Fundraising in its current form just doesn’t work anymore. Indeed, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less.
Really, what nonprofits need is a financing strategy, not a fundraising strategy. By that I mean nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all their activities. Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change.
What does this new approach to financing a nonprofit look like?
- Nonprofits understand funding programs and general operating expenses is not enough to survive and thrive. All activities that bring money in the door (individual donors, foundation grants, earned income, government contracts, loans, etc.) are integrated and part of a larger financing strategy that supports the short AND long term goals, as well as the programs AND infrastructure of the organization.
- Nonprofits no longer segregate fundraising from their other activities (programming, administration). All elements of a nonprofit’s operations, including the money-making ones, are fully integrated and moving forward together.
- Individuals, who make up 80%+ of the private money entering the sector, become a greater focus of fundraising efforts, rather than corporate or foundation philanthropy, which make up 5% and 12%, respectively, of the private money entering the sector.
- Fundraising messaging moves from an emphasis on the tin-cup mentality and donor benefit to an emphasis on the social impact a nonprofit is creating.
- Money is raised to support not only the direct services a nonprofit provides, but also the infrastructure (staff, technology, systems, evaluation, training) of the organization. Nonprofits understand they will only get better at delivering impact if they have an effective organization behind their work.
- Other types of capital vehicles,like loans and equity, are added to a nonprofit’s financing mix.
- Earned-income opportunities are evaluated and if appropriate, launched. Earned income is not right for every nonprofit, but it is worth exploring and analyzing opportunities as they come and understanding and embracing the revenue-generation possibilities.
- The net revenue of every money-making activity a nonprofit engages in (events, individual fundraising appeals, corporate sponsorships, earned income, etc.) is calculated and evaluated. Low net revenue activities are replaced with highernet endeavors.
- Nonprofits move away from “push” fundraising and marketing efforts that force their message on innocent bystanders (e.g., direct mail appeals) and toward “pull” fundraising and marketing efforts that bring interested donors/prospects to the organization (e.g.,blogs, Twitter, Facebook, friend-raising events, etc.).
There really is a better way. Nonprofits don’t have to wear out their fundraisers, their donors, their staff and their message. By working toward financing their efforts, as opposed to fundraising for them, they can get much closer to social impact and financial sustainability.