7 Tips For Hiring Your Capital Campaign Consultant

Capital campaigns can be one of the most impactful activities to help your nonprofit mission.

These targeted fundraising efforts take place over time and take considerable planning and effort to be successful. We’ve found that capital campaigns are often a high priority in strategic plans for organizations.

Capital campaigns are unique projects and can be massive, spanning multiple years. For example, if you’re starting a new program or constructing a new facility, those are projects that take serious planning and execution time.

For those reasons, one of the most valuable assets you can find to help guide your campaign is a Capital Campaign Consultant or consulting firm. These experts in capital campaigns can help provide expert guidance and critical accountability to ensure that your campaign hits its goal.

You could look at the work of a campaign consultant as adjacent to that of a project manager. They will provide direction and planning, manage the timeline, and help with feasibility studies or problem-solving, but they typically don’t do the solicitation of gifts, recruiting volunteers, or any other tasks that form part of the campaign.

Why hire a campaign consultant? Because having that outside expertise can be the key to keeping your goals centered and your project on track. The big question is, what should you look for when hiring one? We’ve included some of our criteria below.

Tips for Hiring a Consultant

A Capital Campaign Consultant plays a pivotal role in how your biggest fundraising campaigns play out. Choosing the right consultant should be a careful process, so we’ve compiled a few criteria that can help:

Define Your Needs First

Why are you hiring a consultant? What do you hope to achieve? By defining your needs early, you can use them to guide your hiring process.

For example, do you need someone who can:

• Conduct feasibility studies?

• Provide strategy and support?

• Identify a strategy for new revenue streams?

• Generally, strengthen your fundraising approach and processes?

You may need to engage your board and key stakeholders in this needs assessment to ensure you’ve accounted for all the needs for your capital campaigns. Your strategic plan should be a key part of this, as capital campaigns rely heavily on strategy.

Experience

You’ve identified your needs, so it’s essential to find a consultant with the experience to handle those specific areas. The best consultants have a great deal of capital campaign experience; the best consultant for you will have significant experience in your priority areas.

You need a consultant who can speak with authority backed by experience. They’ve seen all sorts of different campaigns and even experienced some failures. Importantly, they bring multiple valuable learning experiences to the table.

Today, most capital campaigns rely on fundraising/donor prospecting software. Make sure that your consultant is adept at using the software and can provide you and your team with the necessary guidance.

Great consultants are also adept at managing people. They can help herd differing viewpoints so that everyone is heading in the same overall direction. The best consultants have people wanting to listen to what they have to say.

Accessibility

Consider how accessible the consultant is. Are they remote-only? Can they come to your office regularly? Will they work as a mix of remote and in-person consultations? How quickly or easily are they available to you?

You should determine the mode and level of help you expect to find a consultant who is a match for those needs. If you need someone who will come into your office a few days a month, you may need to narrow the geographic region of your search. If remote is acceptable, then you might even look worldwide for the best possible fit.

Discipline

Capable consultants are all about deadlines and accountability, which can be hugely valuable for nonprofits juggling multiple tasks. Suppose your organization frequently struggles with sticking to timelines or getting distracted by ancillary tasks. In that case, you want a highly disciplined consultant and not afraid to hold people accountable.

At the same time, you want a highly-organized consultant, so they’re not scheduling meetings on short notice and giving you no time to prepare. You should know precisely what you need to be working on and what to expect from your meetings.

Flexibility

Planning and campaign roadmaps are valuable tools to keep your capital campaigns on track, but what happens with large projects that span months or years? Over such a long period, you’ll face at least one struggle that doesn’t go according to plan. In that instance, you’ll need to adapt and make adjustments.

Good consultants know this and are flexible in their approach. While they may be disciplined in terms of timelines, they’re not so rigid that they can’t see when a plan needs adjusting to suit the current realities of the campaign.

Cost

When hiring a Capital Campaign Consultant, the cost will always be a factor for prudent nonprofits. Hiring a consultant is an investment, using the limited funds you have for this purpose. You need a realistic budget for finding a consultant.

