Fundraising Through Nonprofit Leadership Transitions

Can nonprofits go through challenging and sometimes painful leadership transitions and come out stronger?

I believe they can for two reasons:

1. In Psalm 84, while David was in exile he and his followers went from strength to strength through the Valley of Baka, which literally translates to, “the valley of weeping.” We can leave one strength and find a new strength even in challenging or painful seasons. 
2. I have seen nonprofits navigate leadership transitions and become financially stronger. For ten years, we have walked alongside at least 50% of our clients whose chief executive or lead fundraiser is coming or going. Transitions done well can produce leaps forward in charitable giving.

If becoming stronger through a challenging, sometimes painful, leadership transition is possible, how is it accomplished? What allows some nonprofits to become fiscally stronger while others dissolve? 

First we need to address the most common response to leadership transitions — the “wait and see” approach — and the five reasons it doesn’t work and hurts your nonprofit. 

Then we will break down the three steps that nonprofits take to become better fundraisers through leadership transitions: focusing your fundraising strategy, stewarding your donor relationships, and adapting your fundraising staffing model. 

Are you ready? Let’s go!

5 Ways “Wait and See” is Hurting Your Nonprofit

Pausing or decreasing your fundraising work — I call it the “wait and see” approach —  is one of the most common responses to nonprofit leadership transitions. It’s also one of the most dangerous responses. Consider this…

Have you ever exited a highway behind someone who came to a dead stop in a merge lane? Talk about an accident waiting to happen! It’s frustrating and, at times, scary. 

As a nonprofit you have momentum barreling down the highway with your leader. When leadership changes you redirect your momentum, and take an exit to merge onto a new path. All that re-directed momentum comes to a stop when you stop fundraising.

Even if you avoid a collision, it’s still going to take a lot of time and energy to regain momentum for charitable giving.

Here are five ways momentum is lost when fundraising stops or slows down during transition.

Donors Lose Confidence in the Organization

What message are you sending to your donors when you choose the “wait and see” approach? Will your donors also “wait and see”?

A favorite client waited for more than 20 years between major fundraising initiatives.  After navigating a 5-year period of interim leadership, a new highly capable director returned the organization to financial health and restored relationships with some long-forgotten major donors.

When a new vision for the future emerged and a capital campaign was launched, new donors seemingly fell out of the woodwork with their excitement and their gifts. But despite their admiration for the new leader, those long-forgotten major donors just couldn’t commit their best gifts to the campaign. They had lost their confidence in the organization during “wait and see."

High-Capacity Donors Redirect Their Gifts

A “wait and see” approach doesn’t inspire gifts from donors who are “ready to go."

There are all kinds of triggering events that make large gifts possible for our donors - the sale or acquisition of a business, an inheritance, a tax strategy.  When these events occur, and a high-capacity donor is “ready to go” with their large gift, they will look for the nonprofit that is ready to put their large gift to transformative use.  If your organization is stuck in “wait and see”, it most likely won’t be you.

Legacy Donors Revise Their Wills

Legacy donors give to a nonprofit whose vision matches their own. 

The “wait and see” approach isn’t visionary and legacy gifts aren’t final. When legacy donors perceive that your organization isn’t intentional or confident about the future, your organization might be excluded the next time they revise their wills or update their asset beneficiary forms.  

At least 80% of all legacy gift commitments are revocable and can be changed. Since legacy gifts are often 200 times the value of a donor’s annual gift, losing one of these commitments is not a chance your organization can afford to take.

Donors Need to Be Reacquired

When your nonprofit falls off your donor’s radar, inevitably some of them will fall off your donor list. Donors will stop supporting you, and you will attempt to reacquire them. Reacquiring a lapsed donor is just as heavy a life for a nonprofit as acquiring them in the first place. 

First-time donor retention hovers around 20%, while current donor retention is 40%.  And 48% of donors take 5 years to become major givers. This means that it costs 5-10 times more to acquire new donors than retain current donors. That data helps you appreciate the risk you take and the opportunities you lose when you have to reacquire a donor.

Choosing to “wait and see” could cost you tremendously. 

Skilled Leadership Can’t be Recruited

A “wait and see” approach won’t attract the best possible executive or fundraiser. No new leader wants to come to work for an organization that requires them to climb out of a deep ditch before they can hit the road running. The best new leaders for fundraising are attracted to the momentum of organizations that are already winning at philanthropy.

