Derric Bakker, President of nonprofit consultancy DickersonBakker, is one of those rare individuals who has been in fundraising for almost his entire career. As a nonprofit leader, his view on our sector—and what's to come within it—is a rare look at the power of change.
In his book Change or Die, Alan Deutschman poses the question: “If you had to change your life patterns to avoid death, would you do it?” The answer seems obvious. Deutschman, however, concludes that the opposite is actually true—people rarely change, even when they know the consequences may be severe. Alcoholics relapse. Criminals repeatedly offend. Patients defy their doctors. We run up our credit cards. We resolve to lose weight but still reach for that cookie. We pledge to exercise but stay solidly in our seats.
For nonprofits, change may be more important now than ever before. We are living in a time of disruption. Nonprofit organizations and those who lead them are grappling with a complicated and rapidly changing labor market, higher expectations from supporters, inflationary pressures, and ever-changing and increasing community needs.
DickersonBakker recently completed a major national study of nonprofit leadership and fundraising that uncovered some troubling discoveries suggesting that our industry may be stuck in a paradox and will face continuing decline if we don’t find a way to break out of it. In particular, four of the study's findings indicate that things are not as they should be:
Nonprofits are experiencing diminishing returns from fundraising.
There was a clear consensus amongst a majority of respondents that traditional fundraising methods are no longer working as effectively as they have in the past, and new approaches are needed. Two in three say their organization is using the wrong metric to measure fundraising success. An overwhelming 94% of nonprofit professionals say they want to see their organization make a shift in fundraising strategy. Nonprofits are clearly seeking a better way to fundraise. Specifically, they believe two changes are most needed:
Invest more in major giving.
- 85% of respondents say that growing major giving is their top priority. They want more focus on activating new major donors and growing existing ones. Nonprofit professionals also want more focus placed on nurturing mid-level donors.
- Few respondents believe that their organization is good at the very thing they believe is most important. Only 3% say their organization does a good job identifying and nurturing mass market donors into mid-level donors, and the numbers are only slightly better when it comes to turning mid-level donors into major donors.
- Approximately six in ten say their organization lacks a solid major donor strategy, and seven in ten believe their organization’s major donor messaging program needs improvement; in many cases it is non-existent.
Prioritize retention over acquisition.
When asked what areas of fundraising should be de-prioritized in the future, the answer was clear for a majority: spend less on acquiring new mass market donors in order to shift those resources toward retaining and developing current donors, particularly those with mid- and major giving capacity.
A majority want to see more two-way communication between their organization and its donors. Nearly seven in ten say their organization needs to do a lot of work to become better at getting meaningful feedback from donors (fewer than 5% rated their organization as ‘excellent’ in this area).
Most fundraisers also understand that relationships are crucial when it comes to retaining donors and growing their giving. A healthy majority say they want to see their organization place more focus on developing relationships with donors at all levels of giving, including mass-market donors with higher giving potential, even if it comes at the expense of sacrificing some near-term revenue. At the same time, this study also makes it clear that these kinds of changes are unlikely without changes to how organizations measure success in fundraising.
Staff shortages are persistently problematic.
DickersonBakker’s 2021 Nonprofit Staffing Study revealed that a severe shortage of qualified fundraisers poses a major threat to the future of many nonprofits and the people who rely on them for help.
85% of the organizations responding to that survey reported that it was challenging to find qualified candidates for open fundraising positions. Nearly half stated it was extremely challenging or nearly impossible to find even one qualified candidate. This year’s nonprofit leaders’ study showed that those staffing challenges haven’t subsided—they are still one of the gnarliest problems facing nonprofit leaders today.
When asked to identify areas most in need of improvement, three of the top four areas cited as needing a lot of work were related to fundraising personnel. Fewer than one in ten said their organization excelled at recruiting enough qualified staff to be effective at fundraising.
Most nonprofits are also struggling to maintain compensation at a level sufficient to retain staff members who are effective at fundraising. Finally, providing adequate training for fundraising staff was also singled out as a priority for improvement. As organizations increasingly find themselves priced out of the market for experienced fundraisers, they in turn tend to hire more entry-level staffers, but then struggle to provide them with adequate training.
When it comes to fundraising, few things are more important than the people you have doing it. If we can’t find a solution to these stubborn staffing challenges, nonprofit organizations and the people they serve will continue to suffer.
CEOs and front-line fundraisers are not in sync.
On one issue after another, this study showed that there are significant gaps between how CEOs and front-line fundraisers see things in their organizations.
Overall, CEOs have a rosier view of how their organization is performing.
When respondents rated their organization in ten different areas, CEOs consistently scored their organizations higher than their staff did. Even so, there was widespread agreement that improvement was needed. The highest-rated area was called ‘excellent’ by fewer than 20% of respondents, and nearly six in ten could not rate their organization as ‘excellent’ in any area. 75% of respondents see at least one area within their organization that is badly in need of improvement.
Interestingly, nonprofit management also gave themselves higher marks for leading their organizations effectively than did the people they lead.
However, the most significant perceptual gap was related to how best to measure fundraising health. Only 48% of CEOs think their organization is emphasizing the wrong fundraising goals, compared to 80% of fundraising staff. On the whole, CEOs seem more comfortable focusing on simple top-line metrics such as gross revenue, while front-line fundraisers want to focus on more sophisticated metrics such as donor retention, elevation, and net revenue growth.
There is a strong desire for change. But change is not happening.
Despite the disconnect we saw on many issues in this study, most nonprofit leaders and front-line fundraisers seem to agree on this: their organization is focusing their fundraising efforts on the wrong priorities, yet most continue doing what they’ve always done. They are spending more but seeing diminishing returns. Like a hamster on a wheel, they are running harder than ever but not making forward progress.
A resounding majority of the respondents to this study understand that circumstances are rapidly changing, and they want to shift strategies accordingly. Approximately half of all who responded said they are willing to take risks to try new approaches. Yet the majority also say their organization is stuck on the proverbial hamster wheel, running full speed, doing the same things, year after year. This is the very definition of a paradox.
The data is clear: change needs to happen. But change is not occurring. Why? And what can be done to fix this problem? Here are a few places to start.
For starters, we need more collaboration between CEOs and front-line fundraisers. If we can’t agree on fundraising goals and how to best measure success, we will never make progress.
Assuming we do reach a consensus on these fundamental issues, the next step is to convene a discussion within organizations to identify the barriers to change, and how to overcome them.
Managing change may also require development of a new skill: i.e., a Paradox Mindset. This means shifting from ‘either/or’ to ‘both/and’. Don’t try to change everything at once. Test new approaches before implementing them. Be responsible and innovative at the same time.
Seeing these changes coming, our team at DickersonBakker recognized that we needed to help our clients rethink how they engage with donors across the entire fundraising continuum versus just at the upper reaches of giving, which has been our traditional focus. That’s why we went all-in and launched a new direct-response fundraising service line. Built from the ground up, this solution seeks to elevate donor experiences and deploy scalable fundraising platforms focused on “treating every donor like a major donor,” so that our nonprofit clients will be better prepared for the coming sea-change in giving.
If you’re on a mission to change lives and believe there’s a better way to fundraise, DickersonBakker stands ready to help. Whether your nonprofit needs help with strategy, talent, or fundraising solutions, we have the tools and expertise to help you get the resources that match your vision.