Strategic Planning, The Cornerstone of Financial Stability
By William Bennington
Of all the actions that a Board of Directors can take to strengthen the organization they are charged with leading, strategic planning offers the most promise. Yet planning is the most commonly overlooked solution. In nearly 40 years of serving on non-profit boards and a decade and a half of service on the faculty of the Institutes for Non-Profit Excellence, I have heard countless times, “We have so many problems to cope with, we just can’t afford to take the time to plan.” Yet, these same organizations are content to marinate in financial crisis rather than take the time to engage in a simple process that will make an organization more efficient, more effective, and more economical.
Research among nearly 500 randomly-selected Institute attendees over a 15-year period shows that organizations that create and use strategic plans experience an average increase of 21% in private sector funds raised the year following the introduction of planning and a 22% increase in clients served. For the typical surveyed organization with an average annual budget of $380,000, this increase in income amounts to $70,800 net of planning expenses and an additional 153 clients served on average.
Strategic planning need not be a complex undertaking, nor does the process require a rocket scientist to administer. In fact, organizational planning often fails because the people managing it complicate the process.
A simple plan consists of several distinct sections including:
The overall purpose of the organization and why it is in business. (Says what we do, who we serve and where.)
Our dream. What we want to be when we grow up organizationally -- sometime into the future.
Those behaviors that shape the character of our organization.
Key Goal Areas -
Those major areas of concentration critical to the achievement of our vision. For example, we could have not put a person on the Moon without rockets, facilities, astronauts, etc., each a key goal area for that program.
Those major accomplishments over a period of time that will enable us to realize our vision. Our current year plan will have perhaps six or seven key goal areas (board development, fundraising, programs, donor base development, facilities, communications etc.) and one or two key goals for each.
The interim accomplishments that taken in combination are necessary for the achievement of each goal. For example, if our goal is to win the championship, our objectives would be to win game one, game two, game three, etc.
When you set a goal or a target/objective, it must contain the following:
a. a measurable component
b. a defined time frame
c. an individual who is responsible
Include those major factors that inhibit or enhance our ability to achieve our goals or to complete our tactical targets/objectives.
If any of these elements is missing, you will likely not realize the results you expect.
Strategies are the "best approaches to solving the problem." They state "how" you plan to accomplish something - not what. For example, if our goal is to “win the championship”, a key strategy might be to win more games through development of a strong defensive capability.
Action Steps/Programs -
These are the specific measurable and time limited things we must accomplish to achieve each of our objectives. Usually, it takes a number of separate action steps to reach an objective and the accomplishment of several objectives to achieve a goal.
Following are some suggestions that should be helpful in developing your plans.
Goals/Targets/Objectives always begin with an action verb:
· achieve, increase, reach, sustain, eliminate, overcome, convert, etc.
Strategies always begin with a participle:
· by or through, followed by a gerund ending in "ing". Examples: by creating, by removing, by providing, through a process of, etc.
Action Steps/Programs begin with an action verb:
· complete, achieve, increase, reach, implement, overcome, generate, sell. Action steps also must contain an action to be taken, a time frame for completion, an element of measurement that indicates the action is complete and the name of the individual responsible for finishing the task.
At every step throughout your planning process you should ask the following five questions:
· Is it in keeping with our mission?
· Will it move us toward the realization of our vision?
· Do we have the human resources to do it?
· Can we fund it?
· Can we sustain it beyond the initial grant?
If the answer to any of these questions is anything other than yes, you should reconsider.
Remember, wishing consumes as much energy as planning.
And never lose sight of the ancient Japanese Proverb that says, “When you are thirsty, it’s already too late to dig the well.”
10 Yardsticks to Success in Fundraising
Published in the Pennsylvania Grants Guide
William Bennington has been a grantmaker for more than 30 years. In addition he has taught more than 7,200 non-profit organizations worldwide the basics of board development, strategic planning, communications and fundraising.
