Fundraising Fundamentals: Proactive vs. Reactive
In the competitive environment of NGO fundraising, understanding where you’ll get the best return on investment—based on understanding what approach your organization is most suited for—can often be the difference between keeping afloat and sinking. NGO fundraisers and programmatic staff tend to stick to what they have always done. Sometimes, you find that organizations don’t know how to make small shifts in focus, capacities and investments in order to realize the full potential of various approaches to generating institutional and programmatic funding.
From the perspective of an international NGO, successful fundraising or business development can utilize a number of different approaches, each with its own set of particulars. A proactive approach to fundraising can look like accessing funds as a result of successful implementation of marketing-based fundraising campaigns, donor visits involving a mix of tea time and information exchange, and the development of long-term relationships based on mutually beneficial goals and objectives. A reactive fundraising approach usually entails building an organizational structure that is flexible and adaptable, allowing you to respond quickly to donor calls for proposals that outline a project and its specific budget, timeline and set of deliverables. This approach is more often referred to as business development, although many might consider fundraising and business development synonymous. For the sake of this piece, let’s assume that is correct.
No matter the main approach an organization takes, a few things are certain. Successful fundraising requires a well-thought-out strategy, the appropriate resources (insert cliché: “It takes money to make money”) and, most certainly, stamina. Fundraising, in the world of international development NGOs, is a cutthroat, competitive environment, with many organizations that have similar technical capacities and objectives competing for the same monies. You not only have to understand what sets your organization apart, but also what it is best set up to do, given the requirements for success in your organization’s fundraising approach.
While some might argue that a successful fundraising unit needs to employ both a proactive and a reactive approach in order to be successful, it’s worth exploring whether the organizational structure, processes and human resources are more suitable for one or the other. So, what is needed to be successful in each?
While it would be impossible to state here all of the many elements an NGO needs in order to be successful in either approach (and keep in mind, these are not the only two approaches), a few tidbits on where an organization can focus its often limited resources will help organize and focus staff efforts, and hopefully lead to sufficient funding to continue work toward its mission.
The Proactive Approach
First, a proactive approach requires an organization to plan for the return on investment to be long-term. Often these returns can take up to a year or more to achieve fundraising targets. This fundraising approach asks the fundraisers and programmatic staff to develop, focus and prioritize their ideas and capabilities behind a strategy that targets where and with whom they need to form long-term relationships. As in all sectors of life and work, international development NGO fundraising is facilitated by tapping the network of donor-money decision-makers and implementing partners in your organization and your field, and working to find a common ground through which you can build a long-term, mutually beneficial relationship. Gaining an audience with the right people, understanding who they are, where they focus geographically, and how much and what funding each person is responsible for should inform your strategy.
The goal you are ultimately working toward is helping donors visualize how you are the right organization to help them achieve their objectives. Over time, the right consistency, patience, honesty and stamina can lead to both you, the mission-driven NGO partner, and them, the donor with strategic objectives, to find success in aligning and achieving your development objectives. When donors have money to spend on a program that relates to your organization’s mission and capacity, you want them to think of you first! There are many large donors, often with millions of dollars to spend in order to achieve huge impact. Investing in the effort to connect them to the populations they are assisting—while showing them how they can achieve their missions and objectives through working with you and supporting your activities—can help you to lock in and build on programmatically aligned successes in the short-term and long-term.
In order to achieve these results, organizations needs to have the right staff in place, with the contacts, network and connections required to identify and engage the right people. Once you are given funds to implement toward achieving specific objectives, sound project implementation is key to maintaining commitments, reputations and relationships with partners and donors.
Elaborating upon the up-front investment cliché, what NGOs need in addition to the right skills and contacts are investments in time, people and resources to support staff efforts. This is essential before results are realized. You need a budget to support staff time, travel, consultant fees, lunches and dinners, coffee and tea breaks, meeting space, and media and communication technologies. (At minimum!) Further, fundraising leaders and managers need to plan to free up staff time to invest in proactive relationship-building and organizational marketing campaigns. It is common for organizations to assign the same people doing the fundraising to implement the resulting project, which requires clear management of time and support for staff. Without proper time management, this critical resource—your staff—can become overloaded, inefficient and ineffective.
The Reactive Approach
Some say that success in fundraising starts and ends with the right relationships. So, what should you do if you don’t have the contacts or network needed to gain an audience of donor decision-makers and build those lucrative relationships? If this is the case, your organization might want to focus primarily on building its network, profile and place in the field with a robust, reactive approach to fundraising.
One word to describe this kind of approach to fundraising is “competitive.” Organizations just like yours, or with similar missions and capacities, are building up their programmatic and geographic capacities in order to respond to the competitively bid projects funded by donors. There is a finite amount of money, and an ever-growing number of organizations competing for that same money for their missions.
What do international development NGOs and fundraisers need to do to be successful when taking a reactive fundraising approach? Recognizing that the universe of successful elements cannot be accounted for in one short article, it is worth sharing a general overview of the approach.
Critical in accessing funds through a competitive bid process is that your organization has a competitive edge—something that other organizations with similar missions don’t have. Innovations, superstar technical thought-leaders and managers, strong processes and systems that allow your organization to respond rapidly to bids donors announce them (usually on a completely unrealistic turnaround time, such as three weeks or 30 days)—these are all examples of competitive elements that could set one organization apart from another. Understanding your organization’s competitive advantage, reinforcing it, using it to win, and making sure to keep it strong should all be priorities of your fundraising approach.
A strong internal bidding process is paramount to success in the world of competitive bid-tendering. Nothing kills success like a disorganized, poorly managed, multi-disciplinary team of well-intentioned development workers without proper guidance. Setting teams on a well-planned path—which maintains consistency and transparency along every step of the process and is rounded off by strong accountability structures and feedback loops—is critical for fundraisers to remain effective and nimble within the competitive environment of reactive fundraising. If systems and tools are in place, then the workers can work without getting bogged down in inefficiencies and confusion.
Another ingredient vital to success in reactive fundraising is having staff who can design well-rounded, responsive, innovative and competitive projects, and are able to articulate their design in a narrative—a proposal, concept note, expression of interest or grant application. While there might be heaps of well-intentioned subject-matter experts, not everyone has the design and conceptualization skills to be able to articulate their ideas against a budget, timeline and logical framework, and to do it better than the competition. Training, recruiting and retaining this caliber of professional is one element that will allow your organization’s reactive approach to fundraising to be successful.
When employing the reactive approach, each engagement with a donor, partner or government stakeholder should be viewed as an opportunity to expand your reach, set and maintain a positive reputation, and build a network of individuals through which key relationships can be built moving forward. Successful project implementation and partner relationship-management is as effective a fundraising method as any.
This is the path that delivers you from a reactive approach to a proactive one, where donors—with their underspent years—think of your organization to help solve their problem. Your competitive advantage, sound project-design and management all begin to bear fruit the day your phone rings, or an email pings in asking your organization to “let me know what you can do with X amount of money in X location” in your programmatic area.
There are many ways to succeed in fundraising. But understanding key elements of the proactive and reactive approaches might lead your fundraising teams to reflect on where your strengths lie—and how you can reach your targets.
Brandy Wood is senior manager for business development at International Potato Center, an NGO in Lima, Peru. An international development professional, she has focused for the past 13 years in business development and resource mobilization. At the macro level, she works with nonprofits and for-profits to help them achieve their fundraising goals through the development of sound projects and programming, designed to achieve maximum development impact