Prospect Research · Prospecting · Major Giving · Prospect Engagement
Dodging the Dangers of Fantasy Fundraising: Your Roadmap to Navigating Its Hazards
If your organization is struggling to focus on setting and meeting measurable and achievable goals, it might be time to quit fantasy fundraising.
Fantasy fundraising is a term I derived from fantasy sports, a game where participants concoct virtual teams composed of actual professional athletes. As players, you’re in the driver's seat, picking and managing a lineup of real-world pros, earning points as your chosen athletes rack up statistics throughout the season. The thrill lies in the make-believe, acting as a pro team's head honcho, scouting for emerging stars, diving into stats and making predictions — it's a feeling of being right in the thick of the game. (A touch of friendly wagering adds to the excitement, too!)
Likewise, in the realm of portfolio-based major gift fundraising, the concept of fantasy fundraising emerges when fundraisers incorporate high-profile yet improbable prospects into their portfolios. This is done in the pursuit of a dream, a hope that one of these philanthropists might just turn out to be a miracle donor and provide a transformative gift.
As you peruse your organization's major gift prospect portfolios, do you notice any signs of fantasy fundraising? Are there instances where your prospect pyramids hinge on a celebrity or billionaire philanthropist — who has no other links to your organization — to achieve a campaign goal? If your organization is caught up in the game of fantasy fundraising, the odds of you being in a position to request a transformational gift from this miracle donor could be as remote as your chances of managing an actual professional sports team.
You might be thinking: “What’s the harm in daydreaming about a few aspirational donors who could supercharge my organization’s campaign?” Imagine you’ve just bought a lottery ticket, and for a moment, you allow yourself to daydream about splurging with your potential jackpot. In the same vein, envisioning a monumental contribution from a philanthropic angel gives us an aspirational target, a fundraising jackpot to aim for.
While it might not be ideal to deflate the fantasy fundraising balloon, those in prospect development roles hold a special position as data and information professionals within nonprofit entities. They can offer insights grounded in data, assist in prioritizing limited resources and maintain the focus of fundraisers on goals that are realistic and within reach.
Placing too much faith in the mirage of an ideal fundraising scenario can transform into a perilous gamble. It opens up the possibility for several adverse outcomes, such as:
- Failure to meet short-term and intermediate goals: If the transformational donation does not materialize, your organization might not meet its fundraising goals. This can impact the programs and initiatives that depend on this funding and may lead to difficulties in maintaining day-to-day operations.
- Neglecting other donors: Focusing too much on a miracle high-profile donor can mean neglecting other potential donors, both major and smaller. This can lead to missed opportunities and a decline in relationships with your regular donors, who can feel undervalued.
- Impact on reputation: If the hope of a big donation is shared publicly and doesn't come through, it could lead to a loss of credibility and trust. This can impact future fundraising efforts and the overall reputation of the organization.
- Resource misallocation: Efforts to attract the attention and favor of high-profile donors can consume a lot of resources, creating an opportunity cost. These resources might be better spent nurturing relationships with existing donors or finding new potential donors who align with your cause.
- Lack of sustainability: High-profile donors who are not personally engaged or invested in your cause are less likely to become long-term supporters. Even if you do receive a large donation from a miracle donor, it might not be sustainable in the long run.
- Unrealistic expectations: If your organization continuously relies on the remote possibility of a fantasy donor, it can breed a culture of unrealistic expectations. This could inhibit proper planning and strategic thinking.
If your organization is enabling fantasy fundraising and experiencing any (or all) of the above, here are some strategies to re-focus on realistic, achievable, evidence-based, fundamental prospecting theory to ensure you’re maximizing your return on investment:
- Identify your addressable market: Total addressable market (TAM) is a concept commonly used in business and marketing to estimate the maximum market demand or revenue opportunity that exists for a product or service. When applied to the context of fundraising for major gifts, TAM can be used to identify the full scope of potential donors that could be approached for contributions.
The first step is identifying your market (i.e., the group of potential donors you aim to reach). In fundraising, this market could be segmented based on several factors, including geographic location, demographics, psychographics, the donors' previous giving history and their alignment with your cause. Identifying an addressable market also requires you to define who is not in your market because of the improbability of alignment or approach opportunities. Most miracle donor possibilities will fall out of your TAM.
- Market sizing: Quantify the size of this potential donor market through surveys, census data, studies from philanthropic organizations, etc. For instance, if your cause appeals to a certain profession, like teachers or doctors, look at how many of these professionals exist in your target area.
- Donation capacity: This fundamental evaluative tool in the prospect developer’s toolbox involves understanding the maximum potential donation that each prospect could make. Various factors can help estimate this, like income level, net worth and previous donation history. In a perfect scenario where every potential donor gives at their maximum capacity, you'll get the TAM.
- Assumptions and reality checks: Reality is often different from theoretical maximums. Not everyone you identify as a potential donor will donate, and certainly not at their maximum capacity. It is therefore essential to make reasonable assumptions about what percentage of your TAM is attainable, considering factors like your cause's appeal, competition with other charities, economic conditions and past performance of your organization’s campaigns.
- Refining the prospect base: Based on the TAM and the reality check, refine your prospect base. This might involve focusing on a more specific segment that is more likely to donate or broadening your scope if the TAM calculation reveals a larger potential donor pool than anticipated.
Incorporating these strategic focuses on tangible markets can gently guide your major gift fundraisers, pulling them away from the alluring trap of fantasy fundraising. It’s crucial to steer clear of the risky expectation that a caped philanthropist superhero will descend out of the clouds to miraculously save the day. As professionals in prospect development, we stand at a unique crossroads where we can shift the spotlight from wishful thinking to those genuine, measurable returns our organization anticipates.