The data are in: nonprofits need better fundraising performance. AFP's Fundraising Effectiveness Project 2013 reveals that gains of $769 million from new, upgraded current and previously lapsed donors were offset by losses of $735 million through reduced gifts and lapsed donors. Even worse, gains of 866,000 new and previously lapsed donors were offset by losses of 909,000 in lapsed donors, for a loss of 44,000 donors. That statistic really hurts; retaining donors is not nearly as tough as bringing in new ones, and the new ones cost you about six times more.
Then there's the GivingUSA report, showing that charitable giving as a percentage of GDP (gross domestic product) has stayed flat at 2 percent. Its highest point in recent years was only 2.25 percent, during the U.S. housing bubble when lots of us thought we were just on the verge of untold riches and were more willing to give money to charity. Too bad we were wrong.
Fundraising is in chronic need of improvement, isn't it? Have you ever spoken to a nonprofit executive or major-gift officer who said "we don't need more money"? But here's the rub. The thousand and one things people do to improve their results may not have any long-term impact on such improvement.
That's why we need a fundraising revolution. We need a revolution in the way we manage fundraising, not just in the way we do it.
What's the difference? The way fundraising, or any other business function, is managed is what leads to more fundraising income at lower costs. Managing a business function, including fundraising, means identifying the results desired from the fundraising effort, establishing performance targets and indicators, developing methods of doing ifundraising that are effective and in keeping with the organization’s corporate values, and holding the “do-ers” accountable. The way you manage fundraising is the way you make your fundraising sustainable.
The way fundraising is done, on the other hand, describes the tactical activities of the fundraising staff, be they employees, contractors or volunteers. Many fine fundraising professionals have raised their tactical skills to the level of art. We all know outstanding practitioners who specialize in grant-seeking, major gift work, capital campaigns, corporate relations, special events, and the list goes on. If there are, in fact, so many high performers out there in the fundraising discipline, how come fundraising remains the problem child of the nonprofit sector?
I contend that the nonprofit sector as a whole would enjoy more sustainable levels of income if the management of all that talent and art were to become more sophisticated, adopting some of the practices that support performance excellence in the for-profit sector. In fact, many nonprofit organizations, such as those in the fields of healthcare and healthcare research, practice extremely sophisticated management when it comes to service delivery and related programs. Many of them are required to do so by their certifying authorities. But as far as I can tell from the data and observation, it’s the rare development shop that’s managed strategically, with a stated intention to improve productivity.
A version of this article is the preface to our newest book Fundraising the SMART Way: Predictable, Consistent Income Growth for Your Charity. We'll be posting a series of blogs based on the book over the next few weeks.