Given the challenging economic times we find ourselves in, many nonprofit organizations are questioning whether to hire a professional fundraiser to supplement their own fundraising efforts. Often the perception is that professional or paid fundraising campaigns are expensive and only for the larger nonprofit organizations. So, does size really matter, and when does it make sense for a charity to work with a professional fundraiser?
Most professional fundraisers will tell a prospect that size doesn't matter. Costs can be worked out to fit the organization's objectives and budget, and certainly, the expectation is that the additional funds raised will at least meet and hopefully exceed the costs. The general thinking then, is that "need" is the determining factor. Perhaps additional funds are needed to expand the mission; perhaps the organization does not have sufficient staff to spend time raising funds; perhaps they don't have the expertise to conduct a fundraising campaign; perhaps past campaigns have been dismal failures. In addition to need, however, the board and staff have to be ready to support the effort, since a new fundraiser will require information and help from those most familiar with the organization's mission, goals, and vision.
According to Changing our World, Inc., a communications, public relations, and marketing firm, a professional campaign is "an extraordinary fundraising effort for a clearly defined purpose or purposes over a set period of time," usually for:
- capital needs (bricks and mortar),
- growth capital (capacity building and organizational expansion),
- program (strengthening or growing existing programs,
- launching new program initiatives), and/or
- endowment (creating new or growing a permanently restricted fund).
They go on to explain that the essential ingredients for achieving success include:
- a strong case for support,
- committed leadership (more on this below)
- cultivated prospects, and a
- clearly articulated plan for implementation.
It all sounds great, but how many times have we heard that a hired fundraiser just didn't work out, or that the campaign stalled and didn't achieve its goals? So what steps should a charity take to insure that a professional fundraiser and campaign succeed? Clearly, the organization must engage a quality fundraiser, well-versed in social and digital media*, and with a proven track record, or perhaps a new and innovative approach to fit the organization. That will require the usual due diligence, such as interviews, references, testimonials, etc. But an often overlooked cause for a less-than-successful professional fundraising campaign is a lack of commitment and support from the organization's leadership. Thus, the first step should be insuring that the governing body and management are ready to adopt an "all-in" approach "with" the fundraising consultant.
No matter how good a professional fundraiser is, he or she cannot do it alone. An organization cannot just expect to engage a fundraising consultant and leave it all up to him or her. In order to articulate the case for support, cultivate prospects, and implement the plan, the fundraiser will need the full support of the board and management, as well as staff and volunteers, who all have the ability and responsibility to help identify prospects, open doors and influence philanthropy.
Having realistic expectations can also be a factor in whether hiring a fundraising consultant turns out to be a good idea or not. It usually takes more than a year to establish a successful program, and the first year of fundraising can be the least efficient. Consider that it takes large numbers of donors to raise large sums of monies. If the governing body is too quick to abandon a program, based on unrealistic expectations for the initial year, they may end up planting the seeds of a successful campaign, only to leave them in the field to die.
As accountants, we would be remiss in failing to mention that, along with a paid fundraising consultant, comes additional tax considerations. Professional fundraisers usually target a wider area of prospects than an organization would target itself. This may mean crossing state lines for donors, which means the organization will also have to factor in the management of charity registrations and filings across multiple jurisdictions. In addition to federal rules and regulations, most states require filings as a result of fundraising solicitations. Approximately 40 states (and DC) require professional solicitors to register, in addition to requiring registration by the organization soliciting the contributions. Therefore, the cost of registering, annually filing, and staff time to comply, all need to be considered.
Assuming an organization determines they have a need for a professional fundraiser, are ready to throw their full support behind the fundraising effort, and have realistic expectations as to outcomes, they are probably ready to take the plunge and engage a paid fundraiser. Just don't forget to factor in compliance with additional state rules and regulations.
If you have any questions about the content of this article, please contact Audrey J. Sherrick, CPA, at ASherrick@FriedmanLLP.com.