5 Mistakes Most Nonprofits Make in Their Fundraising Strategy

This article is written from the perspective of our fundraising consultant, Rev. Jana Swenson, CFRE. You can read her full bio HERE.

I finally had, what felt to me like a dream opportunity, the chance to advance the financial wellbeing of a nonprofit organization that was having an incredible impact on the lives of others. The prospect of  communicating stories of lives transformed and inviting donors to invest in this organization gave me an invigorating sense of purpose. But before the first year was up, it was clear that raising funds wasn't going to be as easy as I had imagined.

Our organization lacked a strategic fundraising plan. I couldn’t have told you that then, though. No, I would have told you that I didn’t know where to start, that I didn’t know what was most important, and didn’t have enough time to make meaningful donor visits that led to bigger and better gifts. So I planned a couple of events, sent out regular appeal letters and signed thank you notes. 

Gradually, I realized that I needed help if I was going to help reach our fundraising goals and create the impact they were capable of. So we hired a consultant. That’s when I learned that the challenges I was facing stemmed from not having a solid fundraising plan.

Since then I have walked alongside many organizations as a consultant and I can confidently tell you that most nonprofits have a weak or non-existent fundraising strategy. They spend way too much time planning events, then neglect the other important areas of fundraising. They don’t know it, but they’re leaving gifts on the table! In this article I’m going to introduce you to five common fundraising mistakes by walking you through my experience serving this nonprofit. I’ll also introduce you to the solutions I learned and now share with my clients. 

Fundraising Mistake #1: Too Much Focus on Donor Acquisition

This nonprofit was good at retaining donors was blessed with an incredible backbone of faithful donors. This provided us with a sizable amount of dependable income and a list of people who we could reach out to with gift invitations. 

This is not the case for most of the organizations I have worked with as a consultant. Instead of creating systems for retaining donors, organizations focus on acquiring new donors. This is costly to nonprofits for two reasons: 

1. According to CCS Fundraising, 48% of donors take five years to make a major gift. As development professionals we know that major gifts are the financial life-line for nonprofits. These are the gifts you need for your important work to continue.
2. It costs 5 to 10 times more to acquire a new donor than to invest in an ongoing relationship with a current donor. By investing in a relationship with a current donor, you’re saving money for the organization, while cultivating a relationship that could lead to a major gift. 

Retaining donors will save organizations money in the short term while paving the way to larger gifts in the future. Organizations that want to see positive transformation in their income both now and 30-50 years down the road need to create donor retention systems. 

How to Increase Donor Retention

Retaining donors doesn’t have to be complicated, it needs to be regular and routine — like watering a plant. Would you water a plant once and expect it to grow new leaves and live for the rest of the year? No, you would water it at least once a week. Similarly, having a routine for retaining donors will set your organization up to not only survive, but thrive.

A simple donor retention strategy should include three parts:

1. Whenever someone makes their initial donation, provide an option for them to make it a monthly gift. 
2. Send a letter to current donors who give more than once a year but not at regular intervals, and ask them to consider making a monthly contribution. 
3. Include an invitation (and return envelope) to give monthly in your newsletter or regular communication.

If your one-time donor is passionate about helping the people you serve, they may be excited to invest more in the  important work your organization does. Don't miss the opportunity to grow your impact and invite donors into a joyful practice just because you didn’t ask!

Fundraising Mistake #2: Not Analyzing Your Donor Data

Do you know your fundraising strengths and weaknesses? Analyzing donor data and determining the strength and weaknesses of your fundraising can be transformative to your fundraising efforts. 

I was often caught “in the weeds” of trying to hit our fundraising goals it never occurred to me to analyze our donor data! But that was one of the first things our consultant helped us do. Assessing our fundraising strengths and weaknesses taught me a lot about our donor giving habits including what percentage of donors we were retaining and what the average projected lifetime giving per donor would be. With this information our consultant was able to help us identify the strategies that would allow us to reach or exceed our fundraising goals by the end of the year. 

How to Analyze Donor Data

Leveraging your time and energy is critical to reaching your goals. Understanding your donor data and donor giving patterns makes it much easier to steward your time and energy. Donor analytics gives you the information needed to grow your gift income most efficiently. It will help you determine who will likely say yes to automated giving, who is ready to increase the size of their gift and who your most loyal donors are to name a few. 

You can begin analyzing your donor data today with a free software called Fundraising Report Card. I highly recommend you enlist the support of a consultant who can help you interpret the data and dig deeper into your donor records. My Fundraising Report Card will give you more information than you know what to do with. I was overwhelmed when we received the report for Bethany Camp, but our consultant pointed out which analytics to focus on and use in our fundraising strategy. Learn more about working with our consultant team HERE.

Fundraising Mistake #3: A Disengaged Board

Have you ever seen a lake in the early morning? It looks like glass. The serenity makes you whisper to avoid disturbing the moment. Then a fish jumps, a raindrop falls, or a boat ambles through and the entire body of water is disturbed with ripples. 

Most nonprofit boards are like water — calm and almost unmoving until disturbed in some way. Once disturbed most boards go into reactionary mode, often without all the information they need to make wise decisions. Our board was no different. When things were running smoothly and income matched expenses, the board was calm and disengaged. When the board was concerned about finances, they jumped to conclusions and solutions that weren’t always helpful. Showing the board our fundraising analysis proactively disturbed the board. Then when I asked them to participate in development efforts they jumped into action in a more helpful way. 

