What Every Nonprofit Needs to Ask Itself- Kim Klein

 As nonprofits, how we raise our money has a direct influence on how we do our work. For example, does one person do 95% of the fundraising? Are we careful with spelling donor names correctly or getting grant reports in on time? Do we communicate with donors when we don’t want money or do we treat them like a digital wallet? An often neglected question is whether the sources of our money reflect our larger values about how our work should be supported. What are the most mission fulfilling ways to raise money (which may not be the fastest, the cheapest, or the most lucrative)?  This is a conversation every nonprofit needs to have.  

Imagine you knew a psychic whose readings were known to be completely accurate. People sought her out from miles around. You approached her and said, “What is the best way for our nonprofit to raise money?”

She looked into her crystal ball and said, “Actually, I am seeing that you could get money any way you want to. Foundations will help you. Corporations will help you. Poor people and rich people will line up to donate. Government grants can be yours. Whatever you turn your hand to will be profitable.”

How would your organization decide to raise money in this fantasy? You would probably think about what kind of fundraising would be most in keeping with your mission, and you would likely ponder what kind of fundraising activities would be the easiest to manage. Weighing these two questions, you would quickly realize that the answers do not always point to the same kinds of fundraising for each of them. Here’s an overly simple example: ten individual donors who give very large gifts would be easier to manage than 1,000 donors giving gifts of various sizes. But if one of the donors in the group of ten said she wanted you to do X or did not like that you were doing Y and her donation rested on your organization changing focus, suddenly the easy management (just say yes and keep getting the money) would run up against your mission and could cost you 10 percent or more of your budget. One person in a thousand donors exercising the same prerogative will not have that effect. 

In addition to spreading your risk over many donors, you also need to think about what effect the source of your money has on your mission, and could the very source of the money be part of the solution or part of the problem? 

Take, for example, primary and secondary schooling in the United States. Public schools used to be almost entirely funded by . . . wait for it . . . the public, through taxes! Now most public schools are really public/private partnerships, with public funding taking care of bare bones needs and a bevy of parents and friends raising money to pay for art programs, music education, libraries, sports uniforms and supplies, and the like. Charter schools represent an extraordinary collection of hybrids: they use both public and private funding and are run by both for-profits and nonprofits. There may be advantages to this arrangement. For example, because they are involved in raising funds for their charter school, the parents have a lot of skin in the game, and perhaps for that reason, the children are less likely to take any part of their education for granted. 

But even the existence of these hybrids points to the fact that we, as a nation, never had a conversation about how public schools should be paid for, or what schooling model serves the country best. In the 1980s and later, because of the Great Recession, communities saw their tax revenues fall and the quality of their schools go down as a result, so they rallied to raise money. Some communities did rally in favor of higher taxes, to be sure, but mostly the burden of ensuring a good education for their children has fallen more and more on beleaguered parents. Parents who have one job and some energy left at the end of the day can, through their PTAs and PTOs, raise money. Parents holding down more than one job or having other complications and time constraints cannot do so, to the disadvantage of their communities’ public schools.

We are a reactive nation; we respond to natural disasters quickly and this serves us well when reacting generously is most helpful. Giving to both right- and left-wing groups went up so astronomically when Trump was elected president in 2016 that this became known as “the Trump Bump.” During the COVID pandemic in 2020-2021, epic giving to food pantries was often able to meet the epic needs of families. The problem with being so reactive is that we have historically not had enough national conversations about structural change. From time to time, social movements force these questions into public debate: Civil Rights, Women’s Rights, anti-War, Occupy Wall Street, and many more such movements have challenged oppressive structures. Most recently, Black Lives Matter and other movements challenging white supremacy are causing us to address some of our most intractable issues, such as poverty and racism.

 These movements are supported by nonprofits, which in turn are supported by a broad base of individuals. When movements such as these become more dependent on foundations or very wealthy people for support, they lose their edge. When that happens the executive director usually spends a lot of time pleasing funders, attending funder convenings, and sharing information with other social justice organizations about foundations and their program officers.  

The fact that foundation funding does not build power among a large constituency, nor is it a reliable source of funds over the long haul, nor often does it even reflect what the organization would most like to be doing, may be considered the price you pay for financial stability, although that will only be true in the short term, and financial stability should not be the driver of your fundraising.

Sometimes organizations want to raise money from individuals because their foundation funding has dried up, or because they lost their government funding. For these organizations, individual donors are a fallback position. Needless to say, this is not a good reason to seek gifts from individuals. Individual donor fundraising is, in many ways, the most difficult method. It requires finding a lot of people not just to give money, but also to raise money. It is detail-driven, and success requires using a variety of strategies.

Viable organizations start with a philosophy of funding: an understanding of what fundraising strategies are most compatible with the mission and goals of the organization. Every nonprofit needs to know what funding direction they are moving in, and it is good to raise consciousness among board, staff, and volunteers about why you are raising money the way you are and consider all the alternatives.

Adapted from a chapter in the forthcoming 8th edition of Fundraising for Social Change by Kim Klein. This edition features a co-author, Stan Yogi.