Reactor

Study Finds Nonprofits Generally Suck at Fundraising

by Jillian Steinhauer on January 24, 2013

All images are screen shots from "UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising"

All images are screen shots from “UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising”

Nonprofits across the US are stuck in a cycle that hinders their ability to raise money, a new report says. Commissioned by the Evelyn and Walter Haas Jr. Fund and conducted by CompassPoint, the study examines fundraising issues at nonprofits nationwide, and the results aren’t pretty.

The authors of the report, which is titled “UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising,” conducted their research by interviewing 2,700 nonprofit executive directors and development directors. The largest group of respondents — 22% — worked in human services; the second-largest, at 11 percent, came from arts, culture, and humanities organizations, according to the LA Times.

One of the biggest problems the report cites is that the position of development director is incredibly unstable at many institutions. “At many nonprofits the development director position has been vacant for months, or even years,” the authors write, and the vacancy is likely to last longer at the organizations with smaller budgets. Also, tons of development directors admitted that they had plans to leave their jobs — half of the ones interviewed said they would probably leave in two years or less — with a good number saying they would probably leave the fundraising field altogether, too. In both of these situations, the percentage of those planning to leave increased yet again at organizations with smaller budgets.

nonprofits-3Part of the issue is, obviously, that development directors at smaller nonprofits get paid far less than their counterparts at bigger organizations ($49,141 at the low end; $100,127 at the high end — more than double), and they likely burn out more quickly. But more than half of the executive directors interviewed in the study said that they had a lot of trouble finding qualified candidates for development director positions, and one in four CEOs said their development directors lacked essential skills for the job. So not only are there not enough people to fill top fundraising positions, but those who do end up getting hired often don’t do a great job.

But lest we blame only development directors, consider this (emphasis mine):

More than one in five nonprofits (23%) — and 31% of organizations with operating budgets of under $1 million — have no fundraising plan in place. … In addition, 21% of organizations overall — and 32% of organizations with operating budgets of under $1 million — have no fundraising database.

Yikes! Maybe those development directors are underperforming because they don’t have much to work with. According to the executives interviewed, a vast majority of boards and board members are not helping enough. But then at least a quarter of CEOs themselves don’t seem to be doing much fundraising — 26 percent said they had “no competency” or were a novice at it — while nearly half of development directors at organizations that don’t qualify as “high performing” said they don’t have much ability to control or engage the staff in fundraising. At this point, I envision all of these people standing in a circle, each one pointing a finger, and the blame, at someone else.

nonprofits-2The authors go so far as to conclude that “Many nonprofits do not have an organizational culture that supports fundraising success,” and although they then offer some calls to action, the whole thing is inevitably depressing. (I do wonder, though, if those who work at nonprofits are surprised by any of this.) We can petition the government all we want for a new WPA: even if it somehow worked, it wouldn’t be enough, and we’d still need our nonprofits. And yeah, Kickstarter’s awesome, but it doesn’t work for everything. Clearly something has to change. But is the nonprofit system really fixable, or is it just a broken model? Is there an alternative?

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  • http://www.facebook.com/mwwaugh Michael Waugh

    There are many conclusions to be drawn from the chart. One could conclude that the organizations with smaller budgets are more apt to have bad organizational structures that don’t support retention. Or one could conclude that bigger organizations (where staff can command higher salaries) have staff that are willing to put up with bad structure and do their job despite that bad structure. I suspect that the truth is somewhere in the middle. And I suspect that sympathetic structural weaknesses can be found in the for-profit sector (where most small businesses fail) and in government (gridlock). One solution for smaller organizations that can’t offer development directors monetary compensation is to offer them real decision-making power, the power to change the very shape of the organization. This is not unlike the failing factory that turns itself around by making its employees share-holders.

  • Jamie DeAngelo

    I agree that among the smallest of the small non-profits, where everyone has to wear 3 or 4 different hats depending on the day, fundraising tasks are often run by people who are better suited to other areas and who may even resent taking time away from their primary task in order to solicit donations or write for grants. To a certain extent, it’s comforting that non-profits suck at generating money. This is simply not their first priority, and I agree that this does seem endemic to the model. What to do, then, about funding? Honestly, I think commercial partnerships cannot be undervalued, provided that they are the right match. Do I think KFC should sponsor the walk against diabetes? Not really. However, when I worked at a small non-profit focused on early childhood health and education, one of our partners was a major dental and health insurance provider. The assumption there was that we were working in tandem towards the same ultimate goal. Do such matchups make taking corporate money a bit more palatable and less corrupting? I’m not certain.

  • http://www.facebook.com/people/Gayle-Bourne/12933025 Gayle Bourne

    In the organizations that I have worked for and worked with, the main problem seems to be that the small or medium sized orgs are not willing to pay for needed training – and not just for fundraisers. They want knowledge and experience but can’t afford appropriate living wage salaries for that level of qualification. Then they hire less qualified people or people with special circumstances who then have to leave when they need a “real” job. Either way, they won’t pay for classes or training. It’s a self-reinforcing loop.

  • Claire Axelrad

    There’s absolutely an alternative. It requires us to embrace change, however. That’s hard. Here’s my dream for our sector. http://www.clairification.com/2013/01/24/philanthropy-not-fundraising-i-have-a-dream/

  • Laura Dake

    In addition to more partnerships with for-profit business, I believe an increasing number of nonprofits will begin moving towards a fee-for-service model where maybe 50% or so of
    revenue will come from clients/customers. Those fees — whatever they may be for — will be charged at a reduced rate or on a sliding scale, which will still require the nonprofit to fundraise, albeit at a less stressful pace.

  • http://elainefogel.net/ Elaine Fogel

    The sector needs to develop an investment mentality, something which has evaded nonprofits for eons. As Claire says, it’s about embracing change. Here’s my take: http://elainefogel.net/2013/01/29/my-2013-dream-for-charities-and-donors (will post on 1-29-13)

  • Desi Cabrera

    It’s a sad state in which many nonprofits find themselves, especially with the challenging economic climate and always evolving technologies and communication channels. This is definitely affecting confidence amongst fundraisers. I spotlighted a report which included

    3 Factors Impacting Nonprofit Fundraising Confidence According to Report: http://www.miratelinc.com/blog/3-factors-impacting-nonprofit-fundraising-confidence-according-to-report/

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