How To Tell Your Board You Fell Short Of Your Fundraising Goal -Delivering Bad News

Announcer: 0:00

Welcome to the practice of non-profit leadership, a podcast specifically designed for executive directors of non-profit organizations. With a touch of humor, your co-hosts, tim and Nathan, work to provide encouragement, insights and practical strategies to help you be a more effective leader. And now here's Tim and Nathan.

Nathan Ruby: 0:24

So you didn't hit your fundraising numbers in 2023. You did the best you could, but there just wasn't enough dollars coming in in the last few weeks of December to hit that goal. And now you've got to tell your board. Man, no executive director wants to tell their board bad news.

Tim Barnes: 0:46

But don't worry, today we have you covered. We're going to walk you through what to do, so it doesn't feel like you're going to the principal's office. Welcome to Episode 119 of the practice of non-profit leadership.

Nathan Ruby: 1:00

I'm Tim Barnes and I'm Nathan Ruby, you know, communicating to the board that you didn't meet your revenue budget is definitely a challenging task, but there are some key things that you can do that you could do. That just will make it a little bit easier. And you know, tim, I'm guessing for you, you probably don't have a lot of times where you have to tell your board that you didn't make your revenue goals.

Tim Barnes: 1:26

Well, maybe, maybe not, but there's still opportunities to have to share hard news, like, oh, you're overspent in that budget or something like that. It's like, oh whoops, how did that happen? But yeah, there's all kinds of times where we have to have share difficult news with our board.

Nathan Ruby: 1:48

Yeah. So we're going to use this today's episode in the context of not hitting your revenue numbers. But, like Tim said, you could use these principles. We'll go to different other types of bad news as well. So all right, let's get at it today, tim. So number one when you have to share with your board that you didn't make revenue numbers is don't take it personal. You know, not hitting revenue numbers is that's not an indictment necessarily on your leadership. It's not like your donors said to themselves oh you know what I don't like? That Nathan Ruby guy and so I'm going to get him. So I'm going to just not give as much money this year. Or you know what, I'm going to really get him and I'm not giving it all. You know that probably didn't happen. Now there is. It is the case that if your donors don't personally like you, if there is angst, if there's animosity between you and a particular donor, then they're probably not going to give at all or give as much as they would otherwise. So that is the case in individual donors. But as a generalization of you know, we didn't have 150 donors didn't give. It's not about you, it's not personal. So don't take it personal. Now, not taking it personal doesn't mean that you don't take responsibility. Taking responsibility is totally different than taking it personal. You know, if your organization did not make the revenue numbers that you had hoped for last year, well you know that falls on you, that falls on the executive director, and you don't want, your board doesn't want you. They don't want to hear you at the board meeting saying, well, you know, we didn't hit our numbers and I know I don't know, and blah blah, blah blah. That's not what they want to hear. So you've got to take responsibility for not hitting those numbers, but don't take it personal.

Tim Barnes: 4:00

And I think the board wants you to step up and be asking the question did I do something? Did I need to do something differently? And it's okay. But they're not just picking on you. You have to really be honest and be open and kind of walk through hey, what were the issues? And I just have to take responsibility and keep moving forward. Well, that's great. So we don't want to take it personally. Before we move to our next point, we want to share something exciting that we're doing at the practice of nonprofit leadership. So we'll be right back Are?

