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.

Being True to Our Mission

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Interesting article in the Wall Street Journal the other day -  http://online.wsj.com/article/SB122963299671419401.html

This article jumped off the page for me. I raised the issue in a blog post awhile back in May of 2008 - 

 see…. http://oculusdirect.com/blog/2008/05/

To see this article raise this issue means a great deal to me and should to you as well. The nonprofit sector can no longer be complacent – especially, regarding how we are measured not just by ourselves but our donors and those pesky rating agencies like Charity Navigator.

We need to take a stand and develop a new and innovative method for measuring our effectiveness – not by dollars raised or a convoluted SOP 98-2 process that can be jury-rigged to fit the outcome we want. Why are we all sitting by and letting this happen? It’s kind of like the lazzi-fare attitude that Wall Street faced for so many years. Everyone seemed to be in on the little secret that there was a house of cards being built but no one really cared as long as everyone continued to prosper from the deceit.

Is the nonprofit sector much different? Really? We are perfectly content producing what we feel are legitimate numbers and percentages and do our best to “comply” with the rating systems and perhaps acquire the BBB seal of approval. But if you are like many in the industry there is something gnawing at you - yet you don’t know what to do because there is an ocean of movement going in one direction.

Well, one by one, we can take a new direction that someday might become the norm for measuring nonprofits. The paradigm shift that needs to happen involves completely rethinking how we measure success.

Lets begin taking a hard look at this and figure out a way, method, that will logically and effectively measure if we have accomplished our mission and goals or not. Whether its serving people in soup kitchen, or drilling bore holes, or funding a cure for diabetes,  or educating people, or building an art museum, or filling some other social or cultural need, we need to quantify what we have done in real terms not simply financial terms.

I don’t have the answer – perhaps you do – but the best thing we can do is to begin the conversation – NOW before its too late…. and we are another casualty like the investment community.

Let’s Re-calibrate Our Priorities

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I am sure you are just as appalled as I am with regard to the Madoff scandal, Ponzi Scheme, swindle or whatever you want to call it. But no matter what you call it there seems to be change in the wind – not just on Wall Street but also in how we live our lives and what we should consider important.

How can we see so much wealth, or presumed wealth, evaporate into thin air. Where did it go? Were we in a bad dream for the last several years and now wake up to face a different reality like NEO in The Matrix?

I am truly saddened to know that several charities have literally had to close their doors because of this one man – Madoff. Yet I keep thinking there is a bigger lesson to learn from all of this. None of us know if it will get worse or get better and perhaps we may even look back upon the last several years with abhorrence as to how we lived our life and the misguided values we embraced. Regardless of our perspective everything is different now.

See Chronicle article http://philanthropy.com/news/updates/index.php?id=6582 

Bottom-line is we were collectively mesmerized by money, success, the fast-lane and reaching new and greater financial heights and acquiring more and more things.

I hope that one of the outcomes of this Madoff debacle, along with the stock market cratering, the recession, bankruptcies and so forth – will be a resurgence of a renewed consideration for the “person” and not just “things”. We need to circle back and embrace the human condition and not materialism. This is simplistic I realize and possibly idealistic – but doesn’t all of this nonsense make you want to go home and spend some time with your family and hug your wife and kids and appreciate what you have? Doesn’t it now seem like material things are simply just that and consequently have no intrinsic value. There is nothing endearing about a fancy car or a fancy house – yes, its impressive but the aura of it doesn’t live forever. What lives forever is family and integrity and honesty and character and honor and memories.

Anyway, to the point I really want to make – I think this is the change we have been looking for in the nonprofit world. We have been chasing money for far too long. This is an unavoidable reality but we need to be chasing passion more than just money. The outcome of the last twelve months will be a re-calibration of priorities which will direct people to a renewed sense of community and a sense of duty with regard to those around them and for the greater good. People will realize that materialism was a sham and that there is much more to life. They will find a new passion in helping and doing things for others, their families, and the world. Nonporfits will be the beneficiary of this new perspective of the world.

A close friend of mine is a shining example of someone that is professionally very successful yet never turns down a chance to help people and support others way beyond the call of duty. He has a tremendous passion for life and those around him, especially his family. He is in the process of training (finding time in his busy schedule must be daunting) for a 24 hour 400 mile bike ride to raise money to find a cure for Lupus (his daughter suffers from the disease). http://lifewithoutlupus.org

This is the future of fundraising. Individuals making personal commitments because they believe in a cause and have the passion to help make a difference. Its going to be people like Chris Paradysz that help people in new and extraordinary ways.