Donors Think What?!!!

I’m still shaking my head. I recently read the summary of findings by Grey Matter Research that reported on its research into Americans’ beliefs about overhead costs at nonprofits.

The findings were released a few months ago, but it’s very timely to think about them today as we are on the cusp of the final month of the year — a key fundraising time for most nonprofits.

If, as the findings indicate, the average donor thinks we spend 37 cents of every dollar on overhead, donors may think twice before making gifts to nonprofits they aren’t completely convinced are better than the rest. After all, donors like to believe that the charities they give to squeeze every last penny out of their donations to carry out their good work.

But clearly, donors aren’t reading our information closely enough to get the message. While many nonprofits spend 10, 15 or 20 cents of every dollar on overhead, this fact just isn’t being heard. So for the next four-and-a-half weeks, we have to work even harder to get the word out.

Whispering isn’t working; shout it out
Many e-mails tout great overhead rates but confine this information to the footer. And when was the last time you really read the footer of an e-mail? I know some of you do, but in this age of scanning instead of reading, it’s the big and bold messages that get read.

If you are testing e-mails and landing pages, test the prominence of your overhead rate. Try putting your great overhead rate in bold letters in a prominent spot. Move your pie chart up to the right of the opening paragraph. Position your fiscal responsibility as a benefit to your donors. See if making your fiscal thriftiness more obvious helps donors feel confident enough to give their gifts to you.

Given mail schedules, it’s probably too late to make your overhead rate more prominent in your year-end mailing. But think about making this message a priority in 2013 with an article in your newsletter, an insert in your receipts or some other prime real estate where it will get noticed and (maybe) change attitudes.

Make it easy to understand
After several months of presenting financial reports, a participant in the meetings finally had the courage to ask me, “What’s a fiscal year?” It’s easy to forget that the terms we use so easily may not be communicating to the average donor on our files.

Pie charts can help convey your overhead (or more positively, the amount you invest right into your programs). Showing a dollar bill separated into parts representing program, fundraising and operations is a nice variation that helps convey the message.

Maybe there is an even more interesting way to show your overhead. Challenge your graphics person or team to come up with ways to illustrate this in a way that is simple to grasp. Remember, most of your donors didn’t get their degrees in accounting. Find a way to get this important message out so it’s understandable and even motivational.

Accentuate the positive
If your overhead is a bit high, don’t apologize. Instead, highlight the great work you are doing. You may even have an overhead expense that could win points with a donor. For example, if you are an environmental group, you could mention that your overhead includes the cost of insulating your office last year to reduce your future heating expenses and help the environment.

I once spoke to a potential donor who said he would only give if I promised I wouldn’t take any overhead out of his gift. I gently explained that overhead was a reality; in fact, I (overhead) was talking to him on a telephone (overhead) while sitting in an office (also overhead). After a long, frank conversation, he made a very generous gift with the understanding that a percentage of it would be used for overhead.

One caveat — never let talking about overhead overtake talking about need and your fabulous solution to that need. Be sure you engage the heart even when you invite the head to join the conversation. Financial statements generally don’t motivate a gift on their own.

While donor perception of overhead costs may not be hurting your income, it doesn’t hurt to promote your careful use of funds to do the most good — especially at year end. Let’s help our donors by giving them the facts in a manner that is easy to understand. That, on top of your compelling case for support, may help your nonprofit receive even more income this December.

Originally published in 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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