According to Campaign Counsel, the cost can run from a few hundred dollars a month to around $30,000 per month. This varies greatly across the wide range of nonprofit sizes and campaign goals. At the high end, you get full-service, on-site campaign management. If you hire from outside of your direct area, you can also expect to pay travel costs if you want the consultant on-site.

When we talk about cost, it’s also beneficial to mention the old adage, “You get what you pay for.” Yes, consultants can be expensive. By all means, do your due diligence and look into their past projects and testimonials. On the other hand, cheap or pro bono consultants may not have the experience you require or the time to devote to making your capital campaign a success. After all, they’re probably working additional jobs to pay their bills!

Look at the cost in terms of ROI (return on investment). A consultant is an investment, and if “getting what you pay for” means a wildly successful capital campaign, you will get your money’s worth.

Fit with Your Organization

The right consultant should be a good fit for your organization's overall culture. You’re going to spend a lot of time working together, so your team and the consultant should generally get along well.

At the same time, the consultant should inspire action and help give your team the confidence and courage to make big decisions. You should feel supported, and that you’re getting advice born from experience. The consultant should help you to work through scenarios and feel confident in your course of action.

You’ll work closely with a Capital Campaign Consultant, so you should ensure they’re a good “fit” for your organization

Questions to Ask When Prospecting for a Consultant

Here are some sample questions that you might ask to help narrow down your choice of Capital Campaign Consultant:

1. Have you worked with organizations previously that were facing similar challenges? You should explain some of the challenges you anticipate and ask if the consultant has dealt with similar issues before.

2. Can you detail previous campaigns you have conducted? You’re looking for genuinely detailed answers. Sometimes a person giving the presentation for a consulting firm wasn’t deeply involved in previous campaigns.

3. What sort of fund development / donor prospecting software do you use? Will you be able to guide us in its use?

4. Have you worked with organizations with similar staffing and boards?

5. How do you think you’d start the campaign process with us? You want a description of how they’d get started to demonstrate they’ve already done some homework on your organization.

6. Do they know your local landscape and have experience serving nonprofits in your sector?

7. How do they provide their service? You’re looking for methods that will be a good fit for your organization.

Conclusion

Capital campaigns are a big investment of time and money for your organization, so finding the right consultant to help guide you through the campaign can make a huge difference in your overall results.

Capital campaign consultants are worth the investment when you find the right one who fits well with your organization. The tips we’ve listed above will help you identify your needs and determine some essential criteria before choosing.

Choosing the right consultant will take careful consideration and due diligence. However, once you find them, you’ll enjoy the confidence and strategic direction that their experience brings.

How Having a Strategic Plan Will Help You Raise Significantly More Money

If you’re like most nonprofit leaders, figuring out how to keep your organization financially stable is perhaps your biggest pain point.

Individual donors, foundations, and granting agencies will often donate to your organization because their heart connects to your mission—helping children, pursuing social justice, teaching the arts, etc. However, for funders to support you many times, you have to appeal to their logical senses. To do that, your strategic plan can demonstrate that your organization is committed to executing your vision, and funders will be happy to support your well-run nonprofit.

With a strategic plan—and strong mission statements and vision statements—your nonprofit’s team will feel confident and aligned with your fundraising objectives. And an organization with positive energy towards their strategic objectives will stand out to funders more than a nonprofit that isn't tuned in to their organizational health and will keep their promises. 

What data do we have to back this up? In 2020, Mission Met conducted a fundraising survey to learn more about the relationship between strategic planning and fundraising. From the 169 nonprofit leaders that participated, 86% of respondents said that having a strategic plan had a positive impact on generating revenue through grants, donors, events, etc. And respondents that regularly reviewed, revised, and measured their strategic plan were over six times more likely to generate revenue as a result of their plan.  

Want to read more details on the relationship between strategic planning and positive fundraising results? Check out this guidance on how to improve your fund building in Mission Met’s article on how strategic planning will raise you significantly more money on NonProfit PRO’s blog!

Key Questions to Ask Before You Start Your Capital Campaign

Capital campaigns that end well, start strong.

As we referenced in our recent article, successful capital campaigns begin with a comprehensive planning phase. This phase includes laying out your goals, establishing your strategy, and setting deadlines.

