When the Ax-Man Cometh: What to cut out of your budget

first_imgJeff Brooks is not only one of my favorite bloggers and fundraising experts, he’s my personal hero for giving his time today to speak on our Network for Good Nonprofit 911 call on the topic of where to cut if you’ve got to cut your budget. He is still talking (this is live blogging, folks) and I’m happy to say he is wise, helpful, insightful and provocative, my favorite combination in a speaker. You can see his slides here and access the MP3 file at this same link in another day or so.Here are some gems from his talk:1.) DO NOT CUT net-positive donor cultivation programs. To be wise enough to keep those programs, though, you have to know which are NET positive (not gross positive). How much did you NET from your gala (as opposed to raise)? Figure out net present value of a donor: what money do you expect in projected lifetime giving from that donor (take their first gift and multiply by ten), then subtract the cost of acquisition and the ongoing cultivation cost. Measuring net present value can tell you where you’re spending too much and where you can spend more to get more. 2.) KEEP ACQUIRING DONORS. Cutting donor acquisition is the quick path to long-term pain. Donors are worth more every year (he suggested two times the second year and exponential growth from there, for example) so if you get far fewer donors this year, you’re going to feel bad pain next year and far worse pain the following year.3.) CUT WHAT’S UNCLEAR. If you’ve got less money to spend, don’t spend it on things that have unmeasurable or questionable impact. In hard times, stick to things that have demonstrable impact, not things like your warm fuzzy brand awareness effort. Direct response fundraising is a better investment now than general “branding” campaigns. PR and media relations are a relative bargain – positive impact for very few dollars – but non-response advertising (with no measurable response vehicle) is not. Kill the “we exist and we’re really cool” ads if you’re short on dough. Leave that to people who can do it on a scale where it’s effective – like Coca-Cola.I completely agree with the last point. And it’s going to make some people nuts. Really nuts. I like how Jeff put it —What would you rather do with your limited budget:• Move 100 people 10% of the way toward giving?• Move 10 people 100% of the way toward giving?He added a positive note that I’d also like to second: In hard times, innovation doesn’t happen because people are afraid of risk. New ideas often don’t work out, but you can’t let these times cut off innovation or let fear rule you. Be wise, but also be bold.last_img

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