Robin L. Cabral, MA, CFRE, MFIA
Do You Review Your Fund Development Office Structure Annually?
I have undergone a lot of change throughout my career of twenty-five plus years. The most challenging was when I took on a recently consolidating religious organization, the Sisters of Mercy. I was hired to restructure its fund development offices after a merger as a “community.” This restructure required that I merge six New England fund development offices into one.
While other religious orders were consolidating at the time, none had developed a tried-and-true method. So, while I would have thought that there would be best practices to guide me, there were none. I had to absorb the change and create best practices on my own. What follows is the roadmap that I eventually crafted after much trial and error. I offer it is a solid course that any organization embarking on office restructuring can use for a smooth process.
Fund Development Office Structure and Operations
Let’s face it, we don’t always have control over the world around us. In this real world, for a nonprofit to survive, it needs to keep pace with the changing times. The efficient and effective function of the fund development office is critical to the survival of any nonprofit. That is why the structure of this office, in particular, should be reviewed frequently.
Sometimes changes are external to the organization, whereas other times internal events drive the change. Whatever the case may be, there is often an impact — either large or small — on the direction of the organization. And, when these “changes” occur, an organization should pay especially close attention to the decisions relating to the role of the fund development office.
So, you agree that the fund development office is an important function. Next, you might ask, “How should our fund development office be structured for maximum efficiency and effectiveness?” I am often asked that same question from my own clients.
Well, it depends on your organization. But, regardless of who you are or what you do to keep your nonprofit running smoothly, I always recommend the same thing: the structure of the organization and its processes should be reviewed at least annually across the board and for all departments. When all is said and done for the year — the last batch of thank-you letters have been mailed to the donors, the financials have been reconciled, and holiday cards have been sent — management should take a step back and think about where to go from there.
Strategic planning analysis and a fund development review should be completed. This will help to outline the strategic vision to target an effective and integrated fund development function. This would involve the development of a case for support with clear messaging and rationale for fund development. And all members of the organization should be on board with this vision.
Let’s first assume the changes impacting your operations are not major this year. The general economic climate combined with the uniqueness of your mission still requires some assessment. What makes sense for your nonprofit next year? Where should you focus the efforts of your fund development? Should you change the way you are doing things? Do you have the staff you need? The answers to these important questions will help make decisions about your future strategy.
Common Circumstances Driving a Fund Development Office Restructure
A high-level assessment might lead to decisions that result in minor shifts in how the department operates or the focus of your fund development. Or, a review might shed light on the fact that more significant adjustments are required. It really depends on the events driving the need for change.
So, how do you know when to restructure your development office? When might this be necessary? What are some common circumstances that might require such a restructuring? Again, before making that decision, it is important to understand the need for change.
There are several instances that might occur in any fund development department. The function of fund development may no longer be effective for various reasons. The department targets may have reached a plateau and now need to shift gears. Staff may no longer be engaged. An alternate model of fund development may be necessary. Systems or processes might be inefficient or costly, or simply not being utilized most effectively.
Situations outside of fund development itself might also impact the function. Budget cuts, an increase in budget, a change in funding sources, organizational restructuring or expansion are some of the more common instances. All of these scenarios require an in-depth analysis of the fund development function.
Funding is the crux of a nonprofit’s balance sheet and income statement. It is the major player in the organization’s budget. If something occurs that leads to a cut in this budget, there will be ramifications for the office directly involved. Your top major donor might stop giving. Or, changes in the economic climate might be the reason. You need to react and address this immediately! It might be necessary to eliminate staff.
Conversely, your organization might benefit from an increase in budget. Maybe, instead of losing a donor, you’ve brought on a new major contributor. Or, perhaps, a significant expense has been eliminated. Maybe a loan has been paid off. Whatever the reason for the improvement in net revenue, the structure of the fund development needs to be evaluated.
Strategic planning analysis might have deemed it necessary for a nonprofit to change funding mix. A transition to alternate revenue streams directly impacts the process of fund development. The focus of the fund development efforts will need to be shifted. For example, the decision might be made to concentrate resources on stewarding existing donors rather than the cultivation of new donors. This might occur as a result of certain economic conditions. It will be critical to realign fund development staff with this new funding model.
When the organization is restructured from the top down, there is an obvious need to reorganize the departments across the business model. This often happens when a merger occurs. It is crucial to streamline operations, removing duplicate systems and processes.
