Why Nonprofits Don’t Raise More Funds

“Cash is king,” they say. Sooner or later, nonprofits need to raise funds because funds are the lifeblood of their existence and ability to fulfill their missions. On this we probably agree.

And we have been blessed. How can we complain when in 2007 Americans gave a record $ 306.4 billion to non-profit 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 of too many nonprofits struggling with their finances. So the question is, in a nation so rich and so demonstrably concerned, why aren’t nonprofits raising more funds?

The answers are not rocket science, magic mystery, chance, or “out there beyond our control.” No, while it may be a difficult drug to swallow, nonprofits must 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 do. The decisions we make and those made by nonprofits have consequences. The answers to our fundraising question are based on a number of basic things that nonprofits all too often don’t do.

So again, why aren’t nonprofits raising more funds? Nonprofits don’t raise more money because …

• Do not ask. As incredible as it may sound, nonprofit leaders who never ask for support are more common than you might think. They are good people, but they don’t pull the trigger. Top seasoned donors repeatedly tell stories about organizations that interested them but never approached them for support. Maybe the nonprofit hinted that they wanted help, maybe the CEO entertained the potential donor, or maybe the organization invited the family of the potential donor 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 it didn’t ask for it.
• Don’t develop a plan. To raise funds, you must develop a plan – a workable, written strategy based on proven principles and processes – and then work on the plan. This is true whether it is a booming or declining 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 executing the plan than it is about the economy.
• 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 who projects the vision, and who better to do that than the CEO? But surprisingly, the CEOs of nonprofits that avoid fundraising like the plague can be found in every community across the country. Staff members or volunteers can sometimes run a campaign without meaningful 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-engagement reduces the likelihood of successfully completing the campaign.
• Don’t develop relationships with your constituents. Nonprofits struggling to raise funds have generally failed to abide by 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 participation, perhaps an affirmation. People want to be part of something meaningful. Nonprofits often miss out on this, bragging about their own accomplishments but forgetting to acknowledge the accomplishments or woes of their followers. 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 constituents. About 80% of the funds generally come from 20% of your donors. This is an old rule of thumb that is now turning to 90/10. Most of the funds you need will not come from direct mail campaigns, mass e-mails, phonatons, car washes or bake sales, golf outings, or free will offers. Most of the funds that your nonprofit organization 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 and 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 advocacy, networking, and fundraising for the organization. Non-trustee fundraising efforts work with one hand tied behind your back. Trustees or directors must “give, take or get off.” Nonprofits are not being mercenaries when they recruit board members with “Work, Wealth, Wisdom, and Testimony” in mind. Being a trustee is an honor, but that’s not what the appointment is really 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. Uninvolved, non-donor 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 between 5% and 12% of the goal. Better Business Bureau sets 35% as the upper limit. Nonprofits cannot raise funds without investing in the process: in career advice, in a plan, in staff development (staff to assist the CEO in fundraising) and staff development (training on how to request support ). Nonprofit boards of directors that pinch pennies when it comes to fundraising will soon not have many pennies to pinch.
• Don’t acknowledge the reality of the competition. Approximately 1.5 million nonprofit organizations are working in the United States for religious, educational, humanitarian, medical, or other public causes. According to the National Center for Charitable Statistics, that total represents a 36.2% increase over the past ten years. So while a nonprofit can reasonably expect to find an audience receptive to its requests for help, it must also compete with many similar organizations requesting support. Like the competition in any other endeavor, this puts pressure on nonprofits to distinguish themselves and learn to succinctly express 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 excellent programming. While everyone can think of a shoddy organization that somehow survives, quality matters. This is especially the case for potential donors with higher net worth. They can pay and buy quality regularly in their own lives and look forward to it in the organizations they are 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 organization’s funding may be, you can still do what you choose to do as well as possible. There is no defensible 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 your need for more money. Nonprofits interested only in acquisitions soon find themselves alone. This point does not contradict the need to ask. Simply acknowledge that donors want to be approached with more than one request. We go back to the relationship and the vision. Raise the gaze of donors and potential donors. Talk about plans, solutions, and success stories. Tell potential donors why and how their support will make a difference. Hope for something better and the funds will come.
• Don’t develop an ethically flawless track record. Lose confidence today and lose support tomorrow. Nonprofits known to have wasted or misapplied funds may forget about successful fundraising until problems have been rectified, apologies, and new practices implemented. Putting highly responsible, accessible and admirable financial and operating systems in place. Be blameless. It 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 seasoned fundraising consultants can help nonprofits solve problems, put a development plan in place, and encourage nonprofit leaders by partnering with them and increasing their productivity. Top 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 provide. So should non-profit organizations.
• Don’t acknowledge that they no longer have a viable mission. Nonprofits sometimes outlive their usefulness, and astute donors are often the ones who acknowledge this fact before it is recognized by staff or board members. The reason is that donors often do not give their money to lost causes and generally do not have the same rights as those who work for or run an organization. It’s never easy to allow a beloved nonprofit to die with dignity, but sometimes that’s what should happen. Donors withdrawing support is one way this natural process takes place.

Timing, economic circumstances can affect a nonprofit organization’s ability to raise funds. But most of all, nonprofits don’t raise more funds because of things they don’t do.

This is really good news. It means that the ability of a nonprofit organization to raise more funds is not beyond its control. Your nonprofit organization can raise more funds if you decide to do so by taking certain steps. So go ahead. In fact, you can attract more money for the mission. The choice is yours.