There’s no escaping it: every organization needs to raise revenues to support its work. Amazingly, I’ve worked with several organizations that either don’t have a fundraising plan, or they have a very vague and weak one.
When working with an organization on financial planning, we always cover the basics: goals, objectives, audiences, strategies, and tactics. Plus, I always push clients to think about other components that can really make for a robust plan. But in every case the goal is financial sustainability: ensuring that the organization can cover the cost of doing business and continue its mission in the long-term through recurring, reliable revenue.
In working with a client recently, I realized that every financial planning process starts with a series of questions that every organization should be able to answer clearly and concretely. I boil these down to four key questions:
1. How much do you need? This is pretty basic, yes, but there’s many considerations to take into account. Sure, there’s your programmatic expenses to cover (salaries, supplies, travel costs, administration, etc.) but there’s also other expenses to consider that often get left out (debt, depreciation, technology, web hosting, rent and utilities, etc.). The question is really: what is the total amount of money you need to get the work done successfully? The qualifier here is need. How much do you actually need, at a minimum, to do the work you want to do in the time you have set for yourself to achieve it?
2. What are you going to use the money for? Again, not a surprising question, but you should be able to define it in concrete terms. Related to the question above, on what will you spend the money you receive? Plus, if you want to convince others to contribute to your cause, you need an articulate and compelling way of answering it. Not only should you know what the money will be spent on, but more importantly, what will you achieve once you spend the money? What outputs will you produce and what outcomes will that accomplish? How will it advance your mission and solve the problem?
3. What will you do if you don’t get the money? This is never a pleasant question to ask, but it’s an important one for proper management of the organization. Knowing how to adapt your organization is a key element of resilience and sustainability. This question also forces executives to think about priorities: if you don’t get the money you seek, what must you maintain to continue the mission and what can you cut or reduce? Ideally, leadership considers different scenarios and plans ahead for different outcomes. This way the organization is prepared for economic downturns – and for surprising windfalls.
4. What would you do with more money? Related to the last point above, I encourage executives to dream big and imagine what they would do if money were no object. We often get so caught in the “bare minimum” mindset – a byproduct of living in a limited-resource environment for so long – but it’s good to also think about what you would and could achieve if you had the resources. This sort of thinking helps create a vision for the organization, and it also helps to inspire others to support your cause. If the last question above asks what you would do with the bare minimum, this one asks what you would need to realize the ideal situation.
These four questions ask what you want now, why you want it, how you will adapt, and where you are going in the long-term. Basic ideas that are loaded with lots of complex considerations. These questions are what lay the foundation for a solid plan that can lead an organization to financial sustainability.
Does your organization have a clear financial plan? Have you considered all the questions above? What questions do you find most helpful to ask in the planning process? What do you know now that you wish you had known before you did your financial planning?