6 Keys to How Successful Nonprofits Win at Fundraising

Published by LTBD, P.C. | October 17, 2017

When most nonprofit professionals choose a life in the not-for-profit sector and begin their careers, they do so because they are drawn to the mission of the organization they serve. That mission-driven purpose is a powerful, and essential, ingredient in the culture of any successful nonprofit organization.

And yet, it comes with a downside. In the private, for-profit sector, anyone who begins a career in business understands at least tangentially that the purpose of the business is to make money and generate revenue, pursue more sales and drive financial growth.

Nonprofit professionals often feel that these are foreign concepts, and as a result it often comes as a shock when they realize that nonprofit fundraising is much the same work as is for-profit selling, and that doing fundraising well is often the number one most pressing need their organization faces.

This is why it’s extremely important for nonprofit organizations to master fundraising not only in a manner that generates needed revenue, but also in a manner consistent with the organization’s mission and culture.

Here are six essential strategies that seek to strike that balance as you pursue fundraising success for your nonprofit:

1. Cultivate Relationships Before the Ask

Many nonprofit professionals are hesitant to ask for money, which means that, when faced with the need to do so, they often do a poor job of it by going right to the ‘ask’. Nervousness and discomfort with the task at hand often leads to a disastrous result. Don’t rush, and don’t even focus on the ask (yet).

Before asking people for money, you need to build relationships. That means getting to know every one of your existing or past donors: why they give; how they chose to give to you; what other causes or organizations they give to; and so forth. Building your knowledge and understanding of donors also enables you to build real, lasting relationships with them. And remember, whether people are buying for themselves or giving to others, it’s emotion that drives most human financial decisions…and positive emotions begin with a great relationship.

2. Use a Database and Build Referrals

If you’re running your fundraising efforts out of a direct mail list in Excel and a hodge-podge collection of contacts captured on your cell phone or in your Outlook emails, stop right now. You need to go back to the beginning and start again…with the right tools.

An essential and foundational tool is the right Customer Relationship Management (CRM) system — preferably one that is designed or configured for nonprofit organizations. Every fundraising-related contact should be fully entered and updated.

Not only will this enable you to effectively track and manage your existing relationships, but it also gives you a solid foundation for asking about (and tracking) referrals that current donors can make to other potential donors on your behalf.

3. Treat High-Dollar Donors as Investors

When you’re working with high-dollar donors or with major funders, it’s important to understand that they probably view their financial commitment to your nonprofit more as an investment, rather than seeing it through the traditional lens of a purely charitable gift. And investors want to see results from their investments, not just stuff going on and a handwritten ‘thank you’ note.

When you view your leading financial partners as investors, it gets you focused on the results — not just the activities — of your nonprofit. So many nonprofit professionals get caught around the axle of action that they lose sight of impact. Action is essential to impact, but in many cases more action does not result in more impact. For example, the Boy Scouts of America has been adding more scout troops in more communities steadily over the years, but at the same time the total number of young people participating in scouting has dropped by a third.

Make sure you’re looking clearly at the total range of potential results your organization is working to achieve, and communicate about these metrics and objectives clearly with your funding partners.

4. Diversify Your Funding Sources.

Innumerable nonprofits have become narrowly dependent upon one or a few funding sources over the years, and then suddenly find themselves facing a crisis or potential collapse when one or two sources dries up. Remember that nothing lasts forever, not even that ‘guaranteed’ indefinite grant you’ve been receiving from your local government or community foundation for twenty years.

Seriously: Nothing. Lasts. Forever.

In response, you need to make funding diversification a critical strategic priority — spreading your funding across a combination of large donors, numerous smaller donors, various private foundation grants and a healthy mix of federal, state and/or local government grants or contracts as well. That diversification can also further strengthen your hand when you pursue new or renewed funding from existing sources, since they’ll recognize that you’re shoring up your financial stability and that makes their investment in your mission all the more sound.

5. Stay Mission-Focused and Funding-Flexible

In addition to becoming myopically and dangerously funder-dependent, nonprofits often also lose mission focus in the process of chasing dollars.

If yours is an urban transportation advocacy organization, don’t suddenly declare that your mission also includes affordable housing advocacy just to secure a new grant. If you’ve been helping disadvantaged LGBT high-school aged youth for years, don’t suddenly accept a grant tomorrow to help cut smoking by adults in your community because it adds more dollars to your coffers. Losing mission focus demoralizes staff, weakens your case when it comes to grant renewals, and eventually catches up with you when your individual donors find out.

At the same time, you need to aggressively protect your streams of unrestricted funding and therefore demand (as much as you reasonably can) that funders allow their moneys to remain flexible to meet your mission objectives.

This means not accepting grants that require a huge administrative burden but don’t allow funds to be used for administration (typically so that the funder can declare that 100% of their money goes to the mission itself). And don’t bend when major individual donors start asking about making restricted gifts to fund specific pet causes or projects when what you really need is unrestricted general operating funds. However, to make this case you need to be ready to show that your operations are well-managed and efficiently administered (which they should be).

6. Get Out. Now.

Finally, smart nonprofits know that building your donor base and increasing fundraising impact does not come from sitting behind a desk alone. You shouldn’t be looking back over the year and realizing that the only time you left the office was to attend the annual gala.

Instead, you need to hit the phones and call people, then get out of the office and meet with people. Real deals are best closed with your voice and your handshake delivering confidence to your donors, funders and other contributors. Commit to getting out of the office and interacting in person (and to working the phones in support of that effort) as much as you can over the course of the year.

These six strategies share a penchant for focused action that is built around a solid mission and a commitment to financial excellence. Those commitments, in turn, serve as the cornerstone upon which your fundraising efforts are built. Remember that money comes from people, and the key to working with people is to build relationships. A relationship-focused strategy is the key to long-term success with smart, effective nonprofit fundraising.

Image Credit: U.S. Embassy New Delhi (Flickr @ Creative Commons)
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