Issue 1- Summer 2013: When boards talk fundraising

Arrows

The conversational tone is changing in charity boardrooms across Canada. Whether exhorted by sector spokespeople or galvanized by superficial analysis and sensational reporting, fundraising leaders and board members are speaking out firmly and frankly about the connection between fundraising success and mission achievement.

 And they’re finding that donors understand. “The view of cost per dollar raised [CPD] is less myopic,” comments Calgary fundraising consultant Ross Marsh. “More donors are focusing on outcomes: will your fundraising investments drive more money into your mission? There’s still a wide gulf. It’s the more sophisticated donors who understand fundraising costs. But even less aware donors are beginning to learn that it’s about outcomes. They’re catching up.”

Reasonable dialogue at the board table

Ted Garrard, President & CEO of SickKids Foundation, learned that his board of directors was talking frankly about fundraising costs even before he was hired in 2009. And their discussion was, and remains, open and reasonable “They want to be comfortable defending it [CPD] to stakeholders, and they want to know where we are positioned compared to others in our sector,” he explains. “The Sick Kids board wants its CPD to be in the mid-range for like organizations.”

 

Most board members have some business experience. Say things like, “Could you run a $4 million business without investing in a business plan or resourcing the business?” —Ross Marsh, Ross W. Marsh & Associates

But to be meaningful, that comparison must be accurate. “It’s important to compare ourselves with organizations that have to raise a lot of unrestricted money,” Ted notes. “That means a lot of expense on mass marketing and events. We wouldn’t compare ourselves to the United Way, for example, where much of their fundraising is done by workplace volunteers in their own offices.”

 We must pay decent wages to keep our [donor relations] staff. Otherwise,we will always be training bright young things for their next position somewhere else. — Tim Maloney, Mercy Ships Canada

Ted uses a three-year rolling Marsh & Associates average CPD to smooth out some of the bumps caused by acquisition campaigns and newly launched events. His board understands that a new initiative, especially an event, may take three or four years to reach its target Return on Investment (ROI ). “But it also generates what we call warm leads, good prospects,” he points out. “You have to track the conversion rate of that as well.”

Set targets, report outcomes

Clear targets and outcomes reporting make board members much more comfortable with fundraising costs, says Halifax consultant Anne (Coyle) Melanson of Bloom Nonprofit Consulting Group. “I work now as a consultant and have interacted with dozens of boards over the years, where investing in fundraising growth and outcomes is on the agenda,” Anne observes. “I don’t generally find boards to be resistant to investing in fundraising if there is a sound ROI strategy and a realistic plan that the board has confidence in.”

It is really important for charities to strike the balance between investing appropriately and not appearing to be extravagant. — Anne (Coyle) Melanson, Bloom Consulting for Nonprofits

Head and Heart in Conflict

As with any human trend, intellectual understanding precedes emotional acceptance. The notion that you have to invest money to make money has taken hold in board members’ brains. But many directors still struggle with what Ross describes as “fundamental squeamishness.” Tim Maloney of Mercy Ships Canada agrees, describing his board as one that simultaneously “wants every possible dollar to go to our projects [and] to raise more money.” Anne concurs. Boards, she explains, “don’t want the organization’s reputation to suffer because donors or the general public view them as being irresponsible.” That’s where measurement and reporting can help, provided it takes the long view — the three-year rolling average of CPD that Sick Kids uses, the “warm leads” from new events, or an understanding of donor lifetime value, which Tim points out can be hard to measure for younger organizations like his.

If mission dollars increase faster than your cost per dollar raised, that’s a grand slam success. — Ross Marsh, Ross W. Marsh & Associates

But the most meaningful measurement is impact. Lives changed, diseases understood, illnesses healed — these speak to donors more powerfully than a CPD that is marginally lower than that of the not-quite-similar charity down the street. The time is right for boards to transform their charities by proclaiming that more money for fundraising, properly used and monitored, means more money for their mission. And they can only do that if their fundraising staff experts give them the outcome measurements to prove it.