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Jul 6, 2012

Fundraising is best when it focuses on relationships well before asking for money

My June Business First column focused on an interesting model to develop significant donations that emphasizes multiple interactions with a donor long before any gift request is made.  Here is why this is important.

A nonprofit exists in order to fulfill a useful need of the community that the for-profit sector cannot do at the volume or quality the community needs.  That connection to community defines a nonprofit’s mission and serves as the primary channel to donors, volunteers, and community support.  Unfortunately, some nonprofits take for granted that the public agrees that what the nonprofit does is needed and useful to the community.  If that disconnect occurs, nonprofits need active remedies or they will eventually fail to thrive.

This disconnect can develop over time for several reasons.  Community needs and priorities are constantly changing.  If the nonprofit is doing the same things in the same way it did ten years ago, it is likely that its work is not as valuable to the community as it used to be.

The community needs to know about a program before it can support its usefulness.  If the nonprofit focuses on doing its work and serving its clients but neglects to tell its story to a broad audience, it is possible the public will not value its work.

The essence of usefulness is how the community benefits, not why the nonprofit needs contributions and volunteers.  If the nonprofit’s outreach is primarily to solicit donations and volunteers, it is likely the public sees the nonprofit’s financial needs more clearly than it sees how the nonprofit is addressing the public’s needs.

Some nonprofit associations have published economic impact studies in an effort to establish community need.  These studies show that nonprofits are a major taxpayer through the $500 million of Ohio personal income taxes and $1.1 billion of federal taxes paid by their employees.  They are a major employer, accounting for about ten percent of the Ohio workforce.  They are a major purchaser of goods and services, over $65 billion in Ohio or about one-seventh of state gross domestic product.

These studies are valuable, but not for establishing community need.  Their value is to make it clear that the nonprofit sector should be as important a focus for economic development as the for-profit sector.  Their tax exemption should not be begrudged by the plentiful for-profit companies that seek government subsidies and tax credits.

Instead, a nonprofit assesses its continued linkage to community need through direct outreach and communication.  For example, school districts must demonstrate community value every time they ask for a levy, yet the majority of the voting population normally has no contact with the schools.  Wise districts make school facilities available to community organizations.  They highlight upcoming student performances and competitions and work to attract the general public.  They sponsor student community service to local institutions and events.  This activity turns the “them” into a “we” and provides a direct channel to demonstrate the positive contribution of the schools to the community so that a tax levy becomes a support to a part of the community rather than an obligation to pay for a mandatory service.

So too for nonprofits.  The Chronicle of Philanthropy recently described an outreach approach that has produced the dual benefit of creating constructive interaction between nonprofits and the public and generating a reliable and significant stream of individual donations.  The method is instructive.

In short, multiple interactions with only one solicitation point has proven to be a successful way for nonprofits to learn if there is a disconnect between their mission and the evolving needs and values of the community.  When that connection is strengthened or reaffirmed, then the financial contributions follow.

Reread chapter 19, “Informing a Nonprofit’s Constituencies” in Linking Mission to Money to remind yourself what you need to tell each of your constituencies in order to create a solid relationship.

Share your views on this more prolonged approach to seeking donations.  Is there too much pressure to get money now?