Starting in this phase can feel a bit intimidating, which is why we’ve laid out a set of key questions your team can use to frame your planning efforts.

Answering these questions will help you and your team gain an accurate and clear understanding of the campaign description, size, and scope.

(We’d like to thank Andy Eber at Partnership Resources Group for assistance with this article.)

Questions for Fundamental Planning

Does your organization have a current strategic plan?

Strategic plans are essential to nonprofit success. They provide a host of benefits such as:

• Alignment between staff and team

• Confidence for donors to invest

• Measurable goals

• An actionable path to accomplish the organization’s mission

Your strategic plan isn’t something you set and forget, either. You should revisit and revise as changes occur.

In the Association of Fundraising Professionals (AFP) guide “Getting Ready for a Capital Campaign,” author Linda Lysakowski notes that “It is also crucial that the board ‘own’ or buy into this strategic plan. A good indication of ownership is that the board has developed a financial plan to support the goals and objectives of the strategic plan.”

A current and well-executed strategic plan will help set you up for success in your capital campaign.

What is the clear purpose and scope for the capital campaign?

A strategic plan outlines clear goals for your organization as a whole, but you need an equally detailed vision for your capital campaign.

The more specific you can be, the better. Donor Search defines a capital campaign as “a targeted fundraising effort that takes place over a defined period of time.” Your job in this planning stage is to determine the focus of the targets. Are you planning on building or purchasing a building? Buying some land? Creating an endowment fund? Whatever your targeted purpose and scope is, be sure to be clear and provide as many specifics as possible so you can plan accordingly.

What is the projected time frame?

Did you notice the second part of Donor Search’s definition?

It mentions a defined period of time.

Capital campaigns don’t last forever. Most take 2-3 years to complete, depending on your goal. Having a realistic time frame set at the beginning will help your organization stay on task and work together to keep things moving at a steady pace.

Questions for Funding Goals and Resources

What is the financial goal of the campaign?

This question helps you define the “capital” part of your campaign: how much do you want to raise?

If you’re hoping to construct a building, for example, be sure to include the costs for the project’s infrastructure and planning. Kevin Wallace of Campaign Counsel points out, “Most nonprofits mistakenly only include the obvious costs, like construction. Your capital campaign project budget should include cost estimates for the expenses that follow.”

Remember to also include the cost of managing and leading the campaign itself. As a benchmark, Wallace says that most donors will consider it acceptable for the cost to be 15% or less of the overall campaign goal. He also notes that anything less than 10% is often seen as “very efficient.” The larger the campaign, the smaller the percentage.

Who are the top donors that will provide leadership gifts for the campaign?

In the AFP guide, Lysakowski writes, “It is a proven fact that, no matter what the size of the campaign, 5-10 percent of donors will provide 90-95 percent of the goal of the campaign.”

You probably already have a few top donors in mind that can provide leadership gifts, which is why it’s so important to build and maintain those relationships as part of the quiet phase of the campaign.. Lysakowski says that neglecting those relationships will make it harder to identify, cultivate, and solicit major gifts for the campaign.

Who are the next thirty donors that can provide major gifts for the campaign?

After pursuing and securing key leadership gifts, the next part of the quiet phase is to approach those donors that can provide major gifts.

While a leadership gift may be $500,000, a major gift may be $25,000.

Roy Jones provides some differentiation between leadership gifts and major gifts in this article.

What percentage of your campaign funding will come from charitable donations, bonds, equity, financing, and lending?

Not all donors will simply write you a check. Some will prefer to give through other, more complex gifts such as equity or loans.

Considering and estimating the percentage of these gifts ahead of time will help you manage those funds properly.

Questions for Your Organization’s Leadership and Experience

What is your staff and board’s experience with capital campaigns?

A lack of experience does not necessarily lead to a lack of success. We’ve seen many first-timers lead extremely successful campaigns. However, they also received a significant amount of guidance from experienced campaign consultants. While it is possible to overcome any lack of experience, planning for it will help your campaign succeed.

Is there a strong, committed board of directors in place that will support the proposed campaign?

