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The Mysteries of Fundraising

The following is a post by Chuck McLean, GuideStar's vice president of research.

Chuck McLean Chuck McLean

One Saturday during the 2012 giving season I found an unusual envelope in the mailbox. There was no indication of who the sender was, but it was menacingly marked “Second Notice” in a way that implied that it was an overdue bill. When I opened it, I found that it was a fundraising pitch from a local charity that my wife and I support. I’m not sure that was a great idea, I thought, but I quickly forgot about it.

The next week, though, brought another letter from this organization, a letter of apology from the executive director. The organization had been flooded with angry phone calls about the fundraising piece, many of them from donors or past donors who were having their own struggles with a local economy that hasn’t recovered strong enough, fast enough. Indeed, some people whose only prior relationship with the organization had been as a donor were now in a personal situation that required them to rely on the services of the organization. The icy feeling in the pit of their stomachs when they received the original mailing was very real.

People have a complicated relationship with fundraising. On a rational level they understand that most charities have to spend at least a little bit of money on fundraising in order to support their mission, but they aren’t really happy about it. I can’t help but shake my head every time one of the charities that I support sends me another request in the mail that I am going to ignore. There’s another buck that isn’t going towards the mission, I think. And a majority of Americans are with me - a 2008 survey by Grey Matter Research found that 62 percent of Americans believe that organizations spend too much money on fundraising and overhead.

But these are visceral reactions on our part that may or may not have any basis in fact. GuideStar has long supported the claim that the overhead ratio isn’t a valid metric of performance or long-term success, although the popular print press does little to convince us otherwise, usually choosing to emphasize these expenditures over the organization’s mission and how well (or poorly) it is being accomplished.

The Form 990 filed by public charities has been redesigned by the IRS to collect more detailed information about the use of fundraising professionals by charities. Over the next several months, I will be combing through this and other fundraising data to see if I can enlighten us all about what is really going on in charitable fundraising. Hopefully, this will help us to put a little bit of reality behind our perceptions.

Chuck is responsible for conducting research for GuideStar and customers interested in nonprofit sector data. He also works to identify new data sources and ways to present data effectively to GuideStar users. Chuck produces the annual GuideStar Compensation Report, which analyzes the salary and benefits of thousands of nonprofits throughout the country. He has 15 years of experience as a teacher and researcher in various institutions of higher education. Chuck serves on the advisory committee of the National Center for Charitable Statistics and is a member of the Panel of Nonprofit Sector Representatives for the Commission on Accountability and Policy for Religious Organizations. A graduate of Christopher Newport University, Chuck also received an M.S. degree in mathematics from the College of William and Mary.

Topics: Fundraising Trends