Category: Ask

My last post was about why sharing a shortfall with your donors is good for revenue and your relationships with donors.

That’s a challenging, counter-intuitive idea.  So because we humans learn through stories, let me share the story of how one nonprofit navigated their shortfall situation.

Here’s how it went…

Opening Up to a New Idea

Years ago, a nonprofit we were serving let us know that they had a $500,000 shortfall as they approached the end of their fiscal year. 

We recommended that they share the shortfall with their donors by running a shortfall campaign. 

The conversation that followed went through the standard steps that most of these conversations go through…

First, they told us that sharing their shortfall was a ridiculous idea.  They shared that their organization is a pillar in their community.  They were worried that making the shortfall public would negatively affect their brand.  They were worried that donors would think the organization was a bad steward of their gifts.  They were worried that – even if some donors gave a gift to help – that overall it would cause more donors to stop giving to the organization.

We listened.  And then we shared that we knew from experience, having run 60 to 70 successful shortfall campaigns, that their donors would give generously if the organization included the shortfall in their messaging.  And we shared that, in our experience, the organization would not suffer any of the negative consequences that they feared. 

Feeling slightly warmer to the idea but still unconvinced, they said what most organizations say at this point, which is, “Well, there’s no way that will work with our donors because [REASONS].”  The reasons tend to be things like, “Our donors are different than other donors” or “this won’t work because all our donors know our founder” or “our donors are professionals and won’t fall for this” (as if there’s something to fall for?!?) and, my personal favorite, “all our donors are from [location] and people from [location] don’t like things like this.”

So we said, “We hear you and acknowledge that these are real concerns.  Could we share an example of a shortfall campaign from an organization similar to yours?  It worked well for them and we think it would work well for you.” 

They replied, “Yes we’d love to see the example… but we have to tell you that our boss isn’t going to like it.” 

So, I had a warm conversation with the Director of Donor Development.  She was open to the idea, found our experience persuading, and decided it was worth talking about. 

This leads to the final step, which is moving up the chain of command to have a conversation with the VP or ED/CEO who can make the final decision.  In this case, I spent an hour on the phone with the VP of Philanthropy.  She’s a brilliant woman and had all the concerns mentioned earlier – in part because she was very good at fundraising and had never experienced a shortfall before.

I talked her through several shortfall campaigns I’d been through.  I shared all the positive reasons that donors respond to shortfalls.  I shared results of previous shortfall campaigns compared to standard results. 

It was basically an hour-long counselling session.  People in Fundraising tend to have deeply held beliefs about what their donors will and will not respond to.  And I was warmly sharing some data that challenged this person’s beliefs.  There were hundreds of thousands of dollars on the line, and relationships with very large donors, so we talked it all the way through. 

The VP of Philanthropy bought in, and then met with the Board to get approval.  After much discussion, the Board nervously decided to try it. 

The Campaign

It was time to get to work.  Here’s what we did:

• We planned out a 6-week campaign that ended when their fiscal year ended.
• The campaign had two direct mail letters, 8 emails, and phone calls to major donors.
• I wrote up talking points about the shortfall.  These included how the shortfall happened, what the consequences would be if it wasn’t erased, and what the organization was doing about it.
• The talking points were distributed to the Board, to Major Gifts Officers who were calling major donors, and to the people answering the phones. 
• I wrote the direct mail appeal letter that kicked off the campaign.  We used the thinking and messaging in the letter to craft the follow-up letter, the emails, website copy, and giving page copy.
• The messaging was clear and to the point: through no fault of their own, the organization was facing a $500,000 shortfall.  We shared what would happen if they couldn’t erase the shortfall.  We shared the good work the donor’s gift would help make possible.  Then we asked the donor to send in a special gift to help erase the shortfall.

The people were prepped.  The letters were mailed.  The emails were sent.  It was time to see what happened…

The Results

Their fiscal year-end campaign normally raised about $150,000, and our campaign raised about $650,000.  That’s an “extra” $500,000 that effectively erased the shortfall.

It doesn’t always work out that perfectly, but it does more often than you’d expect.  The major donors who get involved often want to know how much is needed to reach the goal.  They will often stretch their giving to help you reach the target number.

In addition to the overall success, there are few numbers I’d like to highlight:

• The response rates to the direct mail and emails were notably higher than average.
• Their average gift sizes were higher than normal.
• The organization had about 100,000 donors at the time, and they had a total of five donors reach out to them to ask about the shortfall.  Five!
  • Two of the five people who reached out were Board members who had already been briefed on the shortfall.  (Yes, that is as ridiculous as it sounds.)
  • In the five conversations, after hearing more details about what was going on, two of the five people gave a gift on the spot.

In addition, none of the feared negative consequences came to pass.  This shortfall was a few years ago, and the organization now has about 25% more donors than they used to.  Their major gifts program is going great.  They’ve also successfully funded a significant capital campaign.

Their brand was not tarnished.  Their standing the community remains strong.  Their donors did not leave in a thundering herd.

The Lesson

This whole thing is a lesson in the power of vulnerability.

The organization was vulnerable and courageous enough to share the shortfall with their donors.  Their donors responded generously, and were pleased to help the organization in their time of need.  There were no negative consequences to speak of. 

The organization has a deeper appreciation of their donors than ever before; the organization needed help, and their donors answered the call.

All of this is to say, if you have a shortfall don’t be afraid to share it with your donors.

