You’re hard at work fundraising – but could your efforts be hurting you more than helping?
Opportunity cost.
It’s a term the business world uses to describe this fact: when we choose one option, we lose the benefit or value of choosing other options.
An example:
You’re a baker, and you’ve only got one bag of flour.
You use it to bake a batch of croissants.
The opportunity cost of your decision?
You can’t sell any pies that day.
Now, croissants are delicious – but will they bring you the most revenue?
What if you’ve failed to consider that your flour would have stretched farther if you’d used it to bake pies?
As leaders, we’ve each got a certain amount of money, time, manpower, and energy to devote to fundraising.
Every choice we make, as to how we use those resources, comes with opportunity costs.
Sometimes, when we’re hard at work filling our coffers enough to keep our organizations afloat, we make decisions with too-hefty opportunity costs.
Like, for example, focusing our resources on maintaining smaller donors when, instead, those resources could be used to cultivate new, larger ones.
It’s frightening to let donors of any size go.
But.
What if doing so could free you to raise exponentially more?
Vacillate no longer. Let these two questions serve as your opportunity-cost calculator:
How much money will you raise by continuing to pursue your smaller donors?
How much could you raise if you dropped some smaller donors and focused on nurturing bigger potential?
Let’s run some numbers:
- When you invest 25 hours in soliciting from your 40 smallish donors, you make $15,000.
- What if dropping those donors and reinvesting your 25 hours in cultivating three larger prospects could reasonably bring you $40,000?
Opportunity cost on the line here: $25,000.
(Of course, you could also pass your smaller donors to others on your team and keep bringing in much of the $15,000…
…Just don’t forget to calculate the opportunity cost of that decision!)
So, friend – my question to you: what’s ONE area of your fundraising that’s costing you money by swallowing resources that could be devoted to more lucrative efforts?
And, what’s ONE thing you can do now to start using your resources better?
Have a great week,
Avraham