What would be useful for us to know before we initiate a development audit for our organization?

Don’t be intimidated by the “A” word! Auditing your development program can be an excellent way of taking a snapshot of your current fundraising activities and measuring your effectiveness against best practices. This evaluative exercise will provide qualitative and quantitative insights and increase understanding of your fundraising program’s strengths and weaknesses in order to get the best return on your investment. The dialogue that is inspired during the process helps raise everyone’s awareness, builds consensus, and will broaden your staff and volunteers’ ownership in successful development. The ultimate goal is to identify areas for improvement and strengthen your fundraising program. When changes are initiated, the benefit is increased revenues that support your mission and those you serve.

Why do an audit?

There are a number of reasons why you’d conduct a development audit. Maybe your organization is considering a capital or other special campaign and you want to take stock and determine your fundraising readiness. Staff turnover may instigate a time for reflection so you understand the development priorities and what skills you’d like to recruit in a future team member. Another reason may be to demonstrate transparency and accountability to your donors and funders. In previous articles I’ve also mentioned Canada Revenue Agency’s new Fundraising Guidance which could prompt a response. For instance, you may find — once your charity applies the principles of the Guidance — that your ratio of fundraising costs to revenue is more than you expected and you decide to explore that discovery more fully. Whatever the case, a development audit will help you understand what is and what could be as well as identify what’s reasonable and what’s possible within your organization’s capacity.

Who should conduct the audit?

There are pros and cons to conducting an audit internally. On the positive side, you already know the organization’s history, culture and ability to respond to opportunities. You have an understanding of the strengths and weaknesses of the program and people involved and you can save money by allocating staff time to do the research. Having said that, don’t be penny-wise and pound-foolish.

Having a consultant facilitate the process has its advantages. A fundraising expert brings an objective point of view and knowledge that your team may lack. Their time is dedicated to the development audit without routine distractions. They should be effective interviewers in order to draw out the collective wisdom from key players. They are trained to listen to subtleties and provide an analysis of your organization’s results against proven techniques. You can expect them to make informed recommendations on how your organization could improve its fundraising strategy and application.

Ideally, the consultant should have experience conducting development audits, or the sound judgment that a seasoned professional brings to the table. You want the tough issues identified in a direct yet sensitive manner. For instance, it would be difficult for a staff person to say a member of the organization’s board is having a negative impact on success but that being the case it needs to be identified with suggestions for handling the situation.

What information is required?

Whether you hire a consultant or not, you will still need a significant commitment of time and effort. The research is extensive, requiring input from select staff, board, volunteers, and donors answering a series of questions either one-to-one or in a focus group. In addition, a comparative analysis of your organization’s fundraising results, going back three to five years, is an informative reflection.

Check out fellow Canadians Guy Mallabone and Ken Balmer’s (copyrighted) questionnaire that examines eight key areas: Governance Environment; External Environment; Fundraising Track Record; Constituency Analysis; Program Maturity; Resource Availability; Fundraising Culture; and Donor Perspective. Each section asks ten questions and compares “Do we operate this way?” and “Should we operate this way?” They developed this audit tool to help charities with limited funds gain insights even if they don’t have the resources to retain an expert. If you find this useful, their new book, The Development Audit, is due out this month.

Another excellent source of information is US-based Simone Joyeaux, ACFRE (Advanced Certified FundRaising Executive). She is an excellent presenter at many fundraising conferences, is always a wealth of knowledge and very generous with her materials. Take a look here for a series of questions that can be asked to assess your development department’s strengths and weaknesses.

Hopefully, you have a software system that can generate important reports. Do you already understand the terms LYBUNT and SYBUNT? If so, we’re talking the same language and if not, they’re acronyms for Last Year But Unfortunately Not This and Some Year But Unfortunately Not This. Fundraising software helps you identify which of your donors are not renewing their gifts regularly, donation history of those who are, and comparative (year to year) analysis. Examining the organization’s fundraising income to expenses, budgeted projections to actual funds raised, the number of donors, and gifts from all sources are all telling indicators.

