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Mistakes

June 11, 2013
By Tom Harrison

It’s been said that good decisions come from experience, and experience comes from bad decisions. There’s a lot we can learn from some of the really bad decisions that have been made—so that we can make better ones. Or at least we can make our own mistakes rather than simply repeating these whoppers.

Here are 13 mistakes we all wish we had known about without having to actually make them!

Mistake 1: Cutting acquisition quantity to improve fundraising ratios, but destroying your future revenue stream in the process. If you cut back on acquisition, you’ll have fewer current donors to cultivate next year and will start a downward revenue spiral that’s difficult to reverse.

Mistake 2: Hiring the wrong major gift leader. You don’t want a major gift leader who meddles with your successful direct response program instead of visiting with donors. Or one who tries to restrict direct response (DR) communication with donors based on how much they’ve given rather than based on who can actually be personally cultivated. Major gift officers should generate major gifts.

Mistake 3: Letting brand dictate fundraising messages instead of mandating that brand reinforce fundraising messages.

Mistake 4: Getting seduced by a consultant who claims to be able to acquire “higher value donors” and ending up getting too few donors to sustain your organization. The lesson is that you need a program that acquires those higher value donors plus all the other donors.

Mistake 5: Setting a target for your capital campaign but forgetting to include two years of operating budget in the total. The new building or new programs always cost more to operate than your current budget. By raising two years of operating costs up front, it gives you time to increase your revenue stream to meet the new operating budget.

Mistake 6: Cutting revenue-producing programs to address a budget shortfall. A wise accountant serving as a new board member addressed a nonprofit’s $100,000 budget shortfall. He suggested actually spending more money on revenue-producing activities. He correctly noted that the DR program raised $3 for every $1 spent. Increasing the DR budget by $50,000 raises $150,000—with a net of $100,000 to solve the revenue shortfall.

Mistake 7: Accepting Watchdog standards. Don’t brag about your stars. Instead, teach donors to judge you by the impact of your programs, not by arbitrary – and often misleading – cost ratios.

Mistake 8: Chasing blindly after the next big thing. The fear of being left behind can cause us to leap before we look. Protect your core revenue streams, and budget separately for R&D with dollars you can afford to lose.

Mistake 9: Making it look too easy. If people take your fundraising programs for granted, they’ll be tempted to water them down by mistakenly cutting frequency or insisting on more stories of success and less emphasis on need and urgency. Worse still, when the resulting fundraising efforts fail – they will – it will be blamed on the channel or the donors or your department, rather than on the dilution of the strategy.

Mistake 10: Forgetting to test. Why would anyone abandon a control for something new without testing? Maybe they’re afraid to be proven wrong, or because testing is difficult, or testing costs more, or maybe they just can’t imagine that their idea could fail. Always test.

Mistake 11: Believing that you are the target audience. Meet the donors where they are, rather than where you wish they were. Make it easy for donors to financially support programs that they are passionate about, not programs that you (or your program people) wish donors were passionate about.

Mistake 12: Being so afraid of being called a micro-manager that you don’t manage enough. It’s irresponsible to stand by and watch your people make mistakes that you know, from experience, will damage your organization. Sure, you sometimes need to allow them to learn from their own mistakes—on the small stuff. But on important matters, you owe it to your organization, your people and yourself to teach your staff the right things to do and the right way to do them. If there’s one thing experience teaches us the hard way, it’s that not all ideas are of equal value.

Mistake 13: Being afraid to fire someone. If someone is not succeeding in his position, he is hurting the cause you represent and likely demoralizing other employees. Your organization deserves top-performing employees. If someone isn’t cutting it, even after you’ve worked to help her improve, let her go. It will allow you to hire someone better, and will allow the exiting employee to find a position where she’ll contribute more and be more highly valued.

There may only be seven deadly sins, but there are myriad marketing missteps. If you have others to add, we’d love to hear from you!

Tom Harrison, CEO
Russ Reed
russreid.com


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