Articles & White Papers

01/27/2006
The Development Audit

What is a development audit?

A development audit enables the leadership team to “see” the fundraising program through unbiased eyes. Advancement Associates recommends an audit as the ideal starting point in shaping a strong and effective fundraising effort.

Give specific reasons to call for a development audit?

I’ll suggest three such reasons, although they could be many more.

• to determine organizational readiness to launch a comprehensive development effort.
• to assess the attitudes of staff and key volunteers about the appropriateness of or need for the organization doing more with fund raising.
• to assist in future planning for fundraising success.

Why use an outsider to make the audit?

Seeing ourselves as others see us is as difficult for organizations as it is for individuals. For this reason, many non-profits find it advantageous to contract with outside counsel to assess the effectiveness of services and administrative procedures – including the organization’s fundraising activities.

Doesn’t a development audit expose us?

The best audits result from open, honest communication between counsel and the client. It’s AAI’s style to ask probing questions, listen carefully, and seek connections and themes in the answers given. We don’t promise “quick fixes” for organizational challenges. Rather, our goal is to help staff and the board discover for themselves how the current program might be enhanced.

What does a development audit cover?

An audit includes a review of the people, programs and recent performance of an organization’s fundraising efforts, including:

• the adequacy of planning to clarify the mission, priorities, and funding needs.
• the case to be made for attracting support.
• the support constituency – the appeals made to individual contributors, to government agencies, businesses, churches, foundations, and other potential funders.
• the growth potential of special events.
• planned giving.
• printed materials and public relations.
• organization, personnel, procedures, and budgets.
• board leadership and participation in fund raising.

Whom does the development auditor contact?

During the audit visit, a principal of AAI meets with the CEO and all staff who work directly with the fundraising program, as well as the following individuals (as appropriate to the organization):

• Chair, board of directors
• An additional four to six other board members
• Six to ten current donors to the organization
• Six to ten current volunteers with the organization
• Chief business officer
• Selected program staff

How long does an audit take?

In most cases, AAI devotes one day to advance preparation and two or three days on-site for interviews with staff, board members and key volunteers, donors, and other selected stakeholders. An additional two days are required for preparation of the follow-up report.


How would we prepare for a development audit?

Gather all available information, make copies to share and be prepared to discuss the following:
• Planning
• Structure
• Systems
• Practices
• Results

What do you include by the term planning?

Documents that evidence the nature and extent of recent visioning and planning processes, both for the organization as a whole and for the advancement program. Include relevant meeting minutes and documents from other planning engagements. Be prepared to discuss the strengths and weaknesses of the planning process from your perspective.

Which structures do you refer to?

Organizational documents (bylaws, organization charts, job descriptions, manuals) that describe the governance and management of the organization as a whole and the advancement program in particular. Be prepared for discussion of staff and volunteer roles.

Could you say more about systems?

I think especially of accounting practices and tools as well as fund raising systems along with documentation procedures.

By practices, are you referring to how we do things?

Yes, included are

• Donor relations activities
• Special events
• Cycle of annual appeals, with sample letters and (if available) phone scripts
• Description of major gift practices and activities
• Description of volunteer and board involvement
• Plans and materials used for annual communications cycles (sample newsletters, donor update letters, bulletin inserts, etc.)

To what should we be pointing when we report results?

Be prepared to share recent fund raising statistics (number of donors, average gift, number of gifts in ranges, number and kinds of planned gifts and bequests).

What do we then receive from the auditor?

Within three weeks following the audit visit, AAI provides the organization with a detailed analysis of the existing fundraising program and suggestions for changes and/or improvements. The goal of the audit and accompanying report is to lay the groundwork for a fundraising plan that assures a dynamic and financially secure future for the organization.

Could you be more specific about your report?

We first describe the agency and its principals and report on its moment in development. We indicate why an audit was requested, and summarize all of the activities of the audit.

The report typically includes a summary of comments and information gathered during the interview sessions, as well as recommended immediate first-steps toward implementation of a comprehensive development program.

A convenient outline for a report begins with an enumeration and discussion of organizational strengths, moves into organizational challenges and then concludes with recommendations.

Illustrate kinds of recommendations you might offer?

I shall try to imagine a generic case, but know that there can be no uniform pattern.

1. Define more precisely your case for support. It is not enough simply to tell prospective donors that your agency needs gift support. Rather, it is crucial that staff and board work together in determining a menu of activities for which gifts will be sought. Once those decisions have been made, work can begin on putting together a compelling case for support. This will include an explanation of why particular activities have been identified as priorities for fund raising, something about the people being served, and what it is that qualifies your agency to do the work as described.

2. Match the fundraising priorities with your organizational budget. It is important, before the organization embarks on a full-scale development program that policies be developed relating fundraising goals to the organizational budget. It will be discouraging and unfair to development staff if restricted gifts – regardless the total dollars raised – do not “count” in calculating the value of the program to the organization.

3. Target two or three potential donor groups. In contrast to not giving much thought to who is being approached, your agency should segment its constituency into levels of donor potential. It is important to focus your energies, then, on the groups with most potential. Along with identifying specific target donor groups, it is important to segment the organization’s appeals for support and to implement a mix of special events and more standard fundraising approaches (direct mail, face-to-face contacts with potential major donors).

4. Provide fundraising training for board members and selected staff. An auditor may find willing spirits but considerable apprehension concerning what is expected of staff and board members as the organization becomes serious about doing fund raising right. Similarly, staff members may feel uncomfortable asking someone for money. People are beginning to recognize that it takes time to develop a program, but there’s not a lot of patience. In the face of such organizational inexperience, it is necessary to provide training opportunities and mentoring sessions for board and staff members to build their confidence levels and to give them a taste of success with fund raising.

5. Recruit an advisory group to assist with fundraising planning. When first venturing into fund raising, it can be a helpful thing to invite a small group of current and potential donors to advise the organization on how best to shape the development program. A development advisory group can be especially beneficial in light of the composition and size of the organization’s board of directors. It will take some of the pressure off the board to know other volunteers are available to help shoulder responsibility for the success of the new program.