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February 5, 2020

Is it really feasible for your nonprofit to raise millions?

Eric Javier

CCS Fundraising’s Managing Director Eric Javier discusses the feasibility of your organization receiving large donations. This podcast explores feasibility studies, organization context, and audience research and redefines the 80/20 rule.

Transcript

Sarah Durham: Welcome to the smart communications podcast. I’m Sarah Durham and I’m joined today by Eric Javier. Hi, Eric.

Eric Javier: Good morning.

Sarah Durham: Eric is a principal and Managing Director with CCS Fundraising. For more than 20 years, Eric has been a trusted advisor to leading nonprofit executives, trustees, and development leaders. He’s helped design and implement campaigns and initiatives that have raised more than $2 billion to make a positive difference in communities all around the world. Whew. That’s a lot of money. Eric’s primary areas of expertise include feasibility and planning studies, capital and endowment campaigns, major donor programs, principal gift solicitation strategies, strategic development planning, case messaging, board development and coaching and training. And he regularly speaks about philanthropy and development strategy at professional conferences. In fact, I’ve run into you at many a conference myself. I’m delighted to have you here, Eric.

Eric Javier: It’s such a pleasure. Thank you.

Sarah Durham: So tell us a little bit about CCS Fundraising.

Eric Javier: Sure. So CCS is a fundraising consulting and management firm that is dedicated to the nonprofit sector and helping them achieve transformational change. So we’re usually partnering with nonprofits when a nonprofit needs to do something extraordinary– raise money for a new wing to the hospital, raise money for significant endowment for scholarships or program, you name it. And we work across the entire nonprofit sector. So, we work with about 500+ organizations every year at this point, but across the whole gamut like you, so the arts and higher education, private schools, health, social services, civic organizations, advocacy, et cetera. And it’s just an honor to be able to do this work with the nonprofit space.

Sarah Durham: We’ve had the good fortune to work together on a few projects and I would say that CCS has one of the most impressive client lists I’ve ever seen. So I’m excited that you’re here and we can borrow your wisdom today. I really want to talk to you about something that I know very little about, but I know you know a lot about, which is feasibility. When you’re trying to raise a lot of money, like a capital campaign or something like that. My experience with this is that a lot of nonprofits envision the glory of raising a lot of money and they know what they would do with that money. And I’ve heard a lot of organizations say, wow, if we could just raise, you know, $15 million, we could build a new building. Or if we could just raise $5 million, we could get this huge new thing off the ground. Or if we could raise $1 billion, we could change the world. But for most organizations that may or may not be realistic. If I called you up as an organization and I said, Hey Eric, you know, I want to raise $20 million, where do we begin?

Eric Javier: Great question. And there’s a lot to talk about and I want to make sure that this is really helpful for all your great listeners. So I would begin by making sure that we have the right context. You’re an organization that raises a certain amount of money every year and you would like to raise a lot more money. While this may sound simple, I think the first question is why do you want to raise that money? A feasibility study and determining how much an organization can raise is one step in what’s a continuum for, I think, most organizations who do this well. The beginning of that continuum usually is some sort of thoughtful, deliberate planning for the future. It might be a formal strategic plan, doesn’t have to be, but you need to begin to answer those questions. And I know it’s so much a part of the work that you do with your clients.

Eric Javier: What do you want the future to look like for your organization in terms of deepening or expanding your impact? And in order to achieve that vision, what do you need to do programmatically from a staff standpoint and to make those things happen? Where do the resources fit in? Right. And that’s where this idea of a campaign or raising some factor over and above what you normally raise comes into play. And so that’s where a feasibility study comes in. The idea that, okay, we’ve done some thought as an organization, we have this vision for the future where we want to do more, we want to be more , we want to have more impact. And as a result we’ve thought, you know, this is going to require X number of new staff, three new programs, opening up offices and maybe different cities, whatever it might be, depending on the organization. And there is a financial plan behind that. And so in our hypothetical example, we need to raise $20 million to do that and that’s where a feasibility study comes in to paint that continuum. I think we start with: why do you want to raise this money? What will the impact be? Once you can have some good answers to those questions, we can dig into, okay, what’s possible, what’s the capacity and how do we determine that? And maybe we can talk more about that.

