Does Having a Fundraising Development Plan Really Matter? Actually, Yes.


By Barbara O’Reilly, CFRE, Founder and Principal at Windmill Hill Consulting

It started with a tweet asking if there was a correlation between fundraising development plans and fundraising success. We have so much anecdotal evidence how intentionally planning fundraising for a fiscal year creates a stronger vision for success. But can we concretely support the anecdotes with data?

So, Windmill Hill Consulting partnered with Bloomerang and DonorSearch to commission the Institute for Sustainable Philanthropy to find out. This global study was the first of its kind analyzing feedback from nonprofits around the world. Not only did it assess how much the act of planning and the written plan itself contribute to a nonprofit’s fundraising results, it took a wider view to determine the other factors that play a role in a nonprofit’s fundraising thrivability.

The overall conclusion was that there is a strong relationship between the degree to which an organization had a formal annual strategic fundraising planning process in place and whether that nonprofit was successful in meeting its fundraising revenue goals. 

But there were other elements that played equally important roles in annual fundraising success.  The ideal recipe for fundraising growth includes four elements:

  1. Fundraising Culture
  2. Data-informed Planning
  3. Commitment to the Plan
  4. Senior leadership/Board Involvement

Having the written plan of goals, timelines, and tactics is simply not enough. A nonprofit whose fundraising thrives—especially during difficult times—also has an organizational mindset toward fundraising, senior leadership buy-in to this culture, team ownership, and defined and tracked metrics and accountability standards.

In a time when donor and staff retention are urgent needs in the nonprofit sector globally—now is the time for all leaders to look at how they can build these conditions for success into their own organizations.

As fundraisers and nonprofit leaders, evaluate in your own organizations these factors to move toward a path of fundraising growth:

Factor #1: Culture

“Culture eats strategy for breakfast” rings true as the leading ingredient in a nonprofit’s fundraising success.  In this case, culture pointed to an internal and external mindset. Internally, a strong fundraising culture is one in which the entire team understands fundraising is about building long-term relationships with donors. The external mindset is reflected in how a nonprofit tells its story built on a case for support that stems from the wider mission and vision of the charity not just what and how it does its work.

Not surprisingly, nonprofits that reported having a fundraising plan were more likely to have philanthropy as a core value, see fundraising as a profession, have strong involvement by their boards in fund development, and have a strong case for support. In fact, in a previous study, organizations whose leaders intentionally focus on creating a strong internal culture of giving and fundraising are more likely to double, triple, or quadruple their fundraising revenue over time (Sargeant and Shang, 2013).

Factor #2: Data-informed Planning

Fundraising plans that were most likely linked to fundraising success were developed from a structured analysis of trends and opportunities. Organizations that did not have a plan were significantly less likely to conduct SWOT analyses or similar benchmarking, and did not regularly check on the health of its donor pipeline and giving trends. In other words, they had no idea what preceded that current fiscal year and no idea how to plan a way forward.

The study shows that nonprofits that have a fundraising plan are more likely to base their strategies on giving trends they see within their own organization with an awareness of external factors that may help or hinder their success.  As each year’s plan is written, fundraising leaders look at past performance of fundraising channels, segments of donors, the donor communications results, and the health of the donor pipeline as a whole.

Factor #3:  Commitment to the Plan

Metrics tracking donor behaviors are established and regularly monitored so leaders can quickly spot deviations from their progress toward goals.  Given that the average donor retention rate for nonprofits in the U.S. is below 50% according to the Fundraising Effectiveness Project, knowing how many donors a charity is keeping year over year is an important starting point. First-time donor retention is even worse with an average 20% of first-time donors making a second gift.

Again, not surprisingly, nonprofits that had a written plan were more likely to have higher subsequent year retention and increased revenue than those that did not have a plan. So, the act of charting goals, activities to reach those goals, and metrics to measure performance was the secret sauce of success.

Factor #4: Senior Leadership/Board Involvement

Reports like BoardSource’s Leading With Intent and the Evelyn and Walter Haas, Jr. Fund’s UnderDeveloped report cited that boards view themselves as very weak in fundraising and are a contributing factor to high staff turnover.  Similarly, this report found that just 57% of respondents felt their boards were supportive and fewer than half of respondents reported that all members of their board made a gift in the last year.

Fundraising staff and leaders need to understand what has worked and not worked in the past and build on those findings both in what channels to spend time development, what activities will best engage their audiences, and who on their fundraising staff or organizational leadership and board must be involved to create the best donor experience. In short, those nonprofits that have a written plan (and the mindset, capacity, and discipline that goes with it) more consistently outperform their peers who do not have a plan.

Development Plans As Guideposts During Disruption

The Good News: The majority of the more than 300 nonprofits around the world that were surveyed stated that they used a development plan to chart their fundraising strategy and felt that having the plan contributed to their fundraising success and growth each year.

Even in light of the global pandemic of COVID-19 which disrupted the entire charitable sector around the world in 2020, confidence in weathering this pandemic and economic uncertainty was 14% higher because the nonprofits with plans had a roadmap to guide their continued activities and they had established metrics that help them measure their performance.  Those nonprofits with a fundraising plan expected a 10% lower reduction in income compared with those without a plan.

The Bad News: More work needs to be done to develop the other qualities of fundraising success, such as the organizational mindset toward fundraising, senior leadership buy-in to this culture, and regular tracking of metrics and accountability standards.

To read more about the study findings, visit the report and user’s guide.

 


Author Bio:

Barbara O’Reilly, CFRE, has thirty years of annual fund, major gifts, and campaign fundraising experience at major non-profit organizations including Harvard University, the National Trust for Historic Preservation, Oxford University in England, and the American Red Cross.

Her firm, Windmill Hill Consulting, helps non-profit organizations cut through the noise and develop a profitable fundraising strategy that focuses on the resources, skills and tactics they need to raise more money and keep more donors.

She serves as past president of the Association of Fundraising Professionals (AFP) Washington DC Metro Chapter and as a former member of the Advisory Panel for Rogare, The Fundraising Think Tank in the U.K.  An AFP Master Trainer, she is a frequent and sought-after presenter at national and international conferences and webinars. In 2020, she joined the faculty at the University of Maryland’s Do Good Institute teaching nonprofit fundraising.