Yearly Archives: 2009

Should I conduct a development audit?

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Development Audits (or Development Assessments) are a genuine way to get a clear and objective snapshot of the overall health, effectiveness and efficiency of a fundraising organization. Depending on the goal of the organization being assessed, the audit can include a review of the overall business operation, including organizational structure, business processes, marketing and communication efforts, positioning in the marketplace, donor surveys, as well as employee and volunteer staffing and so on.

Development audits are very helpful when leadership changes, particularly at a senior or board level, so that a snapshot of fundraising capacity can be made and establish both a benchmark to work from and uncover potential for new or revitalized growth through the identification of specific areas of opportunity . This isn’t to find fault with how business was conducted before but it does help identify “organizational creep” that may have resulted in under investing in certain areas of the business and identify specific ways thatleadership can impact both the health and capacity of the nonprofit.

As an example, an audit may find low-hanging fruit, such as major gift or planned giving opportunities or even discover a segment of the donor database that was not being solicited frequently enough because of a business rule that had been set up years ago by a major gift officer. People may have had the best of intentions but perspectives change and the needs of the organization change – an audit can help right-side business rules that would otherwise go unnoticed.

Who should conduct a development audit?

All nonprofit organizations, especially those relying on multi-channel fundraising efforts that incorporate two or more of the following: direct mail, online, major/planned gifts, foundation support, tele-fundraising and special events among others, will benefit from this top-down review of their operation. This is not to say other organizations won’t benefit from an audit – but it does mean that the more complex the organizations fundraising the more important it becomes to conduct a periodic audit.

But the organization can’t wait until the train falls off the tracks – the best plan is to conduct this periodic review, every five to ten years at a minimum, to ensure that the organization, especially the fundraising efforts, are on the right track and going in the right direction.

Some of the symptoms that might prompt you to consider an audit include: declining response rates to direct mail or other fundraising programs, increased costs and overhead, stagnant or downgrading of giving levels across any segment of the donor file, increasing attrition, complaints from donors, shrinking database size, fewer major gifts and a reduction in planned gifts.

An audit may also be prompted by a lethargic environment in the organization that embraces a reluctance to tackle the new challenges and complexities of the nonprofit world or simply an employee base that lacks skill, motivation, energy and a general inability to embrace innovation. These are all signs of a dying organization that may be facing significant challenges ahead.

The basic focus of a good audit will look at three primary areas of the fundraising process: How donors are acquired, how they are retained and most importantly how the relationships are cultivated and solicited. All with a close eye on how enduring relationships are built and maintained with the donor.

Of course this is rudimentary at first glance but this tree-top view is where the review process must begin since successful fundraising rests in the health of the portfolio of supporters. The review will simply drill down through these three primary areas and assess the health of the database by looking at trends and historical data pertaining to metrics such as retention, gift frequency, response rates to marketing efforts, return on investment of programs, costs to raise a dollar, average gifts, and so on. It will also dig into how the marketing and fundraising efforts are conducted by measuring them against best practices, industry trends, emerging techniques, and historical data.

Additionally, it will look at the fundraising channels being used – including direct mail, special events, advertising, online, etc. and assess their individual and collective effectiveness on the fundraising program. Perhaps most importantly the review will take all of this into consideration and formulate a high level summary of pros, cons and recommendations for moving forward.

A development audit really boils down to a periodic maintenance check-up just like you do with an automobile. We wouldn’t dream of totally neglecting our car no matter how well it works; preventive maintenance and foresight is always the best maintenance. It can uncover existing problems as well as potential problems or problems that are developing and need some attention.

Thank your donors profusely….

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There is no question that the poor economy is beginning to take its toll on both the for-profit and non-profit sectors. The stock market is taking off in the right direction but all is still not okay on Main Street. Unemployment is unusually high and there’s talk of another wave of instability headed our way in the form of problems in the commercial real estate and banking market. What will it mean no one knows but I think that’s the point here – the uncertainty is killing the average “Joe” on Main Street.

We don’t know what’s around the corner, which means we tend to hunker down and do nothing; we cut back on spending, we become more cautious, we hold things (and our money) close to our vest, and we tend to count our blessings and pray that “things” get better.

But this doesn’t mean we simply stop living, or eating, or going to work, or consuming things, or stop going to church, or enjoying life and family. It also means that people simply don’t stop giving to things they care about. Many people out there are being very generous with the money they do have because they know that even if they have money there’s a good chance that some else can use it even more.

Thankfully – the good nature, the conscience and the integrity of the human being is still intact.

Which ultimately means that those people that have the financial means will still contribute to their church or favorite charity – but it doesn’t mean they won’t prioritize or cut back on some charitable giving. I think it’s safe to say that most people are beginning to realize the true value of a dollar, which means we won’t simply throw it around willy-nilly.

So if we are to assume that people are being cautious with how they spend their money (as they should be) we can also assume that they will contribute those hard earned dollars to causes that are – (1) important to them; (2) need their support; and (3) appreciate their gift. It is the third point I would like to discuss – appreciation and gratitude…

Most donors assume you need the money otherwise you wouldn’t be asking for it – right? But what most donors don’t tell you (well they might by stopping or reducing their donations) is that deep down they want to know that their gift is appreciated and that it will be put to good use. A gift that goes unacknowledged or the acknowledgement comes across as perfunctory and not heartfelt is the beginning of the end of a donor’s relationship with your charity.

During these uncertain times when donors are making critical spending decisions it is absolutely critical that a charity profusely and deliberately acknowledge ALL gifts of all amounts in the most heartfelt and genuine way possible.

Whether it’s a personal phone call or a hand-written note from the executive director it’s important for the donor to feel appreciated and to know how grateful you are for their gift. Just think about it, if you were sick in bed and a family member brought you some hot chicken soup, which they did out of love and concern for you, and you didn’t say thank you – don’t you believe the person that brought you the soup would feel unappreciated and that you weren’t grateful for the kind gesture? – now extrapolate that scenario out to all your donors that only know your charity in an even less personal manner than the family member that brought you chicken soup….

Bottom-line – thank your donors in the most heartfelt and sincere way possible. The old adage that you can never thank someone enough never seemed more relevant.