Nathan Ruby: 4:45

you ready? Are you ready to go deeper? Are you ready to learn more? Are you ready to join a community of people who are walking the same path as you? Well, if you are, tim and I invite you to join the practice community. As a member of the practice community, you will have access to two things. First, you will have access to additional content. Tim and I will be recording additional shows that only members of the community can have access to. Second, you will be invited to our monthly office hours. Once a month, tim and I are going to be hanging out on a Zoom call and members will be invited to join us. There'll be time to ask questions and to get feedback, not only from the two of us, but also from other executive directors who are walking right alongside with you. All of this for just 10 bucks a month. When you divide that out, it's only 33 cents a day. That is a whopper of a bargain To join the group today. Go to the show notes and click on the link that says the practice of nonprofit leadership, and it has a plus sign at the end of it. That'll take you right to the sign up page. We are really excited to offer this opportunity and to be able to connect with you on an even deeper level. Please join us. You'll be glad you did, okay. Number two is be direct. It's kind of like just rip the band-aid off. I had a person that I worked with. We did a lot of interaction in the past. This person would communicate and they would. When they communicated, whether it was verbally or written and this was particularly the case when it was written is they would bury the information that they wanted to convey at the bottom of the communication. So they would send an email and there would be 200 words of I don't know. I don't know a story or something that happened to them that day or what was going on, whatever. And then in the last two sentences, was the information that I needed, or you know that was relevant and it was. It got to be almost a joke. It was like, well, okay, what story am I going to have to listen to today to get the information I need so that I could do my job? So you know, the point is, you know, don't bury in the new. In newspapers or in journalism they say don't bury the lead, so you can't have the important stuff. You know, eight paragraphs down. So what I'm, what I'm saying here is, if you took a loss last year, when you start either verbally with the board communicating them or in an email, that ought to be your first sentence In 2023, we took a X number net revenue loss, or however you want to say it. That is how you start out and you want to put that up front, because everything that you say after that then is in the context. Your board member, as they're processing what you're saying, they know what the end of the story is, so they're able to process towards that bit of information. If you start rolling off numbers and you know we didn't do this and we did, you know this happened and that happened and that happened, well, they, they're not able to put it into context until you get to the end and say, oh, by the way, we had a loss for the year. So you want to state it right up front this is what happened, this is the end result, and then go into here's why I think this happened. So it'll make for a much better presentation communication if you do it that way.

Tim Barnes: 8:45

I think we're taught. Nathan, have you? Have you heard of the sandwich method? You know where you start with something. You know the day outside of the sandwich you start with hey, kind of here's a good thing. Then you get to this middle it's like here's a really, really bad thing, but then you finish with a good thing. You know we're in.

Nathan Ruby: 9:05

I think I've tried to. I've never heard of that, but it's a sandwich and I can. I can buy into that, Tim, yeah because we're trying to soften the blow.

Tim Barnes: 9:13

you know what I'm saying? It's like we need to just take our time, or whatever, and I think what we're saying is, hey, let's say it right up front and then let's work through it so that people know this is the issue that we're trying trying to deal with. Sometimes people walk away going no, what, what, what's going?

Nathan Ruby: 9:33

on Right, what are we what? What am I supposed to do? I'm a board member, I'm supposed to make decisions, but I don't. I don't know what I'm supposed to make a decision on. And you know, full disclosure, my organization. We took a loss in 23. First one we took in four years and I got to tell you, tim, it made me mad. I didn't take it personal, but I hate to lose, man do I hate to lose. And I took that as a loss. And and that's how I started, you know when I did communicate it, because we have a board meeting on the second Tuesday of December, and so, you know, the board's like, oh, where are we? You know, where are we? And it's like, I don't know. You know, the next two to three weeks is going to be like 30% of our revenue. I don't, I don't know and I said a little bit nicer in that, tim, but you know, and so by January 10th, 11th, 12th or so, you know, I'm getting emails and phone calls and texts hey, where you know where'd we end up? And it's like. But you know, that's how I started every conversation, every email, every text. We took a loss, you know, and then I started filling in from there. So start with that, rip the Band-Aid off, then go into your details. So be direct. I guess that's the big thing is, just be direct.

Tim Barnes: 10:53

Okay, and be direct also doesn't mean being jerky about it or it's just speaking it clearly. This is the issue, you know. Don't make excuses. Just this is where we are.

