Six Ways Your CFO Can Boost Your Fundraising Success

What can your financial team do to strengthen the development pipeline? Plenty! By incorporating some of the same principles of smart financial management into your fundraising process —a disciplined forecasting process, for example — your financial leadership can help your development team meet its 2010 goals.

For executive directors, this approach may be a missing link. Four of five EDs who responded to our recent survey identified “expanding fundraising and development” as a top financial priority for 2010. If it’s a priority for you, too, consider taking these actions now:

1) Make sure your CFO and development staff work together. They should meet at least once a month, or every two weeks if cash is tight, to review the development pipeline and update the revenue forecast. Your CFO should ask questions about progress on all current fundraising activities. Have proposals been submitted? Meetings been scheduled? Sponsors been confirmed? One of the CFO’s roles is to complete the “due diligence” on the forecast to make sure it’s achievable. Think of these meetings in for-profit terms: they’re part of your sales management process.

2) Focus on revenue forecasting. You can do this by translating your fundraising activities into an accurate forecast report. You can request our Revenue Forecasting Tool that adds a forecasting piece to the traditional spreadsheet that most nonprofits use to track fundraising workflow. It categorizes activities as “confirmed,” “likely” and “prospective,” and differentiates between operating and restricted revenue so your development team knows where to concentrate its efforts. From a financial management perspective, this is more accurate and makes the entire pipeline more transparent and manageable.

3) Avoid the “best case scenario” trap It’s natural to hope for the best. After all, this is the nonprofit sector — we’re optimists! However, resource development and revenue forecasting are disciplined processes based on attainable results. So while your CFO should encourage your team and keep enthusiasm high, keep numbers realistic by using probability percentages to discount expected revenue, based on where your organization is in the development process

4) Exploit your funding niche. Do more of what you’re good at. Much more. For example, if your funding comes primarily from foundations, reach out to more foundations. Your proven track record of performing on grants can go a long way and, from a back-office point of view, you’re already experts at grant reporting processes and procedures. This rationale applies no matter what your niche.

5) Hire development staff with the expertise you need. Think strategically about who you should add to your development team. Choose professionals who can raise the budget you’ll need in 3-5 years, says the national nonprofit search firm Commongood Careers and authors of Ask the Expert: Best Practices for Hiring Development Staff, a guide prepared exclusively for Beyond the Bottom Line. And if you have three or more people in your development department, make sure new hires are specialists with experience in your current fundraising priorities. This is not the time to hire another generalist.

6) Show off your fiscal stability. Donors need to know you’re well managed. Timely statements, clean 990s, a strong efficiency rating from Charity Navigator ... all these support the position that you’re a solid organization worth funding. Have your CFO prepare a succinct “Financial Overview” document that highlights your financial strengths. This will inspire donors by showing your financial leadership pays close attention to the numbers and your organization delivers on its promises.

It cannot be overstated: a disciplined financial management approach will impact your fundraising success. When your financial and development teams work together effectively, you get solid reporting, achievable forecasts and the kind of strong financial management that attracts and retains committed donors. It’s all about teamwork in 2010!