5 Need to Know Trends in Fundraising and How to Cope With Them

If you’ve been looking for signs about which way the fundraising winds blow for 2015, there is no lack of places to look. The Web has been awash with predictions for months.

One source I like especially is the National Council of Nonprofits. If anyone is in a position to see the near future for fundraising, this organization is.

Back in December of 2014, the Council posted What’s Up, What’s Down in Funding for Nonprofits. Here’s the gist:

The Good: More Interest in Helping Nonprofits Become Sustainable

1. The good news is that grant makers are starting to loosen up when it comes to including general operation expenses in their grants.

Over the past three years, the total grant dollars earmarked for overhead has gone from 20 percent to 25 percent. It’s a move in the right direction, even though grantors still favor funding new ideas rather than sustaining existing ones.

2. Also, multi-year grants are on the upswing, allowing NPOs more latitude in their planning. And grants for capacity building are more in favor as well, with about a quarter of funders saying they have increased this type of funding.

Other good news about grants is that a recent survey suggests that overall giving is expected to rise during 2015-16 by nearly 5 percent.  Giving by foundations is a big part of that increase, with foundation grants expected to increase more than 7 percent this year and 6.7 percent in 2016.

The Bad: Some Players Are MIA

3. On the negative side, government money is in decline. Nearly half of nonprofits in one survey said they’re seen an outgoing tide of government contracts and grants over the past five years. Even worse is that payments on existing government grants and contracts are often late, forcing nonprofits to take out loans to fill the gap.

4. And what’s up with corporate money? Yes, corporations are doing well with in-kind gifts and they have increased participation in skilled volunteer programs, but cash is down or just barely keeping up.

5. The most devastating  news however is that donor retention is still pathetic. The national median retention rate is 42 percent. That means that for every 100 donors gained in 2013, 102 lapsed. The majority of new donors simply never return.

What to Do While These Trends Play Out?

Stop looking for money where it doesn’t exist or is so rare as to be a waste of time. Instead, direct time and resources where they are most likely to pay off.  For instance,

  • If you have a grants program, keep it up and watch for opportunities to apply for money that helps your organization become more stable, such as overhead funding and capacity grants.
  • If you depend a lot on government funds, try to become more diversified. Beef up other funding sources. It’s never a good idea to put all of your funding eggs in one basket.
  • Shift from asking corporations for cash and put your efforts into in-kind requests. Plus, ride the wave of corporate interest in retaining and motivating their employees through volunteer programs. Offer more opportunities for skilled volunteers.  Businesses are also very interested in helping their employees to be charitable, so beef up your promotion of corporate matching programs.
  • Cause marketing is also a win-win for corporations and nonprofits. Businesses are fully aware that their customers want to shop for good. Money spent on cause marketing programs can enhance their marketing dollars. Even smaller nonprofits can participate if they think creatively.
  • Do something, anything to retain your donors. Most donor retention problems can be solved by paying attention to basic donor care. Ask, thank, report results is a formula any nonprofit can adopt. In this environment, sometimes even the basics are not enough. Consider improving your thank you letters, making phone calls to new donors, and starting a monthly giving program.

Watching trends is a passion with businesses, and it should be for nonprofits as well. If you know which way the wind is blowing, even minor changes in your plans for the year could pay off. 

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