Failing Is Winning: Being More Transparent With Your Donors

Playing it safe is not the strategy nonprofit leaders need in the information age. In fact, it’s entirely the opposite. As a result, leaders — including board members — have to embrace the idea that failing is winning. In other words, fear-based leadership does not work, and now donors are too savvy to want to remain supporting a group that does not innovate and thrive.

Late in the 20th century, the world moved from the industrial age to the information age. And this period, which is also called the digital or computer age, has specific attributes. A byproduct of the industrial age was the industrialization of the economy, and technology and information served as the main drivers. Therefore, nonprofit leaders need to understand that the digital age requires new skills and awareness.

As much as I understand that people are getting tired of hearing about disruption, continuous change and transparency, those ideas are not going anywhere. If nothing else, the pace at which disruption, change and transparency happen is only going to accelerate. And know this: Your donors live in that world, so they will push you to it. Leaders who adapt and understand how to navigate well will succeed. Leaders who cannot operate in a world of continual change, massive disruption and transparency will get tossed aside.

Why Failing Transparently Is a Good Thing

One of my favorite quotes about failure comes from Max Levchin, PayPal co-founder:

“The very first company I started failed with a great bang. The second one failed a little bit less, but still failed. The third one, you know, properly failed, but it was kind of OK. I recovered quickly. Number four almost didn’t fail. It still didn’t really feel great, but it did OK. Number five was PayPal.”

There was a time when nonprofit leaders feared speaking of failure because they worried that the donations would dry up. However, in the digital age, nonprofits that “play it safe” experience unintended consequences. Meaning, not showing impact, for instance, results in fewer donations and less donor loyalty. Donors and the public want to support groups that innovate, fail, learn and try again. They want creativity in everything from fundraising to program development. Understand this: Organizations that do not fail are not innovating! What’s more, several reasons exist for transparency in trying new things and discussing failures (and learnings) openly — including with donors.

Transparency creates an atmosphere of confidence. When you share your innovations and learnings — which usually come from failures — you increase confidence. In other words, when people know something didn’t work out as planned, but they learned from the experience, it builds confidence in leadership. By speaking to your donors about failures, and then learning from it, you demonstrate thought leadership. And that creates confidence in your ideas.

Donor loyalty increases with more transparency, including failures. When you demonstrate transparency, especially in defeat, you show your supporters that you have ethics. Remember that donors are people. As a result, people know that when you try something new, it’s not always a “win.” Sometimes lessons have to get learned. But when you are transparent in everything, donors become more loyal.

By being transparent, you build a relationship of trust. Let’s say you get a significant gift from a major donor for a pilot program. Any good fundraiser knows they have to want to nurture and grow that relationship. Well, when failures happen in that pilot program, and you tell the donor, you develop trust. It’s easy to come up with reasons that obfuscate a failure. But in transparent learning, the donor trusts your successes and losses.

Quick Tips to Become More Transparent With Your Donors and Supporters

You can do several things to demonstrate that your nonprofit is transparent in everything it does, and, therefore, worthy of donor support. By leading transparently, donors will remain with you during those times when things don’t turn out as planned. Here are some suggestions:

1. Publish your nonprofit financials. Even if you have a small organization, place your audited financials on your website.
2. Consider getting a Guidestar Seal of Transparency. With a Seal of Transparency from Guidestar, you can increase your donations by 53%.
3. In all of your programs, publish your outcomes and impact. Donors want to know the metrics for success and what your organization does. Be clear and transparent about it.
4. Make sure to have whistleblowers and conflict-of-interest policies. When you have these policies, you demonstrate to donors that you understand best practices.
5. Experiment and create pilot programs or initiatives. Finally, nonprofit leaders must develop their organizations. Thinking out of the box with vision and transparency shows you want to be a better nonprofit leader and expand your outcomes and impact.

Remember, failure is part of the success story, and it needn’t be looked at as something to avoid. Get used to thinking of failure as an opportunity. Smart nonprofit leaders partner with funders by developing new efforts to pilot. Nonprofits should try new things and invest in planning, research and development. It’s all in how you market and position your program developments on the front-end and how transparent you are when things occur.

Editor's Note: This Rethink: Social Good column was originally published in the July/August 2020 print edition of NonProfit PRO.