As a society, we are enamored by records. Think about it, the Guinness Book of World Records, Olympics, and sports at every level. We enjoy the ability to rank successes. There is something satisfying about rankings, they feel certain. Record holders stand out as beacons of achievement in their chosen fields, Wayne Gretzky, Simone Biles, Tom Brady, all undisputedly great. At the same time, records often come with caveats. Football fans will remember deflategate when Brady played for the Patriots. Does it change the rankings, not for a minute. Does it offer a caveat when thinking about reputations that negatively impacts perception? Perhaps. Admittedly, I’m from New England. For me, Tom Brady will always be the GOAT.
I have worked in two dramatically different schools. Everything about them was different, location, size, community, they had very little in common. Unsurprisingly, they took two very different approaches to budgeting as well. One school took a consistent and traditional approach to forecasting, the other a much more aggressive and dynamic one. The interesting thing is that both achieved the results they forecasted. Another point of commonality, they were both keenly aware of rankings.
Best practice suggests annual fund growth rises at a rate of 5% per year. Anywhere between 3% and 5% would be considered a safe forecast. Capital campaign goals are a bit different because they are tied to feasibility and more complex gift scenarios. For the sake of simplicity, we’ll stick to annual giving as our example of fundraising forecasts. Each year, a small core of leaders work together with board members to develop a budget for the coming school year. Absent any unusual economic factors, the school with a traditional approach to budgeting would build the next year’s plan anticipating 5% growth in annual fundraising. What is magical about 5%? It is often lower than the return rate on a school’s endowment. It may be lower than inflation and it is almost certainly higher than the percentage of increase afforded to employees’ annual compensation. There is some consideration for donor behavior but in any given year some donors drift away while a new crop of prospects are introduced. With a decent donor retention strategy, 5% feels like a very doable increase. More often than not, success comes down to the final 60 days. It is unlikely that schools meet their annual giving goals before.
Why? Do organizations train their donors to give at the last minute? Is the fundraising campaign planned to naturally align with the majority of donor’s charitable giving cycle? Are fundraising professionals conditioned to meet a goal then move on to the other priorities that may have lapsed in pursuit of the goal? I’m inclined to believe it is a bit of all three. I’ll elaborate.
The second type of school I worked for took an aggressive approach to budgeting. The school was led by for-profit industry leaders, not career nonprofit executives. Fundraising numbers at this school were not set by traditional measures of best practice. The budget was not dependent on a donor’s readiness to make sizable contributions. Instead, fundraising targets were based on the broader need to achieve strategic goals related to growth and marketplace competition.
On the surface, this sounds like every fundraiser’s nightmare. Aggressive goals were set, without input from development, and the donor pipeline was not a consideration. It is a risky proposition to be sure. But it worked. Why?
Such an aggressive strategy required the right environment to be successful. This school happened to have a perfect set of circumstances. The school had a deep pool of capacity, a growing culture of inclination, and the ability to take aggressive risk. The school’s strong financial position, established demand pipeline, and bold culture offered the ability to grow philanthropic revenue at an astonishing pace. Did it defy conventional fundraising wisdom, absolutely.
So which model is right? The traditional, sustainable model that takes into account donor behavior? Or the aggressive one that is more reminiscent of Farragut’s “damn, the torpedoes”? It depends. Logic suggests that innovative strategies and strong donor cultivation work would allow the traditional model to outperform standard metrics. However, basic laws of economics suggest that eventually the aggressive model would fail when either equilibrium is reached or demand changes. True wisdom lies in recognizing both opportunities.
When we drive a car, practical experience has taught us we can go faster on the straightaway but need to brake when rounding a corner. We have the foresight to read road signs or maps that tell us when we need to slow down. In fundraising, knowing when to accelerate or brake are more subtle. Some key signs to monitor include broader economic factors, giving rarely increases in a recession. Donor sentiment, are donors eager for new leadership that may be coming in? The signs vary by organization and by circumstance but they are evident nonetheless. Having a voice that allows for the input of this situational wisdom is the key.
Motivation is an important factor in determining when to hold steady and when to accelerate. I would argue that records may be a marketable point of inflection but they are not a budgeting strategy. Pushing boldly ahead to achieve new heights is essential, perhaps even a responsibility, when times allow. However, vanity pushes for records when blindly with no specific plan to achieve them. When thinking about your fundraising program, it’s important to build goals based on science, not simply emotion. Use the emotion to drive your fundraising campaign and allow that momentum to raise your community to the next point of celebration.
Learn more about the science of goal setting: https://positivepsychology.com/goal-setting-psychology/
