Growth yields the greatest impact.

Dear nonprofit leader, “overhead” is not a bad word.  If wisely invested, it can be a powerful tool that enables you to honor your donors’ gifts at the highest level of return.

We owe it to our donors to carefully, thoughtfully, and efficiently use their gifts in the ways they intend them to be used.  We also owe it to our donors to invest in a healthy growing donor base so their gifts can be combined with other donor gifts to make an even stronger impact for the cause they hold dear.

Consider the following two donors.  Which gift has the greater impact?

Donor #1: Gives $100 to Charity A, $90 is spent on services.  Only $10 is used for administrative and overhead costs.  Her $90 is combined with ten other donors for a total community reach of $900.

Donor #2: Gives $100 to Charity B, $80 is spent on services.  Only $10 is used for administrative and overhead costs, but an additional $10 is invested fundraising strategies.  Because of growth, her $80 is combined with twenty other donors for a total community reach of $1,600.

On the surface Donor #1 may feel better about her higher “efficiency rate,” but Charity A is not making a greater impact in the community as compared to Charity B.  Charity B is “only” using 80% of donor gifts on services, but overall, they are making a stronger impact by reaching more donors and thus raising more funds.

The power of reach and impact is in a growing donor base, not in lower overhead costs.  Yes, it can be said this example oversimplifies real life scenarios, but dear reader, not by much.  You cannot grow unless you invest part of your donors’ gifts back into fundraising to reach more donors.

The problem is that donors do not know how to ask all the right questions.  They will ask a charity, “What percentage of my money is used to carry out services and programs?”  That is a fair question to ask, and must be answered directly and honestly.  But if you only understand nonprofit management and fundraising from this standpoint—keeping costs as low as possible to maximize short-term efficiency—you miss out on your real potential as a charity and in realizing the possible highest return on your donors’ investments.

The correct question to ask but one you will most likely never hear, “What percentage of my money are you reinvesting into effective fundraising programs to help maximize the impact of my gift?”

While your donors may not know to ask you all the right questions, they do not want you to stop investing in the name of “lower overhead.”  In their hearts, they want you to further their gift by increasing the number of donors, so the impact of their giving can be maximized for the cause they love.

Don’t be afraid to invest and grow.  Your growth is the best way to honor your donors.  Growth brings the highest return on your donors’ investments.

The promise of a greater good is fulfilled in growth.

The Nonprofit Excellence Group is a consulting and marketing agency for nonprofits.  Give us a call.  We’ll help you put better ideas at work to help you more deeply connect with your donors.