According to a recent survey by Camber Collective of people with incomes of at least $80,000, 49% of respondents said they were concerned about how their donations were spent. Hopefully this isn't a big surprise to anyone involved in nonprofit management and fundraising. Judging by the frequency with which pie graphs are used in annual nonprofit reports to show the breakdown of expenses it seems like most people understand that donors want an idea of where their money is going. But how well of a job do we do actually explaining how donations are used? Especially when it is for administrative and fundraising expenses I'd say many nonprofits don't engage in meaningful explanation at all, which could ultimately be damaging to the ability to fundraise.
Back in April I wrote a post about word choice and why it's important to choose words that convey the meaning and value of the work being done. For example, rather than labeling a category in your organization's expense chart as "Overhead" you might instead choose "Critical Infrastructure." In today's post I'm asking you to take it to the next level: after choosing the right words, what about digging deeper and truly explaining to donors what/who their donations fund? If knowing how their donations are spent is truly important to donors then they are probably interested in knowing about the expense categories that at first glance may strike them as burdensome, wasteful, or not directly supporting your organization's mission. In fact those may be the categories they have the most questions about and which need the most explanation in order to seem valuable and worth supporting.
Unfortunately, a lot of nonprofits, rather than educating donors about costs for the categories I've just been discussing, try to sweep them under the rug, minimize them, and generally attempt to distract the donor from really thinking about those expenses. I would suggest taking an entirely different approach: embrace those costs by illuminating the donor as to how they support the mission, highlighting the talented people who fulfill those duties which are typically under appreciated by the public, and calling out the rate of return for time spent fundraising.
Oftentimes an annual report will show an expense chart next to an income chart, but the rate of return for fundraising isn't put into numbers. It's left up to the person reading the report to do the math, and, considering how few people enjoy math, that's a risky proposition. Why leave it up to guesswork? If your organization has a good rate of return than trumpet that number and tell the donors about the people doing that wonderful work.
Similarly the people doing the administrative and back office work--receptionists, grant writers, accountants, maintenance personnel, etc.--at an agency are infrequently highlighted in reports or on websites. It's left up to the donor to make the connection that without the payroll person the direct service worker doesn't get paid to take group home residents on educationally enriching field trips, for example. Again, that's a connection that shouldn't be left to chance, but rather a nonprofit should claim those expenses as necessary and worthwhile. If you have talented people in all areas of your organization who are committed to your mission then that should be heralded as a great achievement. Why not do profiles on those employees/contractors/consultants that announce what they do, their backgrounds, and how they contribute to your success?
When organizations--particularly small nonprofits and/or those without long histories--are transparent and honest they have an easier time raising money and keeping donors, which is much less expensive than acquiring new donors. Telling people why your group spends money on certain areas will only contribute to current donors and possible donors trusting your group more, and trust is crucial to successful fundraising and fundraising is integral to continuing your good work.
Back in April I wrote a post about word choice and why it's important to choose words that convey the meaning and value of the work being done. For example, rather than labeling a category in your organization's expense chart as "Overhead" you might instead choose "Critical Infrastructure." In today's post I'm asking you to take it to the next level: after choosing the right words, what about digging deeper and truly explaining to donors what/who their donations fund? If knowing how their donations are spent is truly important to donors then they are probably interested in knowing about the expense categories that at first glance may strike them as burdensome, wasteful, or not directly supporting your organization's mission. In fact those may be the categories they have the most questions about and which need the most explanation in order to seem valuable and worth supporting.
Unfortunately, a lot of nonprofits, rather than educating donors about costs for the categories I've just been discussing, try to sweep them under the rug, minimize them, and generally attempt to distract the donor from really thinking about those expenses. I would suggest taking an entirely different approach: embrace those costs by illuminating the donor as to how they support the mission, highlighting the talented people who fulfill those duties which are typically under appreciated by the public, and calling out the rate of return for time spent fundraising.
Oftentimes an annual report will show an expense chart next to an income chart, but the rate of return for fundraising isn't put into numbers. It's left up to the person reading the report to do the math, and, considering how few people enjoy math, that's a risky proposition. Why leave it up to guesswork? If your organization has a good rate of return than trumpet that number and tell the donors about the people doing that wonderful work.
Similarly the people doing the administrative and back office work--receptionists, grant writers, accountants, maintenance personnel, etc.--at an agency are infrequently highlighted in reports or on websites. It's left up to the donor to make the connection that without the payroll person the direct service worker doesn't get paid to take group home residents on educationally enriching field trips, for example. Again, that's a connection that shouldn't be left to chance, but rather a nonprofit should claim those expenses as necessary and worthwhile. If you have talented people in all areas of your organization who are committed to your mission then that should be heralded as a great achievement. Why not do profiles on those employees/contractors/consultants that announce what they do, their backgrounds, and how they contribute to your success?
When organizations--particularly small nonprofits and/or those without long histories--are transparent and honest they have an easier time raising money and keeping donors, which is much less expensive than acquiring new donors. Telling people why your group spends money on certain areas will only contribute to current donors and possible donors trusting your group more, and trust is crucial to successful fundraising and fundraising is integral to continuing your good work.
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