Acquiring agreement among board members for the need of a capital campaign is an absolute must. Even minor disagreements could become public, which Lysakowski says could cause people to “lose confidence in the organization and the campaign.” There’s too much at stake to risk it, so it’s better to make sure everyone is basically on board before you begin.

Does the executive director have the time and space to engage in a capital campaign?

Running a capital campaign is hard and time-consuming work for everyone in the organization, particularly for leaders.

As an executive director, you will be a fundamental part of the campaign, meeting with donors and overseeing the day-to-day processes. You and your team will need to work together to make sure that you have the time to carry out the campaign.

Who will serve as the capital campaign task force?

A capital campaign task force, also known as a planning committee, oversees a campaign plan.

According to Capital Campaign Toolkit, this is usually a group of 4-6 people that includes:

• Executive director

• Development director (if applicable)

• Board chair

• Campaign chair

• One or two other current and former board members

This group will often work hand-in-hand with a campaign consultant(s).

When the right people are involved in this task force, they will ensure that everything stays on track to accomplish the campaign’s goals.

Will you hire a campaign consultant? If so, who?

Many nonprofits combat their lack of experience or staff availability by hiring a campaign consultant or firm. These specialists offer critical guidance and accountability to ensure success in your campaign.

Picking the right consultant will come down to a variety of factors.

• Resume: According to Capital Campaign Toolkit, “there’s a large spectrum of experience, services, and capabilities available in the consulting marketplace.” If your organization is going to invest, you want to make sure you find the right people who have a proven track record of capital campaign success. .

• Access: Consultants offer different kinds of access. Some meet in person a few days a month; others utilize remote tools. Determining the kind of help you expect will help you find the right consultant.

• Cost: Campaign Counsel says that consultants can range from a few hundred dollars to $30,000, depending on the needs. Figuring out how much you need will help you build a budget for your consultant.

Questions for Operational Concerns

Is there a well-developed budget for a campaign?

Fundraising isn’t free, and budgeting for those costs on the scale of a capital campaign is important. To help you develop your budget, Campaign Counsel has outlined various cost considerations including:

• Acquisition or construction costs for infrastructure

• Testing, zoning, and permitting fees

• Design fees

• Furnishings, fixtures, and equipment

• Consulting fees

• Campaign management

• Indirect costs like promotional material, mailers, and other expenses

Is there high-functioning donor software in place?

Donor database software can help you track and manage your donor relationships. The best ones allow you to:

• Segment prospects into different categories

• Personalize messages and acknowledgment letters

• Track campaign results

• Generate reports

According to Lysakowski, such a tool “is a veritable gold mine” because it allows “the organization to monitor its donor pipeline and take the right steps to keep it on track.”

Can you easily track progress on the campaign?

Having the donor database software in place may help you generate reports, but it’s also important to know the best metrics to measure. Once you’ve got the right numbers in place, you can better monitor your progress and make informed decisions about what needs to change or what practices should be optimized.

Do you have policies and guidelines to help your team accept, record, and acknowledge gifts?

You will likely get various kinds of gift offers from your donors. It’s also expected that you’ll have various people participating in the fundraising efforts. It’s best to set those people up for success by giving them policies and guidelines that address:

• How to accept different gifts

• What kinds of gifts are acceptable

• Where to record the gift, so everyone stays aligned

The board should ensure that these policies are in place, not just for the campaign, but for fundraising in general.

Here is a primer on gift acceptance policies from the National Council of Nonprofits.

Closing Thoughts

Capital campaigns can be one of the most exciting initiatives for any nonprofit. They allow you to dream big and aim high. But for them to succeed, you need to plan well from the very beginning.

Asking and answering the right questions will help you plan your capital campaign so that you can reach those goals that you and your team are so excited to accomplish.

Guide for Running a Nonprofit Capital Campaign

Over the years we've observed that one of the most common priorities that our customers often integrate into their strategic plan is the development of a capital campaign.

A capital campaign is one of the most exciting and transformative activities that you and your nonprofit can implement. According to Donor Search’s Capital Campaigns Guide, a capital campaign is “a targeted fundraising effort that takes place over a defined period of time.” These are separate from other kinds of fundraising activities because “they are massive projects that can span multiple years and cost thousands of dollars.” They often require extensive planning and strategic execution over various phases.

