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Why you should worry less about reducing overhead and more about delivering value.

Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

Fundraisers and donors are in a pickle.
They have been unfairly subjected to a broken system for decades. It isn’t their fault, but it is their problem.

Charities are saddled with extra pressure to meet formulas for how much they should spend to raise money. This policing of business practices stifles the actual mission.

Critics often preach that charities need to act more like businesses, but then they refuse to let them. In an effort to “expose fraud,” critics and watchdogs impose rules regarding what amount of overhead is considered allowable. The heightened scrutiny squelches innovation in fundraising strategies, because the innovation might fail and would then be viewed as a waste of donor funds.

Together we CAN change the paradigm with a focus on value.
I know, everyone else wants you to focus on overhead! You’ll hear that mostly among fickle low dollar donors, the media and the charity policing sites.

But when it comes to raising massive amounts of money, overhead doesn’t really matter so much. No! What matters is value (especially among major donors).

Think about it this way.
Do you drive the car that cost the least thanks to the manufacturer’s purchase of the cheapest materials? How about your vacation. Do you always choose the lowest priced hotel? And restaurants? Do you go to the restaurant that buys the cheapest ingredients? Of course not!

Why? You want value! You make your decisions by weighing the value you get for your money.

Your donors are no different.
And, the more they give, the less likely they are to care about your overhead in relation to how much they care about what they will get in return for their giving.

For goodness sake! It’s about making people feel good, not cutting overhead!! Make your donors feel good and they’ll care less about overhead. Trust me on this.

If a donor wants their name on a building, they’ll weigh the ‘cost’ against the value using an internal fulcrum.

If they want to find a way to satisfy their desire to find meaning in their life, who knows what they’ll pay to get it!

So stop worrying so much about overhead.
Of course you should aim to be fair and be a good steward of your donors’ dollars. But focusing too much on overhead (especially to satisfy the 80% of your donors that deliver less than 20% of your donations, the media, and the charity police) can actually harm your revenue goals and yield diminishing returns.

 

Related Posts:

>>How nonprofit organizations can provide more value to generate more revenue in 5 simple steps
>>The difference between goals vs. quotas for major gifts and planned gifts fundraisers
 

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