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December 20, 2012

Board member investment

Essential #6: Board Members as Investors: the boards role in giving and fundraising

What would it mean to your organization if your Board of Directors worked hard to ensure the financial sustainability of your nonprofit? How would your clients or community benefit from the board being fully engaged in the fundraising efforts of your organization? Imagine, if the financial pressure were taken off of the Executive Director and shifted to the BOD; would the effectiveness of the organization increase as the Executive Director became able to focus efforts moving the organization towards its vision and mission?

As we’ve been discussing, an active and engaged Board of Directors is primary in the success of a nonprofit. Fundraising or ensuring the organization has adequate financial resources to achieve its mission is one of the primary functions of ALL boards. This means good board members both give personally and influence others to give.


Board giving is the #1 Indicator of fundraising success for nonprofit organizations. Research indicates that the most effective fundraising campaigns involve board members. This is because board members are the primary investors in the organization; they are the bedrock to supporting and ensuring the success of a nonprofit. As such, they should support the nonprofit, not only through a personal investment of time, but also by investing their financial resources into the organization. This personal investment sets the tone for the organization’s overall fundraising success. June Bradham, author of What Boards Really Want, found that the single most powerful predictor of overall fundraising success is Board Giving! This alone should encourage our board members to get involved.

Board giving should be standard in nonprofits but unfortunately this isn’t the case with all organizations. Without board members adequately securing financial sustainability and leading the organization as an example in individual giving the organization may find it difficult to raise funds from individuals or foundations. If the closest people to the organization, ie: the board members, are not giving, then why would any one else want to give?

Board giving sets a leadership example for staff, volunteers and other funders to follow. As Timothy Seller noted in an article, Roadmap to Fundraising Success, “Historically, and still today, the most effective gift solicitation is that of a peer volunteer asking for gifts in a face-to-face solicitation.”

Board members are uniquely positioned to invite peers to join them in their support of your organization and can open the door to a wealth of resources in the form of volunteers and finances. In the corporate world of products and services, word-of-mouth marketing is gaining momentum as the biggest trust builder between a brand and a new customer. What this means is if a friend tells you about a product or service that they love you are more likely to try and then buy into the brand. The same can be said of individual giving to a nonprofit, and the Board of Directors can play a huge part in building the trust and effectively fundraising for their nonprofit.

Board giving increases engagement. Through giving, members become much more engaged and passionate about the organization. Members have increased credibility when asking others to “join” their support for organization. By not only verbally supporting the organization, but also giving to it, board members can authentically encourage and inspire others to give.

If your board of directors does not have a Board Giving policy in place this should be the first step to better board involvement in fundraising. Support for the organization should start in the boardroom. This process may take time and may require a change in organizational culture. Start small and take little steps with the goal that eventually your entire board is on board and actively supporting your organization through giving.


1. Create a Board Giving policy and ensure that accountability is built into the policy. Without accountability it is easy for members to disregard the policy and not follow through on the commitment.

I work with many organizations that have policies that state something like, “I will financially support the organization at a level that is personally significant to me.” While this sounds nice it is not measurable and there is no way to determine if the member has met their responsibility. On the other hand, I work with other organizations that require board members to give a certain amount each year – for example, “As a board member I will give a minimum of $5,000 this year.” This is obviously easier to track but this requirement makes many leaders uncomfortable.

One idea is to include language that allows accountability but does not set a minimum giving requirement. As an example, “Each year, but no later than Thanksgiving and without having to be asked, I will make a personal financial contribution at a level that is meaningful to me and will put XYZ organization in the top 3 charitable organizations I support. This year I pledge to give: _________.”

2. Put into writing the fundraising roles and goals of board members. Share this information with potential members during the recruiting stage. Though it may scare some people off, it is better to be honest and recruit board members who understand and accept the duties you are asking of them. Luring people in under false pretenses almost always results in frustrations and headaches for everyone.

3. Model and reinforce success by providing annual training. Fundraising does not come naturally to many people. These are skills that should be taught and reinforced on a regular basis. Help board members understand that you aren’t asking them to “shake down” friends and family. Fundraising can be as natural as sharing stories and expressing a contagious excitement about all that’s happening at your organization.

4. Clearly explain the options for giving/getting to board members. Most board members I’ve talked to find it easier to fundraise for projects, or something tangible, than the broad mission. That means we have to make fundraising as simple as possible for them.