With such a time-intensive project, organizations need to take a deep dive early in the planning stage if they want the campaign to have success. A half-hearted effort won't work. You need excellent guidance, a thoughtful strategy, clear goals, and actionable steps. When these are in place, capital campaigns have the potential to produce wonderful results.

In this capital campaign primer, we’ll provide you with some ideas and links that will help you make your campaign a success.

What is a Capital Campaign?

Organizations use capital campaigns to raise a large amount of money for a specific purpose over a dedicated timeline. Campaigns are typically used for things like:

• Constructing or expanding a facility

• Purchasing land

• A substantial acquisition of equipment or supplies

• Funds to start new programs

• Endowments

In general, capital campaigns should be used to raise money for unique projects, not long-term operations. The latter is best done through regular fundraising efforts.

What are the stages of a capital campaign?

Since capital campaigns involve a large, long-term goal, they occur in stages. The Capital Campaign Toolkit says that “capital campaigns generally take between two and three years,” and in that time are various phases.

A typical five-phase timeline includes:

1. Planning

2. Quiet phase

3. Kick-off

4. Public phase

5. Wrap-up

The planning phase should be thorough and include items like:

• Completing a feasibility study that includes determining organizational readiness

• Assembling the campaign committee, which may include a campaign consultant(s)

• Establishing goals and the critical case for support

• Setting deadlines

• Coming up with a budget

• Conducting comprehensive prospect research and screening

• Identifying the best capital campaign donor prospecting and management tool

• Building your prospect list

• Building your campaign’s branding and marketing material

Our colleagues at Partnership Resources Group have some excellent blog articles that will give you great insights into your planning process.

Comprehensive planning is where your campaign will live or die. This needs to be done before launching into the next phases.

Quiet Phase vs. Public Phase

The two key fundraising phases of a capital campaign are the quiet and public phase.

The quiet phase happens first, shortly after establishing you’ve completed your planning. The primary goal of this phase is to raise about 50%-70% of your funds through major gifts before taking the campaign public. This phase typically takes up to a year.

The remaining funds are raised through a larger population of donors after the official launch of the campaign. This public phase is usually initiated by a kickoff event and/or a public announcement. Then, you begin fundraising efforts in the community and through smaller donations.

Throughout the entire campaign it is important to keep your donors aware of progress since they have an investment in its success.

What will it cost?

The old adage that you have to spend money to make money is just as true for nonprofits as it is in the private sector. Fundraising costs money, and capital campaigns are no different.

According to Campaign Counsel, capital campaigns can be considered acceptable if they cost less than 15% of the campaign goals. Anything under 10% is considered “very efficient,” though larger campaigns may have a smaller percentage. For example, “if your goal is $10,000,000 the cost of your campaign will likely be in the 6-8% range.”

As you are planning your campaign, be sure to include these campaign costs in your overall fundraising goal. This way your organization makes back what it spent to raise the money.

Hiring a Campaign Consultant

One of the best investments you can make in your campaign is hiring a campaign consultant or firm. This person(s) can provide critical guidance and accountability that will ensure your campaign’s success.

Campaign Counsel offers a wide range of potential consultant costs, from “a few hundred or thousand dollars a month up to $30,000 or more per month for full-service, on-site campaign management.” If you’re considering hiring a campaign consultant or firm then this article from the Capital Campaign Toolkit provides good guidance.

Do you know how to appeal to your donors?

Abby Jarvis of the fundraising technology platform Qgiv, says that each donor goes on a journey with your organization before deciding to give funds. She explains: “though, each of your donors and supporters is unique and different, they all follow a similar journey as they get to know your nonprofit’s mission and make each gift.”

In the case of a capital campaign, you need to create a specific and compelling case for support that will lead your donors through the journey. This is critical.

One thing that you can integrate into your case for support is effective stories. To do this is by telling stories. We’ve written elsewhere about how effective storytelling can be for fundraising, especially when you consider Steven Screen’s idea of the “donor story.” While those tips apply to fundraising more broadly, you can reposition your stories to raise funds for capital campaigns as well.

Who should be involved in what capacity?

