Establishing a Fundraising Policy for Your Nonprofit Board

By WA, South Sound Admin posted 02-27-2019 12:00 AM

  

By James M. Hushagen, J.D. and Emily Happy, Principals, The Philanthropy Collective


What does a nonprofit need to remain viable and achieve its mission? Adequate financial resources are key; nonprofits seldom complain about having too much money. And, ensuring adequate financial resources is the job of the board of directors. While relying on executive leadership and staff for much of the work, the board has a fiduciary duty and the chief responsibility to ensure that the nonprofit has the needed funds.

The board’s financial responsibilities fall into two general categories: (1) improving operational profitability through increasing earned revenue; and (2) raising private development support through gifts and grants; e.g. fundraising. This discussion will focus on fundraising.

Best practices in nonprofit governance suggest that most boards should spend more time and energy raising development revenue. Surveys show, however, that many nonprofit boards do not do so, in part because they have no policy setting out the board’s role in fundraising.

Nonprofits can benefit significantly by establishing such policies which detail how much the board is expected to contribute to the nonprofit and how individual board members should participate in the nonprofit’s fundraising efforts. This article will provide some practical advice on creating and administering such a policy, discuss some its key elements and provide a sample form for the policy.


Practical Advice on Creating and Administering Board Fundraising Policies

Simply adopting a board fundraising policy will not instantly improve board and board member fundraising. Board leadership, and particularly the board’s development committee and the nonprofit’s fundraising staff, should make board fundraising a priority and be aware of the following principles in creating and administering the policy:

  1. A board member should first donate to the nonprofit before asking others to do so. This cornerstone of individual fundraising allows a board member to use himself or herself as an example of someone who supports the nonprofit. Focus on getting that first gift first.

  2. Every board member has different financial capacity. Not everyone can make the same size gift. The policy should first encourage each board member to make the nonprofit a priority in his or her personal giving plan. Also, if the nonprofit doesn’t request a specific amount, it should encourage each board member to make what, for that board member, is a substantial financial contribution or personally significant gift.

  3. Nonprofit development professionals acknowledge that personal solicitations from board members are often very effective. But, not all board members have the same skill levels and aptitudes for solicitation. Board leadership and development personnel can help by provide board members with training in fundraising. Also helpful are tools like checklists, elevator speeches and proven steps for approaching a potential donor. The idea is to help each member gradually assume more responsibility. Assigning mentors to new board members and teaming inexperienced board members with staff or experienced board members can also work.

  4. The profession or position of some board members may prohibit them from certain fundraising activities. Board leadership and development staff should find other opportunities for these board members to support the nonprofit in a meaningful way.



Important Components of Board Fundraising Policies

Board fundraising policies can and do differ greatly among nonprofits. But, all should have at least the following components:

  1. A statement as to whether a board member is expected to give a certain amount or to give according to his or her means. Larger nonprofits often have specific dollar amount expectations. Smaller nonprofits more often expect a more general personally significant gift. In either case, the policy should state a bottom line expectation that 100 percent of board members give every year. 

  2. A statement that board members are expected to participate in solicitation efforts. To be helpful, the policy should incorporate a list of examples of various ways board members could be involved; e.g. providing potential donors names, writing or signing fundraising letters, thanking donors personally or by letter/email, hosting fundraising events in their homes or elsewhere, and accompanying development staff on donor visits. Board members may also make the ask themselves. The attached policy refers to, but does not attach, such a list.

  3. A specific pledge form that guides board members in thinking about the many fundraising activities taking place throughout the year. The form should ask them to make an annual fundraising commitment, both of money and of time participating in fundraising activities. The attached policy refers to, but does not attach, such a pledge form.

  4. A series of statements about the overall responsibilities of the whole board, both for fundraising specifically and generally for ensuring the nonprofit has adequate resources, financial and otherwise, to successfully pursue its mission.

Sample Board Member and Board Fundraising Policy

The sample Board Member and Board Fundraising Policy below sets out in bullet form how a fictitious nonprofit called “Mission Driven Nonprofit” expects Board members to participate actively in the nonprofit’s fundraising activities. Board leaders and development personnel can and should use this form as a starting point for preparing a fundraising policy suited to their own nonprofits.

The Policy focuses on three major areas of Board member responsibility — leadership, advocacy and personal action. It also sets out basic expectations of the Board as a body. Finally, the Policy is structured to enable Board leadership to use it as a guide to evaluate the fundraising performance of both the Board and individual Board members.


SAMPLE BOARD MEMBER AND BOARD FUNDRAISING POLICY

for

MISSION DRIVEN NONPROFIT

Duties of Members of the Board of Directors

  • Members of the Mission Driven Nonprofit (“MDN”) Board of Directors should identify and evaluate prospects for donations to MDN, cultivate and solicit gifts from such prospects, actively support MDN fundraising programs by their presence and offer personal acknowledgments to donors and volunteers, all as set out on MDN’s annual pledge form. A list of various ways Board members can be involved in MDN fundraising is attached as Exhibit 1.
  • MDN Board members should provide leadership and actively advocate for MDN’s mission and priorities and the necessity of MDN’s fundraising efforts.
  • MDN Board members should each make MDN a priority in his or her personal giving and [give no less than $_______/year][make a personally significant gift consistent with their ability], as set out on MDN’s annual pledge form. 100% of MDN Board members should give to MDN each year.

Duties of the Board of Directors

  • The MDN Board has a fiduciary duty to obtain and oversee the use of all financial resources of MDN needed to carry out MDN’s programs and services.
  • The MDBA Board, together with MDN leadership, should develop a strategic plan to deliver mission-related services to the community MDN serves and increase public support for MDN.
  • The MDN board, together with MDN leadership, should develop fundraising plans that address MDN’s financial needs regarding staff, office space, budget and all aspects of MDN operation.
  • The MDN board recognizes that it is part of a team, with the obligation to lead, support, and work together with staff and volunteers in the design, supervision, and conduct of fundraising activities.
  • The MDN board should select and evaluate MDN’s chief executive based in part on the executive’s performance as a key team member in the fundraising team.
  • The MDN board shall be responsible for guiding and directing MDN’s ethical and professional practices — including use of the budget allocated for fundraising activities.
  • The MDN board should evaluate budget appropriations for fundraising as an investment strategy to yield reliable long-term results and net revenue meeting MDN’s priorities and should evaluate the performance of fundraising activities at all levels in accordance with MDN’s mission, goals and objectives.
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