How to break the most vicious cycle that hamstrings your organization's growth

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Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

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.

Bridgespan Group's vicious cycle image

Bridgespan Group’s nifty vicious cycle image

Here are three drivers of the circular situation:

  • 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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One response to “How to break the most vicious cycle that hamstrings your organization's growth”

  1. Dianne says:

    I encourage non-profits to post this link on their websites:

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