Whether you are a new organization or one that is 100 years old, the development process should begin with your agency’s strategic plan and annual budget (projected expenditures) going forward. If your organization does not have a strategic plan, the rationale and process for developing a fundraising plan becomes much more difficult – as does “making the sale” when you are approaching prospective donors.
There is no magic to creating a strong fundraising capability or carrying out the process of identifying, cultivating and building a strong and diverse base of donors.
The most essential element of successful fundraising is a board that is committed to and capable of raising support. Board members should provide fundraising leadership through their own giving, their willingness to ask others for support, and through the use of their clout and contacts to bring potential donors to the table.
The second most critical aspect of fundraising success is the development of a written plan to guide the effort. Well-thought-out development plans and strategies can make an enormous difference in the ongoing financial health of an organization.
Following are 10 steps to creating a successful fundraising initiative.
STEP 1 (Organizational design and recruiting)
Complete the organizational design and recruitment of the development team including leadership, staff support, committee membership and volunteers. (For a January 1 fiscal year, this process should be completed by the end of September the previous year in order to allow time for planning, keying to the strategic plan and strategy development and materials preparation for the coming fiscal year.)
Selecting the most appropriate fundraising leadership can mean the difference between unqualified success and disappointment. The leadership group, which typically includes the executive director, the development officer (if the organization is large enough to have someone serving in that capacity), and the organization's board members, must fully support the campaign effort with their interest, time, energy and personal finances.
Leadership is responsible for:
· Developing, reviewing and approving fundraising strategies
· Identifying potential donors (institutional as well as individuals)
· Reviewing and approving fundraising materials.
· Attending meetings and providing active leadership.
· Assisting in motivating and training solicitors and donors.
· Assisting in recruiting volunteers.
· Soliciting appropriate prospective donors.
· Reviewing and evaluating periodic reports.
· Ensuring compliance with the agreed upon plan, methods and procedures.
The resource generating team should include a development chair (usually drawn from among current board members), other members of the board who are willing to assume specific leadership roles for parts of the development plan, staff members who are assigned to carry out support functions and/or donor contact and promotional activities, and non-board volunteers.
Major areas of development team responsibility often include the following:
Donor Database Management
Annual Appeal Campaign
Foundation and Corporate Solicitation
Major Donor Relations
Publicity and Promotion
Using Social Media
STEP 2 (Goal setting)
Determine the total $ amount needed to be raised. (This figure is usually derived from an organization’s annual budget and strategic plan.)
Fundraising needs should be calculated and revenue goals established for unrestricted gifts, restricted or special program gifts, capital gifts, bequests, in-kind contributions and other forms of income such as membership fees, client fees and governmental funding that may be appropriate. Each organization should determine the percentages of income from the various potential sources in keeping with the realities of its own business. There is no strict rule of thumb related to appropriate spreads of giving by segment, but the old adage of “too many eggs in one basket” should be heeded. It stands to reason that an organization with a broad base of small-dollar donors is less at risk than a similar organization with a few very large donors. Generally speaking, the less mature and smaller the organization, the higher the reliance upon the institutional grant making community – foundations, community foundations, corporations and the government or public sector. While larger, more mature organizations tend to have more sophisticated approaches to garnering individual support, smaller organizations should continually strive to broaden their base of unrestricted funding by expanding their base of individual givers.
In addition, foundations and corporations are increasingly more attuned to the desirability of strong community support and many are using this measure as a funding decision criteria. Thus, a growing base of individual support should be a part of any development plan.
As a grantmaker, for the past decade I have asked the following six questions of every organization that has put a request before me, and, more often than not, if they cannot answer the questions or if the answers are negative, I am hard pressed to recommend funding.
1. Do you have a strong, committed board?
2. Does your board take the lead in fundraising?
3. Does 100 percent of your board contribute financially to your organization?
4. Do you have and follow a written strategic plan?
5. How many individual donors give to your organization and how much have their numbers increased over the past several years?
