The $5 Million Dollar Chocolate Bar: How to Spot an Ineffective Fundraising Strategy

When many people hear the word fundraising, they think of those fundraising chocolate bars sold for different causes. I am an old guy, so I remember when they were size of a brick for a dollar. Now they're the size of a thick pencil. Ok, that’s an exaggeration, but you get the point. 

Those chocolate bars are a great analogy for what most small- and medium-sized nonprofits are mired in when it comes to "fundraising." Auctions, galas, crowdfunding, sales and many other gimmicks and fads—that’s what’s top of mind for far too many of us. Strategies like crowdfunding are a great way to create attention and make people feel included, but the central question is whether it is the best use of your staff’s limited time.

If you want a $5 million in new giving you’re going to have to build relationships with actual non-virtual people. In scrutinizing your fundraising strategy, ask yourself: is there a solid return on investment? Are you building relationships? Here are two ways you can spot that you’re wasting your time with a bad fundraising strategy:

  1. Identify your “True ROI?” How much does that strategy cost you? Does your gala cost $600,000 and you raise $1,000,000? Most importantly, did you count staff time? Rarely is staff time counted as an expense for these strategies. Harder to measure is what that same staff time could have accomplished with a more lucrative strategy. How much are you actually raising now, or even losing?
  2. Are you creating only superficial, one-dimensional relationships? Great fundraising is simply building powerful relationships, and if you’re not building relationships, you’re not fundraising at your true capacity. There is nothing more valuable than a strong real relationship with a major donor for your institution. That’s a lot harder to build online. If you have a successful Major Gifts program and some transactional fundraising to complement it, then fine, good for you. But the most important investment is in long-term major giving leading to transformational gifts.

I advised a small organization with a $5 million budget that was thrilled every year they raised $1.5 million with their annual gala. I was working with them on a solid major gifts strategy, though they had two development officers. We did our prospect research and identified a sub group of 80 people out of 500 to cultivate and began to build relationships with them. We held a small major giving dinner of 35 people, and in less than 12 months this strategy raised $5.2 million dollars. They are just getting started. They took their development staff off the gala and focused on landing five- and six-figure gifts. They were surprised to learn that the regular gala attendees knew very little about the organization–they only had participated in the dinner and dancing.

There is no $5 million dollar chocolate bar we can sell and raise that money. Take your passion for what your institution does and show it to the right people who share that passion. Learn how you can start your own Major Gifts program with Armando on Thursday, August 6, 2:00-3:30 ET at his upcoming Foundation Center webinar “How to Start and Build a Major Gifts Program”.

Armando Zumaya has worked in the field of fundraising for 30 years and served in a variety of roles that have given him a unique perspective on development offices, prospecting, and role of prospect research/management. He has spent the bulk of his career as a major gift, leadership gifts, and annual fund officer at Cornell University and the University of California, Berkeley.