For example, I was working with a domestic abuse shelter and we were transitioning the board to a more active fundraising role. We explained the funding need and then helped each board member make a plan for raising funds. The options provided to members included things like: 1) sponsor a room night for $95, 2) sponsor a day in the life of the shelter $4,250, 3) become a premier sponsor for an event $5,000, 4) provide education/training to a woman $75/month.

Providing these options equipped board members to confidently go out and make specific requests for funds. It simplified the process and increased the comfort level with the process.

5. Provide written materials that allow board members to easily share more information about the organization. Our board members don’t always remember the stories and statistics that we share in meetings. They aren’t living and breathing the mission of the organization on a daily basis so it’s easy to forget the talking points when meeting with potential funders. Develop materials, perhaps even a simple impact card that members can keep with them to help them when sharing about the organization.

6. Reward successes by ensuring your members are continually recognized for their efforts. When a board member has successfully solicited funds for the organization, share and celebrate this with the other members. It’s great if the board member is also willing to share how they overcame any fear or objections. This will allow members to learn from one another and grow in fundraising together.

Jim Collins, in Good to Great and the Social Sectors notes, “To make the greatest impact on society requires first and foremost a great organization, not a single great program. To truly be a great organization, board members MUST embrace their role and responsibility as fundraisers for the organization.

If you would like help with this process, please contact me at tiffany@applegateconsultinginc.com or 417-894-4640.

Posted by Tiffany Applegate on December 20, 2012 at 1:32 PM
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Categories: Board Governance | Fundraising
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May 18, 2012
Nonprofit FundraisingWe live in a new era where consumers, businesses, investors, employees, and service providers attach real economic value to social outcomes. An era where the "feel good" issues of yesterday—education, the environment, health care, the arts, animal rights—all have direct economic consequences and opportunities.

This represents a major shift in the world of nonprofits from basic charity to the concept of "investment". Simply being a "right and just cause" is no longer enough to generate donor revenue in 2012.

So how do you attract supporters to your cause in a demanding – and crowded – marketplace of ideas? Realize that it's hard for today's organizational donor/investor to measure or truly understand fuzzy concepts like "improve the quality of life" or "protect" animal rights/access to the arts/healthcare etc. To know if you're making a good investment, you have to have a way to measure your results. And what exactly do those phrases mean?

I believe that every nonprofit is in existence to make an impact of some type for the individuals, communities and/or the causes they serve. And yet many agencies have a hard time understanding let alone articulating the impact that they create. Today's nonprofit must capture and communicate its impact in simple, compelling terms that break through the clutter. Let's explore 3 approaches to effectively market your organization and its impact to investors.


For years many most nonprofit organizations have promoted their activities rather than their impact to attract clients, funders, and other supporters. For example, many of the traditional brochures and websites I see even today highlight the Programs Offered or the Number of People Served.

This approach may have been fine when most people viewed their donations as gifts, and simply wanted to see where the money was going. But as noted more and more people view their philanthropic dollars as investments now, and see themselves as investors or funders rather than "donors". And investors of course like to see the benefits and true results of what their dollars have accomplished, not just where they were invested. So just sharing a list of what you do is no longer enough. People appreciate the actual work that you do, surely – but they invest in your impact on individuals and communities that you serve.

However, that being said there are exceptions to this rule. One primary exception I've seen to this rule centers on volunteering and gift-giving during the Holiday Season. Many nonprofits experience a surge at end-of-year simply because people want to be involved in some type of giving or service activity. For example, around the holidays many people and/or organizations desire to:

  • Serve meals at the local homeless shelter
  • Pay for XX number of meals for a holiday dinner
  • Adopt a local child or family for the holidays
Though these are activities people want to get involved in during the holiday season, I still suggest using this strategy sparingly; keeping in mind that the trend is for investors to want to see tangible signs of real community impact. During the rest of the year, when potential donors are less likely to participate in events or activities, you may see greater results with the next two approaches.


So if not activities (at least most of the time) what should you communicate to potential donors/investors? To improve the success of your nonprofit's pitches, put yourself in your investor's shoes. What valued results do you think THEY are looking for? What impact garners continued or increased investment? What is the best way to show your results and impact?

