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Affording Talent on a Shoestring Budget

financial management for executive directors work relationships Jun 21, 2022

     So, how do you afford to hire development staff who are skilled, qualified, and experienced, especially if you are a small to midsized nonprofit? Don’t these types of candidates apply to the jobs that pay well, usually found in big organizations?

     The answer is no. You can have highly skilled staff at your organization. And I’ll tell you how.

Consider Hiring Part-Time

     You don’t have to hire full-time. Hire a part-time, experienced professional. Experienced professionals can usually perform tasks much more quickly than novices and their learning curve is not as steep. You may realize the financial rewards produced as a result of the increased accuracy and productivity of weathered professionals far exceeds the money you invest in payroll.

     I have had good experiences hiring older workers who no longer wished to work full-time. I know other executive directors who have hired workers facing high family demands who also had good experiences hiring part-time fundraising professionals.

Emphasize Mission Fulfillment

     Provide a desirable nonmonetary perk—create a positive, mission-driven environment. Meeting mission motivates your fundraising staff just as it does your donors. Underline the position’s contribution to advancing your agency’s mission. Directly tie meeting financial goals to mission-related outcomes and growth. Help your development director make the impact they dream of.

Provide Autonomy

     Autonomy attracts. There are hundreds of ways to solve problems and get things done. Be clear that you will not dictate any one of them, providing their chosen methods are within the values your nonprofit espouses. Give your staff the freedom to chart their own courses of action in reaching agreed-upon goals. 

     Also offer flexible work hours. Fundraising is not a nine-to-five job. And many fundraisers have family obligations to tend to. As long as the work gets done, don’t worry about time spent in the office. In most cases, you will find the time they spend meeting their work responsibilities far exceeds what you demand, no matter what their hours in the office.

Offer Leadership Opportunities

     Provide shared leadership opportunities. It’s an exciting proposition for a development professional to build their leadership skills, practice them, and move the agency forward. It is very motivating. Shaping the future of an organization is not something that happens every day.

Grow Your Budget

      Plan for staff growth. Don’t just wait for it to happen—engineer it. Plot out how you’re going to afford qualified staff before you have the need to hire them.  There are several things you can do to raise money for fundraising salaries: surplus budgeting, revenue mix optimization, and revenue portfolio diversification.

Keep Revenues Above Costs

     Budgeting for a surplus makes it much more likely to happen. Just make sure to account for TOTAL, not just direct, costs.  When you are estimating how much a development director will cost, include donor database expenses, training costs, subscription fees, and professional association dues. Also include a portion of your core organizational costs, like executive leadership, accounting, IT, human resources, rent, utilities, and office supplies.

Optimize Your Revenue Mix

     Some activities yield better results than others. For example, the average return on investment for major gifts is 900 percent, while the average return on investment for special events, not including labor expenses, is 50 percent. Compare the returns on your investment for each fundraising activity you implement. See which ones yield the highest financial returns and consider investing your dollars there.

Diversify Your Revenue Streams

     There are four broad ways to realize revenue: earned income, or fees for service or product; unearned income, usually interest and dividends on investments; fundraising, that is, donations, grants, and special events; and government contracts. Studies show that nonprofits with two or more general revenue channels are more stable than those with one.

     You also need to look at the individual elements within each channel. For example, if you rely on government contracts, are they from more than one federal agency? Do they include state or local government sources? Or, if you rely on fundraising, are all your eggs in the grants’ basket? If so, you need to diversify your sources of funding so that if one revenue source dips, for whatever reason, it won’t devastate your organization.

Build Wealth

     Building real wealth, though, involves more than realizing high positive net income. Achieving positive net income pays the bills. Building wealth provides you with freedom and control over your nonprofit’s financial future. Your agency needs wealth to be in a healthy financial position and achieve sustainability.

     Wealth building is the process of generating long-term income based on the acquisition of appreciating and income-producing assets such as an endowment, museum artifacts, or real estate. You want to be able to use your assets to create more net income to invest in more assets which leads to more net income and so on. The key is setting aside a regular portion of positive net income for asset acquisition. No matter how small your organization’s profits, you need to set aside a portion of them to invest in long-term, income-producing assets.

Next Steps

     Let’s talk about how you can develop a strategy to find a qualified development professional and what your next steps are.  Just schedule a complimentary, thirty-minute strategy session. During our time together, we’ll clarify the issues you’re facing and explore possible solutions. Click the button below to get some time with me. I look forward to speaking with you!

I want to move my fundraising to the next level