Escaping the Stigma: What Nonprofits Need to Help Donors Understand

I’m not sure what happens to completely competent business owners when they put on the “donor hat,” but there seems to be a double standard for how I need to run my nonprofit business versus how this donor gets to run her for-profit business.

I know we have to steward other people’s money differently than how a sole proprietor can make financial decisions, but how are we expected to fulfill the mission our donors care about if we’re continually hamstrung by donor demands?

When we’re forced to answer the age-old question, “what percentage of my donation goes directly to the program?” with an actual percentage, we’re feeding into an outdated donor mentality.

Faulty donor expectations

In his 2013 Ted Talk “Uncharitable,” activist Dan Pallotta tackles overhead costs head on. First, he says, is that donors often think of overhead as a negative and not as part of the cause. But it definitely is, especially in terms of growth. He says that another problem stems from this belief where overhead is viewed as an “enemy of the cause.” Because of this idea, organizations are sometimes forced to go without the things that they really need to grow in the interest of keeping overhead low.

Again, we’re bringing these donor expectations on ourselves. We find ourselves pigeonholed in a sector where they feel they have to choose between doing good for others and offering an attractive work environment. This isn’t a mutually exclusive relationship. A critical part of building a successful nonprofit is escaping that “woe is us” mentality.

The solution

We have to help donors understand that we can’t have the programs they want to fund without someone managing that program. And you can’t have great program staff without someone hiring and training that program staff.

If we’re running a successful nonprofit, we’re not competing with other nonprofits for great employees—we’re competing with the destination employers in our community that are trying to recruit them. If we don’t lock these awesome people down, we have a turnstile of training where every 18 months (if we’re lucky) we’re training new hires—and that means more overhead costs. If we can pay competitively in our market to hire good people and retain them, they can focus on doing good and not focus on whether they’ll be able to buy a cool new pair of socks—isn’t that what the kids are doing these days?—or eat for that matter.

The double standard

Donors give us money because they believe in the cause and believe in the program that we’re proposing. They also ask us about how we’re going to sustain ourselves and still expect a zero budget. Sustainability can’t be achieved if we’re forced to have a zero budget by the end of the year. I can’t turn the calendar to January 1 and expect to buy groceries if I had to spend all of my money last year.

As Pallotta says, “if you inhibit failure, you’ve just killed innovation.” I love when he rationalizes how we allow people to make millions off of selling violent video games to kids—but try to make a million curing childhood cancer and we’re parasites.

And I’m not even talking about our nonprofit staff making millions, in this case, we’re talking about having a reserve to sustain the mission and even innovate to further the mission.

We need to get to a place where we’re so good at running our nonprofits, donors trust that when they give to us, we’re going to move the needle on the cause they care about.

profit leaks

Randy Hawthorne

As the former Executive Director and Editor for Nonprofit Hub and a Professional Certified Marketer, Randy shares his passions of marketing and education with nonprofits to help them implement marketing and organizational leadership principles so they can grow their organizations. Randy lends his marketing and organizational leadership expertise to a number of nonprofits in his community. Outside the office, Randy works with high school and college students and mentors young professionals to develop their leadership and entrepreneurial skills.

May 29, 2017

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