The THREE Nonprofit Misconceptions COVID-19 Proved Should End
How are things at your organization?
If you’re panicking about fundraising, worried about the future, and not sure which steps to take next, you’re certainly not alone. Across the country and around the world, nonprofits are working out how to pursue their missions and keep paying bills during this very uncertain time.
The COVID-19 pandemic has shown us a lot about ourselves, from our preparedness to gaps in our healthcare system. For nonprofits, it’s shown three major misconceptions that we simply can’t take into the future with us.
I’ve been thinking about what a new normal looks like once this is over. Will we ultimately have a stronger community because we’ve changed?
Let’s face it. This is not the first time you’ve had to redefine yourself and your organization. You are constantly shifting, pivoting, and learning new strategies to serve more and do more.
But, this time has highlighted the many things that shouldn’t be the way they were before…so we get to start creating a stronger future right now, by kicking these damaging misconceptions to the curb and moving forward toward a new, better normal.
Misconception #1: Nonprofits shouldn’t carry too large a cash balance or reserve.
My hope is that COVID-19 dispels that crazy notion that overhead is bad.
There, I said it.
Investing in growing your operations, administration, and fundraising is good business.
Having a solid reserve fund is a good practice. The for-profit sector doesn’t even question this, but nonprofits are often resistant to the idea.
You are running a great business and that business is changing lives. I’m all about efficiency, and I’m certainly not advocating that you waste money or spend it thoughtlessly. But, doing more life-saving work with less rarely works out.
I’ve always taught nonprofits...
To have solid reserve funds.
To not feel guilty with money in the bank
To not apologize for growth years where the overhead percentage is higher than normal
But often, these are the things nonprofits get the most questions about. They seem to regard any non-program expenses as a problem, or even a failure. This stops them from reaching their potential and growing their organizations.
Can I let you in on a secret?
Not every nonprofit is working this way, scraping by on not-enough and trying to do money magic (you know, when you try to make your one dollar do the work of ten?). Some nonprofits have strong reserves and money in the bank.
In the last few weeks, I’ve checked in with my clients who have prioritized building their reserves and investing in their growth, and they...are not panicking. With 4-12 months in their reserve fund, they are solidly making it through this time of uncertainty, knowing that they can pay salaries, make rent, and keep pursuing their missions. I want that for every nonprofit!
The good news is that there is a step-by-step path to get to where they are. But it takes pushing against age-old misconceptions.
Donors need to hear you fervently share your true need and plan to grow your mission. They need to hear how their gift can propel the mission forward, thus changing a life. You must educate the donor on what this looks like for your organization. You must confidently own why you have a reserve and how that strengthens their investment in your mission.
Why? Well, large donors want to invest in a forward-moving mission – not one that hopes to just squeak by with just a slightly better impact than they had last year. They want to make a solid investment in an organization who has a plan, knows their numbers, and is on solid ground
In short – don’t apologize for a reserve. Budget for it and own it so you can have a different future of funding post-COVID.
Misconception #2: Nonprofits will never have enough money because donors don’t want to pay for salaries or rent.
Repeat after me: “It’s ok that my Admin/Ops or Fundraising percentages are higher during some years than others.”
Why? Because you are investing in your growth.
I see so many organizations stuck and not growing because they’re afraid to spend money on anything but programs. It’s a backward approach and a bad misconception in the nonprofit sector.
I think this idea is left over from years ago when it was common for foundations to mostly fund programs, but not ops or fundraising. (Thankfully, there are lots of great foundations who fund holistically now.)
The problem? Many fundraisers assume what’s true of foundations is also true of individuals. Because of that one guy who “wants every dollar to go to the field”, they assume most individuals only want to fund the fun stuff.
Not true.
People who are in a position to make large gifts generally understand that growth doesn’t come free. Who better to understand funding strategic growth initiatives than a successful business-person who has needed investors themself? Who better to fund a long-term plan that calls for 1-2 years of heavy operational growth so that the program can be 3X in three years? A business-person who has done this themselves!
When you plan to invest money in your Admin/Ops and Fundraising then you have more money for programs. So run this calculation for me:
If you want to grow your programs in the next few years, you may need to allocate anywhere from 10% - 20% of your expenses toward fundraising or Admin/Ops.