Sarah Durham: I imagine that in our listeners, there are probably two categories that people fall into when they’re thinking about this. One category are organizations who could afford to hire a consultant, a CCS fundraising, or another consultant. The other category is people who couldn’t, who would have to decide whether to tackle a campaign on their own. I’m curious what advice you’d have for both. So if an organization can hire you to do a feasibility study, what does that look like? When you hire a pro or if you can’t hire a pro, what would you recommend?

Eric Javier: So Sarah, maybe it would be helpful just to take a minute to explain like what’s the usual process of feasibility study?

Sarah Durham: Great.

Eric Javier: Certainly the organizations that hire us, I think the vast majority who hire you, usually would benefit from some outside help to varying degrees. But if you can’t, I think knowing the process and if there’s a way that you can do it on your own, I think it would be helpful. So a feasibility study is an exercise that accomplishes a few things. One, it tests why you want to raise the money and how your donor audiences respond to that. So going back to my continuum earlier, if we say we want to expand by X number of staff and we want to open new programs or open a new office in a few cities, we need to frame that in a vision that’s compelling. So the feasibility study tests, those arguments and the rationale with your donor community, is this resonating? What objections do they have? And so there’s a really important moment where you can sort of kick the tires on all this planning and desires and the financial plan behind it with the people who are actually going to invest in it.

Sarah Durham: That’s through interviews, through conversations?

Eric Javier: Exactly. That’s through interviews that, in our case, we would conduct with donors and potential donors and stakeholders of that organization. So that’s one piece to it. So it’s really qualitative, but really important information from the people who are going to give you the money. The second part of a feasibility study would be a lot of kind of research and analysis. We can tell you universities and private schools that are just in the business of campaigns, many of these organizations, many of these institutions are to the point where they know that if they conduct a campaign, we can probably raise 10 times, 20 times, 30 times our annual fundraising. So if I’m a school, I want to raise $1 million in my annual fund. The idea of thinking about a campaign in the range of 10 to $20 million because there’s so much experience behind it, pretty reasonable. If you’re a small social services nonprofit and you’ve never done a campaign before, there’s no rules of thumb, and that’s why some of this analysis and the research and the interviews, those conversations with the donor community becomes so important because you are breaking new ground. So the feasibility study process, again, just to come back to that interviews with potential donors and stakeholders, research and analysis and some projections from a very quantitative standpoint. And then I think the third final piece of this feasibility study is what I’d call the socialization of a campaign. If you’re going to raise a certain amount of money, you want to prepare the community for it.

Eric Javier: I know this is trite, but I think the saying is apt. Sometimes when you ask for money, you get advice. When you ask for advice, you get money. The process of a feasibility study is a very real and I think valuable way for a nonprofit to ask their donor community for advice and coming out of it, you will have better analysis, you’ll have a better sense of the goal, you’ll have a better sense of whether your case and your arguments and your rationale for why you want to do a campaign is compelling or not and what adjustments. But you will have prepared and socialized a very important group of people to begin the campaign with you. And there’s just huge value to that.

Sarah Durham: Often I imagine value that organizations don’t anticipate going in, but probably afterwards are really thankful they did. Cause’ I imagine a lot of the people in the community are now on the bus and primed to start. So what are some of the hallmarks of an organization that’s ready to embark on a feasibility process or organizations who are not? What do you look for when you’re trying to decide if this is the right moment for an organization?

