By Sarah B Lange under Uncategorized on September 4, 2023

The State of Fundraising 2023

You can watch the full episode on YouTube or listen to Spotify.

Hey everyone, I'm Sarah Lange and I'm here to spark the philanthropy revolution. The word philanthropy means love of mankind. My show is all about the ways we can open our doors and hearts so we can do more good.

Hey guys, thanks for joining me. I'm Sarah Lange here to spark the philanthropy revolution. And originally we were going to have Chris Baker, the executive director of The Other One Foundation on air with us today, but he's MIA. We suspect that because of the time zone change, he may have mistakenly thought that the show was an hour from now, so we're punting. That's what you got to learn how to do in life, right? So instead of Chris, if he shows up, we'll swap over to him and talk about kinship. But in the meantime, I want to talk to you about my state of fundraising report.

Every year we send out a survey to all the people in our community and ask them about how their fundraising is going, what they're doing, where they're seeing success, and then tabulate it all and send it out. So we were going to send that out later this week, but you guys are the first ones who get to see it. I'm going to share my screen and we can talk about the report.

OK, so as you can see, the state of fundraising for 2023, and as you may know, I am a fundraiser. I've been doing fundraising since 1989. I've raised over 90 million dollars. And if you count all the people that I've taught to fundraise, we're probably talking about billions. I have a little bit of experience in this area and I want to share with you what we found is true for the nonprofits we surveyed.

What we found is that a lot of nonprofits are still struggling to recover. And this is particularly true for organizations in the field of social services with budgets under a million dollars and those who served marginalized communities. So we wanted to get a better idea of how folks are faring post pandemic and what kind of help they need. I also like to compile data on how nonprofits of various sizes compare to one another. This way, not only can I understand my audience better, but I can provide relevant training and support to them. And also, I want to help nonprofits understand how they compare to their peers.

This went out in June and these are the results. So we had 51 nonprofits respond between June 12th and July 1. And we asked them a variety of questions. And so the sample size is 51 and less otherwise noted. So who did we speak to? Mostly people who were in a fundraising role. As you can see, 47 percent fundraising is part of my job, but not my primary role or people who were primarily responsible for fundraising. So that was the bulk of folks. Four people support other people who do fundraising. And 2%, excuse me, still getting over my thing, 2% then also supervised folks who do the fundraising. So most of the folks we spoke to had long term tenure. You can see that 80 percent of respondents had anywhere between two to five years and more than five years. So they've been around for a while, whereas fewer people had less than a year or a year to two years. These are people who have been around and have some experience in their organization.

Most of the organizations have annual revenue between a million dollars, and this is not a typical. So 60% of the nonprofit sector actually has budgets under a million dollars. And if you think about that, a million dollars doesn't really go that far, especially when you're now talking about paying staff, covering overhead costs like lights, health insurance, copiers, reception, all those things. So a million dollars doesn't really get you that far, but that's 60% of the sector. So that is pretty much reflected here as well.

The organizations we spoke to had a very wide range of missions. So some people are in the education and skills training area, others are in the arts, social services, people dealing with hunger, youth programming, parent-child development, religious or faith-based organizations, animals, addiction, third world offshore development, or something else. So you can see there's a pretty wide scope of missions here.

In terms of the 2023 fundraising goals that these organizations had, those were also pretty significant. And let me just get that next slide up for you. Okay. So top 2023 goals were deeper board involvement and better marketing. So you can see that 30% wanted to work on board development and involvement. Excuse me. Communications, marketing, and more grant funding. So those were the top three answers. And when we talked to them about what their barriers were, the number one barrier is not enough time. So role compression continues to be a thing in the nonprofit sector. Organizations need more bandwidth and more capacity to do more fundraising. Because the second barrier is no money. So there's also a lack of organizational buy-in, lack of staff, lack of skill or expertise. So you can see that these are all very much the same problem. It's really a lack of resources to get the job done. And, you know, when you're involving your board in fundraising, it's really about helping boost their knowledge and their comfort and their confidence. And those are all things that take time. You can't just shove your board in the deep end of the pool without swimming lessons and say, “go fundraise!” Because most of them have no idea what that means. So we really need to provide them with the education, the training, and support they need to be active participants in fundraising.

