For nonprofits that have long been laboring under the heavy yoke of managing multiple major fundraising events, this pandemic crisis has created a window of opportunity to change that dynamic and look to create a more balanced approach to revenue generation. Many organizations for years have wanted to migrate away from this traditional dependency, but have been fearful to do so. Now they are discovering they may have no choice if they wish to survive. Most special events have been postponed indefinitely, cancelled outright, or will not be able to be replicated because of future considerations about the gathering of large numbers of people. Virtual events, although for some a quick fix, are not likely to have much staying power beyond the first year.
So how did this large scale dependency happen in the first place? For many small, medium and even large organizations, special event fundraising is a large part of their fundraising portfolio and many started with events because they were easier to establish, were easily repeatable and like any kind of exercise in muscle memory, staff could quickly acclimate to this technique. The revenue they generated could also usually be easier to predict from year to year.
Special Events can be very good at both raising funds and generating new friends for the organization, but they can also cause havoc with respect to the organization’s cost-to-funds-raised ratios. Many large events exceed 50% in direct cost and many organizations do not take into account the indirect costs of dedicated personnel time and efforts required for these events, which are not insignificant.
In a robotic kind of manner, events tend to be replicated year after year with many getting stale over time and participants becoming less and less interested. Almost all special events also eventually start to slide down the back end of the bell curve with continually diminishing returns requiring extensive revitalization, significant format changes or cancellation with the hopes a new concept might be initiated that can recapture the high-point revenue attained by the previously now defunct event.
The pivot then is to a focus on building individual giving programs. Organizations that have been around awhile have a distinct advantage in that they probably have large donor bases made up of people who have participated in these events over many years. Whether dinner events, golf tournaments, third party events, or peer-to-peer fundraising activities, these nonprofits have a wealth of individuals who have demonstrated by their repeated engagement that they have an affinity for the mission of the organization.
The initial work of the development team will then be retrained and repositioned to participate in this new process and a good starting place is to learn the skills to convert these event donors to annual donors, leadership donors and eventually major gift donors. Some staff will not be able to make this transition as the role of the special events manager is very different than the role of a gift officer so some may need to be replaced or managed out.
One of their greatest obstacles to an effective staff transition will be understanding and embracing a lack of benefit or quid pro quo in order for the donor to make the contribution. This will be a hard lesson to unlearn for many. Again, in order to do this effectively, the staff will need to be retrained, re-oriented, and coached for this type of a very different transaction.
By expanding its list of donors the organization will ensure itself greater viability and sustainability into future years that they will be able to depend upon. For this new cadre of donors, the purpose for giving will be to support the organization exclusively without a specific return of some benefit. It will also mean that programs of giving societies and/or giving clubs will need to be established to recognize donors. Stewardship techniques will need to be employed to ensure that the donors are communicated with frequently and informed about the organization’s mission and motivated to continue to contribute with no strings attached.
Most importantly, these organizations will begin to build a more robust and balanced portfolio of fundraising activities. As a general rule of thumb, reducing the number of special events to a more manageable level – more in the range of 25%-30% for expected annual revenues – allows for the continued employment of this technique (which still has value) without jeopardizing the organization’s existence if they cannot be conducted.
Without question, there has been a dramatic shift in the use of social media platforms to connect staff, volunteers and donors to our nonprofit organizations. Stay at home mandates have required everyone to become more innovative and interactive and if you weren’t a Zoom, Facetime or Skype user before, you have been forced to learn and embrace this method of communication. This will allow for a far greater ability to reach our key constituencies and spread the good news of our respected missions. This will be an important tool in your stewardship plans, donor recruitment and retention and communication. We are just beginning to see the opportunities for this medium.
I will conclude by recommending that organizations consider how to best proceed with this kind of transition. How to best make this transition happen quickly and effectively may require some professional coaching assistance. There are a number of good firms that can help. A great friend of Friday Forum for many years, I highly recommend the senior leaders at Copley Raff, Inc. to begin this conversation. Coaching is often the key to effective implementation of transformative business and organizations strategies such as in this instance from moving from event-dependent fundraising to building and executing an induvial giving pipeline.