My study of fundraising dysfunction

In 2002, I left corporate and business employment and shifted to the nonprofit sector, where I found few others were recording the reality of what was truly happening inside New Zealand nonprofits. I soon discovered that the primary inhibitor of nonprofits achieving the good they intended for the world was weaknesses and failures of income generation.

I also came across several people who had given up on nonprofit fundraising and marketing due to an array of challenges and mysteries that left them bewildered. On returning to the for-profit sector, none of them expressed any desire to formally report on their findings during their time in the social sector. They were over it. Mostly their temporary venture into the nonprofit sector only reinforced their skepticism towards the effectiveness of nonprofits in general.

Over time, it became apparent that the realities at play at the heart of nonprofit supporter relations, fundraising and marketing would remain hidden from view if I didn’t report them. So that is what I have decided to do in my book Cracking Generosity. In doing so, my hope is that the constant repeating of nonprofit fundraising, marketing and supporter relations mistakes may be halted or at least significantly reduced from the level they currently are occurring across the social sector.

Much of what you will learn comes from my inside observations from ten New Zealand nonprofits that employed me in some fundraising, marketing or supporter relations capacity. Three of the nonprofits in my study applied the Cracking Generosity principles that I outline in my book, and seven did not. The three that did apply those principles continue to grow their very profitable income to this day. Of the seven that did not, one no longer exists, two are trying to be revived from their ashes, and one was rescued by a government funded social service provider soon after their own government-funded contract payments were cancelled. The others struggle to keep their heads above water, mostly by means of grant applications, business sponsorships, retailing some product or other and running events.

Teaching me (and you) a better way have been hundreds of wonderfully generous donors.

Bewildering findings

On entering the nonprofit sector with a detailed working knowledge of the power of Customer Relationship Management databases and the first-hand experience of running a profit-making business under my arm, what I encountered shocked and amazed me. I was surrounded by people with virtually no previous commercial profit-driven business-building work experience, even vaguely similar to mine or similar to the work experiences of my extended family. Many nonprofit operational systems and processes (particularly those that involved the donor database) reflected a lack of commercial business knowledge and expertise. Numerous aspects of the internal systems and processes of the nonprofits gave scant regard to the view of operations as seen through the eyes of donors that underpin healthy nonprofit relationship marketing, supporter relations, philanthropy and fundraising.

In the nonprofits I worked for that became the basis for my study, I soon found myself alone as a person with a profit-making business background. The few others with true commercial and business profit-driven backgrounds who temporarily dipped their toes into the nonprofit sector quietly left me to it. Driving them away were many bewildering practices within nonprofits that they and I identified would not survive in the for-profit sector. An extensive list of those can be found in my Cracking Generosity sampler found at the end of this article.

If the list of the fundraising dysfunctions you will read about were at play in a business, those nonprofits would soon join the many that cease to be due to lack of profitability. In the for-profit sector, elements of the list are behind why more than 20% of small to medium business start-ups don’t make it through the first year, and nearly 70% have ceased trading within the following ten years.

But the situation is not hopeless. My book reports on proven methods for the building of a highly profitable Fundraising Enterprise that can be attached to almost any nonprofit good cause. Dig in and let me know what you think.