Is it Worth the Risk?

Let’s face it — none of us is too excited about “a possibility of incurring loss or misfortune.” That’s one of the definitions for “risk” found online.

For those of us who have worked for nonprofits — especially small and mid-sized NPOs — we may have another definition, based on previous bad experience: “something avoided at all cost.”

And yet, like any company, a nonprofit constantly takes risks. Hiring, renting space, launching a PR campaign — life in a nonprofit is full of risk. Except oftentimes, in fundraising. Why is that?

Frequently, the argument goes like this: “We’re gambling with our donors’ money. Every cent spent on fundraising could have been invested in program. If a campaign fails, money is forever gone that could have been invested in direct services to our beneficiaries.”

We also often have a misguided idea that “everyone else” knows what they are doing. So we can look at what is already being done that we aren’t doing, and assume that is the only answer instead of asking if there’s something better that hasn’t been tried yet.

Thirdly, fundraising often generates more embarrassment amongst members of the board and management than programs or operations; they are afraid they will look like beggars to their friends and colleagues. Hence, there is more scrutiny and pressure not to fail.

Finally, too often we don’t have the structure to evaluate and extract learnings; we’re always on to the next thing.

The critical challenge is to create an environment where identifying visionary risks worth taking is simplified, and taking those risks (even failing at times) is acceptable. The following process can help you establish that new culture.

  1. Allow your overhead rate to increase one percent (assuming it is at an acceptable level), and invest that money in a fundraising innovation fund.
  2. Defend every new idea to be considered for funding out of the fundraising innovation fund with a short, written summary of the concept, potential audience, budget, timeline to implement, and expected outcomes. Don’t turn this into a burdensome process; you want to move forward with great ideas that have potential — not process the life out of every new idea.
  3. One negative should never be enough to kill an idea — no matter who casts that vote. On the other hand, if an idea seems doomed to fail, everyone must let it go.
  4. Don’t launch too many innovative ideas at once. This leads to chaos and makes it difficult to manage the innovation.
  5. If an idea fails — and some will (that’s why it’s called “risk”) — the burial must be decisive. The innovation can’t be allowed to continue on life-support. Failure doesn’t mean you didn’t try hard enough. It just means the idea didn’t work.
  6. Every innovation must have a final evaluation — even if it failed, there may be successes that can be turned into a winning program. At the very least, there are lessons to learn about what not to do next time.

When you create an environment where smart people can take smart risks, you open your nonprofit up to finding the next winning program to raise even more money. A side benefit may be reducing staff turnover, as a learning environment is highly appealing to top performers. And, you’ll likely broaden your pool of donors as new ideas often tap into different donor groups.

So take a chance — but only after you have determined that your idea has a decent chance of succeeding based on what you know today, and what you can predict about tomorrow with solid analysis and experience.

Originally posted at Nonprofit Pro.

Author: PJBarden

With a professional career in strategic fundraising that spans more than 35 years, Pamela brings a wealth of experience and knowledge to working with nonprofit organizations. She specializes in writing fundraising copy, grant proposals, P.R. materials, instructional articles and blog entries, as well as developing and executing fundraising strategy for her clients. Pamela is a Certified Fundraising Executive (CFRE); an instructor for UCLA Extension School’s Fundraising Certification Program and the University of La Verne, College of Business and Public Management; a frequent webinar speaker; and author of two online courses for UCLA Extension. Pamela earned a Doctorate of Business Administration in 2015; her doctoral project (dissertation) was entitled “Nonprofit Organizations’ Awareness of and Preparation for Legislation, Regulation, and Increasing Scrutiny.” She is a past winner of a Gold Award for Fundraising Excellence and an ECHO Award from DMA; recipient of a Distinguished Instructors Award from UCLA Extension; a weekly columnist for NonprofitPRO (formerly Fundraising Success); and a monthly contributor to Blackbaud’s blog, npEngage.

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