Taking Risks With Your Fundraising

May 25, 2012      Admin

Yesterday’s post talked about evaluating overall effectiveness of marketing (including fundraising) programs.

I cited a McKinsey article that included the following as one of five key questions to examine in your organization:

How are we managing financial risk in our marketing plans?

McKinsey talks about setting risk parameters that enabled some changes in the marketing mix but limited the total shift in any given year. And then adds: “Managing risk is critical, and marketers shouldn’t be shy about putting this issue squarely on the table.”

I think this is a very important point, and one that senior fundraisers really need to come to grips with in your organizations.

Those who run large fundraising programs are buffeted by all sorts of cross-pressures. The biggest pressure is almost always risk-averting — the demand to meet short term (i.e., this year’s) net income targets.

But cutting against this are all sorts of other pressures that generate real risk:

  • the newest ‘great idea’ from a Board member or chief executive,
  • fear of falling behind what others in your space are perceived to be doing,
  • your own sense of boredom with doing ‘same old/same old’ (even if it’s working),
  • desperation in the face of falling returns,
  • the admirable desire (indeed imperative) to innovate,
  • introduction of bogus metrics (often from above),
  • even pressures from program staff who insist on their dull programs being featured (using their duller-than-dull language, of course).

My experience with this squares with McKinsey’s advice. Force the issue to be addressed explicitly at the level of the organization required. Agree on a ‘risk allocation’ that is conjoined with an allowable spend. And make sure that spend — it’s R&D — is protected in the budget.

Roger and I talk a lot about innovation. But we realize the institutional pressures involved that can make risk-taking a frightening and potentially unrewarding proposition.

And so I re-emphasize: Get it on the table. Explicitly. And at the top level. You (your nonprofit’s top managers) are all in this together.

Tom

One response to “Taking Risks With Your Fundraising”

  1. Rick Malchow says:
    May 29, 2012 at 9:53 am

    If there are no big flops in testing, there are likely no big winners either.

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