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TOOL 8 Review – The Board's Annual Fundraising Audit

By John Pearson

Pop Quiz on Fundraising Practices!

Suppose…at your next board meeting, your CEO and chief development officer announced:

Good News! Our total annual giving for our recent fiscal year was the largest in our ministry’s history.”

Bad News! The total number of donors has decreased (even though giving is up) over the last three fiscal years.”

Does the good news exceed the bad news? Should the board be concerned? Experienced board members would likely ask to see the data. That’s why Tool #8 is a helpful annual checklist for your board.

TOOL #8: THE BOARD'S ANNUAL FUNDRAISING AUDIT

Use this TRUE OR FALSE annual audit as a first step in assessing if the ministry is communicating giving opportunities with integrity and accuracy—and whether or not the board understands and affirms the ministry’s current fundraising practices.

Tool #8 in the ECFA Tools and Templates for Effective Board Governance, is one of six assessments in Part 2 of this jam-packed 272-page resource. John Frank and Scott Rodin recommend that boards develop reporting, measurement, and accountability tools regarding expectations between the CEO, the board chair, and the Chief Development Officer—and set policy and budgets according to those expectations. They add:

“By having solid reporting tools tied to your key performance metrics, you will be able to spot trouble early and respond.” (Read Chapter 3, “The Role of the Board in Development,” in their helpful book, Development 101.)

The big idea in Tool #8: in addition to regular reports you already review in your good governance practices, this annual checklist of 10 statements will keep the board informed. The two-page checklist asks for a TRUE or FALSE response to each statement—and includes space for answering the question, “How does the board know?” Examples:

TRUE OR FALSE?

#2.     “The board understands the ministry’s fundraising program relating to raising restricted donations.”

#6.     “The board knows if staff or external fundraisers are being compensated on the basis of a percentage of funds raised.”

#9.     “The board is compiling, analyzing, and leveraging giving data to serve and support its giving base.”

A sample completed checklist is included with Tool #8 and features color-coded “Ministry Dashboard Signals” in the “How does the board know?” section:

  • Red: Act

  • Yellow: Watch

  • Green:

After you review the 10 statements, ask your development team to brief the board on your ministry’s “theology of development.” When you have a written document on your theology of development, you’ll appreciate the guidance it gives to the CEO, the CDO, and the board to ensure that all fundraising practices are in alignment with the ministry’s mission, vision, values, and theology. (See the book Development 101 for a sample document.)

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: Around the table, answer TRUE or FALSE to this statement: “#4. The board is aware of communication being shared with givers concerning the potential of over-funding or under-funding of projects for which funds are being raised.”

MORE RESOURCES: Could your board members pass a pop quiz of fundraising practices? Read Scott Rodin’s color commentary blog on Lesson 24, “Ministry Fundraising 101 for Board Members,” in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. Rodin notes: “As board members, we must understand the ideology/theology behind our development strategy. That will drive our desire for funds to be raised according to Biblical ethics and used as the giving partner requests.”

 

This article was originally posted on the “Governance of Christ-Centered Organizations” blog, hosted by ECFA.
John Pearson, a board governance consultant and author, was ECFA’s governance blogger from 2011 to 2020.
© 2021, ECFA and John Pearson. All rights reserved.

 


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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