“Cash is king,” they say. Sooner or later, nonprofit organizations need to raise funds because funds are the lifeblood of their existence and their ability to accomplish their missions. On this we probably agree.
And they have hurt us. How can we complain when Americans donated a record $306.4 billion to nonprofit causes in 2007? Charitable giving in 2008 is likely to be higher. It is a wonderful record of generosity unmatched by any other country in the world.
But still, we all know of too many nonprofits struggling with very limited finances. So the question is, in a nation so rich and so demonstrably caring, why don’t nonprofits raise more funds?
The answers are not rocket science, magical mystery, chance, or “out of our control.” No, while it can be hard medicine to digest, 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 life is there to make it. The decisions we make and the decisions nonprofits make have consequences. The answers to our fundraising question are based on a number of basic things that nonprofits all too often fail to do.
So again, why don’t nonprofits raise more funds? Nonprofits don’t raise more funds because…
- do not ask As incredible as it sounds, nonprofit leaders who never ask for support are more common than you think. They’re good people, but they don’t pull the trigger. Experienced top donors repeatedly tell stories about organizations they were interested in but never approached for support. Maybe the nonprofit hinted at wanting help, maybe the executive director entertained the potential donor, or maybe the organization invited the potential donor’s family to organization events, but no one asked the question, “Would we like to help?” will you help with a donation of X amount?” So the nonprofit hasn’t done it because they didn’t ask for it.
- Don’t develop a plan. To raise funds, you need to develop a plan (a written, workable strategy based on proven principles and processes), and then you need to work on the plan. This is true whether it is a boom or bust economy. Sure, during bear markets people tighten their belts and donations sometimes take a hit. But one thing we have learned over time. Successful nonprofit fundraising is more about having a plan and working on the plan than it is about economics.
- Do not involve the CEO of the organization 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 casting the vision, and who better to do it than the CEO? But surprisingly, nonprofit CEOs who avoid fundraising like the plague can be found in every community in the country. Sometimes staff members or volunteers may run a campaign without significant involvement from the organization’s CEO. But this only happens when a staff member, volunteer or board member emerges as, in essence, a surrogate leader. And even then, the CEO’s absence or lukewarm involvement reduces the likelihood of successful completion of the campaign.
- Do not develop relationships with your constituents. Nonprofits struggling to raise funds often fall short of the first law of fundraising: Know your supporters and potential supporters. People want results from their favorite nonprofits, but they want more than that. They want an emotional bond, a connection or involvement, maybe affirmation. People want to be a part of something meaningful. Nonprofit organizations too often overlook this, bragging about their own achievements but neglecting to acknowledge the achievements or woes of their supporters. Nonprofit organizations would do well to understand the values, needs, and interests of their constituents. Money follows the heart.
- Don’t develop relationships with the right constituents. About 80% of the funds usually come from 20% of their donors. This is an old rule of thumb that is now becoming 90/10. Most of the funds you need won’t come from direct mail campaigns, email blasts, phonathons, car washes or bake sales, golf outings, or voluntary offerings. Most of the funds your nonprofit organization could use will not be given away by corporations 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. Massive approaches don’t work. Meet the person.
- Do not involve board members in active promotion, networking, and fundraising for the organization. Non-trustee fundraising efforts work with one hand tied behind their back. Trustees or directors need to “give, take or leave”. Nonprofits are not being mercenary when they recruit board members with “Work, Wealth, Wisdom, and Testimony” in mind. Being a trustee is an honor, but that’s not really what it’s about. Being a trustee implies a willingness to work for the nonprofit organization, give according to ability, share personal and professional experience, and speak on behalf of the organization in the community. Boards that don’t engage and don’t give are recipes for organizational decline and fundraising disaster.
- Don’t spend money to raise money. Whether it’s budgeted in operations or included in the amount to be raised, a fundraising campaign costs 5% to 12% of the goal. The Better Business Bureau sets 35% as the upper limit. Nonprofits cannot fundraise without investing in the process: in professional advice, in a plan, in staff development (staff to assist the CEO with fundraising), and staff development (training on how to apply for support for). Nonprofit boards that spare pennies when it comes to fundraising soon won’t have many pennies to spare.
- Not acknowledging the reality of the competition. About 1.5 million nonprofit organizations work in the United States on religious, educational, humanitarian, medical, or other public causes. According to the National Center for Charity Statistics, that total represents a 36.2% increase over the last ten years. So while a nonprofit can reasonably expect to find a receptive audience for its requests for assistance, it must also compete with many similar organizations requesting support. Like competition in any other endeavor, this puts pressure on nonprofits to set themselves apart and learn how to succinctly state what makes their organization special and worthy of support. If they don’t, sooner or later they will be “a day late and a dollar short.”
- Don’t develop excellent programming. While everyone can think of a shoddy organization somehow surviving, quality matters. This is especially the case for higher net worth potential donors. They can afford it and regularly buy quality in their own lives and expect it from the organizations they are asked to support. Nonprofits that use lack of funding as an excuse for lack of excellence create their own self-fulfilling prophecies. No matter how limited a nonprofit’s funds may be, you can still do what you choose to do as well as you can. There is no defensible excuse for a lack of commitment to excellence, at least no excuse that a potential donor will accept.
- Don’t talk about anything other than your need for more money. Nonprofits interested only in acquisition soon find themselves on their own. This point does not contradict the need to ask. It simply acknowledges that donors long to be approached with more than one question. We return to relationship and vision. Raise your eyes on donors and potential donors. Talk about plans, solutions and success stories. Tell potential donors why and how their support will make a difference. Create hope for something better and the funds will follow.
- Do not develop an ethically impeccable record. Lose trust today and lose support tomorrow. Nonprofits known to have used or misapplied funds may forget about successful fundraising until problems have been corrected, apologies made, and new practices implemented. Put in place highly responsible, highly accessible and admirable financial and operating systems. be irreproachable Exudes integrity.
- I don’t understand the role of fundraising consultants. Fundraising consultants may not typically, practically, or ethically act as conduits for wealthy donors. Also, removing names doesn’t work anyway. Consultants also cannot guarantee that fundraising efforts will be successful. But experienced fundraising consultants can help nonprofits solve problems, implement a development plan, and encourage nonprofit leaders to partner with them and increase their productivity. The highest achievers in politics, athletics, the arts, and business hire coaches. They want to be the best, so they look for the advantage that a coach can give them. So should non-profit organizations.
- Do not recognize that you no longer have a viable mission. Nonprofits sometimes outlive their usefulness, and astute donors are often the ones to recognize this fact before it is acknowledged by staff or board members. The reason is that donors don’t often give their money to lost causes and are usually not as invested as those who work within or run an organization. It’s never easy to let a beloved nonprofit die with dignity, but sometimes that’s what should happen. The withdrawal of donor support is one of the ways in which this natural process takes place.
Times, economic circumstances can affect a non-profit organization’s ability to raise funds. But above all, nonprofits don’t raise more money for things they don’t do.
This is really good news. It means that a nonprofit’s ability to raise more funds is not a matter out of its control. Your nonprofit organization can raise more funds if you choose to do so by taking certain steps. So cheer up. In fact, you can attract more money for the mission. The choice is yours.
