Tom’s post, Selling Your Board on Direct Response, served as a painful reminder that many of our Agitator brothers and sisters are right now ending the agony of the ‘budget season’ in those groups where the fiscal year begins in July.

This perennial run-up or countdown to the final draft and ultimate adoption of the budget in July (or January or any other month) also serves as a window into the dysfunction and disconnect that exists between the leadership of most organizations and their fundraisers.

It’s not a nice picture.

In fact, it’s reflective of a Jackson Pollock work with a splashes of ignorance, spots of miscommunication, blotches of endlessly revised Excel sheets all presented on the mind-numbing gray background of endless meetings.

I’d like to think this is overly dramatic, but sadly it isn’t.

In far too many organizations the budgeting process is a huge time suck, an exercise in frustration, a mental Cuisinart. You get my drift.

Why? Because those in charge of setting the financial goals and parameters (usually the CEO, COO and CFO) are woefully ignorant of such fundamental concepts of investment and return when it comes to fundraising. And, those preparing the fundraising cost and revenue estimates are horrible at explaining the dynamics and key metrics of the process.

It doesn’t have to be this way. Take a leaf from Tom Harrison’s recommendations recently outlined in Fundraising Success. Go into those budget meetings armed with essential facts.

• Be prepared to explain and defend the acquisition expenditure by mapping out the long-term value of your donors, and explain how you calculated what you can afford to spend to acquire and cultivate them and why the return on that investment is so much higher than the organization gets from its endowment funds. See the Agitator’s Investment Paradox.
• Be prepared to show the real, longer-term effect of cuts. As Tom points out, “You’ll be amazed at what happens once businesspeople understand that for every dollar you invest in direct-response fundraising, you net $3 to $4 for your cause.” Conversely, explain that for every $1 management cuts this year they have $3 or $4 less dollars to spend next year. The term ‘death spiral’ should come readily to mind.
• Be prepared to show management that when it comes to investing in smaller gift, direct response donors, the process shouldn’t be dealt with cavalierly. Show them how many direct-response donors (the bottom of the pyramid) ultimately migrate upward to produce monthly contributions, major gifts, capital-campaign support and planned giving revenues.

The amount of time and money wasted in the charade that so often passes as ‘budgeting’ is scandalous. Time to try a different approach.

What are you doing to bring clarity and analysis to the budget process in your organization or with your clients?

Roger