Seriously.
Don’t buy into the fear of the percentages - allocate expenses in your budget that will lead to you raising more money that you can then spend on programs.
The challenge, then?
You’ve got to be comfortable and confident having these investment-level conversations. And that can be scary when you’ve never needed to know how to do that before in your previous career. Luckily, it’s something you can learn to do, and I’m ready to help.
Misconception #3: Nonprofits must have events to find new donors and secure large gifts.
If you're a small nonprofit, it’s ok if you don’t reschedule the fundraising event you had to cancel during the pandemic. I love a good event - but I tell nonprofit leaders to not do them more than start them.
First, let me say I’m so sorry you had to cancel your event. That plain stinks. I know the hours and energy you’ve put into it making it successful and shining a light on your mission. That one is going to sting a while.
But don’t get caught up in the false belief that you need to have an event and “give the donor something” in order to raise money. If I’m honest, sometimes events become too focused on the non-mission activities or transactions occurring during the evening like auctions, raffles, or prizes.
You may think that message conveys,“We are fun and we love our donors” . . . but what it really says is, “We need to create reasons for you to give to us because our mission isn’t enough.”
Whether you hold your event or not, your mission is worthy and valuable enough for people to support in a deep way.
Since you’re in this situation, do this quick check and think twice about rescheduling your event if you:
Aren’t comfortable with or haven't learned how to do one-on-one solicitations (because event revenue is all about the pre-asks)
Don’t have a steady stream of unrestricted, annual funding from individuals every month
Haven’t implemented your Top 30-50 Major Gifts Plan yet
Think about how giving could work without the event. Ask yourself:
Will everyone who was going to give at the event still give to us without the event?
A: If not, prioritize the top 50 gifts you anticipated receiving and set up virtual meetings. You can build relationships over Zoom. You can still ask for their financial support despite the event not occurring.
Was everyone attending the event prepped to give their best gift there?
A: If you didn’t do pre-solicitations prior to your event, your donors were likely not prepared to give their best gift to you (because donors rarely give their best gift at events). An opportunity has just presented itself to you to solicit that donor and ask for the best gift.
Did every event sponsor still give their donation despite the event being canceled?
A: If not, you have an opportunity to pivot this gift from a sponsorship to a relationship. (A business’s best gift does not come in the form of a sponsorship gift. Remember, businesses give donations, too, and unlike a sponsorship, they don’t expect things in return when they donate.
Last consideration: I see so much money left with events. Try to see this as an opportunity to deepen relationships that will lead to larger, annual gifts down the road whether you have an event or not.
A Better Funding Future
This year is proving to be overwhelming, to say the least. This is especially true for those of you who are leading your nonprofit’s fundraising initiatives. With all the programmatic and operational stress you’ve faced these last few weeks, how do you even think about what funding looks like in the months ahead?
What are the things you can be doing right now that will help you prepare for a better future of funding? Small, regular donations are awesome – but if you’re only focusing there, you’re going to leave future money on the table.
Please know I’m thinking about you and your nonprofit and what you need during this time. I encourage you to reach out. In the meantime, I’ve updated my resources page on my website that has all my Webinars and Podcasts up to date. My goal is to provide you with valuable resources during this time. Because you’ve never deserved it more!
-Sherry
P.S. Whenever you’re ready, here are 3 ways I can help you grow your nonprofit revenue:
1. Follow me on LinkedIn for content and resources first
I give away trade secrets and insider info every week - the same lessons I teach my clients about what they can do to start attracting larger dollars and generate more unrestricted money for your nonprofit.
2. Read my WHITEPAPER to see if your overall approach to financing your mission every year might be keeping you from growing.
Here you’ll learn THE BIG FUNDRAISING SECRET that keeps organizations from having the funds to achieve what’s in their strategic plans. Click here to get it.
3. Work with me to reimagine your overall approach to revenue generation
If you'd like to add 7+ figures of charitable revenue to your nonprofit, just send me an email at Sherry@QuamTaylor.com with the subject line “grow.” Tell me a little about your nonprofit and what you need to raise this year. I’ll get you the details! 🎯
