Study Finds Nonprofits Generally Suck at Fundraising

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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