Capital campaigns involve the whole organization in some capacity, but different people will play different roles. Donor Search’s guide breaks down the people involved in two major categories: in-house team members and committee-related team members.

The in-house team consists of board members, staff, and volunteers. The board typically oversees the big picture decisions while staff members execute the plan. The executive director often plays a critical role in meeting with potential funders and overseeing the process. Volunteers fill in whatever gaps are left.

Most organizations also use a campaign committee to plan the campaign and handle any ongoing maintenance necessary. Donor Search says that the campaign chair “is going to be one of the most crucial team members” because they “will be in charge of overseeing your committee(s) and act as an ambassador for your capital campaign within the community.” As you begin planning your campaign, make sure you can identify a strong campaign chair who will handle all the necessary oversight throughout.

How do you get started?

Getting a capital campaign off the ground can take a lot of work, but Donor Search has compiled a list of 14 key starting points to help you in the early stages of your plan. Some of the outstanding pieces we will mention here include:

• Getting a campaign committee together

• Performing a feasibility study

• Setting a deadline for your capital campaign

• Finalizing a fundraising goal

• Reviewing past successes and failures by analyzing fundraising metrics

• Set a budget

• Create a plan, including a contingency plan

• Align expectations for your campaign

The list from Donor Search goes into greater detail for each step, which can help you develop your plan as you get started.

Closing Thoughts

Capital campaigns are great opportunities to raise substantial funds for specific projects in a determined amount of time. In order to succeed, they need to be carefully planned and executed. Before you kick off your capital campaign, think through the elements we highlighted here to make sure it’s right for your organization.

5 Fundraising Mistakes You May Be Making

As the leader of a nonprofit organization, you have no shortage of responsibilities on your plate. Whether helping to structure your teams, establish new organizational processes, or continuously drive your nonprofit's vision, it can be challenging to stay on top of it all.

When juggling all of these responsibilities, the idea of fundraising can sometimes feel like a daunting task. Do you struggle when thinking about how to approach new donors? Are you finding that your fundraising efforts have become less effective over the years? If so, you're not alone.

Below we'll address some common fundraising mistakes that you may be making and progressive steps you can take to improve your nonprofit's financial position.

Not Fostering Relationships With Current Donors

One of the first questions you should ask yourself when assessing the effectiveness of your fundraising strategy is, "how is your relationship with your current donors?"

While this may seem like an easy question (I mean, they've already donated funds to the organization, so how bad could the relationship be – right?), you'd be surprised how often nonprofit organizations can get this wrong. Not unlike any other personal relationship, fostering the right relationships with your donors takes time, consideration, and good communication regardless of their contribution.

Your current donors are one of the most dependable sources of revenue your organization has. Fostering your long-term relationships helps ensure they continue to feel inspired about what the organization supports and the individual(s) leading it. Stay in touch with them often, help them feel involved where applicable, and of course, appreciate them regularly for any gifts or contributions they make. Doing so will go a long way in any of your future fundraising efforts.

Lack of a Documented Fund Development Plan and Process

Fundraising for your nonprofit isn't something that you can execute on a whim without careful planning. Effective fundraising is an art form and can take several years to master. However, by taking a systematic approach to organizing and documenting a fund development plan, you'll be much better positioned to bring in new donors and keep your revenue streams flowing.

One way you can start building a fund development plan "the right way" is by teaming up with a nonprofit strategic planning consultant. Planning consultants take the time to understand your unique needs as a nonprofit while giving you the tools, solutions, and organizational direction to help you succeed in your fundraising efforts. Not only do strategic planning consultants help you draft a long-term plan for success, but they also help you implement the suitable systems and procedures to help you get there.

Failing To Explain The "Why" In Your Organization

Having a clear vision for your nonprofit organization and being able to clearly articulate it to new donors is the winning combination when raising funds.

Maybe you've gone through a few rounds of fundraising and saw a measure of success. But, over time, you're finding it harder and harder to attract new donors. Why is this the case?

Well, while there could be several variables to consider in your outreach strategy, one thing you'll want to ensure is that you're always explaining the "why" behind your fundraising efforts. 

