All the way to zero.
It has been a rewarding and busy quarter for me. Already this year I've had quite a number of intense, immersive meetings with our nonprofit clients.
Growth has been the central theme of every meeting. There's optimism in the air again, and groups are looking out of the bunker window-slit to try to decide what to do next.
Our engagements include a review of current growth forecasts (along with, eventually, a heavy bit of re-engineering of those forecasts). When I pull up an organization's spreadsheet, I almost always see that some number -- 4%, 8%, 12% -- has been added to last year's results as "baseline growth." When I ask where that number came from, I invariably hear that it came from the C-suite. The more frustrated staff will roll their eyes; the ones plucky enough to play along will say, "Our normal expectation is growth." I've had this experience a number of times this year.
This will sound a bit harsh for a Friday, so bear with me: The normal state of things is not growth. It is decline. My skin will not get better as I age; my 401K will not automatically double every five years; my Betamax video recorder will not be cutting edge technology indefinitely.
Even worse, it is very possible to take things all the way to zero. It happens quite often, actually. Remember Bear Stearns? Palm? Hostess? Blockbuster? Small errors can create massive problems. Small issues can mushroom into monumental failures. My house could end up being worth less than my mortgage.
We've all lived through a massive, five-year economic example that demolition is quicker and more definitive than construction. And yet I fear we may have missed the lesson.
The natural state of your program is decay. This is especially true in fundraising, where participant and donor retention might be 30% or less. In other words, we need to replenish 70% or more of our constituents just to stay even. Making no changes to your fundraising program -- or worse, pulling funds and staff from it -- will speed the deterioration.
This is a great time for fundraising because as the economy picks up the results of the entire sector will pick up. But please don't let that convince you that you can put things on autopilot. "Organic growth" is seldom organic and almost never comes from just riding a wave. Growth comes from hustle, ongoing investment, and constant innovation. When I hear nonprofits say they are going to "take a conservative growth strategy" I get a nervous twinge, because it is usually code for "we're going to wait and hope."
Waiting and hoping is not conservative -- it is incredibly risky, because it will almost certainly accelerate your decline. And it is a patently irresponsible strategy. It's time to get out of the bunker. Investment is your most sensible approach.
If you're game, I'm going to bravely take on this topic – and a few others – in thirty minutes or less at next week's Run-Walk-Ride Fundraising Conference. I hope to see you there.