While 2013 opened with some encouraging signs of a long-delayed economic recovery, the outlook for nonprofit organizations remains far too bleak. Simply put, a fundraising recovery will lag an economic recovery by months, if not years. People will not start giving again until they feel secure again—and that may take some time.
A study by GuideStar on the economy and nonprofits released late last year found that 65 percent of 500 nonprofits surveyed saw their annual giving decline or remain flat compared with 2011—the second largest decline since the survey began 11 years ago.
You can't fix the economy or improve a donor's sense of security, but you can take steps to ensure that your fundraising practices don't make a tough environment worse. CompassPoint and the Evelyn and Walter Haas Jr. Fund released UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising within a few weeks of the Guidestar study. They paint a discouraging portrait of a broken partnership between many CEOs and development directors. Here were the headlines from The Chronicle of Philanthropy:
- Half of the chief fundraisers plan to leave their jobs within two years or less. Forty percent are thinking about leaving fundraising entirely.
- More than half of the executive directors reported that they can't find well-qualified people to run their fundraising staffs.
- At many nonprofits, the position of development director has been vacant for months—or even years.
The dysfunction reminds me of Shakespeare's line about the Montagues and the Capulets: "A plague on both your houses."
Does it have to be this way? Of course not. Clearly, the pressure of meeting revenue goals in an increasingly competitive fundraising environment, coupled with the lingering effects of the recession on clients and donors, is getting to all of us. If management, board, and fundraisers fail to align their expectations and root them in some semblance of reality, fundraising goals will be missed, clients won't be served, and someone is going to get fired.
Our experience working with one of our clients, Boston's Caritas Communities, offers what seems like a best practice approach to these challenging times. Caritas is the largest operator of "single-room occupancy" housing in Boston, with over 900 units under management. For several years, the organization financed its work through a combination of government funding and revenue earned on real estate transactions for mixed-use developments.
Government austerity and the bursting of the real estate bubble led board and management to realize that private fundraising needed to be part of the organization's revenue plan. At this stage, most organizations would go out and hire a development director—kind of a "Ready-Shoot-Aim" strategy. Caritas wisely recognized that this was exactly the sort of approach that got so many organizations in the CompassPoint study in hot water. Before they hired someone, they knew they'd have to figure out from where they were going to raise money and the skillsets they'd need from the development staff, management, and board to make it happen.
Many organizations hire development staff based on past fundraising success, but with little thought to whether that success is relevant to their own strategy. Why hire someone who knows major gifts if you're pursuing a grassroots strategy? Why hire someone who raised money for hospitals or museums when you're trying to raise funds for housing?
With our help, Caritas has developed a three-year fundraising plan that's clear on the donor markets that will support them and the roles and skills required for success. Now, they're ready to make a hire that's rooted in a rigorous assessment of their prospects and a shared understanding of the path to success.
Contact Stephen at: firstname.lastname@example.org.
As director of financial sustainability, Stephen Pratt is growing Root Cause's financial sustainability practice within our consulting practice, working to develop more rigorous financial models for our clients and to share how these models are developed for the sector.