Starving Organizations: A Fundraising Crisis

While researching for my doctoral project, I came across an article in the Fall 2009 issue of Stanford Social Innovation Review entitled "The Nonprofit Starvation Cycle." After working for years in nonprofit organizations, I had an “aha” moment—this was a problem I had experienced first-hand. As the authors wrote, “Many nonprofits continue to skimp on overhead . . . Yet decreasing already austere overhead spending (also called indirect expenses) may jeopardize organizations’ very existence—not to mention their ability to fulfill their missions.”

OK, let’s have a show of hands—how many of you have been told to raise more money, but spend less (sometimes a whole lot less) to raise it? How often have you lost a qualified and trained fundraising team member because you couldn’t pay the few extra thousand a year that would have resulted in retaining that staff member? (To add insult to injury, you then spend that same amount or more to recruit and train the new hire, while losing ground while he or she gets up to speed.) How often have you wasted hours “making do” because what you really needed for a successful fundraising effort wasn’t available? How many times have you taken a day off simply because you were exhausted from trying to do too much with too little to meet unreasonable goals?

I’m sure all of us have a favorite invention that we’ve come to take for granted. I remember my first car. I joked that it had everything I needed: four wheels, a steering wheel, a halfway comfortable seat and a heater. Now it’s hard for some to imagine driving without the MP3 and Bluetooth connections, the air conditioner, GPS, cruise control, easily adjusted seat, back-up camera and all the other “essentials.” Every one of those upgrades—and many more, including numerous safety features—was the result of research and development. Vehicles are safer, get better fuel economy and are easier to drive because of investments companies made.

I’m not comparing a multi-zillion dollar car company to the local nonprofit’s fundraising efforts, but there is a lesson here: If a nonprofit organization won’t invest in its fundraising talent and income-generating programs, it is unlikely they will raise enough money to fund breakthroughs that lead to mission-fulfillment. We’ll remain less efficient with a constantly revolving door of talent.

I’m also not advocating out-of-control spending. Nonprofits need to take risks in their fundraising, but they need to be undertaken responsibly and learned from, whether they succeed or fail. But we need to stop pretending things will change if we don’t invest in what’s needed to drive that change. Insanity, in Albert Einstein’s words, is “doing the same thing over and over again and expecting different results.” If we’re really going to achieve our mission, we have to invest in fundraising.

Last week, in its blog, Stanford Social Media Review posted an article called “The Charity Trap.” The author wrote, “It seems to me that we need to make a choice. We should either expect an organization … to serve only a Band-Aid function, or we should allow it to build an organization that can grow and adapt to create longer-term change…. If we want charities to pivot, iterate, and adapt, and to have meaningful long-term systemic impact, we need to remove the handcuffs.”

I know—I’m preaching to the choir. But here’s a challenge: The next time you are asked to raise more for less expense and/or effort (or even the same with less), look at that challenge realistically. If you can do it, great. But don’t forget to look at the cost of lost opportunities. For example, moving a proven fundraising program online will definitely save money. But will it deliver the same net income? Sometimes the answer is yes, but often it’s no. Bringing in a new person rather than raise a person’s salary to match another offer may make sense, but what is the cost of recruiting and training? How much momentum will you lose with major donors who have a relationship with that person? What will not happen while that position is vacant? Can you really afford that?

This old dog has been in the business of fundraising for nearly 36 years, but there’s one thing I have never heard about—a nonprofit organization that was going out of business because it accomplished the mission it had set out to complete. Wouldn’t it be wonderful if that happened? Then all the talented, smart, empowered people who helped make that a reality could go help other nonprofits do the same. We’d all still have jobs—there’s plenty to be done—but we’d be enabling more and more nonprofit organizations to experience the joy of saying, “We did it! We fulfilled our mission.”

OK, maybe that’s unrealistic. In fact, it is unrealistic if we keep refusing to invest in the testing, people and processes that can make success possible. We have huge problems to solve. But, that means we need healthy and high-functioning fundraising programs, not ones that are slowly starving to death because of unrealistic expectations of what it costs to raise enough money to make a real, lasting and measurable difference.