DMA Nonprofit Federation Announces New Fundraising Principles
- Management and fundraising costs are a normal part of doing business.
- Investment in fundraising strategies may not pay off until future fiscal years. Therefore, efficiency measures of a fundraising program can only be based on the organization's overall program and not on a discrete campaign's cost ratio. Analysis should be conducted over a financial reporting period or longer. Reporting metrics may include, as examples: the cost to raise a dollar, cost to acquire a donor, long-term donor value, and net revenue available for the organization to spend on mission delivery.
- Most donors give unrestricted financial support, and funds will be used to best meet the needs of an organization. When donors give restricted or designated funds, a nonprofit organization must ensure the donor's intent is honored and manage the funds accordingly.
- Most stable organizations have diversified sources of funding - each with its own cost of fundraising ratio. Taken in total, in accordance with generally accepted standards, a nonprofit should spend a majority of its annual revenue on program. A nonprofit's effectiveness is best measured over time and on a combination of mission, impact, financial stability, and growth.
- In order to provide the most accurate understanding of how contributions are used, circumstances may compel a nonprofit to allocate joint costs that include fundraising and/or to perform valuation of gifts in kind. These are legitimate and commonplace aspects of financial reporting, are subject to audit and GAAP accounting standards, and are reported on a nonprofit's IRS 990.
Contracting with Agencies, Consultants and Suppliers
Contracting with external agencies, consultants, and suppliers is often the most cost-effective means of accessing fundraising expertise. Written agreements need to be in place. At minimum, these should include documentation about payments due, what the nonprofit is getting, and the ownership rights of donor information and materials produced for a fundraising campaign: