Strategy is a fundraising necessity, not a luxury

25 November 2013
SERIES Funding for think tanks part one: domestic funding 16 items

In 1789, Benjamin Franklin, one of the founding fathers of the United States, famously wrote, “In this world nothing can be said to be certain, except death and taxes.” Think tank directors could be forgiven for expressing a similar sentiment about “death and short-term project funding” – and that’s assuming any funding is certain.

As this blog has documented so well, fundraising is a major concern of think tank leaders. Perhaps most frustrating is the difficulty of raising the core funding and multi-year grants that think tanks need to craft their own agendas and retain their intellectual independence. One director summed up this feeling well: “I find myself writing fewer articles or policy papers nowadays as I have to deal with the administrative and programme management  issues” of fundraising, “all of which take time that I should be spending on more strategic things.”

I wonder, though, if spending more time on strategy first actually could help this director with fundraising. Redstone Strategy Group, the consultancy where I work, has served numerous think tanks in recent years –including members of the Think Tank Initiative– along with many other nonprofits and donors. We have found that organizations that start off thinking they have a “fundraising challenge” often really have a strategy challenge that is making fundraising difficult. Those that have good strategies (including strong monitoring and evaluation) are more likely to make donors comfortable with the idea of core and multi-year funding by (1) giving the funder a clear sense of what it means in practice to support an organization as a whole, and (2) showing the funder that the think tank is thoughtful about achieving the most with its resources.

This trend leads me to think that organizational strategy is not just a luxury for well-funded think tanks. Strategy is a tool to raise more –and more flexible– funding.

As an example, consider an environmental conservation nonprofit we recently worked with on its strategy. Some staff members initially were skeptical, believing that formal strategic planning is unnecessary as long as the organization does great work every day. But after they showed their new strategy to a longtime donor, the donor volunteered to increase its funding well beyond historical levels. The new strategy demonstrated that the organization had a long-term plan and was careful to put donors’ investments to the best possible uses.

We also worked with the Center for Global Development, a think tank with a history of raising multi-year grants for core funding, on its strategic review. The results included steps to improve fundraising. Among them were clearer ways for CGD to “convey to its supporters how it decides on its work programs” as well as experimentation with “new tools to anticipate and track influence and impact.”

Based on these and other strategy efforts in which we have participated, it seems there are three major ways to make strategic planning beneficial for fundraising (as well as for your think tank’s effectiveness in general):

  • Build the strategy and related processes into researchers’ everyday work. For example, CGD is testing out “expected return on investment” estimates that call for researchers to assess prospective initiatives against the organization’s goals and set metrics and targets for their work. This can help put strategy at the heart of an organization’s culture.
  • Spell out a monitoring and evaluation system that communicates impact while generating useful information. The Center for Effective Philanthropy found that donors cite “difficulty in understanding impact of funding” as a major reason for not giving more flexible grants. As a result, it is crucial that your M&E generates evidence of your organization’s real-world impact –not just outputs like papers and meetings.

But M&E also should produce information to help make decisions. After all, the best argument for flexible funding is that the think tank, rather than the donor, has its ear to the ground. The think tank is better positioned to know what the issues are, how best to address them, and when to change course. Think about what information you need to make these decisions, how you’ll gather it, and how you’ll use it – and include specific references to all of this in your strategic plan.

  • Be explicit about the connection between the strategy and funding needs. Don’t be afraid of advertising how and why flexible funding is vital to executing your strategy (see this “manifesto for nonprofit CEOs” if you want more inspiration). As always, the more specific you are, the better. Being clear about how you intend to use flexible funding makes it easier for potential donors to understand what they are paying for, and why it is important that those grants be flexible.

Fundraising, like death and taxes, is an unhappy but inescapable part of most think tank director’s lives. Our experience is that a strong strategy, though not a remedy for an otherwise weak organization, benefits think tanks directly while making fundraising efforts more efficient. This realization suggests that think tank leaders should see strategy as part of their fundraising efforts – not something that might be possible if fundraising succeeds.