Six Reasons Why Fundraising Fails

Many people want to support nonprofit organizations that advance causes important to them. But hidden barriers can prevent nonprofits from reaching their fundraising goals.

Here to unpack the six main reasons why fundraising fails are Mark Payne, partner-in-charge of James Moore’s Tallahassee office, and Alyce Lee Stansbury, CFRE, founder and president of Stansbury Consulting.

Mark leads James Moore’s Nonprofit Services Team, which regularly conducts free training on the challenges and issues nonprofit organizations face.

Alyce Lee has coached hundreds of charity organizations as a Certified Fund Raising Executive and certified Master Trainer. Founder of Stansbury Consulting and author of the “Notes on Nonprofits” column in the Tallahassee Democrat, she combines best practices, timely topics and more than 30 years of nonprofit experience related to board governance, strategic planning and fundraising.

Together, Mark and Alyce Lee bring their expertise to bear on the primary factors impeding fundraising success.

Mistake 1: There’s no fundraising plan.

If your nonprofit organization is failing to raise enough money, first evaluate whether you have a written fundraising plan. According to Alyce Lee,  equating a plan with a series of fundraising events is a common pitfall. These are two different things.

A fundraising plan outlines your revenue goals, campaign dates, fundraising strategies, donor communication, stewardship activities, and event details. It also includes a targeted communication schedule that facilitates the relationship-building processes to help retain donors.

Having this plan helps staff and board members stay focused and on the same page and clarifies actionable steps.

“The secret sauce to long term fundraising success is what’s happening between events where you’re building and deepening relationships,” Alyce Lee said.

Mistake 2: The board is not involved in fundraising.

Another reason fundraising fails is when a nonprofit’s board has no ownership of the fundraising plan or program. One of your board’s responsibilities is ensuring your nonprofit has enough resources to succeed in its mission. Active involvement in fundraising is a natural outgrowth of that responsibility.

“No money, no mission,” Alyce Lee said. “The board plays a huge role in that relationship-building piece.”

Don’t mistake board members’ buying and selling event tickets for meaningful engagement in fundraising. They should be involved in crafting, adopting and participating in your fundraising plan. Make sure they have the training they need to feel comfortable identifying and engaging potential donors, soliciting contributions, introducing their network to your organization, and inviting guests to fundraising events.

Also remember that fundraising is a team sport. A lone development position can only accomplish so much—no matter how effective and knowledgeable they are—without the involvement and support of the board and CEO.

“Think about how much more successful your organization’s fundraising could be if you had 15 board members and your staff all working toward implementing your plan,” Alyce Lee said.

Mistake 3: Set unrealistic fundraising goals.

While you shouldn’t shy away from ambitious fundraising aims, setting goals outside the realm of possibility can derail your efforts from the get-go. Conduct a careful evaluation of your resources, recent results, donor list, giving history, and staff capacity to help you set realistic fundraising goals.

“The number one predictor of how much you can raise this year is how much you raised last year,” Alyce Lee said.

She recalled one nonprofit that contacted her firm with the hopes of raising $1.2 million in less than a year. The organization only had 17 donors on the books.

“They didn’t have the capacity to raise that amount with the resources they had,” Alyce Lee said. “It’s like trying to jump from mountain to mountain. There’s this huge gap, and you’re not able to get there quickly.”

Mistake 4: Neglect to ask for contributions.

One simple reason fundraising fails is because no one is asking. During the height of the pandemic, many nonprofits cooled fundraising activities. It appeared  tone deaf to solicit donations from people and businesses struggling to stay afloat.

Current economic uncertainties also present a challenge to charitable giving. Interest rates continue to rise, inflation is still running hot and a possible recession looms on the horizon. Would-be donors might not have the financial flexibility to contribute to nonprofits in such volatile times.

“If you turn the news on right now, all you’re hearing is that the Fed’s increasing the interest rate. Inflation’s gone crazy. When I fill up my truck, it’s like $125,” said Mark. “I’m thinking, ‘Oh, my word, how do I have enough money to now give money to somebody else to help them?’”

According to Alyce Lee, however, it’s important to remember that your mission is not in recession.

“Whatever your organization does, you’ve got to keep doing it,” she said. “This means you must keep fundraising. You do so tactfully and thoughtfully. Be sure you’re being sensitive to the situation economically or the situation that a particular donor may be in. But you have to ask.”

Mistake 5: Fail to tell your best story.

How you explain your nonprofit’s mission can make or break your fundraising efforts. Your mission is about more than what your organization does, its why you matter.

Effective storytelling connects donors with far more than a list of facts. It describes the compelling, persuasive reasons to give and how their contributions make an impact on people or an issue important to them.

“Unless you get to why it matters, you’re not really telling your best story,” Alyce Lee said. “That is what’s going to inspire or compel someone to want to give to your cause.”

Mistake 6: No CEO involvement in fundraising.

A final reason why fundraising fails is the CEO or executive director is not involved. CEOs are in a unique position to inspire the board, staff and donors to advance your organization’s mission. As the face of the organization, the CEO is your nonprofit’s chief fundraiser.

In close partnership with your chief development officer, the CEO should be involved in helping to seek major gifts and secure critical funding. Many major donors, moreover, will expect donation requests to come from the highest-ranking person at your organization. The role and ultimate responsibility of being a CEO cannot be replaced or delegated to others on your team.

“There are going to be donors that expect to have that relationship be cultivated by the CEO,” Alyce Lee said. “The bigger the number, the more zeros at the end, the more they have to know, like and trust the CEO.”

Engaging the CEO in fundraising is also important to your nonprofit’s succession plan. This is especially relevant as Baby Boomers retire and we see an increase in nonprofit leaders leaving the sector.

“In the last two years, I’ve seen more executive directors retiring,” Mark said. “And I’m seeing the handoff of the relationship from one executive director to another.”

It’s key that donor relationships are passed on to new executive directors. A good succession plan will ensure new leadership is preparing to step into crucial roles as long serving leaders step away.

Understanding these six primary reasons fundraising fails will help your nonprofit strengthen its results. Share this list with board members as a catalyst for discussion about ways to improve and sustain fundraising success. And as always, contact your nonprofit CPA with questions.

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