Fundraising Basics – How to Set Goals

Often we’ve worked with clients who’ve missed their fundraising goals by substantial amounts. I typically ask how these goals were established in the first place. Not surprisingly, it usually comes down to setting goals to balance the budget.

For example, many institutions in private higher education practice tuition discounting. This is where the published price for tuition and fees is at one level, but the actual cost is discounted for most students through financial aid or scholarships. Essentially, this is usually done with unfunded aid.

Some institutions have discount rates approaching 60%. Unfortunately that causes budget shortages, and there are only a few ways to fill those gaps: fundraising, endowment or both. We had one client filling the gap almost exclusively through fundraising.

They had an annual fund goal of $4.5 million to cover the gaps caused by the discount rate. For a small school of 2,000 students, that goal was unrealistic and unsustainable. It had gotten to the point where the President had to secure several $1 million pledges just to balance the budget. Eventually they ran out of million dollar donors, which put the institution in serious financial peril.

Fundraising goals need to be both realistic and achievable, and one good way to ensure that is through strategic planning. Actually for goal setting to be effective, it will need to come from a planning process and address three important priorities:

  1. Goals must address true organizational needs – We typically assess organizational needs during the planning process by reviewing a series of reports and conducting interviews and surveys with stakeholders. That process reveals to us the critical issues that need to be addressed.

In fact, often a goal is a critical issue restated as a goal. However, we also help develop strategies and action plans to achieve those goals. Additionally, we tighten up the strategies and action plans by assigning deadlines and champions. That tends to move the action forward related to the goals.

2. Goals must specify realistic increases in giving levels and sources – For example, if we increase our annual giving by 6%, we also have to decide from where that money will come. How many more donations will we need at the $1,000 or more level? Additionally, from where will those increasing donations come (board, individuals, events, etc.)?

 It’s also important to ask yourself if that level of increase is achievable. If it’s not achievable then we need to see what expenses or programs can be cut. One nonprofit arbitrarily gave the new development officer an 83% increase over a three-year period. This was way out of line during years that had national industry increases of about 4%. True, statistics vary, but 83% was totally out of line.

  1. Goals must tie to specific sources and targeted amounts and involve the development officer – If your organization is considering budget increases, you’d better have more of a plan than just hoping money will come in. That’s why development planning without the development officer is crazy. Who knows best about where the money will come from? The development officer needs to be a full partner in that process.

If you’re doing realistic goal setting, then you should also have a pretty good idea up front of where that money will come from. I’ve had many cases where the CEO and CFO alone have set the fundraising goals, without any input from the development officer. Typically, those goals are based solely on need apart from any realistic assessment of capacity. As a result they’re often missed.

Next week we’ll discuss how to teach and develop volunteers to help achieve those goals.