Why are Fundraising Results Missing the Mark?

The nonprofit sector has an unfortunate secret. While not a well-kept secret, it is nevertheless something that receives too little attention. So, let’s take a moment to shine a spotlight on the issue.

Overall, American philanthropy has remained at approximately two percent of Gross Domestic Product for over six decades, with the percentage bouncing between 1.6 and 2.3 percent, according to Giving USA. Every year when the amount of money donated to charities goes up, the nonprofit sector pats itself on the back even though it is merely keeping pace with GDP.

Despite the massive growth in the number of nonprofit organizations, the significant increase in availability of educational materials, the production of helpful research, the professionalization of the fundraising field, and the rise of new technologies, the nonprofit sector has failed to budge philanthropy relative to GDP.

Now, as a committee convened by The Giving Institute begins to consider ways to grow philanthropy beyond the two-percent-of-GDP mark, I’ve written an article for the Association of Fundraising Professionals magazine, Advancing Philanthropy, that explores the challenge: “What Will It Take to Dramatically Increase Philanthropy?”

To answer that question, we need to understand how and why past attempts to do so have come up short, such as the insightful work of the Commission on Private Philanthropy and Public Needs in the 1970s.

We also need to understand the broad societal cultural factors that are affecting philanthropy so that we can develop strategies for inspiring cultural change and/or adapt to factors beyond our control (e.g., decline in religious affiliation, erosion of social capital, drop in volunteerism, etc.). Furthermore, we need to understand the cultural issues within the nonprofit sector that block change and, ultimately, greater success.

We also must set a realistic, consensus goal for moving the philanthropic needle. While that goal should be bold, it should also be based on something other than a dream. A credible target mark will give us all something to shoot for.

As Henry David Thoreau once wrote:

In the long-run, [people] hit only what they aim at.”

While it will likely take at least a couple of years for The Giving Institute’s commission to do its work, you and I do not need to wait. There are things we can do now to begin to move closer to a more vital philanthropic mark, something greater than two percent of GDP:

1.  Talk. This one is painless. It doesn’t cost anything. We’re doing it right now. We need to have more conversations among nonprofit managers, fundraising professionals, researchers, and philanthropists about what we can do to grow giving. By asking more questions, exploring the issues, kicking around ideas, we just might be able to begin to make greater progress. I encourage you to join the conversation here with a comment below. You can also join the nearly 24,000 people who use “On Fundraising — The Official Group of the Association of Fundraising Professionals” on LinkedIn.

2.  Master the Fundamentals. I’m a huge fan of innovation. It’s even part of my company’s name, ML Innovations. However, we really don’t need novel solutions to increase philanthropy. For many nonprofits, simply mastering the fundamentals will lead to more and larger donations. By the way, this is true for nonprofits of any size.

3.  Retain More Donors. Previously, I’ve reported on how pitifully low donor-retention rates are. You can search my site for “retention” to read more on the subject. For now, I’ll just point out that happy, long-term donors make vastly superior major and planned gift prospects compared with one-time donors who flee.

4.  Create and Grow a Monthly Donor Program. Again, you can search my blog to find great information about “monthly donor” programs. Just realize that a monthly donor program is a powerful way to turn small donors into mid-level donors, enhance donor retention, and identify more major and planned giving prospects. Electronic, easy to manage monthly giving systems have been around since the 1980s. There is no excuse for not having a robust monthly giving program.

5.  Invest in Major and Planned Gift Fundraising. Truly large contributions are more likely to come in the form of stocks, personal property, real estate, retirement accounts, life insurance, and other assets rather than from someone’s checkbook. However, to get such gifts, you actually need to ask for them as part of a proper, strategic program. Checkout my book, Donor-Centered Planned Gift, Marketing, to see how easy it is to implement or enhance a planned-giving program.

One of the reasons we do the work we do is to make the world a better place. In 2016, overall philanthropy totaled $390.05 billion (Giving USA). What if we could have doubled that? What if we could have raised $780.1 billion instead? That would have been just 4.2 percent of GDP, that’s not a crazy percentage. Now, imagine how many lives could have been saved or enriched as a result of the additional charitable giving.

What’s stopping us from increasing philanthropy relative to GDP? What can we do to increase philanthropy? What are you doing to dramatically increase giving to your organization?

Let’s keep the conversation going. Read my article in Advancing Philanthropy magazine. Read Roger Craver’s summary of my article for The Agitator along with the comments it received. Be sure to share your thoughts with a comment below.

That’s what Michael Rosen says… What do you say?

8 Comments to “Why are Fundraising Results Missing the Mark?”

  1. Thanks for tackling this subject, Michael. So important. So often ignored. To add to the ‘ball of string’ on the subject I refer you and your readers to a post this morning by Dutch fundraiser, Reinier Spruit on the importance of proper training for fundraisers. You’ll find it at https://bit.ly/2Ho1lP7
    Keep it up, Michael.

    • Roger, thank you for your kind message, the link to Reinier Spruit’s commentary, and for your excellent summary of my article over at The Agitator. Effective training of fundraising personnel is essential. However, dramatically enhancing philanthropy will require more than this. For the past few decades, we’ve seen an enhancement in fundraiser training with college courses, professional conferences, articles, blogs, books, fresh research, and more. Yet, philanthropy remains at two percent of GDP. More effective training will likely help, but there will remain other issues.

  2. Michael, after 35 years of development, these last few I’ve been in transition to move towards development training for my non-profit on a nationwide scale. I 110% agree with the training sentiments expressed here. And I concur, we aren’t talking about Nuclear science, just the core basics of good communication, solid systems, an actual strategic plan or strategy and then consistency, all wrapped up in a relational based approach, heart, and attitude.

    But in just my limited time, I’m amazed how many of the folks, in just my ultimately very small organization, actually charged to do development, have a handle on hardly any of the elements I mentioned above.

    Aside from some massive societal shift, I must believe the main change element to increased success is going to be training (some, more, and better).

    Just a thought.

    • Rick, thank you for sharing insights based on your experience. There are many things beyond our control that impact philanthropy. That makes it even more important for us to control what we can control. Making sure that fundraising personnel are properly trained certainly falls into the category of something we can and must control and improve.

  3. Michael: I haven’t read your article but when it comes down to increasing philanthropic giving, isn’t that a heart issue? People today aren’t giving more because they’re not motivated to do so. We’re comfortable giving out of our abundance but not sacrificially. Jesus addressed this in his day with the story of the widow’s mites (Luke 21:1-4).

    • Jay, thank you for sharing your thoughts. When it comes to philanthropy, a key factor is what is or is not in one’s heart, as you’ve pointed out. However, it’s more complicated than that. For example, one might have a philanthropic spirit, but simply might not have the means. Or, one might have the heart and the means, but charity begins at home with young children and elderly parents that need care (and funds). Also, while it would wonderful if people would simply give to charity, they tend not to do so unless asked; so, charities need to ask the right person, in the right way, at the right time, for the right purpose.

      All the world’s major religions place a high value on charitable giving. For instance, you cited the example of Jesus. However, there is a decline in religious affiliation in the USA. This means that fewer people will be guided by religious values including teachings concerning philanthropy. That will be something the nonprofit sector will need to adapt to.

  4. May it be a nonprofit or any organizational group; it is safe to say that undergoing basic training to master the fundamentals will significantly play a huge role in bringing in better success rate, or in this case, more donations. Such a delightful read! Looking forward to more informative and helpful fundraising tips!

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