Absolutely–maybe this necessity will be the mother of some needed invention! I’d just add that we also need to be strategic and courageous with our advocacy, so that nonprofit organizations are getting what we deserve from public sources, as well, which have largely retreated from their former investments and, in many cases, are at least implicitly responsible for some of the challenges/needs that many nonprofits–at least those in the human services/community development/maybe environmental realms– are trying to fill. Less ‘demand’, in this case, would be a welcome thing!

I completely agree with you. Just as we need to rethink how nonprofits are funded, we need to rethink how government supports social impact. There needs to be much change there as well.

I love the article Nell. I’m happy to report that we have adopted some and are modifying our approach to align with your recommendations.

I am however struggling to find Philanthropists that think beyond geography. It seems most folks I know are very focused on their hometowns or cities, and not interested in new ideas, approaches, or projects unless they impact their local community. And since we focus in impoverished areas, the existence of philanthropic capital in those communities is low, and often comes with strings attached or favors in return.

I think the key to raising philanthropic capital in impoverished areas is to find philanthropist who you can convince in a compelling way that the impact you are creating is important to them. As a simple example look at the tremendous amount of philanthropic aid that is going to the poorest areas of Africa right now. The philanthropists who are investing there see no benefit to the communities from which they personally come, however they are very committed to the impact they are seeing in those African communities. You have to figure out how to “sell” the impact you are creating in a way that is compelling to investors.

I am a professional fundraiser and I completely agree that the current model isn’t working any more. One key factor is that it has become increasingy difficult to build a volunteer corps to help you go out and raise funds. Getting people to sit on a development committee and take their roles as volunteer fundraisers seriously has become nearly an impossible task.

You’re absolutely right to advise nonprovits to diversify their revenue bases. By doing so they will actually become MORE attractive for donors who will see them as sound recipients for philanthropic investments.

I agree. Donors want to see sustainability in the nonprofits they fund and diversification is a key part of that.

In my humble opinion, there is no reason to disagree with the essence of your hypothesis. In a sense, you are suggesting, as many have for decades now, that nonprofit organizations operate in a more “business-like” manner, and nobody would disagree with that concept.

At the same time, however, I would point out that many, or even most, nonprofit organizations (at least those that are thriving and doing well) already operate with some kind of a general financial strategy and plan in place — one that is fully integrated with a component advancement/philanthropy strategy and plan.

In my own experience over more than 30 years in the nonprofit sector — about half of them as a senior staffer in some large and well-known nonprofit institutions — I never saw an organization that operated solely on the hope of philanthropic income. For any one of those organizations (four of them substantial hospitals), doing so would have been suicidal!

As a consultant over the past 14 years, I have, indeed, experienced some nonprofits that tried to survive without much more than a plan (and a fervent hope) to generate contributed income. Typically, these are the organizations that struggle to survive and thrive. Often, sad to say, they fail.

So, my bottom line is that your hypothesis is “right-on” and, with all due respect, is nothing new, at least from my own experience. It is, at the same time, a subject area always worthy of emphasis and discussion in the nonprofit sector.

Great tips i really like your ideas on moving towards pull fundraising.

Raymond,

Thanks for your comments. Let me respond to a couple of things. First of all, I wouldn’t agree that nonprofits need to be more “business-like.” Just because an organization is a for-profit rather than a nonprofit doesn’t mean that it is more effective or efficient at how it turns resources into something worthwhile. I wasn’t arguing that nonprofits need to become more business-like, rather, I was arguing that they need to become better financed.

Secondly, I think you are fortunate to have worked with what sounds like some of the largest and most sophisticated nonprofit organizations in the country–organizations that have very large and diversified revenue bases. But sadly, that is the exception, rather than the rule. My experience over the course of my career is that very few nonprofit organizations have a finance strategy, and some don’t even have a solid fundraising strategy. I think that one of the biggest things holding the nonprofit sector back is their inability to adequately fund their work. So my argument was an attempt to help nonprofits see that there is a better path. A path which most are not yet taking.

Nell,

On your second point, I think we actually are pretty much in agreement. As I suggested in my original comments, any nonprofits that seek to survive and thrive will need to have some kind of overall -short and long-term financial strategy, including the all-important, integrated fundraising strategy and plan. Otherwise, as I said, they likely will fail. Sadly, I’ve encountered many that had nothing more than a simple fundraising plan and mostly a fervent hope to generate contributed income.

On your first point, I would point out that I certainly was not suggesting that a for-profit organization is, simply its nature, “more effective or efficient at how it turns resources into something worthwhile” than a nonprofit can be.

What I was suggesting is that nonprofit organizations that operate with the kind of financing strategy and income-source development activities that you recommend are, in fact, acting more “businesslike” or operating more like for-profit organizations, because no for-profit business would be operated in any other fashion. Otherwise, they, too, would fail!

Keep up the good work! Thanks for the opportunity to chime in on this subject.

For a decade my husband and I have been working with social entrepreneurs, corporate companies and even launched http://MOMtrepreneurs.com as our own.

This past December we launched the Red Dress Society’s ‘Angel’ award process to provide an opportunity for women behind social causes to be nominated/recognized and then demonstrate their assertiveness behind their passion as part of the judging process.

One of our goals is to make the process of matching donors with progressive causes that embrace change, technology and view funding opportunities from an ROI perspective, instead of the ‘beggar’ for more donations mentality.

Our first event was in San Antonio, Texas and our next four events are in Portland, Seattle, then Tampa Bay & Miami.

Nominate a woman behind a social cause here http://TheRedDressSociety.com

Totally agree Nell. Fundraising poses a lot of limitations on the operations. Financing will have to be the new mantra and the way to go.

[...] Financing, Not Fundraising [...]