The non-profit director’s role in fundraising
By Fermin Diez
The Business Times, 2 December 2016
Directors on the boards of non-profit organisations (NPOs) often face a challenge their counterparts on commercial boards do not: fundraising.
Many are surprised by it, believing that they had agreed to serve on the NPO because of their skill sets, their resonance with the mission of the organisation, and often, because he or she is known to the existing board members. Some are chagrined by the prospect of having to dig into their pockets to help in the cause.
Those who are experienced for-profit directors and doing their bit for charity by being on a non-profit board are even more surprised when asked to take on fundraising. This is because when there is a need to raise funds or capital in the private sector, the company’s management and, sometimes, a plethora of investment bankers and lawyers are there to get the job done.
Yet, the reality is that NPOs turn to their directors not just for governance, but also for their talent, skills, knowledge and experience as qualified volunteers in their work and, sometimes, even their financial resources, as donations to their cause.
Indeed, it is vital for non-profit boards to develop and strengthen their fundraising capability as it is the lifeblood of any NPO. A study on fundraising practices of 202 charities in the social sector between financial years 2011 to 2013 by the NUS Centre for Social Development Asia found that income from donations and fundraising activities remains the most important source of funds for Institutions of a Public Character (IPCs), particularly the smaller ones. Other sources include income from government and grants, as well as self-generated income.
The board’s role
As fundraising is a regular and expected function of an NPO, the board needs to provide oversight and support to it. There are three key aspects surrounding fundraising that directors, as governors of the organisation, should pay attention to: strategy, relationships and fiduciary discipline.
The board should ensure an appropriate fundraising strategy. It needs to first determine how much money needs to be raised versus other sources of income. Next, it should agree on the objectives for the fundraising plan, and clarify if the plan may also be extended to include brand building, raising public awareness or presenting thought leadership. Then the board must ensure alignment of the activities to the other needs and mission of the NPO, and the allocation of resources to the agreed activities. Over the longer-term, the board must help the NPO institutionalise its fundraising function by setting up databases, processes, templates, management and measurement systems.
One important benefit that directors, being external to the organisation, can bring to the NPO are the relationships and goodwill that they have. They can help to expand and diversify the sources of donated funds. Board members who use their own influence and contacts to identify prospective donors, build goodwill, and advocate passionately for the cause, will be able to open doors to new donors and supporters of the cause. These relationships may be more than monetary, they could also encompass transfer of industry expertise and resources or building community partnerships that may be maintained for the long-term to the benefit of the NPO’s work.
The third and perhaps most important aspect that the board should be involved in with regards to fundraising is the exercise of fiduciary discipline. The board should ensure that fundraising will be conducted in line with the set objectives, and that there will be mutual benefits for donors and beneficiaries. Once the money is raised, the board should ensure that the funds are used or managed appropriately. At the end of the financial year, NPO directors should insist on a review of the effectiveness of fundraising.
For the board to effectively play its role in fundraising as described above, there are a few things that board members have to be willing to face up to. At a recent networking session of board members organised by the Social Services Institute, participants shared several insights on how they rose to the challenge of fundraising.
The first is for directors to own up to the challenge of fundraising. When things are not going as planned, the board should develop new ways to engage with donors, to deliver more value, instead of blaming it on donor fatigue.
Secondly, boards should recognise that fundraising ideas should be creative. No matter how successful the NPO may have been with one method of fundraising, regular evaluation should be made to ensure that there is true appeal to the donors.
Thirdly, boards should enable effective communication. There is a need to activate two-way dialogue between donors and the NPOs regularly and personally. The NPO could showcase compelling stories of its impact and donors could share their needs and interests if they have changed.
Fourthly, fundraising activities should be easy. They should be convenient from the perspective of donors to participate or to agree.
Finally, board members should seek collaboration amongst other organisations to share resources and contacts, thus reducing the costs of fundraising.
It is true that self-motivation and perseverance are important qualities in fundraising. That is why it is critical to maintain camaraderie, esprit de corp, enjoyment, fun and laughter in the activities of NPO board members so that they may succeed together and make a real difference to the NPO they serve.
Fermin Diez is a member of the Professional Development Committee of the Singapore Institute of Directors.