There’s a famous fundraising adage, “You need $1,000,000 to raise $1,000,000.” Before a fundraiser can secure the coveted 7 figure gift, a nonprofit needs $1,000,000 in annual revenue. Funders and donors require this revenue level because it’s a proxy indicator of the organization’s stability. If an organization can raise $1,000,000, it likely has financial systems and staffing structure in place to absorb a 7 figure grant. Now, that’s well and good if you are running an established organization, but for startups, it can feel impossible to leapfrog the million dollar hurdle.
For women founders in particular, getting to the first million is essential. Through aggregate data collected from Fast Forward’s Tech Nonprofit Directory, we discovered that when women founders cross the $1M rubicon they raise in near parity with male founders. Thirty-nine percent of tech nonprofits led by white men reach budgets over $1M, while 35% of tech nonprofits led by female founders reach budgets over $1M.
Early stage fundraising is functionally very similar in both the nonprofit and for-profit models. To get to that first million, avoid the three biggest fundraising mistakes we see founders make.
Qualification Fail
The first step of fundraising is research. Fundraisers have to unearth potential donors. This process is called qualification. Good fundraisers will scour annual reports, fundraising databases, and all of Google to find that perfect donor match. Research is critical because it helps narrow the number of qualified leads. But, too often, new fundraisers decide that a potential donor is not a fit without asking the donor directly if he or she is interested. If a donor is on the cusp, always ask. Donors aren’t all knowing. They may need to be educated on your product or approach before they can determine their interest. Also, priorities shift. Everything from natural disasters to political seachanges to boredom can move a donor off one issue and onto another. To reach that first million, qualify more leads.
Give Back Fail
The people behind the checkbooks are….people. They are committed to social good and they are doing their part to advance the causes about which they care most. The people behind the checkbooks also have deadlines, demanding boards, and needy employees. Donors are trying to balance nearly as many things as founders are. Fundraisers can sometimes forget that the exchange between donor and recipient is not just a transaction, it’s a relationship. Great fundraisers empower donors to be successful in their roles. They give back to donors. Fundraisers that share stories that can be easily re-packaged with glossy images and great beneficiary quotes are simply easier to partner with than those that refuse to give back.
Follow-Up Fail
Most fundraising advice is about the “ask.” How to word it, how to package it, and how to close it. Getting the ask right is important, but too many fundraisers focus their time on asking and they fail at the follow-up. There’s an 80/20 rule in fundraising. The best fundraisers only spend about 20% of their time asking and the remaining 80% staying in touch with donors, keeping them informed about what is working and even what is not working. If you are successful at follow-up, it is far easier to close asks. Also, funders talk to each other. They swap stories of the founders that send great quarterly updates and shared progress reports aligned with the donor’s interest. If you fail to follow-up, you’ll miss the opportunity to have your funders fundraise for you.
In my work running an accelerator for tech nonprofits, I often hear nonprofit founders lament about the fundraising responsibilities. Sales is a critical component of all businesses - both for and nonprofit. Fundraising is just sales. If you avoid these three fails, it will be easier and faster to get to your first million.
