Why we need to re-think nonprofit fundraising

Why we need to re-think nonprofit fundraising

If you occasionally venture outside your home, onto the internet, or check your mail chances are you’ll encounter an organization soliciting you for donations. This may vary from the more traditional Salvation Army volunteer standing in the freezing rain with a change bucket to the slightly more sophisticated use of powerful analytics to calculate your annual income based on social media posts and send you targeted donation ads accordingly.

Wow that escalated…

Although…it’s probably unsurprising to most people that nonprofits, from universities to charity bicycle rides, spend an absolutely incredible amount of resources to solicit our donations, including employing the use of big data.

The pretty good reason for this as we know is that they are usually almost entirely dependent on donations to survive.

So just like their for-profit counterparts, non-profits need to “spend money to make money”. While estimates for the total amount spent on fundraising are elusive, if we assumed nonprofits spend $8 on fundraising per $100 raised (a conservative estimate) the number would be in the $34 billion range. From paid fundraising staff to elaborate marketing campaigns, nonprofit fundraising efforts can often rival the private sector in terms of market tactics and billable consulting hours, leaving one wondering if that energy might be better spent in pursuit of the nonprofit’s actual mission. While organizations like Charity Navigator, GiveWell, and Guide Star have done a great job of creating transparency in regards to nonprofit overhead, some methods of fundraising still leave much to be desired. For example, some professional fundraising services can take up to $80 out of every $100 donated as fees.

I feel like Ben looks disappointed…

Rather than blame charities themselves for the billions spent on fundraising (rather than the pursuit of a better world) I think most of us would be ready to admit that it does take quite an awful lot of arm waving to get us to care about that better world (and donate to fund it).

We might also argue that while some fundraising efforts may be over the top or grossly inefficient, it’s a nonprofit’s duty to communicate what they’re doing and have the public validate whether it’s worthwhile, i.e. deserves donations. So maybe fundraising is one of those necessary evils?


But consider this. Is it always the most qualified individuals that get nominated and elected to office? Or is it often enough the ones with a winning smile that can fundraise the most money…Is it the startup providing the most utility or value to society receiving the most attention from investors? Or is it the one with the most charming founder that can inspire them with visions of utopia? Often times the market is right at picking deserving winners. Often times it’s really not.

The trouble with choosing “deserving” nonprofits is that evaluating comparative efficacy and value is notoriously difficult. Nonprofits are tackling society’s greatest challenges like poverty, hunger, access to education, and measuring how well they’re doing at overcoming those challenges is not just a matter of counting how many schools or wells they’ve built. It’s also not necessarily the nonprofit with the lowest overhead (an often touted metric) that’s having the greatest impact. And while there are certainly tangible ways to measure nonprofit efficacy, many times whether or not a donation is made depends mostly on which nonprofit can market the best, pull the most heartstrings, and make donating as painless as possible. In other words, it often depends on which nonprofits have the best fundraising teams, networks, and access to tech.

This system leaves out organizations that don’t have the resources for lavish fundraising campaigns, or that simply aren’t good at it much in the same way that a brilliant engineer might not be adept at marketing themselves or their inventions. And while crowdfunding platforms like GoFundMe can help bridge the divide, they still rely on nonprofits having access to donor networks and the precious time to actively fundraise. They make fundraising easier but don’t address the root causes of why it’s so difficult.

So what’s the alternative? One way we’re working to improve the current system is by developing “passive” funding streams for those nonprofits on their behalf. We’re doing this by making it easy and effective for folks to give back through the purchase of our patches and by donating directly on our platform (with no platform fees). Besides increased funding for nonprofits, our structure provides donors a simple way to give effectively, cutting through the fundraising noise.

Every day our community grows the easier it is for our nonprofit partners to focus more on accomplishing their mission and less on fundraising. We hope you’ll join the movement to help them do so as well.

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