Here’s a “hot take” for you:

If your organization has a shortfall, I encourage you to share it with your donors.  Sharing it will be good for your fundraising and donor relationships, both in the short term and the long term.

I know that sounds absurd to many people.  But this is a data-driven position.

Sharing a shortfall with your donors is a scary idea for many nonprofits.  Doing it usually requires a big shift in thinking.  So this is a longer post than normal.  I’m going to explain what we’ve noticed about three things:

1. Why sharing a shortfall seems like an obvious bad idea
2. The results when nonprofits run shortfall campaigns
3. Why we think shortfall campaigns work so well

We want you to get past the fear because of what’s on the other side…

“There’s no way this is a good idea”

Let’s start by talking for a moment about why sharing a shortfall feels somewhere between dangerous and dumb.  Here’s what “common sense” tells you about sharing a shortfall with your donors:

• It would reflect poorly on your organization and your brand.
• It will look like you’re bad at managing money.
• People won’t give.  (After all, if they think you are bad at managing money, why would they give you another gift?!?)
• Even if sharing a shortfall somehow brought in a bunch of money, there will be negative consequences in the future that will far overshadow any revenue that comes in now.

Furthermore, no one likes how it feels to send out a shortfall message.  Everyone working at the nonprofit, or leading the nonprofit, or on the Board will feel like the shortfall reflects poorly on them.

All of this makes sense.

And let’s add one more layer: no one ever talks about the results of their shortfall campaign.  Have you ever been to a conference where a fundraising professional was up on stage talking about how well their shortfall campaign went?  Nope.

There’s so much shame around this that no one talks about it.

Then we add the branding and marketing folks who don’t really understand how vulnerability is such a big part of fundraising success, and they actively push back on mentioning that the organization has a shortfall.

So we’re in a situation where people think shortfall campaigns are a bad idea, no one likes them, and no one talks about the results.

But in my experience, the vast majority of people have never seen the results of a shortfall campaign.  They just aren’t aware that…

Shortfall Campaigns Work Great & Don’t Have Negative Consequences 

This idea is so counter-intuitive that, until you have experience with multiple shortfall campaigns, there’s almost no way you’ll believe it.

But it’s true; fundraising campaigns that focus on helping an organization overcome a shortfall work great.  And they do not cause the negative consequences that people fear.

I estimate that I’ve helped on between 60 to 70 shortfall campaigns.  They’ve been for organizations of all different sizes and in all different sectors.  Here’s what happens:

• Donors respond in droves.  The letter / email / campaign is usually the second-highest fundraising campaign of the year, behind only the year-end campaign.  Often it’s the best campaign of the year, or the best campaign the organization has ever run.
  • The response rates are higher than average, the size of gifts are higher than average.
• The feared negative consequences do not happen, either in the short term or long term.  I’ve measured; they don’t happen.
  • I can’t emphasize this enough: in 30+ years of fundraising and measuring results, I have never seen a reduction in long-term giving or retention rates as a result of letting donors know you have a shortfall.  All of the things we fear – donors leaving in a thundering herd, donors complaining to the Chamber of Commerce, donors telling all their friends not to give – just don’t happen.
• There will be five or fewer conversations with concerned donors or Board members.  And when the situation is explained to them, about half of them will give you a gift on the spot and be happy they did.

Notice I’m not saying, “shortfall campaigns always raise enough to erase the shortfall.”  I’m saying that they always raise quite a bit more than an organization’s “standard” fundraising, and don’t have the negative consequences that people fear.  And the campaign will erase the entire shortfall more often than you think.

Those are the numbers.  Water is wet, the world is round, shortfall campaigns work great.

“I still don’t believe you… but if I did, how is this possible?”

I’ve thought about this a lot.  Here’s my take on the powerful mix of reasons shortfall campaigns raise so much more money than an organization’s “regular” fundraising.  And I suspect that, even though you might not totally believe my main thesis yet, you’ll look at this list and see how it makes sense:

• Your donors care about your organization, and about your beneficiaries or cause. 
• Donors do not want your organization to be forced to reduce services.  And they know that’s what can happen when there’s a shortfall – you’ll have to cut programs or staff.
• Donors quickly understand the problem you’re having – all of us have had a “shortfall” of our own at some point in our lives.
• Humans respond to clear needs.  Witness the recent giving to help the victims of Helene and Milton.  And a shortfall is a clear need.
• Your donors know you’re a nonprofit.  They know you don’t have all the money, and they know that funding can be hard to come by sometimes.
• Oftentimes, when an organization shares a shortfall, it’s the first time they’ve Asked their donors in a way that makes it very clear that help is needed now.  The contrast between the urgent ask and the regular fundraising (“Things are going great, we’ve helped so many people, it would be lovely if you considered partnering with us”) makes donors see and feel that their help is needed now.
• Humans love to help, and helping feels good.

All of those ring true, right?

Put all of them together and you can begin to see why donors respond so generously when an organization shares that they have a shortfall. 

Should you go looking for a shortfall?  No.  Should you share a shortfall four times a year?  No again.

But when you have a shortfall, trust that your donors care, and share it with them.  You’ll be so glad you did.  Your donors will be glad you did, too, because they love helping you.

In my next post, I’ll share a story of an organization that had a shortfall, had all of the perfectly normal concerns about sharing that shortfall with their donors, and decided to run a shortfall campaign.