According to the report The Next Generation of American Giving, when donors are looking for financial information on nonprofits, the top two things they look for are financial efficiency (70%) and the impact of their donation (59%). Donors care about financial stewardship and they also care about being able to clearly see the impact of their donations.
Nonprofits are unique—there are no stockholders or owners. Instead, you have donors. You promise donors you will use their donations to further your mission, and you have a responsibility to follow through on that promise and to be good stewards of their resources. Donors want to hear about the results you achieved, and they also want to know your organization is financially secure. Who wants to donate to an organization that goes out of business the next year?
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Everyone in your organization plays a part in financial stewardship, but the roles of finance and development are prominent. Development raises the money. Finance manages the money. Development reports back to donors how the money was used. A strong and strategic relationship between development and finance ensures your organization is accountable to donors, so you can keep the donors you have, attract new ones, and be successful in achieving your mission.
Here are a few ways development and finance can support each other:
- Development involves finance in building case statements and donation solicitations. Being accountable to donors starts with the promise you make when you ask for a gift. Your solicitations should be as clear as possible when stating what you will do with donations received. Finance can help answer key questions like: How much money do you need for this project? What happens if you receive more donations than you need? What exact language should be used? Having finance involved from the beginning helps avoid conflicts surrounding these issues later.
- Development focuses on raising unrestricted funds. This can be a challenge, but unrestricted funds provide your organization with the most flexibility. Restricted funds fuel your programs, while unrestricted funds fuel your growth. Unrestricted funds can be used to build infrastructure and innovate. Your finance team can feel good knowing funds are available that can be used for any purpose.
- Finance supports investment in development and communications. It takes time and money to build relationships with the donors that make the work of your organization possible. Development and communications are increasingly intertwined, as getting information out about the donor’s impact is a priority. Audiences have high expectations for communications—they want them to be quick, professional, and personalized. Proper resourcing for development and communications should be in the budget.
- Finance inspires confidence in leadership’s financial management. Sharing financial information is good. Sharing financial information that shows leadership had a solid plan, where the budget and actuals match, is even better. Include details—both numbers and narratives—about your finances on your website, in annual reports, and in other marketing materials.
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