Eric Javier: I think to try to simplify it, I would think about three or four maybe criteria or things to sort of check off. The first is what I mentioned: has an organization thought about the strategy and the initiatives that need the funding? We’re often asked to come in and like you said at the opening, an organization says, Eric, CCS, we want to raise $10 million or $100 million, but often the development side of the house is ahead of the program and financial side of the house. I think that’s one first checkbox to get through. Have you thought about that vision for the future, the initiatives, the financial underpinnings for why you need the money? Right. So that I think is one and just one additional caveat on that. It doesn’t have to be airtight, it doesn’t have to be to the letter, but it has to be thought through. Secondly, if you’re going to embark on a major campaign, who’s your donor audience? It’s hard for an organization that is raising no money or very little money outside of maybe one benefit or event to embark on a campaign if you don’t have a donor community that is kind of at the ready, that is close enough to you to engage in this plan for the future. So the second checkbox would be who’s your audience? Have you thought through likely potential donors that would include, of course your board, but some of your historic normal regular annual donors who have more capacity to give. And then is there an audience maybe just beyond that that we can kind of put our arms around. And then the third thing is when we’re hired, we do most of the heavy lifting, but it has to be a partnership. So is there a staff person? Is there someone within your organization who can walk through this process with us? Because like your work Sarah, you can’t do it in a vacuum. You can’t do it alone. You need the partnership, you need the iteration. And so do you have someone who’s dedicated or a few people who can chip in to make this process work?

Sarah Durham: Yeah, somebody really got to own it internally, so I remember maybe 15 or 20 years ago when I started working on fundraising related projects. Fundraisers talked a lot about donor pyramids and the idea then was for every one person who would make a major gift, you probably had three good prospects and so we worked on a lot of fundraising campaigns. You know, maybe in the nineties or the early aughts where we had a pretty clear sense of the communications, you know, how big the gifts were going to be, what the asks were going to be, and it was almost like an algorithm or a math formula. I haven’t seen that as much recently and I’m curious about that and how that intersects feasibility. I mean, are you also in a feasibility trying to determine how many people can make a gift of $1 million and trying to map that in a tangible way? How does that play out these days?

Eric Javier: Great question. And absolutely. There is math and science behind these campaigns. The trend, and I think most of your listeners will know this and appreciate this, is that for major campaigns and even for annual fundraising, you see these trends that overall more money is being raised, but from less donors. 25 years ago, I remember starting in this business and everyone talking about the 80/20 rule in fundraising, right? 80% of the dollars will come from 20% of your donors. In these campaigns, it’s really more like 90/10, even 95/5 there’s a lot of research, especially in the higher education space because they do so many campaigns, that showed top 10% of campaign donors provided 94% of all campaign dollars raised, the top 1% of donors provided something like 73 or 74%.

Sarah Durham: Wow.

Eric Javier: Right? So think about that top 1% of the pyramid. To your point, the very tippy top providing three quarters of all the money that’s being raised in these campaigns. So how does this relate to a feasibility study? I was at a board meeting actually just last night where I presented a report and a feasibility study and they were asking about our sample, like the people we were interviewing. And it was a legitimate question. I understand where it come from that, you know, it didn’t seem like a wide enough sampling. And I had to clarify that these feasibility studies, it’s not a random sampling. This is a campaign. And so these studies, if we’re interviewing 50, 80, 100 people or 30 people even, we’re trying to gain insight into that top 1%, maybe that top 10% not for the whole pyramid. Because we know at the bottom of the pyramid we’re going to raise five, 10 maybe 20% of the campaign. But if an organization is going to raise something extraordinary, if they’re going to be successful, if they’re going to set that $20 million goal, do we have visibility into 15 to $18 million from the top of the pyramid? And so these interviews, people we meet with where we’re trying to gain insight are from those higher capacity people. And final point on this, to your question, yeah. I think at the end of the day you want to see a pyramid that says, if we’re gonna raise $20 million, we know we’re going to need a 4 or $5 million gift. We’re now going to need a certain number at a seven figures, and based on what we heard, is that likely or not, based on the responses, if people are telling us this is a terrible idea, we don’t believe in this plan, well, we’re going to have to rethink about the plan. But if people say, this is intriguing, we gave a quarter of an hour last time, could we contemplate something more? Yeah, I’d be open to that. Well, that gives us the green light and something to go on.

