Nonprofit Development Assessment Ultimate Guide 2019

JUL 16, 2020

Nonprofits that are serious about measuring their progress and evaluating their organization’s history of outcomes typically engage in some version of a development assessment. Unfortunately, the first step is usually a rabbit hole of search results ranging from free assessments to high priced consultations.

Before you dive down that path which promises insights but only gives you an assessment score with no real direction, let’s talk about how you can evaluate this process without spending tens of thousands of dollars.

What is a Nonprofit Development Assessment?

Nearly 66.3% of nonprofits have budgets of under $1M and exist on what is traditionally called the “annual fund”.  This is the fundraising goal that is developed each year and is the gap between what money you know is coming in from regular sources and what you need to raise from sources yet unknown.

A development assessment evaluates this goal and the organization’s essential fundraising elements in order to find a course of action for success. These assessments evaluate subjects like corporate structure, fundraising strategies, donor relations, volunteer engagement, data management, and software.

The Good, the Bad, and the Ugly of Assessments

While a lot of value can be derived from the organization’s board and staff coming up with a plan for existing fundraisers and target new grants to write up, often times this practice doesn’t allow you to grow or address unmet needs.

To make matters worse, organizations will seek out strategic planning, development assessments and board evaluations that result in an ever growing stack of reports that sit on a shelf.  

So how should nonprofits go about assessing their needs? The key here is to have the ability to self-evaluate prior to seeking help from others. This may sound complicated, however, there is a critical set of questions that can help you get the most out of this self-evaluation.

The 5 Pillars to a Successful Nonprofit Self-Assessment

Major donors, the ones who will invest significant amounts of money in your mission over multiple years, are looking for several indicators that your goals are sustainable before writing the check.  If these elements are not in place, they will move on to other organizations and you will continue to be passed over.  We’ve outlined below the critical elements for you and your board to assess.

1.      Do you have a plan developed, in writing, that outlines what you plan to accomplish in the next three years and how this plan will significantly change the issue your mission addresses?

You must be able to clearly articulate to prospective major donors how their money will make a difference to the issue they care about. Traditional strategic plans tend to focus inward and don’t offer the kind of impact that draws large philanthropic investments.

2.     Have you carefully determined what this plan will cost?

This is where you need to think like a for-profit. If you are going to expand, what will that cost?  

Most nonprofits create their budgets one year at a time and fail to look forward to what they need to raise to really make a change over several years.  

The creation of a multi-year proforma is critical for potential investors to see that you are seeking enough money to be successful. Remember to include all costs even if those costs are currently offset by volunteers or in-kind donations. If you don’t know the real cost of doing your work, investors will worry that your plan is not sustainable.

3.     Do you have the right people to pull off the plan?

This may seem like the easiest question to answer but in reality, it’s the hardest. Dedicated, passionate, caring people tend to support nonprofits. However, they are not necessarily the people who will scale the organization beyond the grassroots level.

I have had many major donors tell me that the first thing to look at is, the CEO/Executive Director. Is this person someone who has the business acumen to pull off a plan they might give a significant amount of their money too?

Many nonprofit leaders, especially founders, have tons of heart but not the skill to lead a multi-million-dollar operation. Beyond the key leader, do you have the staff in place who are able to do the work you are proposing, or will you need more or new positions? Is your board able to open the doors to the key stakeholders or donors you need to get involved?

While these discussions are never easy, they are the keys to success. If you suspect you don’t have the right people on the bus, donors will see it immediately.

4.     Do you have enough donors cultivated who can support the financial goal you have proposed?

Usually, this is the one question most nonprofits quickly answer. Most often that answer is “no”.  But how do you know how many donors you need and at what levels?

That’s easy, watch our quick video on how to determine the number of prospects you need at each giving level to reach your goal.

The harder question is “where do I find people who can give at these levels to us?”. For that you need to dig deeper into prospect research and may need a Sharity expert identify prospects in your community and develop a plan to cultivate them.

Remember, this is not a quick process. Cultivation of a major gift takes 12-18 months, if done correctly. Before you try to launch a campaign, it is critical you have this question firmly in the “yes” or it’s a waste of your money and your donor’s time.

5.     Do you have community champions?

Many nonprofits will say that they are the communities “best-kept secret”.  That’s not a good thing. But how do you breakthrough?

Before your brand becomes well-known, one way is to have individuals who are well respected in the community champion your nonprofit. These individuals can help open doors to key stakeholders and help you start the all-important process of gaining the respect of those who can financially support your work.

What To Do After Your Self-Assessment

Once you complete your nonprofit self-assessment, the final step requires determining exactly what actions need to be done to achieve your desired state. Break up the goals into key initiatives to address all the areas you have identified. Consider the following as a reference:

Common Nonprofit Development Plans

  • 3-5 Year Strategic Plan
  • 3-5 Year Projected Budget Plan
  • Prospect Identification and Donor Cultivation Plan
  • Donor Stewardship Plan
  • Community Engagement Plan
  • Nonprofit Marketing Plan

Take the time to understand what you’ve learned through the self-assessment to determine where you need additional help to overcome challenges. Remember, the key is to not be afraid of asking questions that you can’t answer. Once you have the questions, there is always a place to get the answer.

Try our FREE Assessment

Our Are You Ready To Grow Assessment is your first step to identifying key areas to evaluate in order to meet your fundraising goals