6. How much has the average annual gift increased over the past several years.
The answers to these questions provide a wealth of immediate insight on the relative health and future potential of agencies. Since most grantmakers want to put their dollars where they will provide the greatest return, the strategic plans for most not-for-profits should have goals related to each of those key questions.
STEP 3 (Giving analysis and projection)
Develop an annual history of what you have raised (5 to 10 years if possible). If you are able to, segment the giving by categories and maintain this data on a spreadsheet.
Compare both your income and expense trends (going back five years) to determine if your assumptions going forward are within reason. One approach that has worked with a number of organizations is to use a probability table to develop realistic estimates of future overall contribution levels. In the writer’s experience, actual aggregate results seldom vary by more than about five to eight percent from the probability estimate.
STEP 4 (Donor segmentation)
If you have not already done so, break your donor list into the appropriate giving categories including segmenting individual donors into groups of increasing value. For most organizations the segmentation would include Foundations, Corporations, Board, Events, Planned Giving, and the individual donor segments. The individual segments would range from less than $50 through $51-$100, $101-$250, $251-$500, $501-$1000, $1,001-$5,000, >$5,000. Evaluate the trend and performance of each segment to determine overall potential for moving individual donors up the pyramid. (Generally, the closer the averages are to the top end of a donor category, the greater the overall potential to move donors in that segment up.)
Analyze the specific donors in each segment (usually beginning with the $100+ categories) to determine individuals you wish to pay special (personalized) attention to in soliciting and moving them to the next tier of the donor pyramid.
STEP 5 (Strategy development)
The development committee should be responsible for developing the fundraising/development strategy, with the process generally being led by the chair of the committee or the executive director of the organization. Since the responsibility for fundraising transcends the board, executive director and staff, each of these areas should be a part of the planning process.
Once the overall strategic approach is complete, the fundraising committee, working with the executive director, support staff and volunteers develops the fundraising plan. See STEP 7.
Strategies should be developed for each donor area with emphasis on those segments with the greatest potential for adding new donors, for funding of new initiatives and/or moving the faithful up to the next step of the donor pyramid. (Pay particular attention to the human resources at your disposal in developing strategies and remember that the higher the donor category, the more personal the solicitation must become.)
STEP 6 (Identifying and cultivating new donors)
Often people engaged in fundrasing approach the process of identifying potential new donors wearing blinders. Identifying prospective donors should always begin with a review of what groups of individuals, businesses and foundations are already invested in some fashion in the organization or the issue it addresses and to put them at the top of your prospect list. It is best to start looking in your own “backyard or neighborhood.”
Donor base development should be approached as a process, not an annual activity. It should be pursued:
· every month
· every week
· every day
· every hour
· every minute – by everyONE associated with the organization.
Potential donors are everywhere you look and among every individual or group you encounter daily. (see Figure 3 for sources of potential donors).
Every contact a board member, staff person or volunteer has with another individual should be considered an opportunity to recruit a potential donor.
You and others involved in your fundraising process should capture the name, address and telephone number of every person attending an event or of anyone showing an interest in the organization, its mission or services.
STEP 7 (Development plan completion)
Complete the development plan and assign leadership and tactical responsibilities as well as completion dates for each action step. Organizations that are successful at fundraising, more often than not, have a written strategic plan that spells out the organization’s mission and vision as well as specific goals, strategies and action steps related to fundraising, board development, audience development (friendraising) and so on. In most instances, the fundraising plan is developed as an integral component of the organization’s overall strategic plan. However, in some instances, particularly among well-organized non-profits, a separate fundraising/development plan is prepared.
In addition to the Goal Summary and Information page(s), the development plan should contain Tactical Planning Sheets. Typical Tactical Planning Sections of a Development Plan would include the following major sections and sub sections or target areas:
Donor Base Development
Donor Base Evaluation
Fundraising Event “friendraising”
Foundation Solicitation Prospect Lists
Research (grants guides etc.)