In my work with Sisters of Mercy, the decision was made to establish one development office for six Northeast regions. Each area had operated separately before the merger, with varying degrees of sophistication. Among many other restructuring decisions, the databases for six regions were merged into one common system. Also, we needed to develop systems on how to keep the “local” in the fund development for what was now a regional office. As a result, we developed a network of volunteers throughout the Northeastern United States who were responsible for receiving a list of donors for the month and stewarding them through personal notes and phone calls.
Ending on a positive note , expansion also requires restructuring. A robust, mature nonprofit organization that is growing and thriving also needs to revisit its fundraising perspective. At a certain point during the growth, a director of development will need to come on board. That alone will drive changes in the flow of decisions, responsibilities, employment functions, and so on.
Fund Development Office Restructuring Next Steps
Once the decision has been made to restructure, I highly recommend an internal audit and assessment before making any structural changes. Recommendations from such an audit will help to outline the restructuring process and establish the direction of fund development.
This assessment should include an in-depth analysis of current financials and staff structure. A plan will need to be developed. And, it is always a good idea to consult with your human resources department early in the process. Consider these steps:
- Review the fund development department’s income statement . Understand the revenue streams to determine the income sources as well as the expenses incurred during fund development operations. Compare these results with industry standards and see how they match up. Determine if, and which, strategic changes need to be made. What can be modified to better align your fund development goals with the sources of income for your organization? Think outside the box. Consider alternative sources of income. What are other similar organizations doing? Don’t let missed opportunities pass you by.
- Staffing, staffing, staffing. Simultaneously, you’ll want to take a look at the staffing layout of your department. Does it make sense, given potential changes to your strategies or organizational structure? The example of the religious nonprofit mentioned earlier resulted in the need to hire a new Development Director after the merger.
- Examine the skill and knowledge base of your existing staff, considering strengths and weaknesses. How can these strengths be leveraged for a motivated and engaged staff that fits well with the proposed restructure? Determine who will no longer fit, if that’s the case. Finalize a new organizational structure for the fundraising development department with reporting accountabilities.
- As jobs are reviewed, consider innovative solutions as well. Is it possible to utilize external people resources for certain job functions? Vendors and consultants could be a more cost-effective solution for roles such as database entry, grant writing, etc.
- Craft detailed job descriptions for the new, approved structure with roles and responsibilities. Ensure that employees are clear on accountability and reporting structure.
- Bring Human Resources into the restructuring process early. It is crucial to keep staff in the loop so they can be prepared. Communicate often about the plan, with clear messaging, and through various forums. Share information both verbally and in writing. Explain why the restructuring is happening and outline timelines. Ensure that employee terminations are handled fairly and that individuals are given sufficient notice.
With the information gleaned from the above review in hand, develop a restructuring plan. Consult with professionals, as needed, to determine how best to implement what makes the most sense for your organization. Peer networks, mentors, and industry experts can be good resources as you make these decisions.
The Sisters of Mercy nonprofit merger is, again, a good example. The process I took while working with this group required many of the steps mentioned above. In this case, a new director of development was hired. An initial plan of recommendations was established. Buy-in was sought and approved from all regions. The case for support was developed. A development audit was completed, financial goals were established, and staffing was modified. To reach the targeted annual goal of $5 million, the department was realigned toward individual giving and planned giving since most of the development income came from those donations. We were successful in building a culture of philanthropy across the regions.
After the Design of the Fund Development Office Restructuring Plan
At this point, plan implementation begins, and the work of the new department is set in motion. This plan is the management tool for the director of development, guiding the actions of the restructured department.
It is important to recognize that this process, from beginning to end, will take time. Patience is a critical factor to its success. Do not expect immediate results. Keep your eye on the bottom line and not internal relationships. While it is easy to want to keep staff (as in all mergers), it is not cost-efficient or effective. Sometimes other roles can be found for staff made “redundant” within the organization, while other times they just can’t be. Be cautious of keeping staff on in a move to “just be nice.” Restructuring is hard and difficult decisions must be made. This is an area in which the corporate world offers much sound advice and experience. While some of this advice needs to be tailored to the nonprofit community, other pieces of advice deeply apply.
The nonprofit world is constantly changing. Development offices are forced to change with it. Strategic planning and resulting shifts in fund development models must be a priority in order to survive. Organizations must rethink their development functions, not only for the organization but for their donors as well.
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