Why Nonprofits Don’t Raise More Funds

“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 fulfill their missions. On this much we probably agree.

And we have been blessed. How can we complain when in 2007 Americans gave a record $306.4 billion to nonprofit causes? Charitable giving in 2008 will likely be higher. It’s a wonderful record of generosity unequaled by any other country in the world.

But still, we all know too many nonprofit organizations struggling along on shoe-string finances. So the question is, in a nation so wealthy and so demonstrably caring why don’t nonprofits raise more funds?

The answers are not rocket science, not magical mystery, not happenstance, not “out there beyond our control.” No, while it may be hard medicine to swallow, nonprofits must take responsibility. It’s a bit like Abraham Lincoln saying everyone over 40 is responsible for his or her own face. In other words, our life is there for the making. 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 nonprofits all too often don’t do.

So again, why don’t nonprofits raise more funds? Nonprofits don’t raise more funds because they…

  • Don’t ask. 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 repeatedly tell stories about organizations that interested them but never approached them for support. Maybe the nonprofit hinted it wanted help, maye the CEO entertained the possible donor, or maybe the organization invited the prospect donor family to organizational events, but no one ever popped the question, “Will you help us with a gift of X amount?” So the nonprofit has not because it asked not.
  • Don’t develop a plan. To raise funds you must develop a plan (a written, workable strategy based upon proven principles and processes), and then you must work the plan. This is true whether it’s a boom or bust economy. Sure, during bear markets people tighten their belts and giving is sometimes affected. But one thing we’ve learned over time. Nonprofit fundraising success is more about having a plan and working the plan than it is about the economy.
  • Don’t get the organizational CEO involved as the chief fundraiser. Donors want to meet the person responsible for spending their money and completing the project. They want to meet the person who casts the vision, and who better to do that than the CEO? But amazingly, nonprofit CEOs who avoid fundraising like the plague may be found in every community in the country. Staff members or volunteers can sometimes conduct a campaign without significant involvement of 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 half-hearted participation reduces the likelihood of successfully completing the campaign.
  • Don’t develop relationships with their constituents. Nonprofits struggling for 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 bond, a connectedness or involvement, maybe affirmation. People want to be part of something meaningful. Nonprofits too often miss this, crowing about their own accomplishments but forgetting to acknowledge the achievements or the afflictions of their supporters. Nonprofits would do well to understand their constituents’ values, needs, and interests. Money follows the heart.
  • Don’t develop relationships with the right constituents. Some 80% of funds generally come from 20% of your donors. This is an old rule of thumb that’s now morphing to 90/10. Most of the funds you need will not come from direct mail campaigns, email blasts, phonathons, car washes or bake sales, golf outings, or free will offerings. Most of the funds your nonprofit could use will not be gifted from 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 and real problems and real potential, just like the rest of us. En masse approaches don’t work. Get to know the person.
  • Don’t engage governing board members in actively promoting, networking, and fundraising for the organization. Fundraising efforts sans trustees work with one hand tied behind their backs. Trustees or directors need to “Give, get, or get off.” Nonprofits are not being mercenary when they recruit board members with “Work, wealth, wisdom, and witness” in mind. Being a trustee is an honor, but that’s not really what the appointment is about. Being a trustee entails a willingness to work for the nonprofit, give according to ability, share personal and professional expertise, and speak for the organization in the community. Uninvolved, non-giving boards 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 an upper limit. Nonprofits cannot raise funds without investing in the process-in professional counsel, in a plan, in development personnel (staff to assist the CEO in fundraising) and personnel development (training on how to solicit support). Nonprofit boards that pinch pennies when it comes to fundraising soon won’t have many pennies to pinch.
  • Don’t recognize the reality of competition. About 1.5 million nonprofit organizations are at 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% in the past ten years. So while a nonprofit can reasonably expect to find a receptive audience to its pleas for assistance it also must compete with many similar organizations asking for support. Like competition in any other endeavor this puts pressure on nonprofits to distinguish themselves and to learn to state succinctly what makes their organization special and worthy of support. If they don’t, sooner or later they’ll come up “a day late and a dollar short.”
  • Don’t develop excellent programming. While everyone can think of a shoddy organization that somehow survives, still, quality matters. This is especially the case for higher net worth prospective donors. They can afford and they regularly purchase quality in their own lives and they expect it in the organizations they’re asked to support. Nonprofits that use lack of funds 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 chooses to do as well as it possibly can do it. There is no defensible excuse for lack of a commitment to excellence-at least there’s no excuse a donor prospect will accept.
  • Don’t talk about something other than their need for more money. Nonprofits interested only in acquisition soon find themselves alone. This point doesn’t contradict the need to ask. It just recognizes that donors yearn to be approached with more than an ask. We’re back to relationship and vision. Raise donors and prospective donors’ sights. Talk about plans, solutions, and success stories. Tell prospective donors why and how their support will make a difference. Create hope for something better and funds will come.
  • Don’t develop an ethically impeccable record. Lose trust today and lose support tomorrow. Nonprofits known to have misused or misapplied funds can forget about successful fundraising until the problems have been rectified, apologies made, and new practices put in place. Set in motion highly accountable, highly accessible, highly admirable financial and operational systems. Be above reproach. Ooze integrity.
  • Don’t understand the role of fundraising consultants. Fundraising consultants cannot typically, practically, or ethically act as conduits to wealthy donors. Besides, name-dropping doesn’t work anyway. Nor can consultants guarantee fundraising efforts will be successful. But experienced fundraising consultants can help nonprofits sort issues, put a development plan in place, and encourage nonprofit leaders, partnering with them and increasing their productivity. The highest achievers in politics, athletics, the arts, and business all hire coaches. They want to be the best, so they look for the edge a coach can provide. So should nonprofits.
  • Don’t recognize they no longer have a viable mission. Nonprofits sometimes outlive their usefulness and astute donors are often the ones who recognize this fact before it’s acknowledged by personnel or board members. The reason is that donors don’t usually give their money to lost causes, and they’re not generally as vested as those who work within or lead an organization. It’s never easy to allow a beloved nonprofit to die a death with dignity, but sometimes that’s what ought to happen. Donors withdrawing support is one way this natural process takes place.

The times, the economy-circumstances can affect a nonprofit organization’s ability to raise funds. But mostly, nonprofits don’t raise more funds because of things they don’t do.

This is actually good news. It means a nonprofit’s ability to raise more funds is not a matter beyond its control. Your nonprofit can raise more funds if it chooses to do so by taking certain action steps. So be encouraged. You can, indeed, attract more money for the mission. The choice is yours.