Myths about major gifts that nonprofit leaders should unlearn ASAP.
Of course, by “everything” for purposes of this article I mean “three big things.” But conventional wisdom can lead us astray when devising effective fundraising strategies. Like leprechauns, these mythical truisms can mislead us into thinking we should be chasing pots of gold that will always remain out of reach:
Myth #1: People have been acculturated to resist asking people for donations.
Training them in “doing the ask” and inspiring them about goals are good ways to overcome this resistance.
Actually, only a few people are very resistant to asking strangers for money. Board members are notably willing to sell raffle tickets at the gala or make five calls to people they don’t know and asking, for example, for a renewed donation.
What we do resist is something quite different: asking our friends and family for money.
What goes unspoken in “board fundraising training” is that when I ask a friend or cousin for money I am leveraging an important personal network to do so. We all know that if a cousin gives you a wedding present, when she gets married you pretty much have to give her a wedding present. It’s not as explicit as a quid pro quo; rather, it’s natural reciprocity in a human relationship.
So resistance to asking friends is not just “a learned fear of asking.” It’s more likely legitimate resistance to:
- Uncertainty about whether one would be overstepping the invisible bounds and hierarchies of the social network and
- Reluctance to incur social (and perhaps financial) indebtedness.
These are real concerns that will not be swept away by practice sessions at board retreats. If we don’t confront the real obstacles to asking friends and relatives for donations, we’ll continue to have fun but ineffective trainings.
Our field needs to think more deeply and more practically about how volunteers (including board members) can integrate their work with their conversations in ways that might (or might not) lead to talking about a particular nonprofit and why supporting it might be something to consider. We need to acknowledge and value the invisible, nuanced aspects of relationships rather than act as if they don’t influence asking.
Myth #2: People will give more to our nonprofit if we demonstrate outcomes to them.
True: this is what people say. But one of the intriguing aspects of fundraising is that prospective donors often act very differently from how they believe they act.
For example: if we were to ask people, “Would you like to be telephoned during dinner by a stranger who asks you for money?” pretty much everyone would say, “No!” Yet doing exactly that raises hundreds of millions of dollars every year (without any discussion of outcomes by the way).
And if we look at the “big three” in terms of giving, none of them are related to outcomes at all: churches/religious organizations, alma maters, and disease-related nonprofits. If, for example, you went to Yale, you will give to Yale without for a minute comparing Yale’s effectiveness or efficiency with that of Stanford or the University of Ohio.
When we look at how people give — rather than how they say they give — the answer is clear: people give when they feel a connection to a nonprofit and its cause. We can demonstrate outcomes, too, but let’s not fall prey to this beckoning leprechaun.
Myth #3: Nonprofits should focus more on major gifts
Some nonprofits should focus more on individual giving. But for many nonprofits — perhaps especially those based in poor communities and/or communities of color — individual major gifts may not be the right fundraising strategy.
One foundation president commented to me, “If nonprofits spent as much time asking individual donors for money as they spend asking me for money they would have more than enough money!” A similar and even more common belief is that the only long-term strategy for sustainability is one that relies on major donors.
The recent economic impact study of nonprofits in California showed that once churches, religious organizations, hospitals and universities are removed from the equation, donations from individuals constitute only about 16% of nonprofit revenue (!).
So why are we under the mistaken impression that individual giving accounts for the majority of nonprofit revenue? I suspect two reasons:
- Fundraising consultants and publications frequently state that 72% or even 90% comes from individual donors. They are usually careful to say “of private donations,” rather than “of total revenue,” but it’s easy to make the mistake.
- We all receive so many emails and letters and requests for donations that say something like, “We depend on YOU!!
Individual giving varies significantly depending on the type of nonprofit. Today most nonprofits combine donations with earned income: in effect, we are all hybrid organizations. Many nonprofits have viable strategies that rely, for instance, 80% on contracts with three government agencies, or 55% on earned income such as program fees. (For some nonprofits of course — notably international and environmental organizations — individual giving is more likely to represent more than 50% of revenue.)
While sub-sector averages are useful, what matters is finding the strategy that’s right for you.
Wait a minute! Are you saying we should give up on individual giving?
Of course not. Individual giving is a key revenue stream for many nonprofits. And for some nonprofits, it may eveb represent 100% of revenue.
But major donors aren’t the answer for everyone. Very few nonprofits that were not founded by wealthy, social elite individuals manage to develop even a small individual donor program. And while small donations from many people is an excellent constituency-building activity, it’s seldom a successful revenue strategy.
Consider two after-school tutoring programs, both eight-years-old and both with budgets of $350,000. One is emerging from a low-income community of color that was started by activists and professionals and almost certainly has some government money. The other, started by lay leaders in a mostly-white church and has no government money, but they already have some significant individual donors and people experienced with high-end special event fundraising.
Looking below the surface, one of these nonprofits is more likely to grow through government and foundation funding, and needs board members who can help with those connections. The other is more likely to grow through bigger special events and more major donors. The moral: different nonprofits have different trajectories that result in different assets at a given stage of development.
Now if only I could find a leprechaun who would show me where to find a pot of gold…
About the Author
Jan is a former editor of Blue Avocado, former executive director of CompassPoint Nonprofit Services, and has sat in on dozens of budget discussions as a board member of several nonprofits. With Jeanne Bell and Steve Zimmerman, she co-authored Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, which looks at nonprofit business models.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.