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The Core of a Good Rapport

As you walk out the door after a confrontation with the chief development officer, you hear a whispered “bean counter.” How can you get this relationship, which is so important to your institution, back on track?

By Sigmund G. Ginsburg

Jean Johnson, the chief development officer, sees her job as expanding the institution’s reach into the philanthropic community—and the more reach the better, even if it is not in this year’s budget. She views development as a multiyear, long-term effort that requires an appropriate financial investment. In her opinion, no idea is too grand to be considered. Colleagues describe her as eloquent, innovative, and outgoing.

Because of their differing styles, training, and personalities, is it any wonder that Wade and Jean approach each other with caution? Yet because of their influential roles within the institution, they need to work together.

Walk in Her Shoes

Although they are fictitious stereotypes, Jean and Wade represent the roles often played by two of an institution’s major leaders. The development officer raises funds by developing capital, endowment, and annual campaigns for the current budgeting year as well as the future. As the chief financial officer, you rely on these funds to develop the operating budget and capital budget projections, as well as for financial and strategic planning. How can you—and your staff—work more effectively with the development office and thus increase the contributions to the institution of everyone involved?

To be effective, you need to know more about Jean’s world—what she does, how she does it, and the pressures she faces. In turn, she needs to learn more about you. For example, as a chief financial officer who watches the bottom line, you demonstrate the prudence of the institution. This can be instrumental to the development officer in raising new funds. In turn, the development officer can help relieve the short- and long-term financial pressures on you and your institution by successfully raising funds.

You also need to know what you have the right to expect from the development officer—and vice versa. You have a right to express the need for unrestricted gifts or gifts that are as broadly restricted as possible. At the same time, you should recognize how difficult it is to obtain such gifts. Donors favor naming opportunities and specific programs, and some very sophisticated donors mandate that their funds be used for enrichment rather than budget relief.

You might wonder why development is throwing money and staff at luxurious special events. “Why serve filet mignon, rack of lamb, and lobster when chicken will do?” The development officer responds that the money put toward food, flowers, musicians, exciting themes, and decorations is money well spent. To attract donors to special events, it takes creativity and money. In this situation, compromise will be necessary.

The development officer has the right to expect you to provide timely, understandable financial information—year-end financials, financials versus budget, investment performance, and investment allocations. You or your staff should also be available to make presentations to or answer questions from donors or prospective donors. You have a right to expect the development officer to evaluate the performance of his or her staff and determine realistic needs for new staff. Both of you need to recognize the importance of continuity of staff at all levels in the development area, which tends to be a volatile field. Both of you have the right to expect from each other early indications of good and bad news.

Do You Recognize These Traits?

Do you sometimes believe your chief development officer...

  • is too much of a salesperson?
  • promises potential donors too much?
  • doesn’t consult with you or your staff in advance or regularly?
  • wants reports and information too quickly?
  • spends a great deal of time and money cultivating donors?
  • gives things (naming opportunities, parking, and tickets to the institution’s intellectual, cultural, and sports programs) away too cheaply and does not realize the precedent that is being set?
  • doesn’t try hard enough to make the gifts as unrestricted as possible?
  • doesn’t recognize that looseness or optimism with the numbers and lack of precision will make the job of preparing strategies, plans, and even a reliable budget very difficult?
  • doesn’t understand that you must comply with various rules and requirements to ensure that the books and figures are correct; be ready to face audits by outside/inside auditors, donors, and government; and be able to handle pressure from the audit, investment, budget, facilities, planning, and development committees?
  • doesn’t measure performance of staff by concrete results achieved?
  • spends too much time “working” at lunch, coffee, and parties?

Does the chief development officer believe you...

  • are a narrow thinker who needs to go beyond spreadsheets and fundraising forecasts and think about what could be and how to help make that happen?
  • are unnecessarily restrictive in your rules, requirements, and deadlines?
  • don’t understand that fundraising entails aligning fundraising goals with institutional/strategic planning?
  • look at the number of staff and amount raised and conclude that the money raised per staff member is low—forgetting that many staff members in development have jobs not directly involved in raising money, such as prospect research, database management, gift recording, special events planning, and so on?
  • become irritated when donors make last-minute requests for detailed information in an easy-to-understand manner?
  • don’t understand that it takes time, high-quality staff, and substantial resources to conduct professional fundraising and development at a time of increasing competition for gifts and grants from major donors, foundations, corporations, and government?
  • don’t consult with or support the development office’s function and staff?
  • don’t understand that most donors want to give to specific schools, departments, or programs for specified purposes rather than to the institution for unrestricted purposes, and that many want to make sure the funds are not used as replacement for money already allocated or that should be allocated?
  • don’t appreciate that today’s modest gift giver could, through cultivation, become tomorrow’s major gift giver?

