business development, fundraising industry

Hey Nonprofits! Why Aren’t You Spending MORE on Fundraising?

It’s a pretty simple question, really.

Why don’t you spend more time, more effort,

and more MONEY on fundraising? 

Look, we all know that fundraising is hard. Direct mail returns sometimes seem too low to justify the effort. Email response rates are dismal. And grant applications? Who wants to get rejected 7 times out of 10? No, thanks.

Plus, all that time spent doing fundraising is taking time away from your mission: saving animals, restoring the local greenways, or ensuring that kids don’t have to go home hungry over the weekend. I get it – fundraising isn’t why you got into the industry in the first place.

But it’s a necessary component of running your nonprofit. So if there was a hidden switch inside your fundraising process that could magically expand your funds available to do the good work you signed up for, why wouldn’t you flip it?

The good news is, it’s already there.

The bad news, though, is that you’re going to have to do some work to make it happen.

As much as I might like to say I’m the expert in everything, I’m not. I’m no botanist, social scientist, or playwright. However, I do know numbers. And the one that sticks out to me is the Cost to Raise a Dollar.

This is the standard metric within the nonprofit world, and it represents how much it takes to bring $1 in the door. For some charities, it’s less than a dime. For others, it’s up over $0.40. That’s not to judge either one as right or wrong. In fact, the national average is around $0.20 (see link for details).

So this, to me, signals the opportunity. If it only costs $0.20 to raise a dollar, that means you have a 5-to-1 return on every penny spent on fundraising! That’s up in the realm of stratospheric returns promised by many financial gurus hawking investment newsletters. If that’s the opportunity available, why wouldn’t you continue to spend more to get more?

The difference is, they’re selling you something that may or may not pan out, while you, in your organization, KNOW what your costs are and what your returns are. So, if it costs you $0.25 to raise $1.00, you can be fairly confident that if you expand your fundraising operations next year by $25,000, you should bring in an additional $100,000.

What else could you do with an additional $75,000? That’s $75,000 towards more rescued kittens, low-income student scholarships, or innovative gallery exhibits. Or, think about this. Maybe you reinvest that $75,000 again the next year and turn it into $300,000. Do it once more and now you’re at $1,000,000. WHOA.

It comes down to this: If you could earn those additional funds next year, simply by flipping the switch and expanding your fundraising operations, what’s stopping you? If you can think of three good reasons why putting more time and money into fundraising wouldn’t provide you with the standard 3-to-1, 5-to-1, or even 10-to-1 returns, then you shouldn’t do it.

But I’m betting you won’t have those three good reasons. Probably just one, “It’s not in our budget.” And if that’s true, then we have another conversation to have. But, if you’re willing to at least ask the question of whether you can get more by doing more, it means it’s probably time to consider expanding your fundraising efforts. So: what’s holding you back?