The Importance of Outcomes in Today's Fundraising

11 Aug 2020

Arts and Culture

As we watch the national economy--and each of our own communities--grapple with the pandemic, nonprofits cannot lose sight of the element most crucial to their sustainability and even survival: Investable Outcomes^TM. In our Emerge Ready: Fundraising During and After COVID-19 webinar, we shared the results of a survey of nonprofit leaders. Our research showed that more than 81 percent of nonprofit executives and Board members feel that pre-pandemic funding levels are now questionable.

However, as Fidelity Charitable proved in their study in early '20, 'How Donor Behaviors Are Shifting Amid Pandemic,' most donors actually plan to maintain or even increase their charitable investments.

How to reconcile these two points?

There is now a smaller pool of donors (or investors, as we prefer to call them) and more competition for dollars. This is undeniable. But the funds are out there ... for nonprofits who can show the outcomes of their work in a way that is meaningful to their investors.

Positioning an organization for successful fundraising

Our survey posed the question: What could you do internally that would help position your structured campaign for success once the economy recovers? Translating outcomes was either the top response or tied for the top response in seven of the nine nonprofit sectors across the entire survey. In the top three sectors, translating outcomes accounted for almost half of all responses.

This is consistent with what we have noticed over our past decade in fundraising. Emotionally-based fundraising has given way to a more rational approach, where providing some version of ROI and illustrating the value of specific outcomes are as important (if not more important) to achieving funding goals than providing specifics about a nonprofit's mission and strategic plan. While outputs are a measure of activity, such as number of people served or hours volunteered, outcomes show the downstream impacts your organization has on your clients, your communities, and potentially the world. Outcomes show to what end outputs lead, and they can be more difficult to quantify.

For example, in a successful hospice fundraising campaign we ran, a few of the outcomes included specific dollars related to lessening the financial burden of the bereaved and the economic development catalyst to the city from the construction and ongoing operations of the new patient facility.

As stated in the book Asking Rights: Why Some Nonprofits Get Funded (and some don't), if the program is what a nonprofit does and the output is the product of what it does, the outcome is what happens because of that product.

An outcome shows the true value the nonprofit provides to its constituents and its community. Thus, the importance of providing outcomes as part of a successful fundraising effort is easy to grasp. However, some nonprofits will fail before they start because they are not providing outcomes that are investable.

What makes an outcome investable?

Once outcomes are defined by a nonprofit, they will likely need to be refined and put in the language of investors. Investable Outcomes represent what new investments in an organization even in times such as these will make possible. They provide ROI and encompass the effectiveness of the organization's implementation, focus, and strategy.

Specifically, they are outcomes that:

Have a reasonable chance of succeeding
Have acceptable 'return'
Can be translated into a value
Allow investors to connect the dots

Often enhancing value through outcomes is best done by showing how positive outcomes are enhanced by a nonprofit (see the example above), how negative outcomes are minimized, social costs avoided, and downstream impacts realized. An example of negative outcomes minimized and social costs avoided might be a domestic violence shelter showing dollars saved from children kept out of the foster care system.

Times are different, yes. But fundraising can still succeed. To put a nonprofit on the path to a sustainable future, my first piece of advice is to take a look at the organization's outcomes. To truly emerge ready for fundraising success, investable outcomes should be defined and proven to give investors and potential investors a clear view of the value of the organization now and down the road. To read more about this topic and more uncovered in our survey, feel free to download our white paper.

About The Author

Tom Ralser, CFA

Principal & Director of Asking Rights

Department: Team

“Why should I give your organization money?”

When I began in this business in 1995, this is the question I was first asked to answer. Not only was this asked in my first feasibility study by a prospective donor, but from a company perspective, it became the driving question that would allow us to become leaders in the industry.

Since then, I have strived to not only address this question but improve and refine the answer. In the early days of economic development projects, it was relatively easy to answer. Since then, I have applied my approach to answering this question to virtually every type of nonprofit. The narrower term “ROI” has given way to the broader “OVP” (Organizational Value Proposition®) which is more appropriate for social missions and my focus on outcomes delivered has led to a revolution in addressing the motivations of givers, transforming them from nominal donors to major investors.

My work is not yet done. As investors in nonprofits become more sophisticated and demanding, the bar is continually being raised. Stay tuned.

Tom has worked with organizations of all kinds, from Chambers of Commerce to religious organizations, national museums to rural health networks, and local youth organizations to international research institutes. He pioneered the concept of applying return on investment (ROI) principles to nonprofit fundraising, and fundraisers have described his work as the “silver bullet” that justifies larger investments in nonprofit organizations.

Hundreds of organizations have utilized Tom’s sustainability planning techniques to ensure they can thrive in a tight money environment. He holds the Chartered Financial Analyst (CFA) designation, which provides the framework for his Investment-Driven Model™ of fundraising, and led to the development of the Organizational Value Proposition®, which is widely used by corporations, foundations, and individuals as confirmation that the nonprofits in which they invest are truly delivering outcomes with values. His specialty of utilizing for-profit concepts and methods in the nonprofit world has helped nonprofits raise over an estimated $1.6 billion in the 22 years he has worked with them.

Tom is a frequent and highly acclaimed speaker, addressing topics about attracting new funders, outcome-based sustainability planning, and delivering value to investors.

Summary of Experience

Personally involved in over 600 nonprofit funding projects in all 50 states.
Author of the books ROI for Nonprofits: The New Key to Sustainability, Asking Rights: Why Some Nonprofits Get Funded (and some don’t), and the companion workbook, Developing Your Asking Rights.
Holds the Chartered Financial Analyst (CFA) designation, ranged by Economist as the “gold standard” for investment analysis.
Session leader and/or keynote speaker at dozens of conferences throughout the nonprofit sector and country. A sampling includes:
- Planet Philanthropy (2016) Keynote Speaker.
- National School Foundation Association Annual Conference (2016, 2017) Presenter.
- Association of Healthcare Philanthropy Big Ideas Conference (2017) Presenter.
- Council for Advancement & Support of Education’s Conference for Community College Advancement (2017) Presenter.
Founding Director of Western Colorado Bureau of Economic and Business Research at Colorado Mesa University, where he was a tenured professor.
MS in Finance from the University of Utah and BS in Marketing from Illinois State University.