By Steven Kutsuflakis CPA
Nonprofits Turn Focus to Major Donors
The nonprofit sector is facing a severe departure from the boom of the last decade. Predictions place numerous risks at the feet of fundraisers. From the increased privatization of problem-solving to the politicization of giving, the potential for charitable sector scandals, and eroding donor trust to the emergence of dark philanthropic money, nonprofits have some interesting years ahead. While these predictions are just a sample of potential threats, the most significant game-changer perhaps is the critical importance of the major donor.
Since 2010, philanthropy has been increasing in power and numbers. Programs like the Giving Pledge and the rise in overall wealth as evidenced among the Forbes 400, is a good sign that philanthropy will continue to grow among the nation’s largest donors. However, due to systematic financial uncertainty, increasing secularization, and changes in federal tax law, the number of individual donors that give less than $5,000 per year is declining. In response to the changing landscape, nonprofits are shifting their focus toward their greatest givers.
Recently, the Center for Effective Philanthropy (CEP) surveyed more than 600 nonprofit leaders to learn how nonprofits can effectively manage support they receive from major donors and what major donors can do to support nonprofits better. In this article, we list the top strategies for connecting with major donors and retaining their support.
Invest in Relationships
The findings of the CEP’s survey showed that meaningful relationships pave the way for a better understanding of the nonprofit’s mission and challenges and help the donor feel like they are a part of the organization. When relationships are personal instead of digital, it allows nonprofits to build trust and strengthen bonds. Nonprofit organizations can ask major donors how important a relationship is to them and what they view their role to be in building or maintaining the relationship.
Bridge the Gap
A nonprofit’s work is complex. Operational challenges, both internal and external, are often under-communicated to donors, subconsciously paving the way for donor pressure. Nonprofit leaders are encouraged to screen potential givers to make sure they are aligned with the organizations’ mission and work and then leverage the relationships they build with donors to communicate how their values and beliefs translate to goals and priorities. Bridging the understanding gap will help nonprofits avoid power imbalances with their donors and make it easier to reinforce support.
For a nonprofit to do their best work, they need ongoing support. The best way to secure their plans for the future is through multiyear commitments, unrestricted gifts, and support beyond money.
- Multiyear Commitments. While 92% of nonprofits say it is very or extremely vital for major donors to provide repeated support, only 59% of their organizations’ major donors offer it. The nonprofits cited in the survey say transparency about whether or not they will give in the future is also a concern.
- Unrestricted Gifts. Unrestricted gifts allow nonprofits control over how a donation should be allocated, but according to those surveyed, only 54% of their major donors provide them.
- Support beyond money. More than 90% of nonprofit leaders say they receive support such as volunteer time, pro bono services, assistance with fundraising outside cash contributions. While that number is high, nonprofits cite that more support would help them achieve greater goals.
There is a distinct correlation between the likelihood of ongoing support and the quality of the relationship between an organization and a donor. Of course, when the connection is strong, and the trust is high, nonprofits can ask major donors questions about gaining additional support.
If you have questions or would like to continue this conversation, please contact the nonprofit accounting professionals in our office today.
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