With grant funding in question, individual donors are more important than ever. And as if fundraising wasn\u2019t hard enough, it\u2019s getting harder; the Fundraising Effectiveness Project (FEP) reports that both retention rates and total donors fell by 5% in 2024.\u00a0<\/p>\n
But you already know it\u2019s a challenging time. We\u2019re here to help, not share information you don\u2019t need.<\/p>\n
Drawing on the latest research, this article will make the case that professional accounting infrastructure isn\u2019t a cost, but an investment that will yield dividends while buying you more time to focus on program services.\u00a0<\/p>\n
Let\u2019s dive in.<\/p>\n If you\u2019re on LinkedIn, the \u201cmy employment was terminated because of recent changes\u201d posts have given way to \u201cif I needed to raise $1M in the next 9 months, here\u2019s what I would do\u2026\u201d The initial shock has passed, and nonprofit leaders are reevaluating and expanding their fundraising efforts.<\/p>\n It may feel tempting to grind your way to success, but that\u2019s a recipe for burnout. Make the most of your efforts by answering the following questions first:<\/p>\n I used to help a state representative with fundraising. On Saturdays, we\u2019d meet at the local library and call potential donors. The first thing she taught me was: \u201cThe best person to ask is someone who has already donated to you.\u201d Likely common knowledge, but the starkness of the contrast between new and loyal donors is worth revisiting.<\/p>\n Just 18% <\/em>of first-time donors repeat, while a staggering 84% of seven-time donors stay with your organization. A similar pattern separates small and large-dollar donors. Micro givers ($1-$100) stick around just 21% of the time, while major gifts ($5k or more) are repeated in more than 50% of instances.\u00a0<\/p>\n Yet, there\u2019s a puzzling disconnect in where nonprofits put their effort. Over half of total donors made micro donations, a cohort comprising just 2% of all dollars raised. Similarly, nearly 70% of donors were first-time givers, despite this subsection accounting for just 20% of all dollars raised.\u00a0<\/strong><\/p>\n A handful of loyal donors is worth more than an entire room of brand new small-dollar donors, and yet most organizations are putting their attention precisely<\/em> on the less valuable group.<\/p>\n Why?\u00a0<\/p>\n It\u2019s tough to say. Organizations certainly need first-time donors to build a base of loyal support, but the pipeline leading to regular and more significant gifts leaks somewhere along the way.<\/p>\n Monthly recurring pledges are the hallmark of a stable nonprofit. First-time donors are unpredictable, and big picture strategic planning is difficult without a concrete budget. But what motivates donors? Why do some stay, and others leave?\u00a0<\/p>\n The Lilly focus group can shed some light. For starters, some things are out of our control.\u00a0\u00a0<\/p>\n Participants cited explosive current events as catalysts for first-time giving. While you should undoubtedly incorporate news of the moment into fundraising, new wars in Europe, global pandemics, and major protest movements don\u2019t happen every day. Moreover, economic conditions also fluctuate. Wealthy donors, particularly those who give through foundations or donor-advised funds, often base contributions on their performance in the stock market. People prioritize personal stability over philanthropy during bad years.\u00a0<\/p>\n However, there are<\/em> things within our power. This is perhaps the most critical information from the study. Emphasis ours:\u00a0<\/p>\n People give, and keep giving, to nonprofits that clearly communicate how their money is making a difference. This is where accounting infrastructure plays a role. After all, how can you illustrate impact without reliable figures to share?\u00a0<\/p>\n The report is pretty long, but the desire to see impact and efficacy appeared repeatedly.<\/p>\n Plus, it\u2019s aggravating to show up in somebody\u2019s inbox only<\/em> when you\u2019re asking for money. Lilly participants shared frustrations with charities that did this. I\u2019m sure you\u2019ve experienced this yourself\u2014 political campaigns are notorious for hit-and-run fundraising.\u00a0<\/p>\n A similar sentiment appears in the BoA Study of Affluent Charitable Giving.\u00a0<\/p>\n When asked about their motivations, the second most prominent response was \u201cbecause I believe my gift can make a difference.\u201d When asked what matters after<\/em> making a gift, the top response was \u201cspending the money mostly on program activities,\u201d followed by \u201cdemonstrate sound business and operational practices, including full disclosure of financial statements.\u201d\u00a0<\/p>\n Financial reporting isn\u2019t about making sure you can file an accurate Form 990, though that matters. It\u2019s a powerful tool for building donor trust, proving their dollars are being put to work, and encouraging one-time givers to become longtime supporters.\u00a0<\/p>\n There\u2019s no doubt nonprofits will step up outreach efforts this year. Some executive directors have boards they can lean on for referrals, while others will take to social media or try to reengage an aging email list. Regardless of the tactic, though, what will all potential donors do when they hear about you?<\/p>\n They\u2019ll look you up.