Value-Driven Donor Development

 

Overview

Welcome to the Value-Driven Donor Development e-learning lesson. At the end of this lesson, you will be able to: Recall the three steps of Value-Driven Donor Development; Outline a funder priority research plan; create a matrix aligning funders’ needs and service providers’ strengths; Translate your findings into a value statement; and write a concept paper. Value-Driven Donor Development seeks to identify the value you, as an intermediary, add to certain projects. In addition, Value-Driven Donor Development describes the process for conceptualizing and articulating that value to both funders and nonprofit service providers.

CHAPTER 1: Reframing Your Approach: The Problems With Fundraising

There are a number of potential problems that may hinder the success of fundraising efforts. Nonprofits – passionate in what they do – often believe they can bring donors into their camp simply with a discussion of the need that exists and the solution they offer. The problem with this approach is that it often disregards the current values and priorities of a potential funder, and fails to account for how difficult it can be to get a donor to adjust its course. In addition, nonprofits often standardize their language in a way that might not correspond with the language of a potential donor. The two sides end up speaking different languages. The moment a donor needs to translate a funding proposition into something it cares about is the moment a nonprofit has put all of its hard work at risk. The problem with these two approaches is they center on asking donors for a handout, rather than offering funders an opportunity. Offering an opportunity requires learning what funders want to accomplish and articulating how those objectives align with your work.

Convincing a donor of your way of thinking is difficult to do.

Traditional fundraising focuses on changing minds to create believers. Most nonprofits believe in what they do – on the need that exists and the solutions offered. When walking into a meeting with a potential funder, the aim is to convince the donor of a particular way of thinking, and to have them invest accordingly. The problem with this approach is that it is difficult to lure someone away from the priorities, beliefs, and values they already subscribe to and are being paid to uphold.

When you build your case to a generic audience, you end up speaking a different language than the donor.

The language used to describe a program tends to be generic in the sense that the same description is cut and pasted into every grant proposal (and into every conversation). The problem with this is that the terminology used to describe your mission, values, or outcomes may be significantly different from the terminology the donor uses to articulate its mission and priorities. You end up speaking two different languages, and relying on the donor to translate your proposition into something the funder cares about. The moment you expect a funder to connect the dots for you is the moment you’ve put all of your hard work at risk.

By focusing too heavily on what you need, you may lose sight of what you are offering to the foundation.

Rather than asking for a handout, offer an opportunity. Investing in your program is an opportunity for foundations to fulfill their mission. The challenge with making this case is that you really have to understand what funders want to accomplish, and be able to articulate how that aligns with your work.

CHAPTER 2: The Value-Driven Donor Development Approach

The value-driven approach to donor development seeks to align what funders want with what you have to offer. As an intermediary, you are in a unique position to offer value to both nonprofits and foundations. Whether you are teaming with the right nonprofit to attract the interest of specific donors or offering a funding opportunity through fee-for-service activities, you exist as an important intermediary in the funding process.

As an intermediary, you are in a unique position to offer value to both nonprofits and foundations.

As an intermediary, you are the hollow groove of the hourglass. For nonprofit providers (the bottom half of the hourglass), your special access to foundations, along with your experience developing donors and writing grants, can connect them with funding opportunities. For foundations (the upper half of the hourglass), your knowledge of who is doing innovative and effective work in the nonprofit sector, along with your ability to design TTA plans targeted to their grantee’s needs, can connect them with effective nonprofits.

The value-driven approach to donor development seeks to align what funders want with what you have to offer.

The value-driven approach requires that you customize your pitch – using language that the donor understands, framing your work as an opportunity for the donor to fulfill their mission. This lesson will walk you through a simple three-step process to transform your development strategy.

CHAPTER 3: Listen, Identify

The first step to determining how best to approach a foundation is to do your research. You need to seek out information regarding what foundations align with a program’s area of expertise and learn how those foundations describe their missions. Once you have identified these elements, make a chart that includes: The Funder’s Name; Its Funding Priorities; Its Funding Region; Areas of Alignment for the Service Provider; and additional questions to ask the foundation.

Before you can figure out how to approach a foundation or potential donor, you need to do your research.

When conducting research, there are two basic questions that you need to answer:

In answering these questions, you are trying to figure out what value you can add so you can package what you offer in a way that is palatable and interesting to the funder. There are a number of online resources that can help connect you with potential donors as well. A good place to start is the "Nonprofit Fundraising and Grantwriting Page" of the Free Management Library located here.

Outlining the central elements of a funding opportunity helps structure fundraising efforts.

There are a number of aspects related to each potential funder that you should chart. The first is the foundation’s "Funding Priorities." This describes the types of work that most interests the funder. As you identify these priorities, make sure to document them using the same language as the funder. Next, identify the "Areas of Alignment" – both in terms of services and region – between the nonprofit and the potential funder. Finally, generate additional questions you would ask the funder at a potential meeting.

CHAPTER 4: Understand Your Value

Outlining how your services match with the funder’s priorities will allow you to create a value statement. To create a value statement you should: Identify the funder’s priorities using their language; Describe the services you offer, allowing yourself to be creative in what you are able to do; and create a value statement that frames your value in a language the funder will connect with. Finally, be specific and realistic – a funder will not respond well if you promise more than you can deliver.

After you understand your target foundation’s priorities and concerns, determine how to position your services as a value-add that the funder wants to invest in.

You should be able to articulate why funding a particular set of services represents an opportunity for the funder. As a purely practical matter, funders are interested in hearing what you can do for them. Be able to clearly answer that question in the form of a value statement.

Outline how your services match with the funder's priorities to create a value statement.

First, identify the funder's priorities using their language, and dig as deep into their philosophy as you can. Describe the services you offer, allowing yourself to be creative in how you slice and dice your work. For instance, include work you could offer if you teamed with the right partner. Finally, create a value statement that serves as an opportunity to practice framing your value in language the funder will connect with. Be specific and realistic – a funder will not respond well if you promise more than you can deliver.

CHAPTER 5: Capture the Concept

You’ve done your research and identified areas of alignment with a potential funder. You’ve translated the relationship into a value statement. Now it is time to organize all of that work into an easy-to-understand document. It’s time to create a concept paper. Concept papers communicate important points at a glance. To do this successfully, concept papers: use a limited amount of text; use a lot of graphics; and bold main points. Be careful not to get too detailed. Focus on the value you bring and the outcomes you’ll achieve. You want to pique their interest so they’ll ask, “How?” Be prepared to tell them!

Concept papers easily communicate your value-add.

When you hand out a concept paper to a room, recipients should immediately understand who you are, what you do, and why that should be of interest to them. The most important points to communicate in a concept paper are the outcomes you will achieve and the value those outcomes will add to a funder’s mission. Concept papers should entice a potential funder to want to know more.

Communicate main points simply, while using an assortment of visual aids.

Concept papers are skimmed, not read. Someone should be able to interpret the main points of this document while you speak to them. A successful concept paper uses a limited amount of text, puts important points in bold, and employs a lot of graphics. The reader's attention should be drawn to points that declare, "This is an opportunity for you, funder!"

Summary

Reframing fundraising efforts around the skills of value-driven donor development helps both nonprofits and foundations to easily identify strategic service relationships. Value-Driven Donor Development focuses on aligning what funders want with what nonprofits can offer. When nonprofits know the goals of a funder, how they can contribute to those goals, and how to clearly articulate that contribution, they will be well-equipped to offer funders the opportunity to employ their services.