Let's look at the fundraising that happened. So four or five organizations have a fundraising goal. And the average was $625,000. And the average goal... Excuse me. Boy. Sorry, I should have taken some cough syrup. The average goal for larger organizations was $1.5 million. The average goal for smaller organizations was $175,000. So you can see it's a pretty significant gap between the larger organization goals and smaller. And then organizations with a dedicated fundraising staff report an average of $1.4 million goal. And the ones without any dedicated fundraising staff reported a goal of $131,000. So there's a huge difference in your fundraising when you have somebody dedicated to the task.

Website and email campaigns are the most frequently used tactics. A lot of people have people coming in to donate through their website. Now what I want to say about that is there's a lot of online fundraising which actually is driven by mail campaigns. And this is particularly true for boomers. If you have a lot of boomers that you're appealing to for donations, they really need a letter because they're very paper friendly, I guess is what I would say. This is a generation that's very used to getting solicited by mail. And they're tech savvy enough that they're going to jump online and make that donation. So sometimes we think that our email or our email campaigns are driving more people than they may be. So just it's good to track where those people came from if you can.

An email fundraising campaign, individual solicitations, appeal letters, and special events. So you can see where those are kind of the top five tactics. Now, Amazon Smile, I find that really interesting that 57% people use it. First of all, Amazon Smile has been discontinued. And also it was like pennies on the dollar. So I never really understood people investing the time and energy into Amazon Smile when it brought them in, you know there are a couple of clients I had that were like, ”oh, we got $74.86 last quarter.” And I'm like, “okay, you could have probably just gotten one donation from one donor that would have equaled your whole quarter.” So anyway, I've never been a big fan of Amazon Smile because, again, maybe half a penny for every dollar that people spend. 

Then monthly giving programs, you know, monthly giving programs are actually an excellent source of revenue. And people will give more money if you ask them to break it down into a monthly payment. So I know that I gave my largest gift that I've ever given because they broke it down for me and that would be X number of dollars a month. And I'm like, “oh, I can do that.” So monthly giving programs are really, really good in terms of return on your investment. And people are pretty open to doing them. And the other thing about monthly giving programs is kind of like that gym membership that people forget about. Like once you have their credit card, they just are used to like it going out of their account. So you can usually keep them around for a longer period of time.

What's interesting is that only 35% of folks were using major gifts. And you know, this is actually something I'm really starting to push on my clients because we are in the middle of what they're calling the silver tsunami. So boomers are retiring at the pace of 10,000 a day. And boomers are the wealthiest generation this country has ever seen. And so not only are they retiring, but they're passing away and their wealth is trickling down to their heirs. So this is a perfect moment in time for you to get busy with major gifts and start to identify the boomers in your data clusters. So this is why I love doing a donor data dump, because you can really start to work on people to move them into a major gifts and also estate planning and bequest. So this is the moment if you haven't started this work yet, I will be doing probably some webinars and seminars later this fall on major gifting, because I just think it's so, so, so important for us to really grab this money while we can. And I know that might sound predatory or like vulturistic, but the reality is boomers are the architects of social change and boomers want to leave a legacy of social change. So it's not like they're not already in that vibe of giving and supporting nonprofits and supporting social issues. The pump is already primed so why not just talk to them about it? You're not going to find a more receptive audience than boomers.

