The Fundraising Dilemma: How to Stop Repeating Failed Strategies
Every nonprofit organization relies upon the philanthropic support of others to ensure that the necessary resources are available to carry out their mission. Yet, despite all the knowledge about fundraising, many nonprofits struggle. In fact, according to the “2020 Nonprofit Leadership Impact Study,” 47% of nonprofits report their biggest challenge is having a lack of resources, which include specific positions/roles (58%), donations (55%), marketing budget (55%) and more.
Hundreds of articles and books have been written about the subject of fundraising along with extensive research on the subject as well. Thousands of professionals attend annual conferences hosted by professional fundraising associations covering a wide range of topics on annual giving, major gifts, capital campaigns, donor software and online donor technologies.
Yet, despite all the knowledge and research, why do so many organizations continue to fail to achieve any real level of success?
Perhaps it is time to dramatically re-examine how we think about fundraising, and finally learn what it really takes to create a successful culture of philanthropy.
Key solutions to the nonprofit fundraising dilemma:
- Understanding that people give to success, not distress
- Transition from the “tin cup” versus the “investment” theory of fundraising
- Create an organizational culture of success focused on achievements and results
- Practice the tri-partnership of philanthropy
Let us start with understanding the principles of philanthropy: why people really give money. We know that people give to make a difference; they give because they want to make the world a better place — and most give because they were asked by someone they know and respect. Some people also give for tax benefits. But there are two major reasons why people really give money that we need to understand and change our organizational behavior:
- They give to success, not distress.
- They give to the needs of those you serve, not your organizational needs.
People give to high-performing successful nonprofits because they want to see a “return on their investment.” They do not want to help you address constant operating losses. The more your organization communicates your achievements and successes, the higher the probability donors will give to you as compared to others.
Tin Cup Theory of Fundraising
So how does your organization communicate the positive impact you are having in the community you serve — whether local, national or global? Do you discuss your achievements and successes at each board meeting? Are your board members passionate and committed to serve as your community ambassadors? How often do your stakeholders hear directly from those who have benefited from your services? Do you have video testimonials from them expressing their gratitude to you on your website’s homepage?
When I was a young boy, my mom occasionally took my brothers and sister into New York City to see the Radio City Music Hall “Spectacular Christmas Show.” We travelled into the city by bus and outside the Port Authority bus terminal, and there was always this poor disheveled person sitting on a cardboard box selling pencils in a tin cup. He was always begging for money.
Far too many organizations still practice the “tin cup theory of fundraising” by asking for money because of their financial distress rather than asking them to invest in your organization’s success. Now, your organizational needs for facilities, staff, program and services support are important. However, if you truly understand that people rarely give to your “needs,” but to success and the opportunity to make a difference in the lives of others, you will be on the road to creating a true culture of philanthropy.
Investment Theory of Fundraising
Now is the time to transition to the “investment theory of fundraising.” Board members from organizations that practice the investment theory of fundraising no longer fear rejection or prefer to “have a root canal than help raise money.” They will no longer view the development office like finance and human resources, but more of part of your organization’s culture.
When you develop a high-performing nonprofit that is constantly striving for excellence in everything you do, your board members will become active partners with your CEO and chief development officers in cultivating and soliciting donors. They will have become passionate about the impact your organization is having on others.
Board members from high-performing nonprofits also experience their board service as more meaningful and fulfilling. They have a strong sense of ownership or partnership with you in helping you achieve your strategic goals. The more your board feels responsible for your success the more engaged with you they will become.
About a decade ago I founded a university leadership program called the Center for Excellence: Leadership, Governance and Philanthropy. I taught a course called “How to Avoid the Fundraising Bermuda Triangle.” The fundraising Bermuda Triangle is when the three parties — CEO, chief development officer and the board — all point fingers and blame each other for their organization’s lack of success. Apparently, it is easier to blame others than to own up to their own personal responsibility.
The overwhelming number of volunteers who serve on your boards are well meaning individuals — they want to do the right thing, and they want your organization to succeed — but we must admit we do a pretty ineffective job of training our board members on how to become successful in philanthropy. We often have unrealistic expectations of our board members, too. Just because someone is successful as a business or community leader does not translate to success in the world of fundraising. In addition, constantly reminding them of their role as fundraisers is like reminding your kids to clean their room. It rarely is effective (maybe your kids, but not mine).
Common complaints from development officers are “My CEO won’t help me out,” or “My board expects me to do it all myself. They won’t offer to make any introductions to their friends and colleagues for me.” Another solution to the nonprofit fundraising dilemma is to ensure that you have created a tri-partnership of philanthropy.
The tri-partnership of philanthropy is when all three parties understand the basic principles of why people really give money and the role each is expected to perform to avoid the Bermuda Triangle.
The Role of the CEO
- Chief sales officer. Let people know what distinguishes your organization from others.
- Chief relationship officer. Build relationships with all key internal and external stakeholders.
- Chief communications officer. Tell people about your achievements and successes.
- Chief brand officer. Build a positive image of your organization.
- Chief fundraising officer. Be responsible for your key role in cultivating and soliciting donors
The Role of the Board
- Advocate for your mission.
- Communicate your achievements and successes.
- Identify and commit to your chief development officer to help cultivate a minimum of three individuals, families, corporations or foundation each year. (Leave the actual solicitation to your CEO and chief development officer. Few board members are experienced and knowledgeable about “doing the ask.”)
- Actively participate in special events.
- Write personal notes on annual appeals.
- Make an annual contribution subject to your means.
- Recognize and thank donors.
The Role of the Chief Development Officer
- Develop a comprehensive and diversified fundraising plan.
- Create a written case for support.
- Become the quarterback of the game plan.
- Build donor relations.
- Follow through on all initiatives.
- Educate the CEO and the board.
- Solicit gifts.
- Provide effective stewardship.
When all three parties learn that development is a team effort, not a solo practice or department, the organization will avoid the fundraising Bermuda Triangle and achieve greater levels of success. When everyone learns that people give to success and not distress, when board members are encouraged and motivated to become a partner with your CEO in creating an organizational culture of success and when fear of asking for money is replaced with a passion and commitment to ask donors to invest in your success, your nonprofit fundraising dilemma will become a distant memory; and you will have created a powerful culture of philanthropy for years to come.
Dennis C. Miller, the founder and chairman of DCM Associates Inc., is a nationally recognized expert in nonprofit leadership executive search, and board and leadership performance coaching with more than 35 years of experience working with nonprofit board leadership and chief executives across the country.
Dennis is an expert in board governance, leadership development, philanthropy and succession planning. He is the author of five books, including "A Guide to Recruiting Your Next CEO: The Executive Search Handbook for Nonprofit Boards."