Nathan Ruby: 11:08

Yeah, yeah. So all right. Number three so, after you've been direct and after you've just laid it out there, now you got to have your data. Because the next question if I'm a board member and my executive director comes to me and says, hey, nathan, we took an X, we took a $20,000 loss, we're a hundred. Let's set the scenario we're a $100,000 organization and executive director comes up to me and says we missed our revenue number by $10,000. Well, on a $100,000 budget, that's 10% of our budget. That's kind of a big deal, kind of. And so my next question is going to be as a board member, my first question will be well, what happened? I mean, that's a normal question for a board member to ask. So you've got to have your data ready to then go right into that conversation. And in this case, because we're talking fundraising, data is numbers, and I would start off broadly and then work your way down so broadly which areas did you fall short in and which areas? Meaning which strategies? Was it direct mail? Was it your annual Gala? Was it grants? Was it whatever? What were the categories, your fundraising categories, where you had the biggest loss? So that's where I would start, start with that and then I would cover. Is there anything external that might have an impact on this? So, was it? Was our other organizations in the area? Did they take a hit, a similar hit, or is it specific to you? Is it something that happened to your organization? So that would be a question I would be ready to answer. And so, to answer the question, is it just you or is it other organizations in the area too? Well, of course, that would mean that you have relationships with some of the other executive directors in town where you can call and say, hey, how you could have a honest discussion with and say, hey, how did you do? And so that's, of course, something that you foster over time, and then I would also look at be able to answer is this an anomaly, or is this something we can expect moving forward? So, is it an anomaly? Is it one-off? Is it? I don't know what an anomaly would be. Is it the economy? Was it? Do you think it was the economy this year and some of the issues that the banking industries had? Is that it? Or did you have your number one donor who gives 5% of your budget? Did they pass away? Did the largest employer in town where 20% of your donor base works. Did they shut down and left town? Are there big things in there that are like, ok, this has happened and now we're going to have to account for this because we think this is going to be ongoing? So those are just some examples of have your data ready to talk about so that you can say right off the bat yeah, there were two areas in our fundraising that just we didn't hit our numbers on. It was area one, area two. So have that data ready to go when these conversations take place.

Tim Barnes: 14:35

You know, here's a point for free. That's not in our outline, but to be able to answer those questions starts what you put in place at the beginning of the year, like right now. So what are you tracking? How do you know where to go get these numbers? And you should be tracking these throughout the year. Even if 30% of all your funding comes at the end of the year, you still need to be having these things in place to be able to track where you are throughout the year. It's unacceptable to show up and go. We had a loss, I'm not sure why, oh my gosh.

Nathan Ruby: 15:18

Yeah, if that is your answer. I mean, put yourself in your board members position. If that happens, and you, the board member, says, okay, well, what happened? And your executive director says, well, I'm not really sure, that does not create a lot of trust between the board member and the executive director. Now it's okay to say I don't know yet, you know, that's okay. I had board members calling me on the 4th of January and asking where we end up at and my answer was I don't know yet. You know, we still have gifts that are coming in. We still expect some that are of good size. I need more time. I don't know yet. But that's a different answer than saying, well, I don't really know, you know. So that's not an acceptable answer. Not knowing and, like you said, tim, that means that you're tracking this stuff all year long and you know, in July you should be able to say you know we're at this number and compared to 2023, we're at this number. 2022, we're at this number 2021, we're at this number on July 1st, and so I'm seeing a trend here. You know, we're okay, we're behind, we're about right. Yeah, you've got to be paying attention to all of that. That's a whole nother podcast episode. I think, tim, you just gave me an idea there. Okay. So number four the fourth way to make this just go easier, so that you're not feel like you're at the principal's office is have a solution, have a plan and the board pays you. This is your job. To have a plan, to know what comes next, and it's an expectation. It's your job. And so what underperformed? Okay, up above, we had, you know, have your data ready. So we know that we underperformed in two areas. So great. What's the plan? What are we going to do to fix that in 2024? Now, in fundraising, all things being equal. So if you have the same type of year in 23, as the same year as in 2024, all things being equal, you're going to raise about the same amount of money year over year over year. So if you do all the things in 2024 that you did in 2023 in a specific fundraising strategy let's pick a direct mail. So in 23, if you sent three direct mail pieces and in 24, you send three direct mail pieces, you are going to raise about the same amount. So if you if you're direct mail using, as the example did not hit its number in 2023, then you better be figuring out in 2024 what you're going to be doing differently. Are you going to? Are you going to send more mail pieces? Are you going to add an extra mailing? Are you? You've got to have something that is going to say okay, this is how we're going to fix this underperformance in this area.