Most organizations submitted a grant. You know, obviously if you have dedicated fundraising staff, you're going to be able to get out more grants than smaller organizations. But what's interesting is they're not any more effective. So the overall median funding rate for grant application was 50% and there wasn't any difference between the large and small orgs and there wasn't any difference between organizations with or without dedicated staff. So I found that really interesting. The average, well, the median was six grant applications in 2022. In 2022, my grants division cranked out over 800 applications. So to see organizations with a medium of six is a little disheartening because there's so much grant money out there. There's like $126 billion out there for grants. So larger organizations submitted 11 versus five with smaller. And then those with dedicated fundraising staff did 12 versus three. But, you know, here's the thing, we just finished up working with an organization. They're a $12 million nonprofit. When we walked in the door last summer, they were sending out 20 grant applications. And we actually identified 200 central mass funders that they could apply to. And with the space of three months, we had cranked out $1.8 million in grants. So it's not that the grant money isn't out there. It's that organizations don't necessarily know where the funders are. They don't necessarily know how to get the applications out. Grant writing can be tedious. But, you know, our grants division has a very streamlined process where we know how to gather the information we need and get a foundation document put together so that we're able to send out grants pretty quickly. So, you know, that's something I like to teach everybody about in my grants workshops is how to really streamline the process so you can get more grants out the door.

Most board members write checks, but they're not thrilled about fundraising. So 67% made a gift to the organization. That should really be 100%. If they're on your board, they should be making some level of contribution. Otherwise, I would question why they're on your board. And, you know, like I used to be the president of the Boston University School of Social Work board. So you're not going to find a group who's got, you know, less disposable income than social workers. But we still had 100% giving every single year. So it wasn't necessarily the amount. It was the involvement. So, you know, clearly there's some growth area around board members supporting their own organization. They help with special events. They solicit gifts from other donors. That's awesome. I was so excited to see that was 44% because that can often be a real uphill slog. They help with cultivation. They help with stewardship. Those are really important functions, and they're really easy for board members to do. And then, you know, 16% reported that they're not involved in fundraising at all, which is really a shame. Because, again, if they're on your board, supposedly they're among your biggest supporters and fans. Because, again, otherwise, why are they on your board? So this is really just about good onboarding, setting the expectations, giving people the education, training, and support they need to become involved in fundraising. Like fundraising is not necessarily people understand, especially for nonprofits. So it's something we have to teach them about.

Board attitude, they're leading the change and inspiring everyone in the organization to look to their example. A small 7%, it's disheartening. They eagerly support our fundraisers however they can. 14%, that's better. They usually help, but only if asked, 44%. So that's a little more heartening. They help out sometimes, but it's clear they don't really want to. 23%, so we've got some reluctant participants here. And they avoid helping the organization fundraise like the plague. 12%. So I have a whole course called, it's actually a webinar called, Why Your Boards Hate Fundraising and What to Do About It. And I'll have to pull that out. Because when I see numbers like this, it's clear to me that we don't understand why our board members are reluctant to do fundraising. And there are lots of things we can do about it. Every client that I have, their board learns how to be not only fundraisers, but actually enthusiastic fundraisers. So it is possible and it does not require a miracle, just some work.

Top challenges are the inability to access donors and lack of qualified staff. So can't find donors or the opportunity. You already have donors. I say, start with the donors you have and go deep with them and then get them to help find you other donors. Because 63% of people support causes promoted by their friends and family. So you could do like a peer to peer campaign. Need more better staff, again, I find it curious that I often have executive directors from nonprofits who want to raise more money, but don't want to invest any money in fundraising. And so there is no fundraising fairy. It is not magic. It's about getting more people to roll up their sleeves and do the work. Fundraising is work. It is constant work. And if you don't do the work, you're not going to raise the money. That's just the reality of fundraising. So here we have 30% of people saying we need more or better staff. So we really, really need to invest in fundraising if we're going to move the needle on any of these problems that we're trying to address.

We also asked about staffing. And only 40% of the organizations we surveyed have fundraising staff. And again, you can imagine if you don't have fundraising staff, what a struggle fundraising can be. You know, fundraising is not magic, but it is a process. And it's a process that you have to learn. And so expecting fundraising to happen when you haven't trained any staff on how to do fundraising is, again, kind of like dumping people in the deep end of the pool and not giving them swimming lessons. You're really setting yourself up for failure. So my new website is going to have a bunch of free resources aimed at helping you build your capacity. And also my book does a lot of that work. So even if you don't have trained fundraising staff, you can still take the staff you have and train them to be fundraisers.