You can position a leadership transition as a season of fear and uncertainty with the “wait and see” approach. Or it can be a hope-filled season for a future of flourishing with sound strategy and continued growth.

Focusing your fundraising strategy during leadership transition

“I didn’t have time for my major gift fundraising role before my Director of Development left!  Now what am I going to do while all fundraising is on my plate during the hiring process?”  — Executive Director

“Our Lead Pastor has all the relationships with our major donors, and we depend on these people for 50% of our annual budget. What will happen to our gift income now that he’s retiring?” — Church Council President

“It’s always been like pulling teeth to get our Board involved in fundraising. With my Executive Director leaving, how can I possibly get their attention and engagement?” — Director of Development

“We don’t have a history of strong fundraising results.  How are we going to attract an Executive Director who excels at this work?” — Board Chair

These are all real questions that I field week in and week out. The average tenure of a nonprofit Executive Director is six years. For pastors, it’s 5-7 years. For Development Directors, it's a mere 18 months.

How can we win at fundraising with this kind of revolving door? Your best strategy always — but especially during transition — is focus.

FOCUS STEP #1: Clarify Roles

When there is uncertainty it is wise to create certainty in the areas that you can. Clarifying roles is one of these areas where you can create certainty. Having clearly defined roles helps everyone fulfill their responsibility and creates room for accountability. 

• Every Board has the legal duties of care, loyalty and obedience. That includes the fiduciary duty for ensuring the nonprofit has resources….and that includes fundraising.  Board members can be especially useful in maintaining and even advancing major donor relationships during a leadership transition.

• Every Executive Director is the organization’s Chief Development Officer, whether they want the role or not. The continuous turnover of your fundraising staff may be an indication that you’re not providing the leadership your staff need to thrive in their roles. Transition may be a time to pursue the coaching that will help you turn the corner on this role.

• Every Director of Development  stands with one foot inside the organization and one foot outside the organization. They understand your constituency like no one else and need to be an integral partner in navigating leadership transition strategies with the Board.  

• Your Consultant or Coach has worked through these transitions a hundred times. They can bring the strategy to your process and the speed to your progress.

FOCUS STEP #2: Revise Strategy 

In most fundraising shops, the Pareto Principle flourishes. At least 80% of results are created by 20% of the work. 80% or more of the gift income is received from 20% or fewer of the donors. Especially during a staff or leadership transition, it’s time to go all in on the 20%.

• Begin by identifying and prioritizing the 20% of work that creates 80% of the results. If you don’t know how to get your head around this, look to your data. If you don’t know how, we can help. 

• Focus your limited time on your work with your high capacity/high influence donors. These key stakeholders will not only continue to provide your primary contributors, but they can also be the positive voice that will maintain public confidence.

• Just say no to the non-essentials. If you’ve been looking for an opportunity to discontinue that old worn-out black-hole-of-time event, this is your chance.  It’s not the right time to spruce up your gift acceptance policy. Your CRM conversion can wait until next year. 

FOCUS STEP #3: Ensure Accountability  

When helping nonprofits create their fundraising strategy one of the key steps we walk leaders through is the assignment of strategies, tasks and timelines to specific individuals. We also teach each fundraising team to embrace a specific meeting habit and agenda that fosters mutual accountability.

In a  leadership transition, it’s especially important to identify any new accountabilities during the interim.

• Board members can be held accountable for their fundraising leadership role by the Board Chair or Development Committee Chair. They should ensure that the Board’s assigned fundraising strategies are a substantive part of every board meeting discussion. 

An Executive Director transition, it’s a great time to start bringing fundraising staff around the Board table to foster trust and interdependence.

• The Board’s Executive Committee is charged with holding the Executive Director accountable for the nonprofit’s fundraising success. There should be clear metrics established as a part of the fundraising strategy that will help everyone monitor progress, and a regular meeting process that facilitates accountability and fosters encouragement.  

The Board is also accountable to invest in the personnel that an Executive Director needs to succeed at fundraising. Without that investment, the Board shirks its fiduciary duty. 

FOCUS STEP #4: Communicate Process

Communication is key to every goal and relationship, especially in stressful transition situations. Schedule regular times to communicate with your team, board members, and donors. When people feel thought of and included they are more likely to keep trusting and believing and supporting. 

This can be tricky when a Board is in between executive leadership or a church is calling a new pastor.  Obviously, you can’t be transparent about confidential hiring details. But you can be transparent about the search and hiring process.

