Posted by: michgilb | December 20, 2009

The More You Need The Less You Get

Does your shop rely heavily on philanthropic hand-outs – maybe too heavily? Not good,  because major donors today have little sympathy for risky bets. Tell a major prospect that you rely on fundraising for 25% or more of your operating revenue and what they hear is “my Board passes deficit budgets.”

You know and I know that you’re raising funds to support your mission, but from the perspective of many business-minded philanthropists, you’re raising funds to plug holes.

Check out this piece recently posted by the Nieman Journalism Lab at Harvard.

http://www.niemanlab.org/2009/12/are-news-nonprofits-doomed-to-reliance-on-big-gifts-a-study-in-fundraising-%E2%80%94-and-sustainability/

While the article makes the interesting point that nonprofit newspapers may ultimately be more successful than for-profits, that’s not what grabbed me. More relevant is the author’s research which shows that the most sustainable journalism nonprofits had diverse revenue streams. It’s not just that these multiple income-stream journalism nonprofits had more business type income – they were also raising more money from donations! Their counterparts, journalism nonprofits that based their business models on substantial philanthropic support tended to get less from donors than those that could show a more diverse funding base.

In the author’s words…

The trend also suggests a cruel and ironic corollary: The journalism nonprofits that can demonstrate the least dependence on foundations and large gifts may be the most likely to succeed in winning them.

So, if you are in a situation where you are too dependent on fundraising for your survival, what do you do? You can’t wean yourself from philanthropic dependency overnight – but you can develop a plan that 1) Diversifies your income streams, 2) Drops or alters programs that are otherwise clearly maladapted to achieving earned revenues, and 3) sets some benchmarks and includes a timetable.

Share your plan with your donors so that they can invest with confidence knowing that you have identified the issue and have a strategy in place. It’s by showing that you will soon need to raise less dollars that you’ll eventually find yourself raising more dollars.

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