Donors Want Value: How Nonprofits Can Deliver More
Recently, an organization dedicated to helping women who experience stillbirth or perinatal loss approached my organization, Yad Sarah, a healthcare and social services nonprofit in Israel, where I serve on the board and oversee international fundraising efforts. The organization requested we set up a respite and recovery center for these women.
We immediately responded and allocated rooms at a health and wellness hotel we recently built to cater to people recovering from illness, medical procedures or those in need of accessible accommodations together with their families. This unique, one-of-a-kind center offers these women a badly needed alternative to the heart-wrenching experience of having to stay in a hospital’s maternity ward with other newborn babies just after losing their own or in another ward surrounded by and exposed to illness.
With this new center, we had added yet another service to our organization, originally founded nearly five decades ago to lend out medical equipment to keep people out of hospitals or facilitate a quick release to recover at home. Dozens of women contacted us about staying in this special respite center, but donors — having read about the initiative in the media — also reached out, ready to give more. The lesson here is the more organizations provide and the more value they deliver for each donor dollar, the more they get.
This focus on achieving value for donors’ giving should be the guiding principle of every nonprofit. Philanthropic organizations should focus on how they can provide more services with their resources. This focus on need, and how to fulfill it, leads to more efficiency and effectiveness, often resulting in reduced overhead and ensuring that more of each dollar goes directly to the cause. This increased efficiency and impact, in turn, will likely lead to more donations, which will lead to being able to serve even more people.
Here are a few ways nonprofits can accomplish that by providing donors the value they’re seeking.
Ensure High-Value Giving for Donors
Studies show that the vast majority of charitable donors give money because they feel a moral obligation to help society. In fact, this reason is more common than religious motivation. By expanding or adjusting services immediately when they see a need, nonprofits can increase their impact on society, and are therefore likely to receive more donations.
In my experience, taking action — even small steps at first — to fulfill a new or unmet societal need is an effective way to raise money from donors who prefer to see a program up and running. Immediately putting any available resources, including staff, volunteers, partner organizations and funding, toward a new or unmet need will also, in many cases, increase the percentage of donor money going toward providing services.
And, as is well-known in the nonprofit world, individuals are more likely to donate to charities that dedicate the majority of each dollar to the actual cause, rather than to administration and other overhead costs. Seeing real needs being met and a high percentage of each dollar going toward that — ideally more than 95% though many charity rating organizations give their highest ranking to anything more than 75% — builds trust with donors, inspiring them to keep giving and to give more.
In fact, leadership and adaptability, which measures how strategically organizations think and their ability to innovate and meet changing needs, is one of the four categories Charity Navigator considers when rating nonprofits. Achieving a high rating in this category, and not just in the category of accountability and finance, is part of what leads to increases in both number of donations and dollar amounts.
Use Each New Budget as a New Opportunity to Give
When we create annual or short-term budgets, we always start from zero. This is known in the business world as “zero-based budgeting.” We rebuild the budget each year, according to where money is needed at that moment and anticipated to be needed in the near future.
There is no such thing as simply increasing all programs by a certain percentage or automatically renewing a budget item from the previous year. Creating a budget this way is an opportunity to examine which programs and services have been most valuable, which may be unnecessary and which may need changes or adjustments.
Like constantly adding new services with whatever money and other resources can be found, zero-based budgeting helps increase efficiency, lower overhead costs and ultimately dedicate more of each donated dollar directly to the cause. That leads to more donor giving, which leads to the organization helping even more people.
Embrace Good Governance and a Thin Approach to Management
Having fewer layers of management and administration obviously saves money. But more than that, it allows organizations to be more flexible and more efficient. A thin approach to management allows organizations to act quickly and reallocate available resources on the fly to meet new needs. This all leads back to organizations being able to increase their giving and impact, and to use more of each dollar directly for providing services.
Thinner administrative staff also likely means that most employees are closely involved with providing services or interacting with those who are served. Being so close to those receiving the services leads the staff to be very conscious of seeing the value of donations and using each dollar to its maximum. A staff’s direct involvement has effects far beyond efficiency. It results in people who are very dedicated to and motivated about their work because they see the impact it has. In this way, they see themselves as direct stewards of the donors’ philanthropy.
The focus on giving and how to give more is part of what allowed my organization, within just a matter of days, to seize the opportunity and set up this badly needed hospitality and care center for mothers who have experienced stillbirth or perinatal loss. We accommodated seven women in the first two days, helping them heal and ultimately advancing the mission that our donors are supporting — enabling health, wellness, family togetherness, independence, productivity and much more. As the word spreads, we are receiving more and more calls about this center every day.
When donors clearly see the value their donations are achieving, many are likely to give more. This focus on meeting real needs as effectively as possible as they arise, leads to high-value for the donor’s dollar and a never-ending circle of giving and receiving by all involved — donors, beneficiaries, and both volunteer and paid staff.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
Philip Bendheim is a member of Yad Sarah’s International Board of Overseers as well as a Board Member of Friends of Yad Sarah, which was established by his late mother and has been awarded Charity Nagivator’s four-star rating — its highest award, achieved by only 5% of all evaluated charities.