How to steward donor relationships while leaders are coming and going 

Donors are the lifeblood of any nonprofit. Keeping donors engaged through a leadership transition is crucial to becoming financially stronger. 

Keep donors engaged with these three priorities:

• Be transparent. Transparency includes thanking donors and making them aware of their value to the mission as well as letting them know about leadership transitions.
• Update regularly. Keep your major donors in the loop by identifying and assigning board and staff members to stay connected with them during the transition. 
• Brief incoming leadership. Create donor summaries for key donors so that incoming leadership can pick up where you left off. Fundraising executive, Duke Haddad, found that after implementing this strategy leadership that replaced him often received several major gifts. 

While all donor relationships are important, stewarding your major donors and key stakeholders during a leadership transition is more important than ever.

Referring back to Pareto’s 80/20 principle, if 20% of the gifts you receive will provide 80% of the income, your can give the proper focus to your donor stewardship work with these three steps: 

1. Identify WHO your most strategic partners and top donors are 
2. Clarify WHAT gift proposals are already being considered, what gifts are ready to be invited, and what previous commitments need to be stewarded
3. Determine the strategy for HOW you are going to close, invite and steward gifts from these donors, and develop the interim system for managing this process

Giving proper focus to your donor stewardship can have the greatest impact on your ability to make it through a leadership transition fiscally stronger. 

How to deploy staff, volunteers and contractors for fundraising during a staffing gap

Whether you’re looking for the right-fit to hire or don’t have the budget to add to your team staffing gaps happen. Unfortunately, the work keeps coming. 

The good news is, this doesn’t have to be a season where all your progress unravels. This can be a season where current staff and volunteers become more engaged with your mission and you find uniquely aligned experts to provide support. 

Deploy Staff

Staff members have (hopefully) bought into your mission and are invested in your important work. Enlisting their support is a good first step to covering tasks during a staffing gap.

For deploying staff to be successful you need to be clear about five things:

1. Role description
2. Tasks assigned
3. Task instructions
4. Timelines and deadlines
5. Who they check-in with

Consider the 80/20 rule again. If your staff only did the highest ROI tasks what time would that free up to help? Which of the tasks that may not be getting done during transition could they help with?  

Deploy Volunteers

Volunteers, including board members, are individuals who care deeply about your important work and want to be apart. But chances are your volunteers also have a life. 

In order for their skills and support to make a positive impact volunteers need clear and specific direction. Here are four steps for successfully enlisting volunteer support in fundraising: 

• Clarify the needs of your organization that can be filled by volunteers. 
• Match your needs with your volunteers’ strengths and/or invite volunteers to choose how they would like to help.
• Equip your volunteers, even and especially if they are board members, with the skills, resources, and support they need to be successful. 
• Check-in with your volunteers regularly and communicate gratitude generously. 

Leadership transitions are a great time to re-engage with your volunteers and integrate them into the important work they care so deeply about.

Deploy Contractors

Hiring a new staff member may be cost-prohibitive or you might time to find the right fit. 

In these situations nonprofits are seeing success by contracting professionals for individual responsibilities. Additionally, most nonprofits are seeing increased results for less than the cost of one salary. 

Four tasks that work well for outsourcing include:

1. Grant writing
2. Fundraising events
3. Communications and marketing
4. Development services and functions

The one task you should not outsource is major gifts fundraising. Major gifts fundraising requires building relationships and mutual value of your organization's mission. Even if you will transition major gifts fundraising to the new leadership this work should still be done in-house. 

How Brenda Moore & Associates can Help You Navigate Leadership Transitions

There is so much about nonprofit leadership transitions that feel absolutely overwhelming and impossible. But God can and will make a way as we trust Him. 

Remember David and his men went from strength to strength through the valley of weeping. Challenging and painful seasons don’t stop God from caring about us and working on our behalf. Good and beautiful things can come from this leadership transition. 

We would love for you to join us on November 29, at 11am central for a FREE webinar for nonprofit leaders and board members who want to sustain fundraising during change. There you will be able to have your specific questions answered and troubleshoot any current or pending leadership transition challenges. Register to attend live or receive the replay HERE.

If webinars aren’t your style, but you would love some additional support preparing for or walking through a leadership transition schedule a call HERE.

The article was co-authored by Brenda Moore, CFRE and Samantha Roose.