Understanding The (New) 95/5 Rule

There are many community based organizations or small civil society organizations who spent hours and hours of their very limited time on writing proposals which have a very little chance of success.?

Not having a proper understanding of

1. the context in which we are operating,
2. the effectiveness of our fundraising efforts and,
3. the competition we have

is a recipe?for failure of a fundraising strategy.?

Additionally, not making a distinction between needing a consultant or staff for your fundraising efforts, or assuming that hiring a staff or a consultant is the end of your board's involvement with fundraising is?a big mistake and also a recipe?for failure of your fundraising strategy.?

Before we can move forward, we need to know where we’re standing, and to know where we’re standing, we need to look back and see where we’re coming from.

To build a road-map, we need to have an in-depth understanding of the context in which we operate; and then we need to bring seemingly unlikely allies together and translate our collective vision into a step-by-step plan towards measurable?impact in the domain we are working.?

When it comes to fundraising, I believe it is very important to know why we are raising funds and for whom. Fundraising is not just for non-for-profit organizations or civil society organizations - a lot of start ups and businesses have to also raise funds; yet there is a very different mentality invoiced for each of them.?

For instance, take an international non-governmental organizations such as Simavi which is focused on Health and Reproductive Rights of Women and girls and is based in the Netherlands. Simavi is based in a developed or better to say donor countries and it raises funds from the Dutch government?through the Dutch Ministry of Foreign Affairs or other huge foundations like IKEA Foundation to offer a program to a target group in a developing country.

There are also civil society organizations like CoC - the Dutch LGBTQI+ rights group, which also raises funds from the Dutch governments through the Ministry of Education Culture and Science to support their target groups in the Netherlands. The dynamic in fundraising between these two groups are quite different.?

Start ups and enterprises also receive funding from governments, for instance, the Dutch government, through RVO that is Netherlands Enterprise Agency offers funding for Dutch companies and enterprises to explore and expand their businesses in the Netherlands or abroad which in return will bring prosperity for the Dutch economy.?

So although all these three different types of organizations are receiving funding from the Dutch government they have very different underlying reasons for existence.

When preparing our fundraising strategy that includes hiring staff or consultants, as well as relevant board members we need to take these differences into account.?

By understanding the context of our fundraising, we can move towards designing the right team that helps us achieve our fundraising goals.?

Fundraising is a team effort. Everyone in your community based organization must be aware of the importance of fundraising and be involved in assisting the philanthropic process. Boards, staff, and volunteers must work together to enhance the fundraising process.?

You might at some point decide that you need a consultant to help with your fundraising. You need to know what kind of help you need before engaging a consultant or a professional solicitor. You also must be aware of the legal and ethical issues involved when you engage outside help.?You also need to develop a culture of philanthropy in your organization in order to be successful. It is your job as a fundraising professional to eliminate the “tin cup” mentality that is often present in nonprofits.

66 percent of lapsed donors simply think your organization does not care about them. You need to be always thinking from the donor's perspective. The rule of thumb in fundraising, previously known as the 80/20 rule (80 percent of your donations will come from 20 percent of your donors), has become more like 90/10—or even, as some studies have shown, 95/5 (95 percent of donations coming from just 5 percent of your donors).?

Most organizations don’t follow the 95/5 rule. In fact, they do the exact opposite. They spend 95 percent of their time worrying about the 95 percent of their donors who collectively supply about 5 percent of their funding. They spend countless hours working on special events that often have fewer than one hundred people in attendance and do nothing to build long-term relationships with donors. They plan months in advance for a mail appeal that yields less than a dollar for every dollar spent and has a response rate of less than 1 percent. And they do hours and hours of research and writing for a €5,000 grant.?

And the first step to achieve all these is understanding your own motives for existence, and then the context in which you are operating.?