I recently stumbled upon a study that was jointly conducted by the Center on Nonprofits and Philanthropy at the Urban Institute and the Center on Philanthropy at Indiana University. Essentially, they revealed a vicious cycle that puts you, the fundraiser, in a real pickle every single day.

• Misleading reporting: The majority of nonprofits under-report overhead on tax forms and in fundraising materials.
• Unrealistic expectations: Donors tend to reward organizations with the “leanest” profiles. They also skew their funding towards programmatic activities.
• Pressure to conform: Nonprofit leaders feel pressure to conform to funders’ expectations by spending as little as possible on overhead, and by reporting lower-than-actual overhead rates.

 
 
So what can you do to break the cycle?

1. Be candid about the vicious cycle with major donors
2. Help them recognize infrastructure, administrative, and fundraising needs
3. Remind them that businesses need investment to grow
4. Invite them to decide with you how you, together, should measure performance (be specific)
5. Make sure they trust you (and they will if you are open and transparent in steps 1 – 4 above)
6. Then, ask them to support your mission with unrestricted dollars to allow for growth
7. Inspire them to commit to paying for a greater share of administrative and fundraising costs

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