Relieving the Tension

To alleviate frequent sources of tension, both of you can take some constructive steps. First, the development, finance, and program staffs need to work together when formulating the development and grants budgets and coordinate along the way in monitoring those budgets. Everyone must agree on the income and expense projections and understand where the funds are allocated. Review solicitation materials to make sure there is joint understanding of how donations will be reflected on the books.

Senior development staff members should attend appropriate finance meetings since they need to be able to discuss and interpret the organization’s financial statements. Usually, when funders have questions about an item in the financial reports and statements, they call the development office. Development leaders will be able to respond to most of the questions as a result of their discussions with your office.

On a monthly basis, give the development office a report showing the status of cash collections for pledges, a comparison of budgeted donations to actual income, use of restricted funds, restricted grants not recognized, and so forth. Meet monthly or quarterly with the development office to review actual results and project the remainder of the year. If development and finance computer systems do not interface, the development reports should be manually reconciled with finance records on a monthly basis to ensure uniformity of information. Meet with the chief of development periodically to assess your collaborative efforts. In addition, the president needs to check with each of you from time to time.

Development staff members need to document each grant or pledge because verbal pledges cannot be included on the financial statements. To meet audit requirements, have original copies of donor commitments and the institution’s confirmations. In the event of unusual circumstances, discuss the gift-letter wording and reporting requirements with the development office.

Sometimes, after the original grant, a funder has a conversation with development and changes are made to the program or the grant budget. This can be a source of confusion and misunderstanding. If this occurs, the development office should immediately ask the donor to sign off on new documentation and update finance and the donor file.

It’s also important to record and acknowledge receipt of gift checks and deposit the funds as quickly as possible. Timely action indicates the institution’s efficiency to the donor. However, one question that must be answered first is “Who receives the check?” Both the development and finance offices could make an argument for having the check directed to them, then quickly notifying the other, and having the check deposited. Receipt by the controller’s office will maintain good financial controls.

Two other record-keeping issues to be decided are “Which office should keep the master file for each grant?” and “Who should have access to specific elements in the files?” A good system is to have the development office maintain the master files and allow finance staff members working access to appropriate elements of the files. Exercise a need-to-know approach to protect the privacy of donors.

Now that you know how to work more effectively with the chief development officer, share this article with that individual at your institution so both of you can benefit from knowing more about each other’s roles.

Beware of Six Sticking Points

What are the areas of potential conflict between you and the chief development officer? Do you consciously or subconsciously hold grudges over each other’s position in the pecking order, closeness to the president and the board, or salary differences? What about other issues? Although each situation is different, six areas can cause trouble for both parties.

1. Exhibiting excessive optimism about fundraising potential. This seems to be an important ingredient for success as a chief development officer, but you may see it as a missed projection target.

2. Displaying sensitivity to donors and their peccadilloes. Donors can ask for a lot, and the chief development officer will no doubt ask you to comply with these requests. Hopefully, the development staff will not make really farout requests, particularly for people who give small gifts and have little potential for future giving. However, your responsiveness, in person and through timely data and reports, will make an enormous impact.

3. Dealing with the income from endowment gifts. Every endowment, large or small, takes a lot of work and software but is extremely important to the donor who thinks that his or her endowment is the only one on the books. Although keeping track of the income can be difficult, good reporting on the use of each endowment’s income is a leading factor in producing more gifts. As the CFO, you need to understand and appreciate this, just as the development office must appreciate the strain this puts on your staff, systems, and priorities.

4. Allocating the income. A donor can be extremely narrow in his or her wishes about the purpose of the gift. The chief business officer, chief development officer, and program officer who will be spending the money should have a three-way conversation so the gift satisfies the needs of the institution and meets the needs of the donor.

5. Investing in staff and systems. Fundraising cannot be done quickly with limited staff or outdated systems. It’s the chief development officer’s job to convince you to take a chance and make the necessary investment in additional development staff, as well as new systems and technology, to help build the short- and long-term financial strength of your institution. It’s your job to carefully evaluate the use of funds provided to development and the results achieved.

6. Establishing office relations. The development office needs to work with your office to reconcile financial information regularly. You will need to certify gift reports and work with the development officer to come to the same set of numbers. At the same time, the chief development officer must understand your financial reporting requirements, systems, and procedures.

Author Bio Sigmund G. Ginsburg, executive vice president and a director of the nonprofit practice for DHR International, New York City, has served as a chief financial officer at four institutions and worked with nine chief development officers.
E-mail sginsburg@dhrinternational.com