Those of you with a July 1 fiscal year start date are most likely working on your budget for next year. Some of you may have a calendar year budget, so you’ll be working on yours later in the year.

Whatever the case may be, putting together a budget is hard, especially if you’re a small nonprofit with limited resources. It may be tempting to create a minimalist budget with the mindset “we can’t afford this.”

But be careful. What are you saying you can’t afford? It may be something you should be investing in.

You’ve probably heard the phrase you need to spend money to make money. Here are three areas you should be investing more money in. Don’t be scared. If you do it right, these investments will help you raise more money.

Invest in a good database

I wrote a post about this a few weeks ago. Why You Need a Good Donor Database

It bears repeating because a good database can help you raise more money. You can segment your donors by amount and politely ask them to give a little more in your next appeal – $35 or $50 instead of $25.

A good database can help you with retention, which will save you money since it costs less to keep donors than to acquire new ones. You can personalize your letters and email messages. Make sure to invest in good email service provider, too.

Personalized letters and messages mean you can address your donors by name and not Dear Friend. You can welcome new donors and thank current donors for their previous support. You can send targeted mailings to lapsed donors to try to woo them back. You can send special mailings to your monthly donors. You can record any personal information, such as conversations you had with a donor and their areas of interest.

Don’t cut corners when it comes to your donor database. You can’t afford to do that.

Invest in direct mail

If you never or rarely use direct mail, you’re missing out on an effective and more personal way to communicate with your donors. Think of the immense amount of email and social media posts you receive as opposed to postal mail. Your donors will be more likely to see your messages if you send them by mail.

If money is tight, you don’t have to mail that often. Quality is more important than quantity but aim for three or four times a year.

Give some thought to what you send. Some ideas, besides appeal letters, include thank you cards; Thanksgiving, holiday, or Valentine’s Day cards; infographic postcards; two to four-page newsletters, and annual/progress reports. Whatever you choose, remember to keep it donor-centered. You could put a donation envelope in your newsletter to raise some additional revenue, but don’t put one in a thank you or holiday card.

Shorter is better. Lengthy communication will cost more and your donors are less likely to read it.

A few ways you can use direct mail without breaking your budget are to clean up your mailing lists to avoid costly duplicate mailings, spread thank you mailings throughout the year – perhaps sending something to a small number of donors each month, and look into special nonprofit mailing rates. You may also be able to get print materials done pro bono or do them in-house, as long as they look professional.

Of course, you can use email and social media, but your primary reason for communicating that way shouldn’t be because it’s cheaper. It should be because that’s what your donors use. If your donors prefer you to communicate by mail, then that’s what you should do.

Invest in donor communications

Here’s some great wisdom from Tom Ahern – If you do better donor communications, you’ll have more money. This means thanking your donors and keeping in touch with them throughout the year.

Don’t skimp on your communications budget. Creating thank you cards and infographic postcards are a smart investment and a necessity, not a luxury. So is hiring at least one communications staff member. Maybe you need to reallocate your budget to cover some of these expenses. You could also look into additional sources of unrestricted funding.

Remember, you can also use email and social media to communicate with donors. This reiterates the need for a good email service provider that has professional looking templates you can use for your e-newsletter and other updates.

Don’t limit yourself by saying you can’t afford certain expenses. If you invest in a good database, direct mail, and donor communications, you should be able to raise more money.

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