What Is Changing About Fundraising

I am often asked what I think is different about fundraising—what has changed, how is it different from when I started in the field.  There’s the obvious—technologies, changing demographics, more wealth inequality.  But those are changes around the margins.  Fundraising is still mainly about building relationships between donor and the organization (aha!  If you thought those relationships were between fundraiser and fund giver, give that another think).  What is really changing is how we are defining fundraising and what it means today.

For most of my career, I thought of fundraising as charitable.  To me it was those efforts that triggered tax benefits, whether because of gifts given to my organization or those monies funneled into foundations for the ultimate benefit of charitable nonprofits. These type of gifts showed a larger community  how generous and good the donors and funders were.  

The problem with this view is that charitable fundraising is actually a very small percentage of an organization’s revenue.  Or if it is not—there are many small organizations where it represents 80% or more of all revenue—then the organization is doomed to smallness forever more.  Doomed may be too harsh a word; not all organization aspire to being larger.  Still, relying on charitable giving can limit what an organization is able to do.

Thinking more expansively, fundraising can be comprised of all sorts of ways to bring in revenue. That means government grants and government contracts, which some organizations already count as fundraising.  It also means earned income.  

Just as it sounds, earned income is income you (individually or organizationally) receive for work.  Because nonprofits need to be aware of how the IRS thinks about your earned income, you want to ensure that earned income is in line with your mission.  If it is not, the income becomes unrelated business and will be subject to unrelated business income tax (UBIT).  And there may be challenges to your 501(c)c status.  But in truth, it is not so hard to ensure that what you are charging for is something that fits nicely within your larger mission.  For example, taking what you do and creating seminars, webinars, books that tell others how you do it.  For a fee, of course.  Or selling use of that app you created to help your organization organize something.  Or selling products or services/opening a store/whatever because your mission is training your clients in running a business.  

To create earned income, make sure you are planning programs with a gimlet eye on how these programs will be paid for and what revenue they might bring in.  If a program can serve your clients and help you to create an earned income stream, so much the better.  But even if you don’t want to consider earned income, it is wise to plan programs and consider the economic impact on your organization

Economic impact also counts with your administrative functions.  Don’t just think about what they cost, but consider what add to revenue generation.  Often, we only look at price.  I’ve seen so many organizations that refuse to pay for software, hardware, additional staff because it costs too much.  And yet, when one considers what is lost because of this penny-wise/pound foolishness, you see that not doing something may be more costly than doing it.

Looking at a fundraising more broadly may also help with your board.  Having serious conversations with them about how you can monetize some of what you do and look for other financial opportunities beyond having them ask their friends and colleagues for a charitable gift, may spur them to much needed action.