Board Leadership Is the Key to Successful Major Gift Fundraising

Well, I am beginning to think that we are getting ready to get back to work and get our major gift and capital campaigns back on track!  Why do I feel that way?  In the last few days, we have had a number of colleagues inquire with us.  They asked about why their board members wanted to know why it is so important for them to be proactive and intimately involved in their organization’s fundraising programs. Although I have written and spoken about this necessity numerous times over the years, I thought, to myself, Let’s take another look at this important aspect of board leadership and involvement.

Ask yourself this question: “How do nonprofits make money?”  Let’s check your answers:

1. They sell a product or charge for a service;
2. They borrow funds or issue bond opportunities (check out your local hospital debt);
3. They receive funds from charitable giving (grants and outright/in-kind gifts), and if they are fortunate enough, they may have a large endowment;
4. Returns on portfolio investments (but for most organizations, this is rare, unfortunately.)  As such, the organization will be required to make its financial and operating information public so that donors can see how the company’s contributions are being used.  An individual or business that makes a donation to a nonprofit is allowed to deduct its donation from its tax return.  The nonprofit, likewise, pay no taxes on any money received through fundraising.

In the for-profit world, by contrast, there is a much higher degree of clarity on financial issues.  This is particularly true when it comes to understanding how different businesses operate.  One reason why the nonprofit sector has not developed its own lexicon of funding models is that running a nonprofit is generally more complicated than running a comparably sized for-profit business.  When a for-profit business finds a way to create value for a customer, it has generally found its source of revenue; the customer pays for the value.  With rare exceptions, this is not true in the nonprofit sector.  When a nonprofit finds a way to create value for a beneficiary (for example, by integrating a homeless veteran back into society or saving an endangered species), it has not identified its economic engine.

The ability for a nonprofit to be tax-exempt is determined by its mission to be a “public benefit corporation,” which in most circumstances, limits its access to funding.  So the primary role of the nonprofit board member, aside from the responsibility of self-perpetuation, is the selection and oversight of executive leadership.  The two fundamental responsibilities of a non-profit board are to assure that the institution makes continued progress in the furtherance of its mission and to guarantee the availability of the financial resources necessary to do so.  Both of these latter charges come into sharp focus in relation to major and capital campaigns.  It is virtually impossible for a major fundraising drive to succeed without the leadership and support of the institution’s board.  Beyond the obvious fact that these individuals are carefully selected for the strengths that they can bring to the institution, they are also the most knowledgeable about it and approve the most important decisions pertaining to its ongoing welfare.  All other constituents look to the board for assurance that the institution is on the right course.  They, accordingly, offer their own effort, financial support, and emotional commitment in faith that the board is performing its duties at the highest levels of social responsibility.

Indeed, to serve as an elected member of the board is to act as the shareholder representative of the public.  This is because the state invests in the board the authority to assure that the institution remains worthy of the non-profit status conferred upon it on behalf of the rest of the state’s citizens.  Therefore, when it comes to fundraising, the public expects the board to make judicious decisions about how much money must be raised and how it will be used.

To be successful, the board must retain control of the institutional strategic planning process and participate fully and appropriately in that process.  Then, its members can be confident that the institutional priorities have been carefully and thoughtfully developed.  Moreover, they will understand the cost of these priorities and the plan for funding them by utilizing a combination of accumulated assets, operating income, debt service, and philanthropy.

If the board is fully engaged in the institutional planning process, reserving for itself the ultimate authority for approval and adoption, then it indeed holds its own plan for the future welfare of its institution.  Such a process ensures that the board will be committed to its successful execution.

How can the community be certain of this?  In addition to participating in the development of the organizational plan and adopting it as a roadmap for the coming years, board members demonstrate their own unanimous support and commitment by stepping forward before anyone else is even asked.  As such, the board pledges 100% participation.  Normally the board’s financial commitments represent a minimum of 20% of the philanthropic goal, and sometimes much more.