Sarah Durham: I’m thinking about some of the projects that we’ve collaborated with or your colleagues on. One of the things that often surfaces from those interviews too is how the organization should speak to those donors, what the messaging should be like. I think it’s often the case that the first wave of envisioning the campaign, that vision for what the future should be like, it’s very organization centric. We need X dollars to do Y things and this will advance our mission in these ways. And what often emerges from the research and the feasibility, I’ve found, is why the donor cares and some of the kernels of the language that you can use as you write that case for support or as you sit down with donors where you stop talking about all the reasons you as an organization need the money and start talking about the benefits to the donor and why this is exciting for them to support the work.

Eric Javier: Yeah, absolutely. And this is where we have had such a joyful experience and we’ve learned so much from working with you and your team because you guys are so good at this and that’s exactly right. The case for giving more money, it needs to be emotionally compelling and intellectually sound. You need both. And oftentimes organizations think usually about the intellectual part. We need $10 million because it would spin off X and it would allow us to fund these programs and that’s all great. That needs to sit in some wider narrative, some meta narrative that answers for people like why is this not only important for the organization but why is it important to me? How does this relate to me and the change I want to see in the world and I think that’s where you guys have been so good and we love the continuity that we’ve had in a couple of related clients where we do these feasibility studies. We learned so much that donors will tell us. I mean that’s the beauty about this process. They will say, this doesn’t make sense to me, this is striking a chord with me, I have all these questions that I think we need to answer if we’re going to make this work. And then we often turn that to you and your team to begin shaping those answers and the message that is now responsive to what the donor community is looking for.

Sarah Durham: Yeah. I’m thinking about a project that we collaborated on where it was a huge campaign. I think it had a billion dollar goal, but one of the things I remember came up as part of that process, that I think is really good advice any organization can do and you can do it on a much smaller campaign, is that the initial draft for the campaign, what it was going to be like was really workshopped by the people at the organization and the people on the CCS team with those lead donors, they were given word documents and rough copy and these were donors with the potential to make multimillion dollar gifts were really invited to pull out a red pen and redline things and really react to it and I thought that was such an interesting strategy to help put the donor in the process in a really meaningful way that brought those lead gifts to light for them.

Eric Javier: Right. It goes back to this socialization aspect of feasibility studies and preparing for a campaign, and so for all the listeners, for all the nonprofit leaders out there, we can all huddle up in our respective conference rooms and offices and our organizations and figure out all the reasons why people should give us all this money, but it takes on a whole new level if you iterate and allow people to help you answer those questions, not just anybody but the people who actually give you the money and invest in that future. One quick example of this, I was working with an organization and as a way to help craft that vision and that case and bring in sort of the donor voice, we set up an obsession, and I know Sarah you and your team do this a lot where we had breakout sessions and all those things that are really helpful, but we set up a shark tank where we had teams of donors, volunteers, people who again are potential major donors, create pitches for elements of their campaign.

Eric Javier: So we put the onus on volunteers and donors. You help us sell scholarships, how would you pitch this to a panel of investors and why should we fund your idea maybe over someone else’s idea? So we broke up the committee into maybe four different groups. There were four elements of the potential campaign. Had people do a shark tank. They had a lot of fun. But what ends up happening is you get the language.

Sarah Durham: I bet you get great- cause they’re saying it in their own words. That’s awesome. All right, well Eric Javier, thank you so much for joining me.

Eric Javier: You’re very welcome. Thanks for having me.

THE SMART COMMUNICATIONS PODCAST IS HOSTED BY SARAH DURHAM, CEO OF BIG DUCK AND PRODUCED BY MARCUS DEPAULA. OUR MUSIC IS BY BROKE FOR FREE.