You can see where, again, majority of folks don't have adequate fundraising staff. So again, if you want to raise more money, you have to invest in fundraising. And I know that feels very chicken and egg. But again, you can at least train your board and your staff how to do fundraising, so they can roll up their sleeves and help. Organizations without staff rely on the executive director to fundraise. So the problem is when the executive director is doing the fundraising for an organization or it's been combined with another job, so I frequently see fundraising and social media communications squished together, you're really setting yourself up for failure on both fronts. Worse, you've now turned fundraising into your side hustle when it really needs to be kind of like the core function of your organization. 

Fundraising needs to be a top priority and the only way to maximize your revenue potential is to invest in fundraising. Obviously, executive directors should be working with the board to raise funds, hint in board members, and develop and deepen relationships with top donors. But the rest needs to be handed off to qualified fundraising staff who can focus on the task at hand without having to think about social media or some other job they've been handed off. So yes, executive directors do need to help raise money but it's really not their job to do a ton of fundraising because there's so many other things that executive directors have to focus on in terms of managing the organizations and external partnerships and planning for the future. I'm working with an executive director right now, and we're on a journey we just started to double their capacity. And so we're thinking this is probably going to take five years. And I don't know, we haven't crunched the numbers yet, but I'm guessing 7 to 10 million. But that's where we're going. And so if she didn't have somebody focusing on the fundraising, there's no way she would be able to double the capacity of the organization. So just think about how to get more fundraising support and take it off your executive director's plate.

When it comes to training, marketing and individual donor work most interests the organizations we surveyed. These results are really interesting because if you look at the data on ROI, individual donor work provides the highest return. So last year we had over $499 billion, and 80% of that, 80% of $499 billion came from people. So most respondents were very interested in individual donor work, board development and major gift work, both of which return a very high yield. There are two areas in which there's little interest and a low level of skill. So if you look at the chart, you'll see there's a low level interest and a low level of skill in major gift campaigns. Yet that is one of the highest ROIs you can have in fundraising. And obviously it's a process. You're not just going to walk up to a wealthy person in your community and say, “hey, can you give us $50,000?” That's kind of like asking somebody to marry you on the first date. Not a great idea. And they'll probably walk away, maybe even screaming, get this person away from me. So the other thing is, you know, there was also a fairly low level of interest and skill level in board development, yet your board is there for a reason. They're there because they believe in the work you're doing. So why not teach them how to become fundraisers on behalf of the organization? Because even if you only have a six person board or a 10 person board, that's still six more people helping with fundraising. You know, I've worked with really small boards. I worked with a literacy organization in Massachusetts, they had a board of eight. And in one fall campaign, they were able to raise $5,000 from area businesses. So that might not sound like a lot, but it was a major victory because every single board member participated in that campaign. And they were so proud because we set a goal of five and they blew right through it. So it gave them confidence. We helped increase their comfort level. They were educated about fundraising. We put together a campaign with them so that they were really familiar with what they were asking for and where the money was going. And I was so proud of them and they were so proud of themselves. So even if you only have a handful of people, train them up and get them fundraising.

About half of the organizations have a budget for training. There's this huge belief that there's a lot of free material out on the internet and that's how people should learn. Okay, that's certainly true to a certain extent. But how do you know you're actually getting accurate information from somebody who's raised a ton of money? And then also a lot of these workshops or webinars or whatever they are out on the internet that are free, you might get back to the office and have no idea how to implement. And so this is why my workshops and my webinars and everything I produce help you develop the thing. So if it's a grant workshop, we are going to help you develop the draft of a grant. We're going to make sure you understand all the components of the grant, what a funders want to see. I have sat on distribution committees, so I know from that side of the table. So I make sure that people leave with a thing. So if it's an appeals workshop, we have one coming up September 22nd, that is going to, you're going to leave that workshop with an appeal because I don't ever want people to go back to the office and be stuck because I have been there. Early in my career, I went to a bunch of workshops. I would go back to the office and be like, “now what do I do?” I was overwhelmed. I was confused. I didn't know what the right next step was. And so free information is free, but you also get paid for sometimes. So free is not always going to get you where you want to go.

