Christian Foundation Grants

The Fatal Mistake Nonprofits Make

Research on difficult economic times is still progressing. However, already there are clear results emerging. As Jonathan Baker, writer for The Guardian, says, “charitable giving has been more resilient than expected when faced with a challenge; and this recession will actually be unusual if it seriously damages the third sector.”

This is good news for nonprofits, but there is a second part to this. There still may be many charities that find themselves forced to close operations. Research gives us a key into understanding why this happens. Statistics show that the “one thing that characterized nearly all of the worst performing charities was a negative spiral of fundraising budget cuts.” To further illustrate this point, the charities that were successful during difficult times “increased, or at least maintained, their fundraising spending—often in the face of falling income.”

Though people may be cutting back, this does not mean to stop asking. In fact, now is the time to ask. There is more consideration that has to go into these requests, but now is a time when peoples’ hearts truly understand the need as they experience some of it themselves.

Baker highly recommends hiring an experienced fundraising professional. Nonprofits need to have a plan of action rather than sitting nervously, hoping to ride this out. Baker says, “a clear and radically strategy and tactics is more likely to save the day.” Fundraising professionals can help nonprofits line out such a plan. Their experience, ideas, contacts (etc.) make this investment well worth it.

Some nonprofits cannot afford to hire a new person, but there still are other tactics for maintaining fundraising. Baker says that “using innovation, flexibility, mergers and partnerships to provide more cost-effective ways of dealing with social problems have to become more common.” Having a “diversified income” can be crucial to nonprofits success. Nonprofits are urged not to have more than 30% of income from one source. If that source is lost, most organizations cannot recover from such a drop.

These are basic ideas, but they are essential if nonprofits are to fight through a recession. Learn from what history shows: do not cut fundraising. Identify within your own organization how you can be most cost-effective that way you can pursue fundraising.

Additional information taken from Jonathan Baker’s article

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