I was initially outraged by this case. But it highlighted some important questions about donor relationships.
If you keep up-to-date on non-profit news then you’ll probably be aware of a $24.6 million settlement involving a US veterans charity and their fundraisers.
You can read about it here and here. But it basically involves the charity paying lots of money to its fundraisers and never getting an acceptable return on that investment. The upshot is that very little of the funds raised ever went to veterans.
(Experienced fundraisers know that you often lose money on acquisition of new donors in the first year. However, ideally you start getting a return on that investment in your second or third year. It may even be your fourth or fifth – I feel that’s too long but that’s not the point of this post.)
My question is about the damage such a case as this does to the whole non-profit sector. Occasionally mismanagement of charity funds hits the news. When it happens, many non-profits and fundraisers lament the lack of public understanding about the costs of fundraising. For the most part, I agree with this.
But I would like you to pose these questions to yourself:
- Are your relationships with your donors strong enough that they trust you to do the right thing with their dollars – even after such a scandal as this?
- Do you show them proof of how their funds are being used – so they truly know you are doing what you say you do with their money?
- Can you show them how much you spend on overheads? If it’s higher than other charities, can you give them a reasonable justification for this?
- Are your donors highly engaged in your organisation or cause in other ways besides giving money? For example, volunteering or attending events where beneficiaries of program staff speak about their experiences?
- Do you give donors opportunities to give you feedback? If they write to you with a complaint or comment, do you respond in a timely manner?
I would argue if you can do all these things effectively, your donors will stick with you even when the scandals strike.
Yes, you may get some donors who call or write to you. They’ll ask whether your charity engages in the same shady practices. You need to be ready to answer these questions and reassure donors you are stewarding their funds well. Assuming that you are, of course!
One charity I worked with got some bad press about their use of funds. This was due to genuine lack of understanding about fundraising costs. Not because they were doing anything underhand.
There was a flurry of internal panic and the CEO got a letter out to donors explaining their position. They fielded a few calls from donors. But there was no noticeable drop in their fundraising income. That’s because they’d done a good job on donor communications and nurture.
Your donor relationships are like any other relationships. If you’ve taken the time to make them strong, your donors won’t run at the first sign of trouble.