“Cash is king,” they say. Sooner or later, nonprofits 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 in 2007 Americans donated a record $306.4 billion to nonprofit causes? Charitable giving in 2008 is likely to be higher. It is a wonderful record of generosity unmatched in any other country in the world.
But still, we all know too many nonprofit organizations that are struggling with very limited finances. So the question is, in a nation so wealthy and so demonstrably supportive, why aren’t nonprofits raising more funds?
The answers are not rocket science, magical mystery, fluke, or “out of our control.” No, while it can be hard medicine to swallow, nonprofits need to take responsibility. It’s a bit like Abraham Lincoln saying that everyone over the age of 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 aren’t nonprofits raising more funds? Nonprofits don’t raise more funds because…
- do not ask As unbelievable as it may seem, nonprofit leaders who never ask for support are more common than you might think. They’re good people, but they don’t pull the trigger. Experienced major donors repeatedly tell stories about organizations that interested them but never approached them for support. Perhaps the nonprofit organization hinted that it wanted help, perhaps the CEO entertained the prospective donor, or perhaps the organization invited the prospective donor’s family to organization events, but no one asked the question, “Did we 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 workable, written strategy based on proven principles and processes), and then you need to work 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. Nonprofit fundraising success is more about having a plan and working on the plan than it is about the economy.
- Do not involve the CEO of the organization as the main fundraiser. Donors want to know 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 that than the CEO? But surprisingly, nonprofit CEOs who avoid fundraising like the plague can be found in every community across the country. Sometimes staff members or volunteers can 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 substitute leader. And even then, the CEO’s absence or half-hearted involvement reduces the likelihood of successful campaign completion.
- Do not develop relationships with your constituents. Nonprofit organizations struggling to raise funds often break 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, perhaps affirmation. People want to be a part of something meaningful. Nonprofit organizations too often overlook this, bragging about their own accomplishments but failing 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 volunteer offerings. Most of the funds your nonprofit could use will not be given away by companies 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 advocacy, networking, and fundraising for the organization. Fundraising efforts without trustees operate with one hand tied behind their back. Trustees or directors need to “give, take or go”. Nonprofits aren’t 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 involves 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 get involved and don’t give are recipes for organizational decline and fundraising disaster.
- Don’t spend money to raise money. Whether 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 raise funds without investing in the process: in professional advice, in a plan, in staff development (staff to help the CEO with fundraising), and staff development (training on how to apply for support for). Nonprofit boards that are penniless when it comes to fundraising soon won’t have many pennies to spare.
- Failing to recognize the reality of 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 Charitable Statistics, that total represents an increase of 36.2% over the past 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 less.”
- Don’t develop great programming. While everyone can think of a shoddy organization that somehow survives, quality matters. This is especially the case for potential high net worth donors. They can afford it and they regularly buy quality in their own lives and expect it in the organizations they are asked to support. Nonprofit organizations that use lack of funding as an excuse for lack of excellence create their own self-fulfilling prophecies. No matter how limited a nonprofit organization’s funds may be, you can still do whatever you choose to do as well as possible. There is no defensible excuse for a lack of commitment to excellence, at least no excuse a prospective donor will accept.
- Don’t talk about anything other than his 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 just recognizes that donors crave to be approached with more than one question. We return to the relationship and the vision. Look up 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.
- Don’t develop an ethically flawless record. Lose trust today and lose support tomorrow. Nonprofit organizations known to have used or misapplied funds may forget about successful fundraising until problems have been corrected, apologies have been made, and new practices implemented. Put in place highly responsible, highly accessible and admirable financial and operating systems. Be blameless. Exudes integrity.
- I don’t understand the role of fundraising consultants. Fundraising consultants cannot 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. Nonprofit organizations sometimes outlive their usefulness, and astute donors are often the ones to recognize this fact before it is recognized by staff or board members. The reason is that donors don’t usually give their money to lost causes and are generally not as invested as those who work within or run an organization. It’s never easy to allow a beloved nonprofit to die with dignity, but sometimes that’s what should happen. Withdrawal of donor support is one way this natural process takes place.
Times, economic circumstances can affect a non-profit organization’s ability to raise funds. But mostly, nonprofits don’t raise more funds for things they don’t do.
This is really good news. It means that a nonprofit organization’s ability to raise more funds is not a matter outside of its control. Your nonprofit organization can raise more funds if it chooses to do so by taking certain steps. So cheer up. In fact, you can attract more money for the mission. The choice is yours.