Tuesday, March 20, 2012

BIG’s Blog: I Heard It Again

Happy first day of spring. Spring brings renewal and the beginning of growth after winter.

At a recent gathering of fundraisers, I heard again the statement that keeps popping up every year: “The end-product of all fundraising is end-of-life bequests.”


But if I am the president of the nonprofit organization, how do I build a budget around bequests? There are many organizations that make a science out of building projection models for estimating bequest dollars year over year. Some are seemingly very good at it, assuming they don’t need exactly the projected amount, because one of these years is going to be an outlier. If the outlier is on the high side it is not a problem, but if it is on the low side, well, that’s a problem. That’s just the way statistics and probability work with projection models.

Obviously, the better way to build a budget is on annual dollars with bequests as icing on the cake.

But if the vast majority of your annual dollars comes from direct mail and you believe that growing your donor base with direct mail is crucial to keep bequests up . . . you have a looming problem.

As direct mail peaks either in total mail volume or the more important metric of net dollars generated begins to decline, your prime driver for building your base of potential bequests also declines.

The short-term signal of revenue decline from direct mail will foreshadow the coming decline in bequests several years later.

The truth is that this cycle has already started in many direct mail dominant fundraising organizations . . . which is why we talk about developing a new fundraising strategy model not built on direct mail.

Today very small and very large fundraising groups have already started down a road that moves them away from direct mail dependence.

Remember, with spring comes renewal and the journey can begin by just taking the first step.


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