Very few organizations have the flexibility to invest in training without approval. And so you can see a lot of people would have to go to their supervisor and that sometimes it could take a few weeks to a month to get the approval. So training is really, really important. And yet the organizations aren't always, don't have the systems to support it.

What's next? So these are some of the things that I see happening in the world of fundraising that I think it's really important for you to know. We are witnessing the largest transfer of wealth in the history of the United States. At present, boomers are in the process of passing on more than $39 trillion. $39 trillion, that's a lot of cashola to Gen X and millennials. By 2061, $59 trillion will pass hands. And $39 million of that is going to pass directly to heirs who are looking to make an impact. So Gen X and millennials and much more millennials than Gen X, my generation's a little difficult to get engaged sometimes because we were the first latchkey kids. Our moms went back into the workforce. And so we are very independent and maybe a little hard to get involved, but we're not disinterested, I guess I would say, but millennials are much more invested in social change.

There's a whole bunch of people getting a whole bunch of money. And if you're not focused on individual giving, now is the time to start. A relational fundraising approach works better than a transactional one. And if you're not sure what that means, let's have a chat. So there's this moment in time, it is unlikely to ever occur again. We have trillions and trillions and trillions of dollars passing hands, and we need to get in line and get our fair share of it. And again, it's not predatory. Boomers love social change. They love giving to causes they believe in. So this is not predatory or vulturistic. This is just taking advantage of a moment in time and ensuring our financial stability. And that's what they want as well. They want to see their legacy live on beyond their lifespan. So relational fundraising, individual fundraising, I have a lot of experience in that. I also use donor psychology and neurolinguistic programming in my individual donor work. So that's training I've gotten over the years. So I have a very particular approach, which is super successful. So I've raised $90 million.

There's two ways to expand your fundraising capacity. Maximizing the capacity of your staff and board by investing in training and professional development. And then hire more fundraising staff. So as you see from the data, it makes a huge difference in an organization's ability to raise money. So take note of where other nonprofits of similar sizes are outperforming you. Share this information with everyone in the organization and create a plan for filling the gap so you can catch up and outpace your peers. And again, with the retirement of boomers at the pace of 10,000 a day, there are fewer fundraisers than there are fundraising jobs. This is the first time this has happened. The field is growing, but not quickly enough to keep up with the needs of the 1.5 million nonprofits in the U.S. So if you're looking to fill a fundraising position, you're probably going to have to consider people who have some of the basic skills, like good people skills, solid writing skills, and then train them how to be fundraisers because there's just more jobs than there are fundraisers. So you're going to have to bring somebody in and then train them up. And again, that's something we do.

I really hope you found this information helpful. And if you want to talk about what's next for your organization, you can book a free one-on-one strategy session right here. There's my contact info. And Chris, maybe you could pop that in the chat as well so folks can see it. And then also here is my contact information. I'm realizing blue on blue is really hard to read, I apologize for that. I'm here to help you. I'm dedicated to nonprofits. I regularly spend, I would say, two to three hours a week consulting with nonprofits, helping them to the best ability that I can. And I'm here for you too.

That is the state of fundraising report for 2023. And I hope you found it useful and helpful. And again, if you have questions, comments, confusion, I'm here to help you. I love the nonprofit sector. You guys are doing the heavy lifting in society and you're what makes the quality of life in the United States possible. And I honor you and I feel so just honored and privileged to work with nonprofits every day because I get to see the amazing work that you are doing in the world. So keep it up and get in touch if you have questions. I'm always here for you. And we'll be back in two weeks, hopefully with Chris Baker or somebody else.

All right. Thanks guys for joining me and I'll catch on the flip side. Bye.

Thanks for tuning in. I’ll be back in two weeks for another episode. Got topics you want me to cover? Organizations you want me to showcase? Let me know! Also, I’m here to help you revolutionize philanthropy at your nonprofit. If you want to talk about what it looks like, drop me an email!

You can watch the full episode on YouTube or listen to Spotify.


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