Firm Financial Footing Essential Preparation for Campaign Success

"Never think you need to apologize for asking someone to give to a worthy cause, any more than as though you were giving him or her an opportunity to participate in a high-grade investment. The duty of giving is as much his or hers as is the duty of asking yours." — John D. Rockefeller, Jr.

It was a paradigm shift. There were so many worthy causes that were struggling.
All it would take was, to some, just a little bit of money to ensure their success.

Then, an early nonprofit and fundraising mentor rocked my world. "Why should someone make a major gift to an organization that doesn't have a stable track record or a high likelihood of survival?," he asked. "People want to be a part of a winning cause."

Wow ... so, success breeds success?

A key factor in our conversation on the importance of being prepared for a major campaign is financial stability. A gift to a worthy nonprofit is a high-grade investment. You wouldn't invest in a company that you felt was poorly managed financially (we spoke about the board and CEO's leadership role last week).

So, if you are looking at a major campaign, be sure that your financial house is in order. Consider these questions:

• What are your sources for philanthropic support and potential earned income?
• Do you regularly balance your budget? Do you have appropriate financial policies and oversight?
• Do you have operational reserves so that you are not surviving day-to-day or week-to- week?
• Is there an endowment or other stable source of income? Have you protected and managed the endowment well?
• Do you have financial projections on any new projects you are considering — cost to build as well as the cost to operate (and any resulting income projections)?

Some struggling nonprofits may argue that in order to do all of the above, they need more money. But proving your organization knows how to manage and steward donations — even if less than desired — is key to securing more support.

The media just reported that a high-profile arts organization that went bankrupt 20 years ago is on the verge of defaulting on its new building that was funded primarily through the gifts of one benefactor. The organization has been bleeding millions a year.

Yes, all it may take is an angel donor who is so attached to your cause that he or she will "save you" or take you to the next level. But how many major donors are making gifts to organizations that are not viable and do not have a track record of fiscal management and strength?

Another important aspect of fiscal strength is a board that will safeguard against inappropriate activities that can tarnish confidence among donors. Even if an organization has a strong bottom line, ethics will speak loudly. Like one nonprofit whose CEO made a grab for a large raise when he was cutting staff and freezing salaries - while his board nearly fired him (they should have), word of this ethical breech has planted the seed of doubt in the minds of donors.

Fiscal strength is one of the keys to being prepared to embark on a successful campaign. Make it your duty to be the worthy cause — both in deed and fiscal management — that prompts high-grade investments from potential donors.