Just because I’ve been in the nonprofit sector for 25 years…
Just because I’ve been a CEO, fundraiser, grant writer, event planner, alumni director, director of marketing and communications…
Just because I’ve worked for a global family foundation…
None of the above makes my opinion the begin all and end all of all things nonprofit. One of my favorite two hashtags is #AlwaysBeLearning. I try my best to keep learning.
It’s why I read a lot. It’s why I publish two enewsletters which force me to stay on top of the latest and greatest.
But that doesn’t mean that I won’t share my opinion. No no. If I see something I don’t like or disagree with, I’ll make my voice heard.
All Eggs In One Basket
When I discuss fundraising and marketing, I always tell organizations to diversify their portfolio. Offer a number of different giving options (monthly giving, annual donation, planned gift, stocks etc.) while also reaching your audience through multiple channels (email, video, social media, blog etc.)
Your goal is to reach people where they are and when they’re ready to make a gift, provide them with different ways to have impact in their community.
Two weeks ago I read this article which advises nonprofits NOT to diversify their giving options. It’s best to stick to one main option.
The article gives persuasive arguments and shares data to prove the point. I honestly was surprised as until now, everything I had read on the topic supported diversification.
But once I started letting this spin in my head, I liked it less and less. I’ve got three reasons.
Small Nonprofits
The article states: “The average nonprofit that raises more than $50 million a year gets about 90% of its funding from one revenue stream and most of those nonprofits get nearly 100% of their revenue from only two source types. Think of a large nonprofit and test it out.”
That’s great for large organizations but they’re not the dominant type of organization on the U.S. nonprofit landscape.
97 percent of nonprofits have budgets of less than $5 million annually, 92 percent operate with less than $1 million a year and 88 percent spend less than $500,000 annually for their work.
The vast majority of nonprofits are small. If they rely on just major gifts or just foundation funding or just corporate funders- what I call The Big Three– they risk having to shut down if even a single big donor stops giving.
It’s not sustainable short or long-term.
Lemme add: Just because the big guys do something doesn’t make it right for all nonprofits. You might think they’re being strategic, have done extensive testing, spoken to donors etc. Ummmmmm, not necessarily. Sometimes they too make decisions without any evidence it’ll work.
See Madoff, Bernie
Remember 2008? I do. Very well.
I was a CEO of a small nonprofit. What a time!
When the news about Bernie’s pyramid scheme crash came out, it sent shockwaves through the nonprofit world. Two things happened:
- Nonprofits that had invested with him (some for years) suddenly realized that all the savings they thought they had was gone
- Many many people who had invested with Madoff suddenly realized they had no savings. This included some very wealthy individuals.
As long as they thought they had savings, nonprofits could grow and donors would give. But as soon it was proven otherwise, those nonprofits went into emergency mode.
An example: My alma mater, Yeshiva University, “lost” about $100 million from their endowment through Madoff. At the time, the university didn’t bother with people like me who could give small donations.
They didn’t care. The only thing I got from them was an annual letter from the President asking for a donation. I never gave.
Their primary focus were large donors who could give millions and have their name on the side of buildings.
After the Madoff news broke, the university went into typical nonprofit mode: Scarcity/poverty mindset. They closed departments, cut down staff and suddenly they were asking me to give whatever I can.
That’s what happens when you rely on one giving option. It’s all good until it isn’t.
COVID
I know, we’re all trying to forget it. So I’ll just pick one little thing to share.
We all know an organization or three who relied heavily on gala events as their major revenue stream. There were nonprofits where the annual gala was 90% of the money they generated to pay for programs, staff and more.
COVID came and suddenly events are forbidden. Some of those organizations were in deep 💩.
That’s what happens when you put all your eggs in one basket.
You Must Diversify
I know that small nonprofits have limited resources, limited time and limited knowledge as the article points out. But that doesn’t mean they should simply roll over and play dead!
Each half year or each year they can introduce a new giving opportunity. The fundraiser’s job is to learn about the giving option and implement it at their organization.
Monthly giving, legacy gifts, major donors, foundation funders, stocks, corporate partners. There are a lot of different options. Learn who your donors and potential donors are, figure out the best giving opportunities and then offer it to them.
Diversification of your fundraising options is a must for survival.
Does your nonprofit want to boost its fundraising and marketing? Have access to a sector expert so that you can grow and thrive? Then it’s time for you to Level Up!