One way to do this is by ensuring that you have an effective strategic plan to justify your “why”. In fact, in research that we conducted, we showed that having and executing your strategic plan is strongly correlated to significantly increased fundraising success.

It can be easy to fall into the trap of asking for donations without fully explaining how and why the funds are needed. While the purpose and vision may be clear to you, donors need to know that the resources they're providing will be put to good use. One way this can be achieved is by creating a theme around fundraising initiatives. Before the launch of a campaign, ensure your funding goals are clearly documented and that they remain transparent to both current and future donor candidates.

Not Diversifying Your Funding Resources

While it can feel a bit intimidating to look for new funding sources, only relying on your current list of donors is a risky and ultimately unsustainable approach. To create a more viable fundraising strategy, it's vital that you start expanding your reach beyond your current network.

One way to start diversifying your funding resources is by investing more time into establishing and updating your social media presence. Social media sites like Linkedin and Facebook are great outlets to start expanding your network. But to start attracting qualified donors to your nonprofit organization, you must showcase the vital work you're doing. Spending time to build your social media presence and participate in more relevant events and conferences are some of the many steps you can take to start building credibility in your fundraising efforts.

Having No Specific Funding Asks

So this one happens more than you'd think...

You've taken the time to engage with a qualified potential donor. After several weeks of getting to know the individual, describing the organization's vision, and sharing relevant documentation, it's now time to make the ask. But rather than proposing a specific donation amount, you leave it to the donor to decide if and what they'd like to contribute.

Now, while this approach may be a discreet way to discuss (or not discuss) financial capacities between one donor to the next, more than not, this is an ineffective way to raise enough funds for your organization.

A better way to engage with potential donors is by having a specific ask in mind. But in order to know an appropriate amount to ask for, thoroughly researching your donors and finding those in alignment with your funding goals is essential. By approaching a potential donor with a specific ask in mind, it will actually showcase the confidence in your vision that many donors are looking for, and you'll be surprised at how much more successful you'll be.

Final Thoughts

If you've been struggling when finding the right approach for your fundraising efforts, understand you're not alone with this dilemma. However, by avoiding these common fundraising pitfalls and working with the right nonprofit strategic planning consultants to simplify your fundraising efforts, you'll be on your way to building long-term viability for your nonprofit organization.

A Beginner's Guide to Nonprofit Financial Management

Let's be honest. While operating a nonprofit organization is meaningful and fulfilling in many ways, the unique challenges associated with long-term financial viability can quickly inject stress and frustration into the bigger picture.

"Am I spending in the right areas?"

"Do I get enough support from my donors?"

"How do I raise more funds?"

"Will the organization be operational a year from now?"

These are the questions that keep nonprofit leaders up at night, and you're not alone when feeling overwhelmed at the scope of it all. However, while balancing the financial and operational needs of a nonprofit organization can be a tricky one to get right, there are practical steps you can take to position yourself for success.

Below is a beginner's guide to nonprofit financial management that will touch on seven critical components to long-term financial viability when operating a nonprofit organization.

Prioritize Goal Setting

When establishing and/or growing a nonprofit organization, an invaluable practice that should be in every leader's toolbelt is process-oriented goal setting.

The creation and prioritization of short- and long-term financial goals is what continuously drives organizations to hit their targets and ultimately fulfill their mission statements. For nonprofit organizations especially, process-oriented goal setting helps address the "why" and the "how" of budgeting needs and donor engagement strategies that will significantly impact long-term solvency and viability.

The important thing to remember is that while having a collection of "pie in the sky" goals concerning your financials can help keep the organization on course, it is the shorter-term, highly actionable goal setting and execution that will truly drive results.

Process-oriented goals can be three times as effective as result-oriented goals when planning short- and long-term financial success.

Establish a Balanced View of Expenses and Contributions

As a nonprofit organization, having a balanced view of financials throughout the year is critical. To do this properly, it's essential not to over- or under-estimate your operating costs as well as your incoming financial support.

If COVID-19 has taught us anything, it's that relying too heavily on historical financials to drive all decision-making comes with significant risks. To mitigate these risks effectively, nonprofit organizations should constantly have their fingers on the pulse of all contributions and expenses on a month-by-month basis.

