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AFP & Rice University’s Inaugural Development & Finance Symposium - Through the Eyes of a Developer AND Financer!

Resource Center - Foundation

by Catherine M. Connolly, MBA, CFRE

We all want our organizations to grow, but too often we forget that HOW we grow is just as important. In the business world, we understand the concept that one needs to spend money to make money. In fundraising and the charitable world, it’s the same concept, but not always as well understood. But the fact is, we need resources in order to take advantage of the opportunities available.  

Even within our own organizations, there can be tensions and different ideas on how best to create and spend those resources, often between fundraiser and finance staff. And that’s why AFP, in conjunction with the Center for Philanthropy, held the first Development and Finance Symposium on the Rice University campus in Houston, July 11 and 12.

The event, supported by presenting sponsor Sage, as well as CCS, brought together development and finance personnel who work in nonprofits to acknowledge the challenges and talk about how we can help each other. 

A survey of attendees before the symposium began found that fewer than 30 percent said their development and finance offices worked together in creating the annual development plan. So it was important that attendees were pretty well evenly split, with 60 percent being fundraisers and 40 percent representing finance offices.

Even though I’m a self-proclaimed data geek and have an MBA degree, I still think of myself as a fundraiser, and I spoke in a breakout session about “Investing in Development” and how to make the case to spend more on fundraising.

Development & Finance 101

Many organizations find themselves with the challenge of how to raise the funds needed in order to deliver more services. Or the challenge might be to diversify income—when a majority of revenue comes from a small number of sources (be it government agencies, funders or donors), the institution is at risk. That moment is an important time to branch out into other income streams, for the financial health of the organization.

One of the first questions to consider is, whom do we need to convince to make this type of investment?  And then we turn to the next question, what’s important to them? It’s different for each person and department. Here’s the breakdown:

  • The board wants to hear about return on investment, what’s the plan and how much is it going to cost.
  • The CEO is looking at the staffing issues: how is the plan going to be implemented and perhaps even how will it impact his or her own personal reputation. 
  • The finance department is looking at where the investment will come from, when will the investment pay off, and how to measure success. 
  • The development department needs to make the case, since staff there will be wondering how this project might impact their job and what role they will play.
  • In the end, we can’t forget the funders and donors, since they have given resources to support your mission. They need to understand how this investment makes your organization stronger and better able to accomplish your goals.

As you can see, the case for investing in development is not a one-size-fits-all situation.  You need to determine what your audience is looking for and figure out what’s meaningful to them.

As we make this case, it’s also important to acknowledge the risk/reward trade off.  We know that if we are taking more of a risk with our investment, we will get a higher return.  Think about the stock market where we get a high return on the money we put in, but it’s very risky and we could lose our life savings.

Each of us has our own personal relationship with money, and we are each different in how willing we are to take financial risks.  For someone who is highly risk averse (such as my depression-era grandmother), making the case for a fundraising investment will sound much different than it will for someone else who is more risk tolerant. 

Like any good fundraiser knows, we need to listen to our audience and determine what information they need to hear in order to understand our case for investing in development and to agree that it’s the right step to take.

Development & Finance 201

Now that we’ve determined that an investment makes sense, we’ve talked with all the stakeholders and everyone is on board with the plan, it’s time to get started.

Step 1: It’s important to create a baseline for where we are now. You can use reporting you already have, but it’s also a great time to start new reports and different ways to look at the world.  Either way, this is a crucial part of the process so you can judge your future progress.

Step 2: After that, we start to look at where we expect to end up. What do the numbers look like in one year from now?  In two years?  In three years?  You will use the same metrics from your baseline so you have the same type of comparison numbers over time.

That plan into the future, looking at costs and revenues for your investment, is something for you to aim toward and measure your efforts against.  And if you don’t create that path or a plan, it’s guaranteed you’ll never get to destination.

However, you will never, ever achieve those projections—they will never be perfect—so don’t make yourself crazy on this step.  It possible to spend too much time here, making the assumptions ever more complicated or asking more questions that need answers.  Don’t get paralyzed by perfection and allow that to impede progress and getting started.

Step 3: In this step, another recommendation is to create your vision of the optimal development operation for your organization. In that manner, you’ll be ready when resources become available.  Also, this type of planning allows you to take advantage of the current strengths in your staff and other resources in a deliberate and thoughtful way.

The Biggest Lesson of All – Mutual Respect

The bottom line from this session was similar to the other themes of the Symposium. It’s crucial to build common expectations with development and finance together as a team.  There’s no magic report or set of numbers that one should be using—what’s more important is to meet jointly and decide what’s crucial and why.  Once that is accomplished, you can move forward with the confidence that your team is operating efficiently and communicating effectively.

And along those lines, you want both departments to be using the same numbers and metrics to measure performance.  Finance and development will always look at the same item from different perspectives (for example, what’s your definition of “revenue?”), but there must be a translation between their two versions of the world, and they must reconcile to a common end-result number.

Finally, having a healthy respect for each other—for the other’s profession and their industry best practices—is crucial.  There are reasons that accounting does certain things in a certain way, just as there are reasons that development does particular things in particular ways.  When we each respect the other, the organization is in a healthier place, and it’s the mission that benefits in the end.

The Teachers

The entire symposium featured some great presenters who focused not only on finances and fundraising, but leadership and teamwork as well. The opening plenary speaker was Paul Shoemaker, founding president of Social Venture Partners International.  He reinforced the message of working together, for the greater good of the mission and your organization.

One of his primary examples was Abraham Lincoln and William Seward.  Lincoln was the thoughtful, quiet man (sound like your CFO?) and Seward was his outgoing, gregarious counterpart (reminds me of many CDOs).  Though Seward was Lincoln’s rival for his party’s nomination, Lincoln appointed him Secretary of State, and over time, they became close friends and allies.

Like Lincoln and Seward, Mr. Shoemaker encouraged the group to excel and achieve something great and uncommon.  It was an inspiring way to think about the challenges in our organizations and the exceptional levels we could achieve.

Presenting sponsor, Sage brought in Dana Campbell from Community Action Agency of Butte County, and she talked about her hybrid organization, using both nonprofit and for-profit strategies to diversify income sources and support their mission.

And then Dr. John Zietlow, professor of finance from Malone University, discussed his nonprofit financial health index.  His emphasis was on the flexibility that strong finances can provide a nonprofit, and with good financial health, an organization is better positioned to achieve its mission.  He also reminded us how each profession can help the other, particularly in an effort to maximize all the expertise within the nonprofit. It’s likely Dr. Zietlow and the Center for Philanthropy will be releasing a paper on this issue in the future.

At the end of the event, hearing what folks learned and were going to take back to their offices, I could tell we were starting a significant conversation and making real progress. Attendees have rated the Symposium very well overall, and we’ve had lots of qualitative comments asking us to continue offering the event in the future.

I’d like to offer my thanks to the Center and to Rice University, as well as our sponsors, for making this great symposium possible. Fundraising and finance, and having the two departments work together, isn’t an issue that’s ever going to go away. By aligning our efforts, we can make the partnership a positive one that contributes to the effectiveness of our organizations. 

Catherine M. Connolly, MBA, CFRE was a speaker at the recent AFP/Rice University Development & Finance Symposium. She has been an independent consultant since 1996, and she works with nonprofits regionally in Northern California and nationally who are interested in improving their direct marketing efforts and results. Ms. Connolly has been working in membership and direct marketing for more than 25 years. 

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