A lot of things keep fundraisers up at night.
But learning that you have lost your biggest funder ranks among the biggest sleep-suckers.
Whether a government agency cuts a program, a foundation does an about-face on interest areas, or a supporter’s passion cools off… when a major revenue source dries up, the consequences of its loss will cascade to your clients, your team, and your community.
I hope this does not happen to you.
But it might.
And if you experience that bad day, you may very well feel panic. But you can mitigate the impact if you stay focused and strategic.
Furthermore, if you prepare for that possible day, you might be able to avoid it altogether.
We’ll get to that in a moment.
Survey the Scene
Have you ever taken a first-aid class? Before rushing in to help a victim in trouble, you need to “Survey the Scene” — look at the surroundings to assess hidden risks; review your skills and capabilities; formulate a rescue plan.
A fundraising emergency requires the same pause. After losing a big funder unexpectedly, take a moment to assess the situation. You will likely need to find revenue from another source, or cut expenses. Go through a checklist of possibilities:
Rainy day resources: Ideally your organization keeps six months of operating expenses saved up in reserve for unanticipated needs. Perhaps you have a line of credit with reasonable interest rates, or even some untapped assets available that can generate revenue (e.g., rentable office space you don’t use). If you have not already initiated a conversation with your board and finance team to evaluate the pros and cons of each option, now is the time.
Low-hanging fruit: The ripest, readiest donors are the ones you already know well. They are invested in the mission; they trust you; and they have the capacity to help get you over the hump. These champions might see this challenge as an opportunity to be a hero. A client of mine had a board member who said ahead of time he could give up to 5% of the organizational budget in extreme situations. Direct your energy toward these individuals and institutions in your core circle.
Manageable cuts: What positions, programs, or expansions can you delay temporarily? Look for one-time costs to put on hold or upgrades that can be done more slowly. Are there any cost-sharing efforts that you could do with another resource-constrained peer organization? Think quarter by quarter, reducing spending incrementally while you look for new income sources.
These are deliberate moves to stabilize your financial situation. Prioritize these and your road to health will be smoother. Once you are able to cover some or all of the immediate funding gaps, then you want to begin plotting mid- and long-term strategies for a fuller recovery.
Get Back on Track
As devastating as it is to lose the supporter who you got to the highest point, you’ve got to maintain a fierce belief that your organization will get back on its feet. Face into the brutal reality, and do not give up.
After all, you did it once. You can do it again.
Keep that in mind when developing your plan. Chances are there are other people or institutions similar to the one you lost who are in your pipeline — and it’s likely your team has the skills and relationship to engage them. Reposition yourself in the donor cycle with these folks, from solicitation back to early cultivation, and bring them along. Don’t lurch into a whole new area of fundraising. As tempting as it might be to experiment, it’s best to build on your core strengths.
There is a role for creativity, though — if it’s grounded. Is there a tactic you’ve used before that could bring in significant funds? For example, a client of mine partnered with another organization as a subcontractor, assigning their staff to provide services for the other organization’s clients in return for payment. Look for win-win scenarios in your ecosystem so you can bring revenue in while you continue the hard work of raising the replacement money.
During this rebuilding phase, being smart with your message is key. Your brand is a crucial asset right now. What is the narrative about what happened? How can you speak both optimistically and accurately? And how can your board and current funders become part of this solution — by making a one-time stretch gift, or setting up a fund with an inspiring purpose? Perhaps emeritus board members who have given generously in the past would be moved to help.
An Ounce of Prevention
Once you have dug out of the crevasse, pat yourself on the back. It takes serious focus, real discipline, and steadfast determination.
You don’t want to go through something like that again.
The next stage in recovery is working to prevent a recurrence.
Even the healthiest organization could show signs of donor fatigue. Look out for changes inside and outside your organization that might foretell a large donor deal-breaker: downsizing at a corporation, a new foundation head, or an individual’s business fortunes turning can all presage instability in charitable giving.
Other times, it’s out of the blue; you have no way of guessing every change in strategy or interest of a donor. But just because you’re surprised doesn’t mean you have to be unprepared. Plan as if none of your donors are permanent.
How would we know that these signs are emerging? Superior stewardship will, among its many other benefits, yield good intelligence. The more you engage your donors and keep in good communication, the more likely you will intuit risks.
Adhering to best practices in fundraising really pays off here. Let’s name a few:
Continual pipeline development: No donor is forever. You’ll always need replacement funds. That means that every moment you’re not prospecting, qualifying, and cultivating new leads is a gap in future revenue. Executive Directors and boards want to be out in front of potential donors — reaching out to foundation contacts, meeting fund managers. The pace at which you are working different stages of the donor cycle will differ, but you need to be investing holistically in the entire cycle.
Excellent stewardship: Keep in touch with your supporters. Update them on your work and treat their contributions with respect. Stewardship is about keeping individuals and institutions engaged with appropriate and well-paced communication. Even if you’re a fundraising machine, run on your highest gear. Build strong and lasting relationships. And — as an aside — if you ever do have a hiccup with a donor, be sure to address the situation and heal it as well as you can.
Sharp strategic plans: Don’t give donors a reason to leave by losing relevance, slackening impact, or managing sloppily. Is your strategic plan forward-looking? Does the latest research support your logic model? Are you still meeting the needs of the community, or are you coasting? Do not give a donor or funder a reason to decline your solicitation for a gift.
Doing this work when there isn’t a crisis has the effect of both preparing and preventing. Many of the strategies to react to losing a funder are also good strategies to expand your base and even keep funders. Preventive care is strategic care.
So you’ve lost your biggest funder. You knew it could happen someday.
Now you’ll be ready.
Not My First Rotary
A client was taking their first real plunge into the world of major donor fundraising, and at a motivational meeting I could see the team really gaining steam. They also knew that it would take courage and discipline to reach out and make connections. Right before adjourning, one of the members of the team blurted out: “We will make this happen — with blood, sweat, and fears!”
It’s true — and sometimes our worst fundraising fears are realized. Blood and sweat notwithstanding, we can overcome the odds with sound strategy.
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