Nonprofit leaders’ top concern has become a lack of resources, surpassing donor acquisition. In this post, we’ll examine nonprofits’ challenges in securing funding and provide solutions to help them navigate this difficult time.
The Changing Landscape of Donor Acquisition
The number of donors is dwindling, and a larger share of total donations comes from a smaller pool. This makes it more difficult for nonprofits to set their priorities for the year ahead. More nonprofit leaders (44%) cited major gifts as their top revenue fundraising source, emphasizing their continued reliance on funding opportunities that stray from traditional development options involving donor cultivation. Proven techniques like mapping and guiding donor journeys have been lost as organizations clamor for large gifts that invariably come with strings attached.
Experience has shown that nonprofits typically do not feel the impact of a contraction (read: recession) in the economy until the year after it begins. This is due to the cyclical nature of grant funding. Capital campaigns, of which there have been more than ever, also carry commitment clauses that often stretch allocated donations across a span of time. While these gifts are restricted, they carry weight when it comes to financial misfortune should they fall on an organization’s shoulders during massive economic uncertainty.
As any nonprofit leader will espouse, never rely on what you have today for tomorrow. The more diverse your donor pool, the more nimble you can be when it comes time to stay above water. Acquiring new individual or familial donors can profoundly impact NGOs when push comes to shove.
The Importance of Digital Fundraising
Digital communications remain the top donor engagement strategy for nonprofits. However, the majority of nonprofit leaders (78%) cited their digital fundraising revenue as half or less of total fundraising. A lack of funding for nonprofit marketing invariably leaves these resources untapped in a world increasingly devoted to digital currencies. To make the greatest impact without the cost of additional payrolls and insurance, nonprofits should give heavy consideration to outsourcing their digital fundraising efforts.
It all boils down to nonprofits’ lack of community foundations in the digital space. Without town halls, outreach events, and online community building, donors are less likely to donate – and even less likely to become recurring donors.
Despite living in a more connected world than ever, nonprofits remain outliers from this, given their limited resources in the workplace. Nonprofit employees rarely carry the load of a single employee. Because of that, more intensive and meticulous tasks that do not directly provide for the mission often fall by the wayside. This is most often the case when it comes to online marketing, which leaders tend to avoid at all costs, given the term marketing is still considered a bad word in the sector. Marketing, at its core, is fundraising.
You have to spend money to raise money, especially in recession economics.
Capturing Donor Data
For 28% of nonprofit leaders, their organizations struggle to capture the correct data to engage donors adequately. Many development professionals see their job duties become overtaken by marketing, outreach, and event management expectations, causing donor databases to fall into disrepair. Many nonprofits do not maintain a database, causing problematic scenarios when churn upends knowledgeable staff makeup.
Recent studies have revealed that 57% of Generation Z believe their gift (in its varied forms) does more good when given directly versus going to a nonprofit. This is generally ascribed to a growing distrust of institutions and a lack of faith that the solutions they promise will change the outcomes for the underserved.
The proof is in the pudding here, and it falls on nonprofits to follow through, but many lack the tools to keep their supporters up to speed. Donor data, while bountiful, is rarely maintained or employed in a manner that sustains relationships.
Despite advances in donor database technology, very few nonprofits have a team devoted to upkeep donor data, much less tending to the knowledge the information can provide.
Simple plug-ins, forms, services, and processes can turn simple donor data into a virtual treasure trove of future investments.
Strategies for Nonprofit Survival in 2023
Nonprofit leaders focus on corporate partnerships, recurring giving, and data-driven decisions. Despite these goals, many are still fighting the obvious answers of either growing their staffing using unrestricted funds (which many lack) or outsourcing to firms that align their values with the growing number of younger donors who now believe their gifts make a bigger difference when given directly.
Moreover, volunteer recruitment efforts have become stagnant, with many decrying the overall lack of options following COVID-19 as the main cause for dwindling numbers when in fact, the reality is that corporations provide volunteers on a regular basis to commodify the mission of nonprofits without actually supporting it on a continual basis.
To pivot back into the core functions of nonprofit development and marketing would be wise for leaders who see their mission as peril due to macro headwinds. When possible, staff up. If not, find talent outside the walls of your nonprofit and go to great lengths to ensure their values align with those your supporters have grown to expect from your own employees.
Diversification of donor sources and an increased capacity for cultivation is key to surviving tumultuous times and spurring greater social impact regardless of economic conditions.
The nonprofit landscape is rapidly changing, and the coming recession will only exacerbate the challenges nonprofits face. Nonprofits can weather the storm and emerge stronger by adapting to new fundraising methods, prioritizing data collection, and outsourcing to experts. It’s time for nonprofit leaders to take bold action and secure the funding needed to continue their vital work in our communities.