5 Steps to Budgeting for a Successful Fundraising Year

5 Steps to Budgeting for a Successful Fundraising Year
Date Published
Debbie Merlino

A budget shouldn’t start with a spreadsheet. It should start with a plan. A projection without a strategy is just a wish. Follow these 5 steps, and your next budget will be built on a sound foundation sure to lead you into a successful year of fundraising.

Step 1: Evaluate past performance and complete a SWOT analysis.

Before you can prepare a budget for the next fiscal year, you need a clear picture of past performance, as well as year-to-date results and how that compares to projections. Results reports should be broken down by technique (direct mail, online, telemarketing, etc.) as well as by audience segment. Share these reports with the entire development team and perform a SWOT analysis – identifying your program’s strengths and weaknesses as well as future opportunities and perceived threats.

Step 2: Discuss key questions.

Before you open even one Excel spreadsheet, you need to understand the context in which your budget will be viewed. This is the time to invite all stakeholders to an open discussion about the year ahead and discuss the following key questions:

  • Has your donor file been growing, shrinking, or remaining flat?
  • Given the choice between generating more dollars or more donors, which should you choose?
  • Is your goal more gross or more net revenue?
  • Will the next year be one of increased investment? Rebuilding? Or retrenching?
  • How will you – and your boss – measure success?

Only after you have answered each of these questions are you ready to start building your budget.

Step 3: Develop a fundraising plan and initial budget.

Your fundraising budget should include details for each campaign, including activity dates, projected revenue, and expense by technique, as well as audience segmentation strategy and suggestions for testing.

Step 4: Continue to refine the budget (and plans) until you balance adequate growth with expenses.

Everyone wants to raise more money while spending less, and understandably so. But instead of an approach that focuses on the expense line, start by evaluating performance.

Focusing on expenses will prevent your team from bringing you new ideas – ideas that could elevate your fundraising program. In addition, a focus on cutting costs could lead to a year of inexpensive – but ineffective – fundraising. Cost cutting will often result in drastic reductions in new donor acquisition, which will ultimately undermine the future health of your program.

Instead, focus on opportunities for increasing revenue. How can you generate more gifts per donor or a higher average gift? Acquire more new donors? Donors are a valuable asset. Invest in them wisely.

Step 5: Determine which key metrics you’ll monitor throughout the year and develop the appropriate reports. Be prepared to make mid-course corrections.

The development team should regularly monitor the following compared to the prior year and to budget projections;

  • Results by campaign
  • Results by audience segment
  • Results by technique

By having revenue targets for each activity, monitoring results, and reporting on your findings, you’ll be able to objectively measure the success of your plan and make data-driven decisions about future activities.

Of course, you’ll need to be prepared to make mid-course corrections – especially if a technique or segment is underperforming compared to expectations. But by embarking on a collaborative process, being transparent, and including key stakeholders early in the development of your plan, you can more easily work together and determine what alternative measures may be utilized to still reach the finish line: that all-important number.

Debbie Merlino
About the Author:
Debbie Merlino
President, Agency Services

As President of Agency Services, Debbie is responsible for overall client satisfaction. She works to ensure AFG’s winning strategies are being shared throughout the organization for the benefit of all our clients. Debbie is frequently out on the road sharing insights with others and listening to your challenges so we can develop solutions.

What excites you about your work at AFG?

I get to meet the best people and hear their stories. Hardly anyone says they planned to work in development. Learning how our clients found themselves in this profession and hearing the stories of the people they serve is inspirational.

If you weren’t at AFG, what would you be doing?

Attempting the life of a freelance journalist, working in a bookstore, and/or doing a podcast for my own enjoyment.

What are your hobbies/interests outside AFG?

Making people laugh. It’s thrilling! Especially when done purposefully and I’m on stage ; ) I also enjoy yoga and a well-crafted cocktail.

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