Disruption that gets your board engaged doesn’t always have to happen from negative data or circumstances. You can be the disruption that gets your board to act by inviting them to help you accomplish bigger things for the organization. 

How to Engage Your Board Members 

When inviting your board to work with you in fundraising, remember who makes up your board. Board members are usually individuals who have been impacted by your organization and want to provide for others to experience that same impact. They are also volunteers, which means they don’t want their time and energy to be wasted or taken for granted. And most importantly, Board members want to do meaningful work. 

Inviting your board members into meaningful work with you will go much smoother if you include three things:

1. Data. Data shows your board you know where you’re at, where you want to go, and how you’re going to get there. In other words, you’re asking them to help you with an informed plan, not a shot in the dark.

2.  Specific requests. It’s hard for anyone to take action if they don’t know what to do, your board members are no different. Instead of asking for generic help, ask for specific help.

3.  Equip board members. No one wants to do something that might make them look silly — board members included. Once you’ve made a specific request, train them to be competent in their specific task.

Board members serve on boards because they believe in the mission of the ministry or nonprofit. They want to see the organization do well, that’s why they’re there. Help them engage by presenting them with data, specific requests, and training!

Fundraising Mistake #4: No Strategy for Inviting Planned Gifts 

When the consultant began working with us, I wasn’t surprised that we started off facing challenges in acquiring new donors and engaging our board. The “ah-ha” moment came for me when the consultant taught us the importance of regularly introducing planned gifts. 

By integrating a planned gift invitation strategy, we discovered a simple and unobtrusive method to significantly increase the size of donations. I learned that it is not unusual for individuals who give as little as $100 annually to be capable of contributing more or in different ways, but they simply never had the opportunity because no one asked. In other words, the amount of money someone gives isn’t an accurate indicator of a donor’s dedication to an organization or their capacity to give. 

Introducing the idea of planned giving to your donors is crucial for two reasons:

• Unless you introduce the idea of making planned gifts, most inexperienced donors will automatically think to give cash. Receiving cash gifts means you’re missing out on significant support because only 10% of a donor’s wealth is held in cash; 90% of their wealth is in assets. 

• We’re in the midst of an era of incredible giving called the Great Wealth Transfer. Over the next 20-25 years 45 million households will cumulatively pass on $73 trillion from one generation to the next! Cerulli Associates estimates that $10-$12 trillion of that will go to charity. Introducing the idea of planned gifts to your donors significantly increases the chances that they will consider you when creating a plan to pass on their wealth. 

Planned gifts are most commonly made when there is a sense of urgency, this means you need to be on the top of your donor’s mind when they begin making an estate plan. A simple way to be top of mind is to regularly introduce planned gift opportunities.

How to Regularly Introduce Planned Giving

Introducing planned gifts in your communication needs to be as automatic as saying “bless you” when someone sneezes if you want to be successful. Whether you’re on a zoom call, in your house with your kids, or in the middle of church service, if someone sneezes, you, someone else, or several people say “bless you” as though it’s an automatic response. How did “bless you” become so automatic? There’s a trigger and response. 

Trigger: Sneezing

Response: Saying “bless you.”

Similarly, integrating gift invitations needs a trigger and response. 

Trigger: Anytime you send a response card with an appeal letter.

Response: Add the question: “Do you plan to include [organization] in your estate plans?” Also include a checkbox for: “Would you like more information about leaving a legacy gift to  [organization]?”  

Fundraising Mistake #5: Undiversified Income

I’m sure you’ve heard the saying, “Don’t put all your eggs in one basket.” We’re good at practicing this phrase in our personal finances, but most organizations forget it altogether. Just like you wouldn’t put all your money into one volatile investment, organizations shouldn’t be dependent on one stream of income. 

Working toward a sustainable revenue model put us in a position of reduced risk and helped us more consistently hit our fundraising goals. Reduced risk is probably the most important benefit of a diversified revenue stream. During COVID-19 we saw the volatility nonprofits faced, particularly for those who depended on income from in-person events. 

Diversified revenue streams are invaluable for helping nonprofits adapt to unforeseen circumstances. 

How to Diversify Your Organization’s Income 

A sustainable revenue model should look something like: 60% from products, services, or in-person events and 40% from donations. If you don’t already have a diversified revenue stream, begin by focusing on two areas:

1. A fundraising strategy. Donor cultivation takes time. A solid fundraising strategy can give you confidence that you are being proactive in finding and keeping new donors.
2. A marketing strategy. Over half of your income should come from the services and impact you provide; this means you need new and repeat clients.

Sustainable revenue models are well worth the time and energy they require because they ensure that the important work of your organization will exist and grow through decades. 

How Brenda Moore and Associates Can Help You Create a Solid Fundraising Strategy

Raising money is hard — no doubt about it. You don’t need the added stress of wondering if you’re doing the right things to hit your fundraising goals. 

You need a solid fundraising strategy so that you know each step required to stay on track of your fundraising goals throughout the year, and meet or exceed them by the end of the year. No guessing, less scrambling, and more delighting in the mission you support as a fundraiser. 

Knowing the next right steps to take is when my work began to have traction. Since becoming a consultant, I’ve witnessed how a solid fundraising strategy was the turning point for nonprofits I have served. If you need help hitting your fundraising goals by the end of the year, schedule a no-cost 30-min consultation with me HERE. 

This article was co-authored by Rev. Jana Swenson, CFRE and Samantha Roose.