I’ve written a few posts now about the importance of having program and development folks get along and start to trust one another. So, I hope you are taking that to heart and forging those relationships. It’s a key to your success.
Today, I want to talk about the actual programs and projects that your organization or non-profit need to be funded. Let me ask, “How hard is it to have access to solid proposals for everything your organization does?” I mean, if one of your donors calls you and says he or she wants to know more about project X, would you be able to quickly get that information and understand how much is needed to fully fund that project?”
Usually the answer is no.
Let me tell you a story. A while back I was talking to a non-profit and asked them what they did. “We help homeless people find dignity,” was the answer. “Okay, that’s great, but how do you actually do that>”I asked.
The person I was talking to started naming all of the programs they have: after-school tutoring for children, a homeless shelter for women and children, transitional housing, a breakfast program for homeless children, and the list went on and on.
So, then I said, “Okay, now, how much does it cost to tutor children for a full year? What does it cost to run your breakfast program for a month?”
I got a pained look from them. “Well, I’m not sure…uh…if we add up the cost of food and beverage it probably is around $5,000 a month to run the breakfast program.”
“Well,” I said, “What about the salaries of the people you employ to run it, and the rent and the allocated portion of overhead for management?”
Sheer panic. “Well, we can’t include those costs in there. That’s why we have an “annual fund.”
UGH! …there are those two dreaded words again…”annual fund.”
Here is where I stop and help this good person understand that if you are going to tell donors what your needs are you need to do two things:
- Take your whole budget and break it down into all of the different projects and programs you do.
- Allocate all the organizational overhead costs proportionately to each of these projects. That’s right! I said ALL. And proportionately. We all know it takes overhead to run things – it is a legitimate program cost.
Don’t tell me major donors do not want to pay for overhead. A savvy major donor understands that in order to actually get any of these programs to work, you need a building, staff, healthcare, janitors and lights.
I’ve reviewed so many budgets that don’t include overhead that it makes my head spin.
I know this issue has been controversial in the past and there have been some really poor judgments by certain donors and Foundations that are shortsighted and don’t allow their gifts to be allocated toward overhead.
That is just plain wrong…and it’s doing our industry a huge disservice.
Hey, plain and simple, …if you want to know how effective a non-profit is, don’t look at their overhead costs, look at the impact they are actually making in their communities. That is what we need to be focused on.
Anyway, I’m getting a little worked up here.
The point is, you have programs and projects that match your donors’ interests and passions. But, you have to identify them, quantify them and then put them in front of your donors, making sure you include ALL the costs to actually run those programs.
Wouldn’t it be great if, the next time you get a call from a donor saying they are interested in one of your programs, you could give them 4 or 5 projects within those programs to fund at different dollar figures? And those dollar figures include overhead?
Of course it would.
You can do it. Sit down with your finance person right now and tell him/her what you want to do. After they get up off the floor, explain that your donors want to fund projects and programs, not some mission statement. Then, go through the painstaking process of figuring out all you do and what it costs.
Is it painful…yes. Is it worth it…absolutely!
Let us know how it goes. Or, if you need help, give us a call. We do this everyday for our clients.