 Sharing the raw numbers or data that came about from donations is a good way to speak to the investors who want to know that their money is making a real difference in your community and in the lives of your clients. And not only will their money facilitate change, but it will make more of an impact than if they had invested in the organization down the street instead. Without these numbers, potential donors may question if you are truly making a significant contribution or difference to your constituents when you use hard to quantify outcomes.

There are three types of numbers that can resonate with investors:
Change of Status - This occurs when a person, organization, or community transitions from one state or condition to another. For example, your organization may be successful at moving people from an unemployed to employed status. You may do this by providing job training to 1,000 people per year. However, most funders aren't really interested in paying for job training unless it results in the trainees actually getting jobs. Another example is GED classes so that disadvantaged people can graduate from high school, where the measurement for success when expressed as a total number or ratio of those who graduated is very simple and straightforward.

If your organization is producing these positive outcomes, share them and show that you are a good investment. Showing how individuals or communities have changed as a direct effect of donations helps create a higher sense of impact and value for your organization's work.

Return on Investment (ROI) – ROI is performance measurement used to evaluate the efficiency of an investment and to compare it with others. Used extensively in commercial businesses, nonprofits can use ROI to show investors that they are good financial stewards, and that investor dollars will have a greater impact within their organization than with competing nonprofit agencies.

It's not uncommon for many nonprofits to document a 2x, 3x or even greater return on the money invested into their organization. For example, if you can show potential investors that for every dollar they invest with your organization the community will receive $3 of benefit compared to $2 provided by an alternate provider - you look like the better investment and become more likely to receive additional donations. ROI shows your ability to fully leverage the dollars invested into your programs.

Though ROI can be quite popular with potential donors, especially those who are financially-inclined, calculating this number presents its own unique set of challenges. This number can often be ambiguous and difficult to identify. If possible it's recommended that you use an outside source or otherwise ensure that the data you use if from a reliable source, to maintain your credibility.

Systemic Change - This often occurs as a result of collaboration within large-scale community initiatives, when several providers join together to move the needle on a social issue at the community level. It's like change of status for an entire community or group of people. To create a systemic change, it is important to build partnerships that center around a community issue. Participate in the effort for change by being a good and active partner, providing leadership where you can, and promote the results you (and the collaboration) are achieving. Some examples of systemic changes may be positive trends in: poverty rate, crime rate, homelessness, school readiness, graduation rates, number of individuals in training programs, employment numbers, access to healthcare, home ownership, and many others.

Everyone loves a great story – the feeling of getting lost in a story and having your imagination along for the ride. When a storyteller does a good job the reader can picture the scenes, hear the voices, and experience the emotions of the characters. There are books that make you laugh, cry, change the way you think or motivate you to take action. Likewise, you've probably read books that left you uninspired and looking forward to the end.

Generating emotions and creating an experience is the effect many nonprofit marketers desire when they tell their stories. They share testimonials in hopes of inspiring and compelling people to engage with their, but unfortunately a story doesn't prove to grant makers and funders that the results are repeatable. But stories do have their place and can be valuable to your cause, so there's value in collecting them.

Put It All Together

If each approach above can be effective in engaging clients and investors, which should you choose? Ideally, you should be combining the three approaches as the most effective way to market your impact and your organization.

I recommend that you build up a "vault" of stories and testimonials and add to it on an on-going basis. Pick several stories that clearly demonstrate the change(s) you are after and then share them frequently with those connected to your organization. This will help to create organizational folklore that can be shared and celebrated with others. Then document and promote your high-impact outcomes over time. These outcomes should provide statistical support for your stories that this wasn't a one-time win. Show that our outcomes can, and have been, duplicated time and time again. And use activities, when appropriate, to engage others. This can also be used to enhance your stories or answer questions about how you produce your outcomes.

The shift from charity to investment requires that we change the way we communicate. Marketing your impact with these three approaches shows you are really making a difference. It helps you capture mind share, and as a result money share. Review your marketing materials this month to see how you're doing, and get help if you need it. Ultimately it's the change we are making that most effectively makes our case to investors. Therefore, I recommend that you determine (and share) the difference you are making, back it up with actual numbers, tell a story that shows your impact on one family or individual, while supporting your numbers with the activities that you conduct, and begin sharing all of this with current and potential investors.

Posted by Tiffany Applegate on May 18, 2012 at 2:30 PM
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Categories: Community Engagement | Fundraising | Marketing
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