Tim Barnes: 18:42

Nathan, I know you're gonna talk about this. I really appreciate that you also emphasize with your plan that you need to be realistic about the plan. You and I both have heard executive directors say oh yeah, we'll just do X, y and Z and you're like what? Talk about that a little bit, because I know this on your heart as well.

Nathan Ruby: 19:01

Yeah, and actually, to be honest, this one kind of caught me in 23. And so I need to be. I should have a mirror up in front of me as I talk so that I can talk to myself. What you can't do and what you shouldn't do and you can't do is say, okay, well, we were underperformed by 5% in our direct mail, so we're just gonna add 8% to our annual gala and that'll even it up, and we got it, let's go. Well, I mean, that's great. But then, instead of having the plan for increasing your direct mail back to where it needs to be, now you gotta have the plan for the gala. How are you gonna increase that by 5% or 8% or whatever it is that you put on it? You can't just wave a magic wand and say, oh well, we'll just get it over here. And, to be honest, that did happen to me a little in 23. I switched some revenue into a different category and that category didn't perform as much as I wanted it to. That's on me. There are some things that I could have done, should have done. Looking back in hindsight, that would have probably closed that gap probably not all of it, but more of it. So that's part of the responsibility thing is all right, I didn't do it right. I messed that up in 23, but you could be darn sure Tim will fix it in 24.

Tim Barnes: 20:37

Realistically fix it right.

Nathan Ruby: 20:39

Realistically fix it. We're gonna, yeah, okay, yes, absolutely realistically, tim. And then I think the last piece and this is kind of like four and a half is after you present that plan. You really need to allow your board to have input, to allow them to get in and have, because the board has to own the plan. Your board does not adopt or does not approve a fundraising plan, but you have to have buy-in. So for them to have buy-in, they have to have input. So you don't just say, okay, here's what happened, here's where we underperformed, here's my three-step plan to fix it. Now, next order of business that we would not recommend, that You've gotta give them some time to have some input and some discussion. Now it depends on your board members. So I am lucky enough to have one of my board members is a fundraiser himself. He ran a national direct mail campaign for years for one of the largest direct mail programs in existence and at any given time throughout the year he would have 30 different direct mail campaigns out to segmented. It was a massively large file and it was. They raised millions and millions, tens of millions of dollars and he ran the whole thing. So when I go to him and say and I call him on the phone and say, hey, I'd like to increase our response rate by 3% for our middle donors, what do you got for me? And he'll take about a half a second and say, well, you could do this, this, this, this, this or this. All right, that is valuable information and I don't even try If I wanna increase our response rate by 3% on our direct mail. I spend zero time thinking about it, I just call him or I email him and he tells me what to do, and that's what I do. Now. If we're a medical organization, if I was to call one of our medical doctors on the board and said, hey, I'd really like to increase our response rate by 3% for our middle donors, what do you think I should do? Not only would they not say anything, they would well, I know a couple of them that would just hang up. They got nothing. So you can't expect your board unless they have hardcore, deep fundraising experience to really give you deep planning and strategy and tactics on fundraising. But you want them to ask questions. You want them to say, okay, how does that work? What does that mean? What would that look like? You want them to do that and to have that chance to talk about this, because it gives them ownership in the plan, and if they have ownership in the plan, they're way more likely to actually engage with you and help you along the way in 2024.

Tim Barnes: 23:50

Yeah, that's great and again, as the board, they do own, they own this and they need to have confidence in going forward and it's important to listen and receive their input into that.

Nathan Ruby: 24:04

You should not be afraid of giving your board bad news. Bad news happens in organizations all the time, and this includes when you don't hit your revenue numbers. But by using some of the things that we talked about today, you could be clear at, you can have your data together and you can give a plan moving forward and then allow for some discussion. These things will make it way easier to present this type of information to your board, and it positions you to be the leader, to be the executive director and to do your job.

Tim Barnes: 24:39

Thanks for listening today. Don't forget. If you're interested in following through on Nathan's announcement to support the podcast, go to the show notes with the link. We also have our contact information there. We'd love to hear from you If you have questions or thoughts or ideas. Well, that's all for today, Until next time.