Events, Ideas and News

Many of our current and former clients are experiencing — or planning for— significant operating deficits due to shifting economic conditions, changing political priorities, and evolving funding landscapes. These financial challenges are real, and the uncertainty they cause is understandably upsetting.

Unfortunately, we see some nonprofit leaders giving in to the impulse to seek quick fixes to these complex problems. In practice, this often means turning up the pressure on development teams—expecting they deliver more money, in less time, and often with fewer resources.

To make matters worse, in times of stress, board members and senior leaders can take on the role of “back-seat driver” to the fundraising team – offering suggestions rooted in personal opinion or recommending tactics they’ve seen work elsewhere, without regard for the organization’s unique circumstance, their development team’s expertise, or even what constitutes effective fundraising practice.
These reactions are typically not helpful—and sometimes they are outright harmful. Such approaches oversimplify the current moment and assign too much responsibility for the organization’s long-term sustainability to the development team. The hard truth is that the problems facing the nonprofit sector are complex and cannot be fixed through philanthropy alone.

Fundraising doesn’t happen in a vacuum —it’s deeply intertwined with an organization’s programs, performance, fiscal discipline and leadership. Holding development responsible for solving the nonprofit’s existential financial problems is not only unrealistic, it prevents the broader organization from engaging in the necessary self-reflection and adaptation that the moment demands.

Ways to Optimize Your Development Team’s Success
Effective fundraising is a “necessary but not sufficient” tool for nonprofits to sustain themselves long-term. To ensure that your development department is positioned for maximum success, it is important that leadership provide:

• Clear organizational strategy: Development efforts must align with the mission and the programs they support. If development efforts aren’t tied to a nonprofit’s strategy, fundraising becomes disconnected from what donors want to fund and what the organization can reliably deliver.
• Adequate investment: Like any business function, development needs sufficient staffing, tools, and budget. Expecting your fundraising team to do more with less is a recipe for burnout, turnover and missed goals.
• Cross-department collaboration: Program staff need to see themselves as part of the organization’s extended fundraising team, helping to tell authentic stories, provide data and evidence of impact and build meaningful relationships with donors.
• Board engagement: Boards should provide a compelling vision, steady counsel and help open doors to potential supporters — and resist the impulse to lay blame or prescribe solutions when fundraising doesn’t achieve newly expanded goals.

Ways to Enlist the Broader Organization in Addressing the Financial Challenge
Operating deficits are often the result of multiple, contributing factors. By having conversations with programming, administrative and fundraising teams, nonprofit leaders can engage the entire organization to take stock of the current situation, gain a better understanding of the source(s) and size of their deficit – and identify a menu of solutions that can be implemented across the organization to bring the nonprofit’s operating deficit back into balance.

Through this organization-wide effort to comprehensively understand and address the operating deficit, the nonprofit is able to create a “roadmap to sustainability” for itself that lays out:

• The source(s) and size of its deficit
• Specific initiatives (levers) that will be implemented across the nonprofit to increase revenue (both earned and contributed), decrease expense, or improve efficiency
• The investment of time and money that will be required to implement each solution – and the impact each lever is expected to make in resolving the deficit;
• The sequence and rollout timeline of the plan – and
• the point in the future when the nonprofit expects to regain financial stability.

We’ve helped a number of nonprofit clients to navigate this difficult time and create their own “roadmaps” – and although it a significant undertaking – they’ve found the exercise to be liberating because it provides them with a renewed sense of agency and a set of tangible, coordinated steps they can take to chart their organization’s destiny.

So remember – if you are among the majority of nonprofits who are wrestling with financial challenges, your best response is likely to come from the wisdom and creativity of your whole organization – not just those engaged in fundraising.

Eric and Kim Snyder are partners at the Excelsior Bay Group.

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