The 3 Biggest Fundraising Mistakes Nonprofit CEOs Make

When first starting out as a nonprofit leader, I had a lot of great ideas but very little fundraising experience. Over the years, I’ve found there are 3 key mistakes nonprofit CEOs typically make. I made them when I was running my first nonprofit and I see fellow leaders make them all the time.

Mistake #1: Focusing Harder on Getting More Donors Instead of Growing Existing Ones

Like many nonprofit CEOs, I used to be afraid to make my organization too reliant on a few big donors.  I worried about what would happen if one of them cut off support.

This fear was paralyzing.  Like Cinderella, I worried the clock would strike midnight and it all would vanish.

However, philanthropy has changed in the past 20 years.  Giving is more concentrated, with many nonprofits seeing 90-95% of their revenue come from just 5% of their donors.  Cultivating fewer but larger donors frees up your time to focus on your nonprofit’s mission—the very thing that won those donors’ partnerships in the first place and will attract more of them in the future.  

Identifying which of your current donors have the capacity to give much more than they currently are will help you get off of the small-dollar treadmill and start seeing your nonprofit flourish.  

I recently helped a nonprofit CEO named Jim.  He felt almost apologetic that one donor provided 20% of his organization’s revenue.  Jim identified whom among his donors has big money but contributes only a small amount.

Jim identified a big money, small-dollar donor, pitched him successfully and increased his commitment by 1,200%.  Now, that donor is one of Jim’s biggest donors, and believe me, Jim is not apologizing for it.  He is proud of his success.

Don’t look at big donors as liabilities. They are incredible assets.  They are key to your organization's growth and success.

Mistake #2.   Acting Like Oliver Twist Instead of Acting Like a Partner

When I first started fundraising, I felt intimidated.  I don’t come from a wealthy background and being in a donor’s massive house or office made me feel out of my depth.  I used to approach donors with a nervous, shaky voice, and meekly ask for a contribution. And then one CEO said, “Tarren, you need to stop acting like a supplicant and be a partner!”  

He was right, and I see my same mistake repeated frequently by other nonprofit leaders.  Many donors act like Oliver Twist, begging, “Please sir, I want some more.”

Don’t be Oliver Twist.  Be a partner.

Big donors don’t want to give to pathetic causes.  They built their entire careers on partnering with other ambitious people to do big things.  They want to partner with you and invest in a grand vision that affects real and lasting change.

There’s a saying about investors: they invest in chefs, not restaurants.  The same is true with most donors. They are investing in you as a leader and know you’ll figure out how to execute the big goals of your organization and overcome its biggest challenges.

That means being candid with your donors.  Talk about successes and failures.  Talk about how you learn from your failures to build future successes.  Then you will be speaking the language of your donors.

Change your mindset.  Don’t be Oliver Twist.  You have a big vision. Your donor has big money.  Together, as equal partners, you will do big things.  

Mistake #3.   Raising Money for Projects

I used to think the best way to raise money was to pitch donors on funding a specific project.  In a way this makes a lot of sense. You see it all around you -- the local YMCA trying to raise money for a new pool; a church trying to replace its roof.  So we see this and think it’s a great idea, making your donor happy by accomplishing something small and specific.

But here’s the problem with project fundraising.  It makes you stop focusing on your nonprofit’s big vision and gets you down into the weeds by talking about tactics.  Or, even worse, talking about one-offs.

You’ll come up with a project.  You may sell a few donors on it.  But it will end up costing more than you expected (in money or in time and focus, which are your biggest limited resources).  It may turn out to not even be necessary after you’ve raised the money. At that point, you’re stuck with it.

I like to think of project fundraising like gift cards.  I used to lay out a shiny selection of project “gift cards” for donors and hope they’d find one they like.  But nobody really likes gift cards and they often sit in drawers unused.

You know what’s better than gift cards?  Getting something you actually like. So take the time and pitch donors on a partnership to buy into your organization’s larger vision -- that’s what donors really want.

When I stopped project fundraising and started showing donors that larger vision, my fundraising took off.  I grew my current nonprofit from $50,000 in seed money to $12 million in annual revenue not by project fundraising, but by securing buy-in for my big vision and getting donors to invest in my organization as a whole.    

Bottom Line:

None of this is easy, but part of growing your nonprofit and developing as a leader is doing things differently.  So build relationships with big donors. Don’t be Oliver Twist, be a partner. Don’t pitch small projects, sell your big vision.  

If I could go back in time, I’d teach myself these three lessons early on and save myself a lot of frustration. They seem simple, but if you commit to making these changes, you will fundamentally transform your organization and make your dreams -- and the dreams of your donors and your staff -- come true.