Not surprisingly, a group of individuals that have already taken important steps in the leadership of its organization is important.  This strategy usually plays a major role in securing the balance of the funds needed for fundraising to be successful.  There is no substitute for an informed, engaged, and committed board.

Yes, the board does have a role in a major or capital campaign!

What, wait?  We hired that capital campaign consultant to run the campaign, and now, you are telling me that I have to do something?

Yes!  It would be unrealistic to think that a capital campaign would be left up to the staff to manage.  The staff does not have access to donors and to their peer network.  A campaign is not a one-, two-, or even three-person job.  It is even more unrealistic to think that since the capital campaign consultant is now in town, no one needs to do anything, period.

Board members have many responsibilities in a campaign.  Here is my top-ten list of capital campaign responsibilities and what I expect board members to commit to:

1. Do not take on any major new volunteer roles for other organizations and consider how to pare down other obligations and be accessible to the campaign.
2. Review their philanthropic planning for the next year and perhaps beyond.
3. Consider what role they could and would like to play in the campaign.  Every board member will be responsible for some part of the campaign and will be engaged in identifying and enlisting campaign committee members.
4. Review their list of contacts — friends and business associates — to consider carefully which of them may be interested in learning more about the organization.
5. Review and approve the capital campaign plan as recommended by the capital campaign planning committee.
6. Make a “stretch” gift to the campaign. We ask all board members to support the annual fund campaign each year in addition to supporting the capital campaign. We also ask all board members to participate philanthropically in the campaign — commensurate with their ability.  The board will be the first to give, and it is essential that other donors see 100% percent participation of the board.
7. Ensure that contributions are used according to donor intent.
8. Read all materials given to them by the organization and the campaign.  Members of the community — donors, clients, friends, neighbors, etc. — will turn to the members of the board for guidance and information when they have questions.
9. Be advocates for the organization, to the best of their ability, in the community.  Help expand the organization’s influence and exposure throughout the community by doing the following:

• Securing the sponsorship of a community group to support the campaign.
• Recruiting a speaker, host, or sponsor for a special event.
• Arranging tours of the organization for interested individuals, corporations, foundations or others.
• Hosting an event in their home, place of business, or community organization.
• Endorsing a solicitation made by the campaign leaders, either by phone or by letter.
• Setting aside at least 20-30 minutes weekly to plan how to help the organization’s campaign.
• Thanking donors and staying in touch by keeping them informed of the project plans.
• Evaluating the success of the campaign to determine strengths, areas of improvement, and the effectiveness of board decisions.

10. Make sure that all other board members make a gift and participate in the campaign, as outlined above.

Donors to your organization will want to see that the board and senior leadership are committed, engaged, and contributing at all levels.  After all — people who give are, generally, people who are involved.

Many board members tend to be reluctant and apprehensive or even downright afraid of fundraising. And this is understandable.  We don’t like to talk about money, particularly when it is with an individual who is a friend or colleague. As such, there are three important things to remember about major gift fundraising:

• First, it is not about money!
• Second, it is not about your organization!
• And third, it is not about you!

So what is fundraising about?  It is about families, it is about community, it is about donors and what they are looking to accomplish, and it is about the opportunity.  It is about connecting your donors to your mission — to the impact, your organization makes in the community, the change you enable, and the difference you make in creating a better community and better lives.  If you are a passionate and committed board member, then you can overcome your fear and discomfort of fundraising and talk to potential donors about your passion.  It is not about your fear and not about their money.  Overall, the key thing to remember is this: it is about building relationships between the community and your organization’s mission.

The benefit of board members to a non-profit lies in their volunteer status combined with their influence in the community.  If your board is not fundraising, it is depriving the organization of critical resources.  The board’s involvement, whatever its character, is essential to successful organizational fundraising.

So fundraising at all levels is unquestionably a board responsibility.

If I can answer any questions or help you in any other way, give me a call, and Good luck!

Ron J. Huddleston, CFRE, FAHP

President