How to Set Realistic Nonprofit Fundraising & Income Expectations

 

board at a table

Everyone at your nonprofit would like to earn more revenue and raise more funds. Boards, seeking to motivate staff and create momentum, tend to set optimistic income goals. Employees recognizing implementation challenges and desiring to exceed any goals, strive to develop conservative ones. When expectations differ, then stress, suspicion, and conflict can result.

How can you bring board and staff expectations into sync? Discuss the whys behind your expectations as a whole, as well as for specific streams such as individual donations. Below are five areas to explore. Use them to structure a conversation to save your staff and board frustration. While the conversation could be the subject of a half-day retreat, you can move a long way toward syncing expectations in a focused 30-minute conversation. To prepare, staff will want to gather supplies and information from the field and the organization.

Get In Sync
As you gather as a group, ask everyone to anonymously write an income estimate on an index card for the budget or budget line item. Hand these into the organizer, who arranges and posts the estimates from low to high on a wall.

How to Estimate the Amount of Nonprofit Income You Can Raise

1. Experience

Which of the posted estimates represent moderate growth based on your experience? For example, in the last three years, you raised $95,000, $80,000, and $90,000 in donated income; a growth rate of 10 percent above the average (the three years added together, divided by three-plus 10 percent of total), or $96,666, represents a fair stretch. For one year, growth rates based on last year’s unusually successful year, or rates of 25, 50, or 75 percent tend to be overly optimistic.

2. Industry Standards

When you launch a new venture, you can’t use the experience as a guide. In this situation, you’ll want to consider industry standards. Even if your effort is ongoing, industry data is helpful. What numbers on your wall represent the experience of your sector? For example, theaters traditionally earn about half of their income. What are the goals and growth rates in your sector? Do you expect to obtain vastly different amounts? Do some or all of your expectations fit the industry? If you differ, why?

 3. Is Growth Realistic?

Every nonprofit must grow long-term. However, in a given year, income growth may not be a realistic expectation. In my strategy work, some clients discover that their best approach is to add cement to their current income next year. This stabilization happens after recent growth, opening a new building, and launching new programs. Is it reasonable for your nonprofit to expect growth this year, or is it time to hunker down and perpetuate your success? As you set your expectations, confirm that the income you obtained last year is secure. Which numbers on the wall represent income you are sure you can repeat? If growth is appropriate, what number represents a good stretch?

 4. Strategy

Do you have a realistic strategy to get there from here that matches your expectations? A strategy is a course of action to reach a goal. You can have all the pieces to make a ship model in a bottle, but if the instruction sheet is missing — the strategy that gets you from here to there —the model will gather dust. You have great hopes, but if no course of action exists, your hopes will gather dust. What strategies do you have in place to reach the low number on your wall? Are there other strategies to get to the high numbers? In this part of the conversation, narrow down the course of actions you will use and your expected revenue outcomes.

Expenses
–  Other Income
Donated Income

Even though the formula above is famous, it does not represent a way to form realistic expectations for contributed income. After reviewing current donations, set these expectations, develop a strategy to support them, and identify resources and actions necessary for growth. If the contributed income fails to close an income gap, additional tactics are needed to obtain other revenue.

 5. Resources

Without pasta or flour and water, you can’t make spaghetti. Does your nonprofit have the resources at -hand to develop income? To make money, you must invest resources. These include skills, time, effort, and money.

A surgeon can be an expert at brain surgery on paper and have a full hospital of resources, but would you let him approach your skull with a sharp object if he has never actually operated? There is nothing magical or unknowable about obtaining any nonprofit income. Skills help. A successful experience is better. Both allow you to access more revenue with less effort. Do you have access to people with skills? Do they have experience with success? Are they available now, or will they begin later this year? If they will start late, how will you reduce your expectations accordingly?

Many of us have exercise equipment and the know-how to use it, but the equipment gathers dust and cobwebs. Owning resources and skills is inadequate. One must also have the time and commitment to pursue income. You may have incredible prospects, such as a long list of wealthy widows with no children – but if staff and volunteers lack time to cultivate them, are your expectations realistic? Nonprofits are frequently time-challenged. (See this article to save 30 days per year.)  Which numbers on your board reflect the time and resources you have to obtain revenue next year?

Finally, you need money. Obtaining income will incur transportation, communications, and supplies expenses. You will want to buy or at least offer to buy donors’ lunch. You will want to send a nice thank you to the person who donated boxes of items on your wish list. You will want to invest resources for doing things, first class. The adage is true: to make money, you must invest money.

Sync Complete

If you now lift ten pounds of weight, a realistic expectation this month is to increase this to 15 fifteen pounds—not 100a hundred. Unreasonable expectations include too little stretch; you stay with the 10 ten pounds, and too much, you expect a hundred. Too low expectations result in underperformance. Too high stress reduces performance. If the expectations are deemed impossible, there will be actions, but no conviction behind them. To maximize your income, both donated and earned, you need “just right” expectations. After your discussion, which number or new number represents your board and staff expectations?

Don’t waste energy and create frustration in working with mixed expectations. You will find staff and board conversation about income expectations to be extremely valuable. Engage in expectations of conversations regularly. Together look at your experiences, industry standards, growth needs, and the strategies and resources you have at hand. Use the discussion to educate and refresh everyone’s knowledge about your income. Use the conversation to sync your expectations.

For more information about fundraising

Read: Nonprofit Annual Appeal Letter Essentials, Are You Helping Your Nonprofit or Chickens?

Read: How to Plan Your Nonprofit Year-End Annual Appeal Fundraising

Watch: How to Make Your Nonprofit’s Yearend Annual Appeal a Smashing Success

If you want to know even more about fundraising planning, please don’t hesitate to reach out. I’d love to help you create a dynamic plan to help your nonprofit thrive, Schedule a time for a free discovery chat here. -Karen