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Risk vs. Reward in Fundraising

by the Nonprofit Risk Management Center

The goal of nonprofit risk management is to maintain the public trust. For most, if not all nonprofits, a major functional area is fundraising. An important responsibility of nonprofit leaders is to ensure that appropriate resources are devoted to fundraising and other development efforts, and that steps are taken to ensure adjustments based on actual results. These goals must be managed with an understanding of the consequences—often in terms of public or watchdog perception—of appearing to devote excessive resources to fundraising expense.

Rather than waiting for others, consider taking the following steps:

1. Evaluate the nonprofit’s track record and reputation with its principal funders. Does the nonprofit regularly adhere to funder requirements and deadlines? If not, what changes are required to ensure greater accountability on the part of the staff members who are assigned responsibility for meeting funder paperwork requirements?
2. Evaluate the process used to ensure that donor restrictions, requests and special needs are addressed in a timely fashion. What grade has the nonprofit earned with respect to fulfilling promises, communicating difficulties and challenges openly, and maintaining lines of communication with donors? What is the nonprofit’s track record with regard to acknowledging its failure to achieve campaign or project goals or meet other deliverables specified in grant proposals or funding requests?
3. Review marketing and solicitation letters to make certain that they are clear and unambiguous about the manner in which donations will be spent—for operating expenses, to fund cash donations to needy clients, to support the purchase of new equipment for a recreation center or for other purposes. Make certain that all written fundraising materials are accurate and free from any potentially misleading information.
    

This article was written by the Nonprofit Risk Management Center (NRMC). NRMC is a MCN partner and provides training, technical assistance and informational resources for controlling risks that threaten a nonprofit’s ability to accomplish its mission. For more information about all of MCN’s partners and discount programs for members, visit Cost Saving Programs for MCN Members.