Tedfellow Peter Haas asks a question always worth re-examining in his post entitled Show me The Money-Disasters, Restrictions, and The Future Of The Fundraising Industry.
The question: Why shouldn’t a nonprofit organization outsource its fundraising to a professional fundraising contractor?
Peter is not talking about bringing in a consultant to train the nonprofit to do a better job raising money. He’s talking about outsourcing fundraising altogether–that is, hiring an experienced pro on a commission basis to bring in the financial resources that a nonprofit needs to do its work:
If the mission of the NGO is the service to the community, and fund raising is truly something administrative (as most donors like to classify it in costs analysis), then it should be something an NGO can easily subcontract. NGOs subcontract back end services all the time, book keeping, accounting, payroll. I don’t hire somebody to tell me how to reach into my heart and find my inner book keeper, I hire a book keeper. Why not fund raising?
To make this feasible for small nonprofits, Peter contends, it has to be done on commission:
Aside from finding the right contractor the boutique fund raising pricing is out of whack with the resources of its potential customers. Contrary to common development director and contractor beliefs, to build a truly sustainable client base they need to work just from commission or fee on delivery of gifts. The barrier to entry for customers in this industry is that most the the small, effective and compelling orgs lack the funds to pay a fee up front to hire one of these contractors.
Compelling set of arguments, these, and no doubt persuasive to many nonprofit leaders who, like Peter, do not see fundraising as either a personal strength or joy. Peter’s own question is:
Why aren’t there more fundraising contractors out there working this way?
Perhaps, he says, it may be bad advertising on their part:
Where are all the big fund raising contractors? The professional solicitors? This is an industry with thousands of professionals yet none of them has a google adword? Interestingly similar fundraising term searches with adwords had hacker SQL injection attacks in the adwords. Hackers and scammers know NGOs need money, why don’t the pros?
What I have learned from this is that either A) the companies and private practices that should be good at this are thinking way too small and a market opportunity exists for a serious player to dominate B) These companies need to hire me part time to manage their SEO because they suck at it . . .really. I might not be so great at the fund raising but honestly folks your google results are pathetic.
Or perhaps, he suggests, it may be a growth industry:
This is an industry that is waiting for its day. Small orgs need the big gift the most. I have often lamented that impact philanthropy has strangled out all the institution building big gift philanthropy of the late 80s and early 90s. Most the groups I respect in terms of impact, Partners in Health, Echoing Green, Teach For America, City Year, all started with a major million dollar or more gift in the first year. For an entrepreneur that is pretty darn useful to start an enterprise, you can staff off of that, you can build both a program execution and a fund raising team. Starting with 50-100K it’s a bit more of a challenge. You are constantly just treading water to creep upwards with your budget.
I’d suggest three other reasons why outsourcing fundraising to contract fundraisers is not more popular:
- It’s viewed by the largest professional fundraising society as unethical.The Association of Fundraising Professionals wrote a white paper on the subject, listing six reasons why they frown on the practice. My guess is that Peter won’t find much of their reasoning to be especially persuasive. From a pragmatic standpoint, the one that carries the most juice is the recognition of how rare it is that there is a 1:1 correspondence between a particular solicitation and a gift, or even between a particular solicitor and a gift. Big gifts especially are like fine wine; they mature with age, and their cork is best popped in the company of many.
- It’s a strategy whose time has come…and gone.There may have been a day when wealthy individuals were looking for places to park their dough where their hands and their checks would separate. In fact, the whole of traditional transactional fundraising is still based on that elusive hope. Increasingly, however, as we document in this blog, there is an ever-strengthening connection between people’s money and their involvement. (As we noted recently, volunteers to an organization give 50% more than non-volunteers.) This goes even beyond the point made above that a number of non-financial activities go into a donor’s decision to give. (Were that the case, we could just say to the contractor, “Tough. That’s just the cost of customer development.”) What the stat recognizes is that donors seek to interact in a certain way with an organization, and the nonprofit must be permeable and amenable to that approach. A nonprofit that outsources fundraising is unlikely to develop the kind of corporate culture in which donors and potential donors feel welcome to volunteer and participate in meaningful ways. If it did, it wouldn’t need to outsource its fundraising.
- Only bad fundraising is truly something administrative.It’s not like bookkeeping really, Peter. I supposed bookkeeping may in some circumstances be personally transformative. But good fundraising must be so. As Sean Stannard-Stockton notes and often laments, donors who say “I’m looking for a really good organization that’s making a significant impact that I can give a lot of money to” are as rare as unicorns. There’s just no way to take the transformation out of fundraising and have that be effective. And that transformation comes from personal participation, engagement, and ownership in the cause…not an encounter with a salesman for high end luxury goods.
What is an industry that’s waiting for its day are donor representatives who are more than financial advisors–individuals who work for givers, not organizations, and who are trained to scout out the nonprofits who want more than money and who can provide more than a good social investment.
Unfortunately, if you try to google those folks at the present time, you’ll come up empty, too.