5 Reasons Your Nonprofit Isn’t Raising Enough Money
The majority of nonprofits struggle to raise enough money. And they often don’t know why.
When you are on the inside of an organisation that is used to doing things a certain way it can be nearly impossible to see new opportunities, to understand what you could do differently. There can be many reasons why a nonprofit doesn’t bring enough money in the door.
Here are the top 5 reasons a nonprofit struggles financially:
1. Too Many Programmes Drain Money From Your Organisation
You struggle with money because your programmes cost money
It sounds like a truism — you struggle with money because your programmes cost money. But the reality is that few nonprofits analyze their programmes to determine each one’s individual impact on the bottom line. Often they will add a new programme because it has an impact on the mission (or because a single funder wants the programme), without understanding how the new programme fits into the organistion’s overall financial picture. The end result is an organisation that is stretched to the breaking point. Nonprofits must analyze all of their programmes to understand their impact not just on mission, but also on finances, then they can make decisions about where to more sustainably focus resources.
2. You’re Leaving Money Up to One Person
The financial engine of a nonprofit must be a team effort
The financial engine of a nonprofit must be a team effort. Yes, it is important, if you are large enough, to have a staff member whose sole job is to think about money, but you cannot leave it all up to her. The entire organisation, from the front line program staff all the way up to the chair of the board must understand the critical importance of money and what role they individually play in securing it. Although programme staff won’t actively solicit donors, they can still share client stories with donors, write blog or newsletter articles, participate in program tours with donors, and even suggest new ideas for tying money to their programs. And there are countless ways for board members to bring money in the door, but you have to make sure they are aware of and doing their part.
3. You’re Not Effectively Telling Your Story
It is more important than ever that nonprofits be able to articulate, in a compelling way, what value they are providing a community
It is so common for nonprofit staff and board members, who believe so passionately in their cause, to think that it’s obvious to outsiders why they should get involved. But it isn’t. And in an increasingly crowded social change marketplace it is more important than ever that nonprofits be able to articulate, in a compelling way, what value they are providing a community.
4. You’re Doing What Everyone Else Does
You have to analyze what you have to offer
Too many nonprofits which are struggling financially witness another nonprofit’s fundraising activity and then try to replicate that perceived success, without analyzing if it actually makes sense for them. Just because it looks like a recent gala or a new thrift store rakes in the money doesn’t mean: a) that it did actually make a profit for the nonprofit and b) that it would make a similar profit for your nonprofit. The key is to make the best use of your specific assets as an organisation. Think about what value you have to offer and who might be interested in paying for that value. For example, a homeless shelter could financially partner with local businesses to move people away from storefronts and into more stable and life-changing accommodations. You have to analyze what you have to offer and who specifically would be willing to pay for that value.
5. You’re Not Investing In Your Money Raising Function
Think about your financial engine and the various revenue streams you employ
If you don’t have enough or the right kind of staff in place to raise money it is little wonder that you struggle. And if you’re not giving them effective tools they will be at a loss. Think about your financial engine and the various revenue streams you employ. Do you have the technology, staffing, systems, materials, space you need to raise money well in those ways? For example, if you want to raise money from individuals you need an effective database system that tracks contact information, interactions, history, interests. Whatever ways you bring money in the door, you need to ensure you have enough and the right kind of tools to do it well.