All incoming revenue sources for nonprofits should have risk percentages associated with them. This will help to keep reasonable expectations in place as you balance your functional expenses like salaries, rent, utilities, supplies, etc., with your current financials.

One way organizations can achieve this is by grading each of their revenue sources throughout the year based on probability. This can be by assigned letters A, B, C, and so on, or simply by assigning probability percentages to each one (i.e., “There is a 50% chance we’ll receive this funding”). When reviewing all of your projected revenue sources over the course of the year, you’ll be able to see overall probabilities associated with them. When your revenue probabilities increase your overall risk percentages increase. This will help you prioritize fundraising and donor engagement strategies and timelines accordingly.

Create a Finance Committee

A vital step to take when building a solid foundation for your nonprofit organization is establishing a finance committee. Nonprofit finance committees are typically made up of a board treasurer, executive director, and bookkeeper.

Finance committees play an essential role in the organization and take on tasks associated with nonprofit bookkeeping, budgeting, financial planning, reporting, and internal compliance monitoring and control. Often, these committees are mandated by the organization's bylaws and help establish accountability policies that ensure the organization remains solvent.

While establishing a finance committee is a great first step, it's equally important to ensure it is formatted to be successful. This involves setting a clear outline on how the committee should function, establishing processes that need to be adhered to, and implementing a healthy cadence for quarterly or bi-annual meetings.

Keep Accurate Records

It should go without saying, but accurate recordkeeping is one of the defining qualities of highly successful nonprofit and for-profit organizations. Good recordkeeping takes discipline, consistency, and an organized approach to leadership and accountability. However, if appropriately mastered, it can provide a slew of benefits for growing nonprofits, including:

• improved operational efficiency

• reduced financial risks, especially when considering potential tax implications

• added transparency of accountability across the organization

• a clear understanding of bylaws and compliance expectations

Apply Budgeting Templates

Outside of having an extensive list of highly engaged donors, effective budgeting is another critical contributor to your organization’s financial health. Budgets are what keep your organization's financials trending where they should and mitigates the risk of having dangerously high expenses in relation to incoming revenues.

While annual budgets are usually managed by internal staff, board members representing the finance committee are typically responsible for regularly reviewing and approving budgets as the organization progresses. When managing this initiative, there are many steps nonprofit organizations can take to keep their budgets realistic and manageable long-term.

There are a variety of pre-established budget templates organizations can apply when balancing their single- and multi-year financials. Budgeting templates are categorized in various ways, including annual expenses and income, startup funding, fundraising, grant proposals, strategic plans, and many others to get you started along the right path.

Maintain an Operating Reserve

A common mistake that many nonprofit leaders make, especially at the lean stages of organizational development, is not establishing and maintaining a healthy operating reserve. While every organization is different, it's important to have money saved for a "rainy day" that will help absorb unexpected costs associated with building repairs, software or hardware needs, funding shortages, and anything else that impacts the bottom line.

As crucial as the reserve itself, however, is how it is managed. Operating reserves should be visible to all relevant stakeholders, and there should be very clear policies and procedures that govern how they should be used.

Team Up With a Consulting Group

As a nonprofit leader, it's vital that you balance the operational needs of your organization while ensuring it continuously stays in alignment with your vision. However, as the organization begins to grow and financial challenges continue to keep pace, tackling short- and long-term strategic planning on your own can be a struggle.

As a nonprofit leader, you can benefit from the specialized guidance of a financial management consultant. Our friends at Bookr and Metis can help you clarify all of your financial management strategies.

Of course, your financial management process should fit within an overall strategic plan. A strategic planning consultant can be an invaluable partner in developing your organization's overall strategy and capacity. Whether guiding you on fundraising options and approach, helping you establish an optimal organizational structure, or building a plan for long-term viability, strategic planning consultants can give you the focus to build and grow a successful nonprofit from the ground up.

As a nonprofit organization, planning your financial success isn't without certain sacrifices and a disciplined approach to organizational development. However, by following this beginner's guide to nonprofit finance, you'll be on your way to establishing a strong foundation of success conducive to long-term sustainability.