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Fundraising sucks. Fundraisers suck too. That’s the general gist of yet another sobering report coming out of the nonprofit sector by CompassPoint looking at challenges facing nonprofits. Katya’s Non-Profit Marketing Blog has a good recap and summary if you want the highlights (or lowlights).

In my 10 years in the sector I’ve learned a few things:

  1. If organizations don’t raise money then they won’t exist or have the impact they want.
  2. How organizations raise the funds is just as important as how much funds they raise.
  3. Fundraising is very difficult.
  4. Very few people and organizations know how to do fundraising well.
  5. Very few organizations invest in fundraising in the form of people, infrastructure and process.

Why is this the case? And why is the sector so UnderDeveloped? Here’s 4 reasons.

1. Fine line between lean and starving.

21% of all organizations have no donor database. At all. For organizations under $1M it’s closer to a third. If the question was posed as “Do you have a remotely useful donor database” my guess is over 50% of organizations in the small to mid range (less than $5M) would say No. The most important lesson in fundraising is KNOW YOUR DONOR and without a database, and one that is somewhat useful, this becomes virtually impossible as organizations grow and they experience any turnover (which is rampant as well).

The main reason these organizations do not invest in a donor database is cost. It’s not “worth it”. That’s the biggest load of crap. If you are a board member or key decision maker involved with a nonprofit organization and have voted down an investment in a donor database that’s not astronomical (I’m looking at you Raiser’s Edge…) you need to think again. Your organization has two assets; its people and its data. A database is one of the only things and tools that allows you to leverage BOTH assets AT THE SAME TIME! If you don’t’ know WHO your donors are you can’t know who is new, who is leaving you, who is growing and most importantly where to spend your time and precious resources when it comes to marketing and fundraising.

So you’ll continue to fly by night at the tyrannical whims of a leader or, heaven forbid, a committee because you have no information from which to make decisions. You’ll continue to worry about raising the required funds every year while you haemorrhage donors and dollars that slip silently away in the night. All because that database was too “expensive”. Please.

2. Unrealistic expectations.

We want to double it. Increase it by 25%. Grow to $5M in 3 years. These are great vision statements and can rally staff to a cause. But if they are unfounded and unrealistic you’ll not only reach those goals, people will be burned out, feel unappreciated and leadership will view fundraisers as poor performers and they will be fired or quit. I worked for an organization that had just gone from a $3.2M organization to a $6.7M organization in a couple years. The “5 Year Plan” was to grow to some ungodly number like $12M and eventually be a $25M organization with 50 staff. Never mind the fact that none of this was based on funding need and impact (what those funds would do…) or that the near 100% growth rate, year over year, needed to hit that mark or the lack of infrastructure in place to scale at that rate or the capacity of the staff to reach those goals.

That $3M “boost” was tied up in two donations. Two. All other indicators that I could see (total donations, total donors) were flat or slightly down. So this ridiculous plan and vision with unrealistic expectations wasn’t even based on real growth! This may sound absolutely crazy but there were some very smart people in that organization and this happens way more than people care to acknowledge. If the expectations placed upon fundraisers are unrealistic, and they often are, they will not have success nor enjoy their fruitless attempts at it. I’m not saying we shouldn’t shoot for the moon, I’m just saying don’t plan on landing on the moon every single year.

3. Broken feedback loop.

Unhealthy organizations can raise a lot of money. Organizations can grow, in leaps and bounds, with a single gift. The 80-20 rule of fundraising (where 80% of donations come from 20% of people) is more like 90-10 (or completely flipped in some new school “bottom up” structures) where major donors wield the power. One big gift can cover up months of bad work, poor process and lack of impact. And that big gift can happen for odd reasons: daughter works there, husband knows a guy, wife wants to work there, and so on.

“Success” is often not success at all but people get hired, plans get made and the organization goes on without actually knowing why they were, or were not, successful. It’s a broken feedback loop and why I don’t think organizations should look at total funds raised as a health barometer. A truly great organization in my mind does two things; keeps its staff and keeps its donors. If you are looking for feedback loops for healthy organizations look at staff turnover and donor retention rates.

4. Lack of compensation and pay leaves top talent out of it.

There are some great, wonderful and talented fundraisers in the nonprofit sector. Just not many or nowhere near enough (and I’m not saying I’m one of them either). To me, this largely comes down to compensation. If you’re sharp, driven, talented and want to create a career you probably don’t choose nonprofit work. It’s getting better, slightly, and the next generation(s) are more interested in impact type jobs but businesses are offering more of those opportunities with benefits, pay, travel opportunities, etc.

Fundraising is brutally tough. And if you want good people to do it we need to pay people more to attract the talent that can solve the problem. But it’s not just about pay. Nonprofits should be leading the way in terms of work culture, other benefits and overall job satisfaction as that’s how they can realistically compete for talent. Yet they often do not.

If you had a sector that has unrealistic expectations placed upon under nourished people working with a lack of resources and not getting well compensated for it the question I have is, why is it any surprise that the sector is UnderDevelop’ed? Of course people are going to leave or get fired in those conditions.

So if our sector is going to develop as it should and fundraising to continue making progress as it needs to, we need to resource it, set realistic expectations for people, look at the real feedback and pay good people. Otherwise we’ll read more reports like this in the next decade.

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