A question we hear a lot: If we hire a director of development, how long before that position pays for itself?
Typically, the question comes up after a nonprofit has secured funding for a development director for a year, or when an organization has adjusted its budget to fund the position.
Either way, the question reveals a common mistake: making the assumption that funding is the biggest consideration when adding a DoD. That mistake often is compounded by a second mistake: creating the position with short-term funding. Either mistake (and, certainly, both together) can doom a development director before he or she even takes the job.
Certainly, funding is a legitimate concern, but other matters must be considered when hiring a director of development. Ask yourself the following questions to determine whether your organization is truly prepared to make the move.
Are we willing to spend time and money?
As a nonprofit, you know you have to dedicate time and money to delivering programs — otherwise, you have no case for philanthropic support. Are you prepared to commit those same resources to raising money?
Before you answer "Of course," be aware that when considering time spent on fundraising, you have to do more than simply count the hours devoted to development. You should also consider how that time is spent. Which fundraising activities absorb time? Special events? Donor calls? Direct-mail appeals? One-on-one donor visits? Identifying the multiple tasks involved in development — and balancing the time required for each them — is crucial to effective fundraising.
As your organization makes its assessment, it is important that everyone understands where your philanthropic dollars come from and distributes their time accordingly. For example, while many people assume that institutions are the primary supporters of nonprofits, the truth is that individual donors account for 85 percent of philanthropic giving, while 11 percent comes from foundations and only 4 percent from corporations. That suggests, in turn, that organizations which devote a lot of time to writing proposals and pursuing grants from foundations are likely to be disappointed.
Is our board engaged in fundraising?
Too many organizations ignore a simple fact: Fundraising success requires a board that's fully engaged in the fundraising process. Is yours? Or does it view fundraising as a staff function? Even if your board is engaged, does it really understand fundraising? Does it have a development committee to oversee fundraising activities executed at the board level? Or does the board expect the staff to perform all fundraising functions and simply report on its activities at board meetings?
Not only does board participation in fundraising improve the odds of success, it also serves as an indicator of your organization's overall fundraising maturity. If your board is engaged in development planning, executes its part of the plan, has the tools it needs to participate, and receives support from the staff, then you probably have a well-designed, well-functioning development operation. And if that's the case, you're probably ready to bring on a full-time fundraiser.
Do we have a plan?
Nonprofit organizations that have a clear vision of where they're going usually are able to make a more effective case for philanthropic support. That's why a strategic plan is integral to fundraising success.
But a strategic plan alone won't ensure success; you also need a written fundraising plan that outlines the techniques the organization plans to use, when they will be deployed, who will be responsible for their execution, and how the results will be evaluated.
As you put together a plan and supporting budget, don't forget one key matter: budgeting development funds beyond the salary of the development employee. This often gets overlooked despite the obvious need to "spend money to raise money." Too often, an organization will add a development professional but fail to support that professional with the funds needed for essentials such as fundraising technology and collateral materials. Donor records must be kept, gifts recorded, information tracked, mail-merge files created, and thank-you notes generated. Without those tools, no development professional is likely to succeed.
Have we considered existing resources?
Sometimes organizations thinking about hiring a development professional overlook a key resource: current staff. For example, the executive director might be an ideal fundraiser if only he or she weren't burdened with so many administrative responsibilities. A thoughtful review of senior staffers' duties may prompt a reassignment of duties that enables the ED to focus a little more on fundraising and a little less on program delivery.
Of course, an organization-wide audit of the staff may also uncover people with the skills needed to either fill a full-time fundraising position or pick up duties that allow others to devote more time to fundraising.
Have we reviewed our results?
An analysis of an organization's fundraising results can be helpful in crafting expectations for its fundraising going forward. What percentage of annual revenue comes from individuals compared to corporations or foundations? If your greatest long-term opportunities lie with individual donors, then it will take more time to build an annual fundraising program that can sustain your organization. If your board doesn't understand this, its members will quickly become frustrated with the pace of progress.
Of course, if the answers to all these questions suggest that you should, indeed, hire a director of development, you still have other matters to consider.
The job description
You should never hire anyone before a job description for the position is created. "Director of Development" means something quite different at a small human services organization than it does at Harvard. Will the person primarily be responsible for running an annual campaign from the ground up, or is the organization in the middle of one that needs a boost? Does the fundraising plan consist mostly of mailings and events? If so, will the person in the new position be expected to continue that approach or take your organization's fundraising to a new level? How will the person in the position interact with the board?
Salary and benefits
Also worth discussion are the salary and benefits being offered. Salaries vary in different parts of the country and according to years of experience in the field, and a higher salary does not necessarily equate with results. As a point of reference, refer to the annual salary survey conducted by the Association of Fundraising Professionals. Although it does not delve into actual job descriptions and responsibilities, the survey does provide some sense of the range of salaries for fundraising positions around the country.
Clearly, the decision to hire a full-time fundraising professional is not simply a dollars-and-cents issue. It's about whether an organization is fully prepared to take that step. If it already has a solid fundraising culture and understands what it needs from a full-time fundraiser on staff, it is more likely to develop realistic expectations about the position.
And that bring us back to our original question: "If we hire a director of development, how long before that position pays for itself?" Sophisticated organizations know that the answer might be "Never!" But if they're ready to step up to the next level, they'll hire one anyway.
A Quick Test
Achieve has guided several clients through the process of assessing whether they are ready to hire a director of development and has created the following checklist:
You are not ready to hire a director of development (and, if you do, you're likely to be disappointed with the outcome) when:
- Your board is not engaged in the process and views fundraising as a staff-only responsibility
- You have no real strategic plan
- Fundraising from individuals comprises 25 percent or less of your total revenue
- A year of salary and benefits for the position exceeds your entire fundraising budget
You might be ready to hire a director of development when:
- Your board members are engaged in fundraising in multiple ways
- The entire organization is committed to building a solid donor base
- Funding for the position is available on a multi-year basis
- There is real interest within the organization to adopt multiple fundraising strategies
- Your programs are stable enough that the staffing model lends itself to having additional staff positions assist in fundraising
You are ready to hire a director of development when:
- Funding for the position is not in question and is sufficient to attract a qualified person
- The vision is to build on an existing fundraising program
- The board is fully supportive of the hire
- You have a well-crafted job description against which outcomes can be measured
To determine whether your organization is ready to hire a director of development, download our podcast and/or take our assessment survey at: http://www.achieveguidance.com.