Depending on the depth of your study, a consultant would take an objective look at internal documents including the organization’s strategic plan and how the development plan dovetails. Is there an action list for donor cultivation and stewardship? The case for support should tell a compelling story that articulates your charity’s priorities. How does the marketing and communications strategy fit together with the case? What do the financial statements, audits and budgets tell? Staff job descriptions in the fundraising department compared to expectations and reality may also be reviewed.

Who has the answers?

The audit will scan the organization’s internal and external environment including donors, funders, vendors and even the competition. It helps to find out the strengths and challenges of similar organizations but remember you are never comparing an apple to an apple because there are inevitably varying elements, regardless of the perceived similarities.

In James M. Greenfield’s book, Fundraising: Evaluating and Managing the Fund Development Process, he states that “internal factors (such as board background and attitude) are easily recognized but hard to change. External factors — what the public thinks and believes about the organization — are more likely to affect results because they do change.” Generally speaking, the external can influence fundraising performance whereas internal factors affect fundraising success.

For a 360-degree perspective of your development program the following people or individuals selected from these groups would be questioned including the:

• Executive Director or CEO
• Development Director
• Development Staff
• Program Staff
• Board Members (particularly the Chair and those on a development committee)
• Major Donors
• Key Volunteers, Constituents, Clients
• Staff at Peer Institutions

 

What are the time and costs?

It depends! That’s always a safe answer but not a helpful one. However, it’s true because we haven’t established whether you are going to pursue this venture on your own or hire it out to an expert. Perhaps you’ll do a combination of the two. Consultants will have different fee structures and approaches they propose and you’ll have to compare and contrast their deliverables and make your selection.

The bottom line is, establishing your budget is step number one. If you put out a Request For Proposals (RFP) without providing an amount or range, many professionals won’t respond. They are often too busy to play a guessing game, potentially taking a day out of a frantic schedule to write a proposal, only to discover they’re out of the bidding because the organization hasn’t budgeted sufficient funds for the process.

According to Guy Mallabone, using the audit tool that he and Ken Balmer developed would enable an executive director or staff person to conduct their own assessment by distributing the questionnaires to a variety of key players. The audit could end there or a consultant could conduct a facilitated discussion with the board and/or senior staff to explore the gaps and brainstorm some strategies for improvement. He said this approach could contain your costs to somewhere in the $5,000 range.

Another tactic would be to delegate the whole exercise. Ketchum Canada Inc. (KCI) states that a full development audit can range in price from $25-$50,000 depending on the scope and intensity of the project. This information is in keeping with the mid-range of a US-based presentation that says to budget 10-25 days at $1,000 – $2,500 per day.

Review

To summarize, a development audit is a multi-faceted exercise that examines the organization’s fundraising readiness, what roles the board, staff and volunteers play in achieving your goals, as well as the systems and procedures that increase effectiveness and efficiency. In addition, it looks at how relationships with prospects and donors are cultivated and stewarded. The overall development strategy and results are assessed to ensure the organization has a diverse and integrated program.

According to Guy Mallabone, if the fund development audit is successful:

• “Leaders in your organization will develop a common understanding of the fundamentals and appreciate the need for continuous improvement and significant change;
• individuals responsible for fund development will be clearer on the areas that need attention — understanding the gaps between best practices and where you are today; and
• fund development teams will agree on how to modernize before becoming more competitive.”

 

With this information, you now have to decide what depth and breadth your charity will go to investigate your development program. Unearthing the details necessary for analysis is a treasure hunt that promises to pay dividends provided your team is prepared to be reflective and strive toward best practices.

Cynthia Armour is a freelance specialist in fundraising and governance. A Certified FundRaising Executive (CFRE) since 1995, she volunteers as a subject matter expert with CFRE International. She works with boards and senior staff to ensure that strong leadership will enhance organizational capacity to govern and fundraise effectively. Contact Cynthia directly at 705-799-0636, e-mail answers@elderstone.ca, or visit www.elderstone.ca for more information about her services.

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