\u00a0<\/p>\n And they all want to know the same three things: are you legitimate, do you use donations effectively, and are you impactful? Maybe they\u2019ll find a blog, or your social media account, or an impact report. But regardless of medium, a persuasive message will do two things:<\/p>\n Kony 2012 is the perfect<\/em> example of what happens when you have one and not the other. For those who don\u2019t remember, a nonprofit dedicated to stopping Joseph Kony, a Ugandan warlord, released a documentary-style video that went viral. It was a masterclass<\/em> in emotional storytelling and racked up 100 million views in just six days.\u00a0<\/p>\n While the video inspired millions, donors started asking questions they weren\u2019t ready to answer. Where was the money going? Why are they spending so much on filmmaking? Is Kony even relevant anymore? Trust crumbled. Donations stopped. And the nonprofit shut its doors shortly after.\u00a0<\/p>\n The moral? A good story might convince a donor that your cause is important, but you need to prove trustworthiness too. Accounting infrastructure is a component of that.\u00a0<\/p>\n Oftentimes, someone who already has a job.<\/p>\n The Center for Effective Philanthropy (CEP) recently surveyed over 400 US nonprofits. In their report, State of Nonprofits 2024: What Funders Need to Know, <\/em>one leader shared their experience on overwork, saying:<\/p>\n \u201cAs an executive director for a smaller nonprofit, I struggle to be the expert in all of the relevant areas. I struggle with working too many hours and not having enough staff or time to do all I want and need to do for my organization.\u201d<\/p>\n Nonprofits operate on notoriously limited budgets. Out of necessity, directors, employees, and volunteers perform multiple roles to keep the organization running. But asking people to take on more work, especially when it\u2019s outside their expertise, can lead to burnout.\u00a0<\/p>\n People who work in the nonprofit sector are inspiring. They dedicate their careers to causes that make the world a better place, often working under challenging conditions with limited resources. But despite their versatility and tenacity, they can\u2019t be specialists in everything, and that includes financial management.<\/p>\n Small organizations usually have a bookkeeper, but they\u2019re a volunteer or a part-time employee at best. This keeps expenses to a minimum, but accuracy, timeliness, and report usefulness often suffer. On the other hand, it\u2019s rare to find a midsize or large nonprofit without a full-time staff person handling accounting. Sometimes this person is in-house, but this can be outsourced as well.\u00a0<\/p>\n It\u2019s more expensive to pay for help than to rely on a volunteer, but the quality, speed, and accuracy can more than offset the added expense. Plus, by outsourcing, an organization can save the annual expense of a full-time employee. It\u2019s a happy medium between free and full-time help.\u00a0<\/p>\n Outsourcing comes with other distinct advantages as well:\u00a0<\/p>\n And of course, donors are more confident in organizations that share clear and accurate financial reports.\u00a0<\/p>\n We\u2019re indinero, your trusted accounting, tax, and CFO firm. Our expert team transforms financial management into an afterthought, so you can focus more on your mission. When the time is right, contact us for a free consultation<\/a>. We\u2019d be delighted to learn how we can serve your organization.\u00a0<\/p>\n With grant funding in question, individual donors are more important than ever. And as if fundraising wasn\u2019t hard enough, it\u2019s getting harder; the Fundraising Effectiveness Project (FEP) reports that both retention rates and total donors fell by 5% in 2024.\u00a0 But you already know it\u2019s a challenging time. We\u2019re here to help, not share information […]<\/p>\n","protected":false},"author":1,"featured_media":148231,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11759],"tags":[12843,13735,14029,20583,20105],"dealstore":[],"offerexpiration":[],"class_list":["post-148230","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting","tag-accounting","tag-fundraising","tag-nonprofit","tag-outsourced","tag-supports"],"yoast_head":"\nPivoting From Grants to Fundraising\u00a0<\/strong><\/h2>\n
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<\/a><\/figure>\nBuilding Loyal Donor Bases: What Motivates People to Stay?<\/strong><\/h2>\n
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\u201cDonors expressed a greater desire for nonprofit organizations to communicate the impact of programs and services and to be informed in more engaging and personal ways. <\/em>People shifted their giving to organizations that demonstrated impact and efficacy<\/em><\/strong>, which actively engaged in communication and education, and which personalized donor engagement.\u00a0 \u2013 Lilly Family: Understanding How Donors Make Giving Decision<\/em>.<\/em><\/em><\/em><\/h4>\n<\/blockquote>\n
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<\/em><\/li>\nTrust Signals, Financial Transparency, and Kony 2012<\/strong><\/h2>\n
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Who Does the Accounting in Nonprofits?\u00a0<\/strong><\/h2>\n
When \u201cMaking Do\u201d Hurts More Than It Helps<\/strong><\/h2>\n
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