The Dangerous Obsession?
Nearly every day, I receive a number of calls, texts, messages, and emails asking me for my opinion, as a donor, on some questions relating to nonprofit fundraising. I’m thrilled that folks are reaching out — that’s how change is made! — but I am seeing some common themes that give me pause.
One of those themes relates to the very real issue of resources and bandwidth. Although I’m on a mission to help those in the nonprofit sector change the way they fundraise, I now understand that without basic business resources, nonprofits can’t help but resist change. Without sufficient resources (financial, staffing, physical plant, standard technologies) it’s incredibly difficult for nonprofits — funded largely by donor gifts — to effectively support, grow or even sustain their mission impact. The lack of resources and support seems to be the brick wall standing between nonprofits and the radical change they need to make to continue their good work.
If nonprofits are in these continuing “starvation cycles”, it’s often nearly impossible to try new methods of fundraising. Sticking to the way fundraising has been done for over a century won’t work long-term, and while many nonprofits say they’re resisting change because they don’t have the resources to do so, younger and emerging donors are giving up on charitable giving altogether. That’s bad news for all of us.
With the billions of dollars spent on charitable giving, why are nonprofits so starved for resources? It’s because of the archaic, misguided yet oddly pervasive “rule of thumb” to give to charities based on their overhead costs. For those who think that the lower the overhead ratio, the better the nonprofit, think again. As costs rise, the common 10-15% guide for overhead stays the same because of this faulty ideology — and there are even fewer resources for nonprofits to do their jobs. That leaves very little room to build authentic relationships with donors, and likely no room for innovation, substantive change and improvements, or anything other than a “tweak” here or there. Giving Compass has called this way of thinking “A Dangerous Obsession.” (See here and here if you want to better understand the “overhead cost ratio” and its negative impact on the charitable sector.)
In this world of multiple platforms, changing rules, and (often) relentless pressure to “make your numbers”, the ability to try new strategies and tactics — to work smarter and better, and to reach new and diverse donors — is absolutely essential.
The nonprofit sector is too important to society to let it be left behind or fail. If resource starvation is due to an obsolete metric, it’s on all of us to change the prevalent and dangerous mindset that relies on it. When eight of every ten newly recruited donors decline to give again the following year, we can’t continue to play the “business as usual” game.
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Lisa