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Why Nonprofits Don’t Raise More Funds
“Cash is king,” they say. Sooner or later, nonprofit organizations must raise funds because funds are the lifeblood of their existence and mission. We probably agree on that.
And we were blessed. How can we complain when Americans gave a record $306.4 billion to nonprofits in 2007? Charitable donations are likely to be higher in 2008. This is an amazing record of generosity unmatched by any country in the world.
However, we all know too many nonprofits that struggle with finances. So the question is why, in such a wealthy and demonstrably caring nation, aren’t nonprofits taking on more money?
The answers are not rocket science, not a magical mystery, not a coincidence, not “out of our control”. No, although it’s a tough pill to swallow, nonprofits need to take responsibility. It’s a bit like Abraham Lincoln saying that everyone over 40 is responsible for their own face. In other words, our lives are meant to be created. The decisions we make and the decisions nonprofits make have consequences. The answers to our fundraising question are rooted in a number of fundamental things that nonprofits all too often fail to do.
So again, why don’t nonprofits raise more funds? Nonprofits don’t raise more money because…
- Don’t ask. As incredible as it may seem, nonprofit leaders who never ask for a grant are more common than you might think. Nice people, but they don’t pull the trigger. Experienced major donors repeatedly tell of organizations they were interested in but never approached for support. Maybe the nonprofit indicated that it wanted help, maybe the CEO entertained the potential donor, maybe the organization invited the prospective donor’s family to organizational events, but no one ever asked the question, “Will you help us with a gift of X amount? ” So the nonprofit doesn’t because it didn’t ask.
- Don’t make a plan. Fundraising requires developing a plan (a written, actionable strategy based on proven principles and processes) and then executing the plan. This is true whether the economy is booming or falling. Of course, during bear markets, people tighten their belts, and giving is sometimes affected. But we have learned one thing over time. The success of nonprofit fundraising depends more on the creation of the plan and the execution of the plan than on the economy.
- Don’t include the organization’s CEO as the main fundraiser. Donors want to meet the person responsible for spending their money and completing the project. They want to meet the person who radiates the vision, and who better than the CEO? But surprisingly, in every community across the country, there are nonprofit CEOs who avoid fundraising like the plague. Staff or volunteers can sometimes run a campaign without significant involvement from the organization’s CEO. But that only happens when an employee, volunteer, or board member essentially emerges as a surrogate leader. Even then, the CEO’s absence or half-hearted participation reduces the likelihood of a successful campaign completion.
- Don’t develop relationships with your constituents. Nonprofits struggling for funds have generally ignored the first law of fundraising: know your supporters and potential supporters. People want results from their favorite nonprofits, but they want more. They want an emotional connection, connection or involvement, maybe confirmation. People want to be part of something meaningful. Too often, nonprofit organizations fail to do this, crowing about their own accomplishments but forgetting to acknowledge the achievements or suffering of their supporters. Nonprofits would do well to understand the values, needs, and interests of their constituents. Money follows the heart.
- Don’t develop relationships with the right creators. About 80% of funds usually come from 20% of donors. This is an old rule of thumb that now changes to 90/10. Most of the money you need will not come from direct mail campaigns, email blasts, phonathons, car washes or baked goods, golf outings, or free will offerings. Most of the funds that a nonprofit can use are donated by non-businesses or foundations. Most of the funds you need are in the hands of higher net worth individuals or families—real people with real priorities, real problems, and real potential, just like the rest of us. Mass approaches don’t work. Get to know the person.
- Do not involve board members in active promotion, networking, and fundraising for the organization. Fundraising efforts without trustees are working with one hand behind their back. Trustees or directors need to “Give, take or get off”. Nonprofits are not mercenaries when they recruit board members with “work, wealth, wisdom, and witness” in mind. Being an honoree is an honor, but that’s not really what the appointment is about. Being a trustee includes a willingness to work for the nonprofit organization, give according to your ability, share your personal and professional experiences, and speak on behalf of the organization in the community. Disengaged, non-giving boards are a recipe for organizational decline and fundraising disaster.
- Don’t spend money to get money. Whether it’s in the budget or the amount to raise, the cost of a fundraising campaign is 5-12% of the goal. The Better Business Bureau sets a cap of 35%. Nonprofits can’t raise funds without investing in the process—professional advice, a plan, development staff (staff to help the CEO with fundraising), and staff development (training on how to ask for grants). Nonprofits that pinch pennies when it comes to fundraising may soon be out of pennies.
- Don’t recognize the reality of competition. About 1.5 million nonprofit organizations operate in the United States for religious, educational, humanitarian, medical, or other public causes. According to the National Center for Philanthropy Statistics, this represents a total increase of 36.2% over the last ten years. So while a nonprofit organization can reasonably expect to find a receptive audience for its request for help, it must compete with many similar organizations seeking support. As with competition in any endeavor, it puts pressure on nonprofits to differentiate themselves and learn to articulate what makes their organization special and worthy of support. If not, sooner or later they will come out “a day late and a dollar short.”
- Don’t develop great programming. Although everyone can think of a lousy organization that somehow survives, quality still matters. This is especially true for potential donors with higher net worth. They can afford and regularly buy quality in their own lives, and they expect this from the organizations they ask for support. Nonprofits that use a lack of money as an excuse for a lack of excellence are creating their own self-fulfilling prophecies. No matter how limited a nonprofit’s funds are, it can still do what it wants to do as best it can. There is no defensible excuse for a lack of commitment to excellence – at least not an excuse that a potential donor would accept.
- Don’t talk about anything other than they need more money. Nonprofits interested only in acquisition will soon find themselves on their own. This point does not contradict the need to ask. He just recognizes that donors will approach them with multiple requests. We’re back to the relationship and the vision. Raise awareness among donors and prospective donors. Talk about plans, solutions and success stories. Tell prospective donors why and how their support will change. Create hope for something better and the funds will come.
- Do not develop an ethically impeccable record. Lose trust today, lose support tomorrow. Nonprofits known to have misappropriated or misused funds can forget about successful fundraising until the problems are fixed, apologies are made, and new practices are instituted. Launch highly accountable, easily accessible, highly creditable financial and operational systems. Be above reproach. Integrity leaks.
- I don’t understand the role of fundraising consultants. Fundraising consultants typically cannot, practically or ethically, act as conduits for wealthy donors. Besides, anonymization doesn’t work anyway. Consultants also cannot guarantee that the fundraiser will be successful. However, experienced fundraising consultants can help nonprofits solve problems, develop development plans, and encourage nonprofit leaders, working with them and increasing their productivity. Top performers in politics, athletics, the arts, and business all employ coaches. They want to be the best, so they look for the advantage that a coach can provide. So should non-profit organizations.
- Never mind that they no longer have a viable mission. Nonprofits sometimes outlive their usefulness, and it’s often savvy donors who recognize this fact before staff or board members do. That’s because donors don’t usually give their money to lost causes, and they usually aren’t as talented as those who work or lead within an organization. Allowing a beloved nonprofit to die with dignity is never easy, but sometimes it has to happen. Withdrawal of donor support is one way of this natural process.
Times and economic conditions can affect a nonprofit organization’s ability to raise money. But for the most part, nonprofits don’t raise more money for things they don’t do.
This is actually good news. This means that a nonprofit’s ability to raise more funds is not within its purview. Your nonprofit can raise more funds if you choose by taking certain steps. So they encourage me. It can really attract more money to the mission. The choice is yours.
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