Should You Conduct A Development Audit?

Development Audits (or Development Assessments) are a genuine way to get a clear and objective snapshot of the overall health, effectiveness, and efficiency of a fundraising organization. Depending on the goal of the organization being assessed, the audit can include a review of the overall business operation, including organizational structure, business processes, marketing and communication efforts, positioning in the marketplace, donor surveys, as well as employee and volunteer staffing and so on.

Development audits are very helpful when leadership changes, particularly at a senior or board level, so that a snapshot of fundraising capacity can be made and establish both a benchmark to work from and uncover potential for new or revitalized growth through the identification of specific areas of opportunity.

This isn’t to find fault with how business was conducted before but it does help identify organizational and scope creep that may have resulted in under-investing in certain areas of the business and help to identify specific ways that leadership can impact both the health and capacity of the nonprofit.

As an example, an audit may find low-hanging fruit, such as major gift or planned giving opportunities or even discover a segment of the donor database that was not being solicited frequently enough because of a business rule that had been set up years ago by a staff person. People may have had the best of intentions but perspectives change and the needs of the organization change  — an audit can help right-side business rules that would otherwise go unnoticed.

Who should conduct a development audit? All nonprofit organizations, especially those relying on multi-channel fundraising efforts that incorporate two or more of the following: direct mail, online, major/planned gifts, foundation support, tele-fundraising and special events among others, will benefit from this top-down review of their operation. This is not to say other organizations won’t benefit from an audit but it does mean that the more complex the organization’s fundraising efforts the more important it becomes to conduct a periodic audit – every two-five years or as mentioned when there is significant staff changeover.

But the organization can’t wait until the train falls off the tracks — the best plan is to conduct this periodic review, every two to five years at a minimum, to ensure that the organization, especially the fundraising efforts, are on the right track and going in the right direction.

Some of the symptoms that might prompt you to consider an audit include: declining response rates to direct mail or other fundraising programs, increased costs and overhead, stagnant or downgrading of giving levels across any segment of the donor file, increasing donor attrition, complaints from donors, shrinking database size, fewer major gifts and a reduction in planned gifts.

An audit may also be prompted by a lethargic environment in the organization that embraces a reluctance to tackle the new challenges and complexities of the nonprofit world or simply an employee base that lacks skill, motivation, energy and a general inability to embrace innovation. These are all signs of a dying organization that may be facing significant challenges ahead.

The basic focus of a good audit will look at four primary areas of the fundraising process:

  1. How donors are acquired
  2. How donors are retained
  3. How donor relationships are cultivated
  4. How donors are nurtured
  5. How donors are solicited.

All with a close eye on how enduring relationships are built and maintained with the donor.

Of course this is rudimentary at first glance but this tree-top view is where the review process must begin since successful fundraising rests in the health of the portfolio of supporters. The review will simply drill down through these primary areas and assess the health of the database by looking at trends and historical data pertaining to metrics such as retention, gift frequency, response rates to marketing efforts, return on investment of programs, cost to raise a dollar, average gifts, and so on. It will also dig into how the marketing and fundraising efforts are conducted by measuring them against best practices, industry trends, emerging techniques, and historical data.

Additionally, it will look at the fundraising channels being used including direct mail, special events, advertising, online, etc. and assess their individual and collective effectiveness on the fundraising program.

Perhaps most importantly the review will take all of this into consideration and formulate a high level summary of pros, cons and recommendations for moving forward.

A development audit really boils down to a periodic maintenance check-up just like you do with an automobile. We wouldn’t dream of totally neglecting our car no matter how well it works — preventive maintenance and foresight is always the best maintenance. It can uncover existing problems as well as potential problems or problems that are developing and need some attention.