Forecasting and fundraising with a “table of needs”
When I worked in the university setting as an annual giving director, the goal-setting process was a mixture of art and science as well as feasibility versus need. Unlike my colleagues who sought major gifts exclusively, I had the fortunate position of leaning more on science due to the nature of expected response rates from a combination of direct mail, the telephone outreach program and our direct solicitations by committee. Oftentimes, my major gift counterparts were dealing with much more uncertainty, such as well-researched prospects who didn’t give to their potential or surprising windfalls from the consistent $25 annual donor.
Forecasting and fundraising
Whenever there were “windfall gifts” that far exceeded our expectations, we always factored them out of the equation for our projections in the new fiscal year because they unfairly skewed our estimations to a more optimistic goal that wasn’t always repeatable. Financial author and consultant Richard Linzer actually talks about this strategy in his book, Cash Flow Strategies. He recommends forecasting revenue based on three different types of income that are categorized by how dependable they are. This way you can forecast several scenarios depending on what type of income renews.
Another kindred spirit on the forecasting topic is consultant and author Julia Ingraham Walker. Her book, A Fundraising Guide for Nonprofit Board Members, gets a lot of attention in our summary store and for good reason. Walker has accomplished the behemoth task of aggregating everything you need to know about orchestrating a coordinated fundraising effort at the board and staff levels.
How one small independent school got it right
In addition to publishing several more books on this topic, Ingraham Walker is also an accomplished fundraiser in her own right, continuing to consult with high-impact nonprofits and universities. One of the many passages in the book that naturally caught my eye was called “Setting Goals.” Here’s how the vignette reads:
One small independent school thought that it would set a capital campaign goal based on what its peer institutions were raising. The headmaster polled several bigger, successful schools in its market and decided that his school needed to raise $100 million to be just like them. When he told the board they were going to raise $100 million, they balked. The largest campaign they had ever completed was for $25 million. Where were they going to find four times that amount?
The school brought in a consultant to conduct a feasibility study. Discussions with potential donors and board members took over six months, but the final result was a recommendation to develop a $75 million campaign in three phases. The first phase was for $25 million to build a new science center, the second phase of $25 million would be for faculty salaries and program needs, and the third phase was for $25 million for scholarships and endowment. In this way the board agreed to most of the aims of the headmaster but focused on a realistic set of needs and a timeline that could be met.
A “table of needs” is feasibility’s best friend
This small independent school is not unlike many other organizations that have aspirations to be more and do more but they require taking a realistic look at what’s feasible. Ingraham Walker introduces a great exercise to facilitate this feasibility discussion called a “table of needs.” A table of needs is the list of goals your organization wants to raise money to accomplish. These needs should stem directly from your strategic plan and be the basis of your fundraising efforts. The table should result in a three- to five-year list of needs over and above annual operating funds. “The list should be prioritized so that as potential donors are identified, the projects that are most important to the organization get funded first,” says the author.
In the picture above [Image 3.2 on page 55], I’ve shown Ingraham Walker’s example from her book. She points out that this plan relieves the annual fund of picking up the additional annual cost of a new staff member, an all too common method for funding new staff, which creates more pressure on fundraising for operations. Notice how the table covers capital, endowment, program and staffing goals over the next five years. And if this organization is fortunate enough to find a “high impact” gift of $2 to $3 million in addition to the priorities it has identified, it has some big ideas to explore for expanding its services.
For small nonprofits with no history of major gifts, there are major financial and staffing implications to plan a comprehensive fundraising campaign to meet the needs outlined in this exhibit. A board must be willing to help seek additional resources to reach the fundraising levels required by a plan like this.
Why I like it
I like this table-of-needs method because it also puts everyone on the same page if you have multiple staff members working toward funding objectives. For larger teams, it facilitates cohesion toward shared funding goals. And for smaller one-staff-member development efforts, it keeps the board tied to the objectives and keeps the type of prospects needed top-of-mind. Above all, it divides the needs among the different kinds of fundraising strategies as well so there aren’t any surprises in annual giving versus major gifts, for example.
After looking at what transpired at the small independent school, it’s easy to see how a table of needs might have helped it break down the goal into the three agreed phases and areas of programming focus. The table could have also helped the board compartmentalize how each phase would come from different kinds of gifts and how to target specific objectives.
If you’re running your development effort solo or with a department, ask yourself if you have a table of needs or something similar in your plan. It’s a small but mighty tool that will yield clarity and commitment toward goal-setting and organizational growth.
Table 3.2 on page 55: A Fundraising Guide for Nonprofit Board Members by Julia Ingraham Walker