Measurement and Grant Reporting Prospect Lists
Reporting of results
Thank-you Letters and Handwritten Notes
Annual Individual Appeal Process
Reporting of Results
Measurement and Grant Reporting
Board Solicitation Campaign
Board Giving Audit
Other development plan tactical categories might include Direct Mail Solicitation, Government Grants, Special Event Plans, Golf Tournaments, Telethons, United Way donor designation (be sure to check with the local United Way for policies and procedures before embarking on this course.)
STEP 8 (Plan execution)
Once the development plan is completed, the process should be launched immediately and be ongoing from that point forward. Every member of the board should be actively involved in some aspect of the fundraising process.
STEP 9 (Donor recognition)
Every donation, regardless of size, should be acknowledged with a personal thank you. The best thank-you’s are those that are handwritten and addressed personally to the giver. Thank-you’s should be sent immediately (the very same day received) to the donor. Remember gift receipts do not qualify as a thank you.
Organizations should find ways of saying thanks to donors several times each year directly and personally. This becomes more important the higher you go in the giving pyramid. A general rule of thumb is that the greater the amount donated, the more personalized the attention and donor nurturing should become.
STEP 10 (Measurement and analysis)
In order to understand the level of progress or lack thereof, and to improve the ability to project in the future, evaluation of fundraising results becomes a necessary function. The most important categories of measurement include Total Annual Income, Total Annual Expenses, Net Income, # of Active Donors (who contributed at least once during the year), # of New Donors, # of Monthly or Regular Donors, # of Gifts received in calendar year, # of Gifts by Category Segments, Annual Campaign Income, Annual Campaign Cost, Average Gift Size, Total Contributed Income, Total Fundraising Expense, Return on Investment and Value of the Average Donor.
The ratios that can be developed from these numbers can be very useful in future planning as well as with potential foundation and corporate funding sources.
In conclusion, there are 10 additional yardsticks that if heeded, will make a material difference in your friendraising/fundraising success.
1. If a donor base is not growing, it is eroding. Thus, donor acquisition is the key to future resource development, agency survival and service growth.
2. Fundraising leaders and volunteers must make their own gifts first before soliciting others.
3. Everyone involved in the fundrasing process must understand that people give to PEOPLE...not to campaigns.
4. People become genuine prospects when there is an emotional or kindred connection.
5. Most prospects and past donors(whether foundations, corporations or individuals) will not give unless asked to do so.
6. Donors give because they are ASKED and all prospects should be asked for a specific gift level.
7. The larger the donor base in relation to dollars raised, the more the risk of losing major grant dollars is mitigated. Institutional funders look more favorably upon organizations with strong bases of individual support.
8. All prospects should be nurtured as friends before they are asked to consider a gift.
9. All solicitors must receive training and preparation before making the ask.
10. Every gift is acknowledged immediately with a personal thank-you (not a receipt with a thanks message).
New Dimensions in Non-Profit Governance:
By William Bennington
There are more than 1.2 million not-for-profit organizations in the United States today – about one for every 250 Americans. This Independent sector is one of the fastest growing segments of our economy, one of the most challenging and one of the most competitive in terms of finding the money to create sustainability.
The equation is simple. The issues that non-profits address are growing by leaps and bounds. Demand for services is increasing. Giving is rising ever so slightly and about 30,000 net new non-profits are being created annually. There is more to be done and less money to go around.
As organizations struggle to remain financially viable and go about making organizational improvements, they often overlook the one area of greatest potential advantage – their board of directors. The role of non-profit boards in general is not evolving at a pace anywhere near the increase in financial pressures.
At Bennington Enterprises, we believe that a key to sustainability is the 3-G Board -- a board whose members Give, Get or Get Off. It’s that simple. If a board member refuses to get involved in building the donor constituency, to assist the director and staff in fundraising or to engage in fundraising activities, they should be asked to resign, no ifs, no ands and no buts.
Boards whose members give to the organization at a 100% rate, boards who build individual donor constituency and boards who demonstrate growth in average annual gifts from individuals are those who are favored by foundations and corporations.
Is your board a 3-G Board? If not, you are short changing your clients.