The band festival was just concluding. The last band had marched out of the performance area and was enjoying hamburgers before boarding the bus for the drive to their hotel. The full stands were emptying out, and the event committee members were ecstatic, patting each other on the back and giving each other high fives. They had nailed the event! Everything went off like clockwork, and all three shows were sellouts or near sellouts. Fabulous, right? Well actually, although no one knew it at the time, the event had just lost the host organization $75,000. How could this be?

  The problem was that the organization (at the time) did not use total program costing and, as a result, they really did not understand and appreciate all the costs that went into their event. The organization in question was structured into a series of committees. Some of the committees were event committees and some were support committees which provided logistical support for multiple event committees. The organization's accounting system, like many smaller organization accounting systems -- both in the for-profit and nonprofit arenas -- was good only at tracking specific line items within the budget. So at the end of the year, the system would tell the committee chair how well he or she had done against the total assigned budget and how much in total had been spent in the aggregate on particular line items, but it did not break down the line item costs on an event-by-event basis. Moreover, it had no way of combining the expenses of several different committees into one event budget.

  The result in this real life case was that the event committee and the organization's leadership were oblivious to the costs absorbed by the support committee, and the accounting system was unable to assemble all of the costs associated with the band festival.  

When the organization finally developed the capability capability to do total program costing, the leadership was stunned to find that this event and several other events which had been considered cash cows were actually losing money.

   Just because your organization doesn't do committee based budgeting doesn't mean you don't need to watch out for the problems related to total program cost. The typical accounting system used by nonprofits consists of a chart of accounts (line items). As expenses are incurred, they are coded against these line items. The system tracks these line item expenses over time, and at the end of the year you get the total expenses in that area. But unless you recognize the need for total program costing, you may not have expenses coded against specific events or programs. Let's take a look at another case, this time hypothetical, where this could adversely affect your organization. (READ MORE) 

In 2010, there were over one million public charities in the US. What they have in common are things like being able to provide a charitable tax deduction to donors, an ability to ask for and get a grant from a private foundation, boards that are supposed to govern and ensure fiscal stability and, typically, a mission that by definition is not self-supporting. By that I mean, in the private sector, the products or services a company sells supports the entire business structure, in the nonprofit sector, our streams of revenue are quite different.

  In fact, in the average, only 45% of support for nonprofits comes from fees and services. The government provides another 32%. Government grants account for 9% and charitable giving is about 20%.

   Charitable giving-despite what many believe-comes largely from individuals. In fact, over 80% --about 75% from living individuals and 8% from those no longer on this earth, via bequests. Private foundations account for around 14%--though more and more and more of these foundations are what we call "family foundations" and don't actually make grants as give gifts. Those foundations typically do not ask for grant proposals-in fact, they don't accept unsolicited asks. My sister, for example, has a family foundation and the only way to get something from that foundation is to get to know my sister and get her to become involved with your organization. Something that-trust me-is not easy to do.

   The other 3% comes from corporations, but as many of you know very well, corporate dollars are shoved into many different pockets and you may be getting the bulk of your support from them.

  Getting charitable gifts-fundraising and grantwriting-is a process. And that process is the same for individuals, corporations, or foundations. It is what you do when you are asking large numbers of prospects-those you believe can and would support your organization or cause-for smaller, regular gifts, or much fewer individuals for larger, more singular gifts.

  Before you do anything, your first step must be to build your case.

The case statement is an internal document that clearly sets out who you are, your mission and purpose, how you go about meeting your mission-your programs-and the difference your organization makes in your community. It is the document from which all your fundraising efforts grow.

   As you take this case outside of your organization-through grants, collateral materials, as you cultivate, solicit, and steward prospects and donors-you will begin to discuss the impact the gift or grant will have. In other words, you will move from an organizational centered attitude to a donor or funder centered one.

  Once you have your case, a good next step is to consider the resources you have on hand in order to fundraise. Successful fundraising organizations have a few things in common:

• Have clarity about what they are doing
• There is agreement about the purposes for which funds are being raised
• There is also an understanding that fundraising is important (as well as sometimes urgent)

• The necessary resources for fundraising are provided
• A Board that understands its roles and responsibilities--including giving and getting gifts
•  Appropriate staffing so that gifts and grants can be secured

• Fosters a culture of philanthropy
• In the organization
• And in its outside communities.

• Is consistent in its fundraising efforts

Once you understand what you are raising funds for, have your case set, and know what your resources are, the next important step is to understand where you are, where you want to go, and what would be the right mix of fundraising techniques to get you there. (READ MORE)