Survey Sez: Okay to Spend More to Raise More

Remember when a nonprofit said 100% of money raised during a crisis went to support the immediate needs of those they help? Then the truth came out….no way 100% of every dime, dollar and nickel could pass directly to those in need. After misleading donors the organization back pedaled. But what was leftover were many donors, the government and other watchdog groups questioning how much nonprofit organizations spend to raise money and implement programs. I am all for oversight, audits and transparent access, but we also have to stand up and admit – we need money to run our nonprofit corporations.

Nonprofit professionals know it costs money to raise money AND run an organization (overhead v. programs). Our sector deserves and needs the best people who are dedicated and passionate about the cause, educated and good managers – last time I looked, those folks deserved to get paid for their experience and their passion. Well a survey* conducted in June 2010 says many agree.

  • People are almost twice as likely to be on the side of spending a lot to bring in a lot as compared to spending little to bring in little
  • Where organizations may be lacking is making sure donors understand value, rather than just perceiving expense
  • People also want to give to charities that spend money on good management
  • Respondents preferred organizations that hire top-quality managers, even with higher salaries, over hiring less experienced managers and spending fewer dollars on salaries
  • Even greater percentage would rather support an organization that spends more on fundraising and brings in more money to help the cause than would support an organization that spends little on fundraising but raises less money

*Heart of the Donor, Insights into Donor Motivation and Behavior for the 21st Century, was commissioned and created by Russ Reid and conducted by Grey Matter Research & Consulting. The survey took place in June 2010 and involved 2,005 adults in the U.S. over the age of 18.

We know donors are smart people. No one makes a donation without knowing where it’s going and how it will be spent. They want their contribution/investment spent wisely. And according to this survey, donors are willing to support better operations, fundraising and programming – to make sure the organization can accomplish its goals. If only we could get foundation funders to understand this.

Many organizations work toward high ratings according to nonprofit watchdog rules. One of the criteria includes spending less than 25% on “overhead.” I think creative accounting can make that a reality. I don’t think the 25% rule can be universally applied to EVERY nonprofit. Is working toward a rating a good use of time and resources? Perhaps nonprofit time can be better spent making sure the budget is focused in the areas that will show the greatest impact and best investment of resources:

  • Effective Board recruitment and development
  • Program staff who know what they are doing and pay them for it. Don’t settle for mediocre staff.
  • Experienced fundraising staff who can effectively create and lead a successful development program. Their past experience should be proven.
  • Tools and infrastructure, donor software, computers, T1 lines that allow your staff to work more efficiently and smarter – not harder.
  • Creative programming to solve community issues – try, fail and try again, but focus your efforts and keep trying – doing the same thing over again……
  • Community needs assessment to focus your work
  • Collaborative partnership to pool resources and effectively address community needs

Nonprofit organizations need to raise and spend the resources they need to grow, contract, review, reshape and retool to meet changing needs. And change is always happening. Seems donors understand that and are more interested in impact and results and percentage of money spent to do it.

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