this year? It pays to have a constant source of new fundraisers each and every year. I know organizations that rely on the same 2 or 3 volunteers for 10+ years. They write the letters, make the follow up calls and ask their friends with only minimal staff involvement. That creates stale messaging, donors who remain the same or decrease their amounts (no real incentive to do anything else) and fundraising that drops dramatically with any change.

“N/A” – Your organization does not have fundraising goals – your organization probably should:

  1. Walk through the streets while people yell “Shame!” and throw fruit at you (a Game of Thrones reference)
  2. Know you need help for 2020

Goal setting creates accountability, expectations and demands a detailed plan. With a solid plan, our development operation will not be based on wishful thinking but rather a set of prepared processes that will ensure success.

That leaves fundraising goals that are “Somewhat too low,” “Just about right,” and “Somewhat too high” for Part 2. Check back on our blog www.merskyjaffe.com, and if this blog was forwarded to you, then subscribe on our homepage to read the rest.

And, if you would like to talk to us about a Organization and Development Assessment for your nonprofit call us at 800.361.8689.

What Would You Do With 1,000 New Donors?

1000 New DonorsImagine if an article about your nonprofit started getting forwarded on Facebook. By a lot of people. Suddenly, you receive 1,000 new donations from 1,000 new donors. Seems like it would be a good problem, wouldn’t it? But, it would still be a problem.  In all likelihood, you could not accept, acknowledge, and begin stewardship on 1,000 new donors with your current structure. In fact, many organizations can’t handle 50 new donors at a time.  Or 10 if they come at a busy time of year.

That is because most nonprofits don’t have a solid organizational structure for stewardship and development.

Whether you have a one-person development shop or fifty people working the task, there have to be formal processes in place to make sure you keep your donors happy. And retain those donors next year, and for many years into the future.

What should you consider when assessing your current structure? Do you have:

  • Goals for your fundraising efforts?
    • Are they realistic?
    • Is there data to back up your goals (vs. wishful thinking)?
  • Prospect and donor research?
  • An updated case for giving?
  • An understanding of the steps you take after someone gives you a gift? Including:
    • How many acknowledgements go out and from whom?
    • Who enters the gift into the system and how is it tagged so you can gather data at a later time?
    • Do you do something different if it is an oral pledge vs a written pledge vs a check or online donation?
  • Written gift acceptance policies?
  • Board involvement in fundraising (and expectations for involvement)?
  • 100% board giving to your annual fund (money, not just time and talent)
  • An effective development committee?
  • A stewardship plan?
  • Processes to update the different thank you letters on at least an annual basis?
  • A planned giving gift acceptance policy?

This is not an all-inclusive list for what to do with 1000 new donors.

In fact, it’s just an overview of considerations to create long-term financial stability and growth.  But, just as it will take additional funds to secure your nonprofit’s future, it will take additional work – from everyone – to be able to accept those funds with confidence.

If you are planning to go viral with a story to help you find 1,000 new donors, or you want to  have the kind of donors who will help your nonprofit succeed for the long-term, email me to today to talk about MJA’s Organization and Development Assessment. A full assessment will help you in untold ways.  To learn more about what we can do for you, click here.

What Were Your Nonprofit’s Goals for the Past Year?

Making Your Nonprofit's GoalsIt’s approaching year-end. I hope by now your annual appeal plan is in place and your initial letters and emails are seeing results. Now is a good time to review the past year. You will not have all your data yet and know whether you reached all of your goals. That can be assessed in January. Now is the time to consider the larger picture, like what were your nonprofit’s goals for the past year?


What were your priorities? Were you working to increase the total number of donors or working on upgrading the $50 and under gifts? Did you have a plan to increase the number of members or make more stewardship touches each month? Was there a plan to have more board members involved in your fundraising effort or to reassess your board manual? Each nonprofit has a unique set of circumstances, but no nonprofit organization (or even for-profit) can afford to stand still year after year.

****If none of this applies to you because you didn’t set out goals for this year, don’t worry. Well, maybe you should worry a bit, but only to use that worry to push you into action. Next year is another opportunity to make an impact through a detailed, goal-oriented development plan.


Did you have a plan to achieve your goals? Did you make it through all the steps in your plan?
• If you did, what were the results? Be honest. Did you really contact 10 additional donors each month? Did those additional touches impact their giving? Or strengthen their feelings about the organization? Did they start to come to new events? In other words, qualitatively or quantitatively, what were the results?
• If you did not have a plan or did not make it through enough steps to make an impact, what prevented your success. Did you lack financial resources, time, staff/board buy-in, or even that you never made it your priority. Be brutally honest.
• If you don’t know how to assess your results, your plan was not well defined. While some efforts don’t show direct ROI, there should be measurements of success in every aspect of your plan.


Now it’s time to consider next year’s priorities. Pick a new goal or two (or revise an old one) and create a detailed plan. How can you achieve these goals? Who will you need to help you succeed? How will you assess your results next year? How will you overcome the anticipated, or unanticipated, resistance?

If you are not sure where to start, consider an organizational assessment. We offer an Organization and Development Assessment where we review and offer suggestions (click here for details).

Of course, you can assess your own organization. Just make sure you don’t avoid what makes you, the board or the staff uncomfortable. Accuracy and honesty will be essential in developing a usable plan. And a solid, usable plan will help your nonprofit raise more money, strengthen its board, or reorganize your staffing structure.

Just make sure there is a plan, so you are not looking back on 2018 and wondering why you didn’t achieve your goals.