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“Cash is king,” they say. Sooner or later, nonprofit organizations need to raise funds because funds are the lifeblood of their existence and ability to carry out their mission. We agree on that.
And we have been blessed. How can we complain when Americans donated a record $306.4 billion to charitable causes in 2007? Charitable donations in 2008 are likely to be higher. It’s a wonderful record of generosity unmatched by any other country in the world.
Yet we all know too many nonprofits that struggle with tight finances. So the question is, why aren’t nonprofits raising more money in a nation so wealthy and so demonstrably caring?
The answers are not rocket science, not a magical mystery, not a coincidence, not “out there beyond our control”. No, while medicine may be difficult to swallow, nonprofit organizations have 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 be made. The choices we make and the choices nonprofits make have consequences. The answers to our fundraising question are rooted in a number of basic things that nonprofits all too often don’t do.
So again, why aren’t nonprofits raising more money? Nonprofit organizations don’t raise more money because they…
- Do not ask. As incredible as it may seem, nonprofit leaders who never ask for support are more common than you might think. They’re nice people, but they don’t pull the trigger. Experienced major donors keep telling us about organizations that interested them but never asked for support. Perhaps the nonprofit has indicated that they want help, perhaps the CEO entertained the potential donor, or perhaps the organization invited the potential donor family to organizational events, but no one ever asked the question, “Will you donate to us?” Help amount of X?” So the nonprofit didn’t because they didn’t ask.
- Don’t develop a plan. To raise funds, you must develop a plan (a written, workable strategy based on proven principles and processes), and then you must implement the plan. This is true regardless of whether it is a boom or bust economy. Sure, during bear markets, belts tighten and giving is sometimes compromised. But one thing we have learned over time. Fundraising for nonprofits is more about having a plan and executing the plan than it is about the economy.
- Don’t include the organization’s CEO as the primary fundraiser. Donors want to meet the person responsible for spending their money and completing the project. You want to meet the person who is articulating the vision, and who better to do that than the CEO? But amazingly, in every community across the country there are CEOs of nonprofits who avoid fundraising like the plague. Employees or volunteers can sometimes run a campaign without significant involvement from the organization’s CEO. However, this only happens when a staff member, volunteer or board member is essentially acting as an assistant leader. And even then, the CEO’s absence or half-hearted participation reduces the likelihood of completing the campaign successfully.
- Don’t build relationships with their constituents. Nonprofits struggling to raise funds have generally missed the first law of fundraising: Get to know your supporters and potential supporters. People want results from their favorite nonprofits, but they want more than that. They want an emotional connection, a connection or involvement, maybe validation. People want to be part of something meaningful. Not-for-profit organizations too often fail to do this, celebrating their own achievements but forgetting to acknowledge the achievements or the sufferings of their supporters. Nonprofit organizations would do well to understand the values, needs, and interests of their constituents. Money follows the heart.
- Don’t build relationships with the right voters. Around 80% of the funds typically come from 20% of your donors. This is an old rule of thumb that now morphs into 90/10. Most of the funds you need will not come from direct mail campaigns, email broadcasts, phone calls, car washes or bake sales, golf outings, or volunteer offers. Most of the funds your nonprofit could use are not donated by corporations or foundations. Most of the money you need is in the hands of wealthier individuals or families – real people with real priorities and real problems and real potential, just like the rest of us. Bulk approaches don’t work. Get to know the person.
- Do not engage board members to actively promote the organization, network, and fundraise. Trusteeless fundraising efforts work with one hand tied behind the back. Trustees or directors must “give, get or fold”. Nonprofit organizations are not mercenaries if they recruit board members with “work, wealth, wisdom, and testimony” in mind. Being a Trustee is an honor, but that’s not really what the appointment is about. Being a trustee means being willing to work for the nonprofit organization, giving according to your ability, sharing personal and professional expertise, and speaking for the organization in the community. Bystanders, non-donating bodies are recipes for the organization’s demise and a fundraising disaster.
- Don’t spend money to raise money. Whether planned into operations or included in the amount to be raised, a fundraiser costs 5% to 12% of the goal. The Better Business Bureau sets 35% as the upper limit. Nonprofits cannot raise funds without investing in the process of professional advice, a plan, development staff (staff who assist the CEO in raising funds), and staff development (training on how to solicit assistance). Nonprofit organizations that don’t spend money on fundraising will soon end up spending less.
- Don’t acknowledge the reality of competition. Approximately 1.5 million nonprofit organizations serve religious, educational, humanitarian, medical, or other public purposes in the United States. According to the National Center for Charitable Statistics, that’s a 36.2% increase over the past decade. So while a nonprofit organization can reasonably expect to find an open audience for its calls for help, it must also compete with many similar organizations asking for support. Like competition in any other endeavor, this puts pressure on nonprofit organizations to differentiate themselves and learn to say succinctly what makes their organization special and worth supporting. If they don’t, sooner or later they’ll show up “a day late and a dollar short.”
- Don’t develop excellent programming. While anyone can think of a seedy organization that somehow survives, quality matters. This is especially true for wealthier potential donors. They can afford and regularly buy quality in their own lives, and they expect it from the organizations designed to support them. Nonprofit organizations that use lack of money as an excuse for lack of excellence create their own self-fulfilling prophecies. No matter how limited a nonprofit’s funds may be, it can still do what it wants to do as best it can. There is no justifiable excuse for a lack of commitment to excellence – at least there is no excuse that a potential donor will accept.
- Don’t talk about anything other than her need for more money. Nonprofit organizations that are only interested in acquisition quickly find themselves alone. This point does not contradict the need to ask. It just recognizes that donors crave to be approached with more than one request. We’re back to relationship and vision. Target 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 come.
- Do not develop an ethical record. Lose confidence today and lose support tomorrow. Nonprofits known to have misused or misused funds can forget about successful fundraising until problems are fixed, apologies made, and new practices put in place. Launch highly accountable, highly accessible, highly admirable financial and operating systems. Be above reproach. Ooze integrity.
- Don’t understand the role of fundraising consultants. Fundraising advisors typically cannot practically or ethically act as conduits for wealthy donors. Also, name dropping doesn’t work anyway. Also, the consultants cannot guarantee that the fundraising will be successful. But experienced fundraising consultants can help nonprofits solve problems, create a development plan, and encourage nonprofit leaders to work with them and increase their productivity. Top performers in politics, athletics, art and business hire trainers. They want to be the best, so they look for the advantage that a coach can offer. Nonprofit organizations should do the same.
- Don’t realize that they no longer have a viable mission. Nonprofit organizations sometimes outlive their usefulness, and it is often wise donors who recognize this fact before it is acknowledged by employees or board members. The reason for this is that donors do not usually give their money to causes that are lost, and they are generally not as committed as those who work in or lead an organization. Giving a loved one a dignified death is never easy, but sometimes that’s exactly what should happen. Donors withdrawing their support is one way this natural process takes place.
Times and economic circumstances can affect a nonprofit’s ability to raise funds. But more often than not, nonprofits don’t raise more money because they don’t.
That’s actually good news. It means that a nonprofit’s ability to raise more funds is not beyond its control. Your nonprofit organization can raise more funds if they choose to do so by taking certain actions. So be encouraged. You can indeed attract more money to the mission. It’s your decision.
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