Would Your Nonprofit Pass a Fundraising Audit? 5 Critical Rules

There are some basic and universal fundraising principles that should be followed by every nonprofit organization. Unfortunately, for a variety of reasons, these “rules” of fundraising are frequently broken.

Sometimes fundraising best practices are not followed due to lack of staff and resources. Other times it’s simply a lack of know-how.

I was reminded of these “rules” recently when I spent the day auditing the fundraising program of a local chapter of a national organization. Sadly, like so many organizations I encounter, this organization was breaking many of the most basic rules of fundraising.

5 Critical Rules for Your Nonprofit to Pass a Fundraising Audit

By design, audits uncover issues the organization is having with regard to fundraising. Unfortunately, many organizations are raising less and less each year and they have no idea why.

Here are 5 of my basic recommendations to ensure your organization can pass a fundraising audit.

1. Improve your donor retention rate.

It goes without saying that you should know your donor retention rate. If you’re using a reputable donor CRM, you should know this with the click of a button. Anything under 40% is pretty bad.

Regardless of what your retention rate is, take steps to improve it — like making sure you have a finely tuned stewardship program (more on that later).

2. Make a donation to your own organization — by mail and online.

If you haven’t made a gift to your own organization recently, you really have no idea what your donors experience. Is the online system easy to use? Can you easily make a recurring (monthly) gift? Do you get a timely thank you note (within one week or less of receiving a gift) in the mail and online?

Take a little time to donate to your own nonprofit through the same channels as your donors. Test out the process and discover their experience firsthand. Then make changes accordingly.

3. Improve stewardship.

Thanking donors in an appropriate and timely way is critical for improving your donor retention rate (see #1). Donors want to feel thanked and know that their gift made a difference.

Make a plan for thanking donors in multiple ways, including:

• A formal tax letter
• A handwritten note
• A phone call
• An email
• In person

First-time donors should be acknowledged as well as repeat donors. The more personal, the better.

4. Grow monthly giving.

One of the most reliable sources of fundraising income is monthly giving. Create a system for asking for monthly gifts from volunteers, clients, one-time donors, and others who interact with your organization.

Do not beat around the bush about what your organization needs. It pains me when organizations ask for diapers and formula when they really need cash. You can buy the supplies you need when you have the funds to do so.

5. Focus on your top donors and ask for major gifts.

If you’ve ever worked on a capital campaign, you know that the top 20 donors make or break your campaign. That’s because your top donor often give 60, 70, or even 80% of your campaign goal. You can apply these same principles to your annual fund as well.

Identify your top 20 donors and ask them for gifts, in-person, this year.

Bonus Rule — Celebrate your success.

Finally, celebrate your successes — big and small. Acknowledge what is going well and what you’re doing right. When you get a meeting with a donor, or even just pick up phone to call a donor, give yourself a gold star. You deserve it.

Fundraising is often frustrating. It’s important to focus on the positive and not just on the negative. Make sure your team feels good about their progress.

Get the Fundraising Basics Down Pat

Doing a full development audit isn’t something I do very often anymore, but recently I took the opportunity because I have a soft spot in my heart for the mission of the organization. Not only that, the board chair is a dynamo and I love working with smart people.

This fundraising audit reminded me that even when organizations are focused on major gifts or are in the middle of a capital campaign, they need to have the basics down pat.

What area(s) mentioned above does your organization struggle with the most? Leave me a comment and tell me about which of these 5 rules give you the most difficulty.