Penny-Wise, Pound-Foolish: A Cautionary Tale of One Nonprofit

Nonprofit staff and volunteers pinch pennies. Maybe they believe donors want them to be frugal or they think that’s what they’re supposed to do as responsible nonprofit leaders.

It’s true that many donors love the concept of low overhead. However, often penny-pinching doesn’t get donors, staff, or board members what they truly want — results.

While most people would agree that it’s not okay to waste nonprofit dollars, there’s an important distinction between waste and wise investing.

A Cautionary Tale of One Nonprofit

I met with a development director recently who wanted my advice. Like so many others in our field, her organization had decided to wing-it when it came to their capital campaign. No expensive consulting fees for them!

It didn’t matter to their board or executive leaders that no one on the team had any significant campaign experience. They knew they had to raise the money, and thought they would do it with sheer will and determination.

The Danger of Raising Capital with Sheer Will

Unfortunately, one year into the campaign, they hadn’t secured several of the lead gifts necessary to be successful. After a 10-minute conversation with the development director, I could clearly see where they had gone wrong.

They failed to do any pre-campaign planning.

Had they done some effective pre-campaign planning, they wouldn’t have been in the bind they were in. In fact, with proper planning, they could raise a lot more than they are trying to raise. And yet, when I spoke with them, it seems like they are going to come up way short!

3 Key Components of Capital Campaign Planning

Here are a few suggestions for what they should’ve done from the start — and what they can still do to get their campaign back on track.

1. Develop a gift range chart that shows how many gifts they need at what levels for their campaign to be successful.
2. Create clear campaign policies spelling out what gifts will and won’t be accepted and how they will recognize donors.
3. Work up a plan to speak with their key donors to get their feedback on the current plans and adjust the plans as appropriate and necessary.

They hadn’t done careful planning and hadn’t spoken with any of their largest donors to test their plan. In other words, they were flying blind. As a result, their messages were inconsistent and they weren’t asking their top donors for gifts that were big enough — both in terms of the donor’s capacity to give or what the organization actually needed to achieve their campaign goal.

In trying to save money, that organization had been penny-wise and pound-foolish. They had saved money on consultants, but their campaign was on the verge of failing.

Failing to Plan is Penny-Wise, Pound-Foolish

Say a campaign consultant would have charged $50,000. The board didn’t want to pay that fee. They figured that their development director knew enough about fundraising to get the job done.

But as she told me on our call, she had never done a capital campaign before. And she knew she was in over her head. She had tried valiantly to make the campaign work, but the results were disappointing.

With some expert help and basic campaign strategy in place, I am confident her organization could raise an additional $500K – $1M and maybe more. In that context, the $50,000 consulting fee seems like a bargain.

It may obvious to you, but again and again organizations are unwilling to invest in staff and expertise so that they can raise more money and have more impact.

Well planned campaigns elevate an organization’s capacity to raise funds and sights of donors.

You may find it hard to make a big investment decision when you’re not sure your campaign will be successful. But those of us who have seen organization after organization raise more money than they thought possible through a well-designed campaign, the decision to invest in your campaign is clear and obvious.

Don’t let your organization fall into the trap my development director friend’s organization fell into. If your organization is going into a capital campaign, invest in getting the expertise and support you need to do it right.

Investing in Your Campaign Means a Greater Impact

As yourself these questions:

• Do your donors want you to have small results or big results?
• Would they prefer you had a small impact or a big one?
• Do they want to be part of a successful campaign?

Most organizations benefit from working with a campaign consultant — at least during the planning and quiet phases of their campaigns.

Don’t be penny-wise and pound foolish. Invest in the future of your organization. You won’t regret it and neither will your donors!