The total long-term debt of the U.S. nonprofit sector is estimated to lie between $440 billion and $550 billion. Nonprofits spend over $20 billion each year on interest.
If your organization has debt to address, you’re not alone.
A campaign that includes debt reduction as a priority can feel different from more traditional campaign targets like new construction, endowment, or programmatic growth.
The good news: debt-reduction campaigns use the same tried-and-true fundraising fundamentals.
However, there are key differences in an organization’s approach to the case for support, campaign leadership, donor prospecting and stewardship, and the overall campaign timeline and plan.
Below, we outline tried-and-true tenets to keep your debt-reduction campaign on track, while also incorporating 21st-century considerations for donors in today’s philanthropic landscape.
Making the Case
Don’t bury the lede
You may feel an impulse to include debt reduction within a larger campaign. While this approach is useful in certain circumstances, a debt-reduction campaign can stand on its own. Be transparent in materials and conversations about the amount of debt incurred, the campaign’s overall financial goal, and other metrics underpinning your organization.
Look forward, not back
Focus on the future. This is not the time to blame others for why your organization may be in this situation. Proactively demonstrate how debt has strategically paved the way for growth. Describe, in detail, how retiring debt will ignite a new era of achieving your mission.
Quantify the impact
Articulate the annual fiscal burden of servicing the debt—and just as critically, how you will be able to invest that capital into your programs and community served once the debt is retired.
Keep it polished
Debt-reduction campaigns can be perceived as lacking glamour. However, without a new building or other elements to showcase in donor materials, it’s even more critical to create polished, visually appealing materials. 21st-century donors are sticklers for visuals and design. Use photos that make your impact tangible; keep text crisp and distilled.
Leadership
Lead by example
Finding supporters who can not only make a gift, but who also have the capacity to influence others, is key to any campaign. Donors with outsized social sway often play a particularly pivotal role in debt-reduction campaigns. Early prospects may not necessarily be your largest donors; rather, look for those with the power to excite others.
Build buy-in
An in-depth understanding of the case is key for both external and internal stakeholders. Ensure finance staff and others are engaged early to lend input on the campaign’s messaging, vision, and roadmap. Deliberate early work here often reduces headwinds down the road.
Involve entrepreneurship-fluent leaders
Consider: how many of your board leaders have run a business or public entity that has leveraged financing to grow? These leaders can play a particularly powerful role as advocates who understand first-hand how debt drives growth and innovation, but also must be responsibly managed. Allies equipped with financial fluency are essential for building credibility and ensuring everyone on your campaign cabinet has the confidence and lexicon to radiate confidence regarding the campaign’s efforts.
Prospects
Focus on the “right” donors
An important basic fundraising best practice is ensuring a bespoke approach for each donor. This is essential for a debt-reduction campaign. Aligning donors with the right case elements, the right solicitor(s), and the right moment will set your organization up for success. Keep in mind that this campaign may not be for every donor—and that’s okay.
Anchor prospecting in data
Finding the right donors is key. Ensuring a request of the appropriate amount is equally as important. CCS’s Feasibility Study and Data Analytics offerings can provide a comprehensive approach to building out a prospect list. Benchmarking each donor’s giving pattern at your organization and other nonprofits in your region and/or sector is also helpful. Fundraising is both an art and a science—these steps will ensure an intentional, data-driven approach.
Future-focus, future donors
While a debt-reduction campaign is rarely effective at cultivating a significant number of new prospects, it can help you hone a conversation focused on the future. Donors should reflect multiple generations of support and spheres of influence; don’t automatically write off Millennial and Gen Z supporters as potential campaign contributors.
Plan
Be candid
By being honest and open about the decision-making process leading up to this point, sharing the impact of making a change, and explaining that clearly, the right donors will understand the importance of this moment.
Set a timeline—and stick to it
Without a building or major program launch to chart a timeline, spurring donors to act, and act now, is key. Consider leveraging matches and challenges to play an even more prominent role in order to drive donors to act.
Take a balanced approach
Equip leadership, major gift officers, and other donor-facing staff with both tangible data and qualitative stories that project positive urgency for the Case.
Celebrate your success
Your plan should absolutely include a public celebration as part of the endpoint of your campaign. Without a building to open or a new program to launch, it’s critical to give your leadership, staff, and community a well-deserved victory. A “burn the mortgage” party is always a motivator!
With the above considerations, we’re confident you can take the steps needed to begin, or re-charge, your debt reduction campaign.
Considering a campaign?
CCS stands ready to serve as your partner in reaching your goals.
