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What's Wrong with Fundraising?

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.

Dan PallotaI was thrilled when I first saw Dan Pallotta’s TED Talks presentation.  I thought to myself, “Finally!  Someone said it!”  And, I wondered why it wasn’t me.
But now that he came out (in more ways than one— Dan is gay), I thought I should make sure all of my subscribers are aware of Dan’s lightning bolt speech.
In case you don’t have time to watch it, below you will find some of the points he describes as shackles that prohibit charities from making real change in the world.  You’ll have to watch the video to see how he proposes we fix things.
1. It’s unfair that we have a visceral reaction when we see that people working in the nonprofit sector make money.  Why should the CEO of a nonprofit be capped at a couple hundred thousand dollars a year when the CEO that sells sugar water to kids can earn tens of millions and celebrities can earn even more? How can we expect to recruit the best and brightest into our sector if we don’t compensate them?
2. It’s unfair that the nonprofit sector is not allowed to spend more money investing in marketing and advertising to generate more funding.  If they do, their overhead increases and donors are led to believe that the nonprofit is wasteful.  As a result, donations have been stuck at 2% of GDP for several decades.  In other words, why is a bake sale that generates a net of only $194 with ZERO expenses a good thing while a nonprofit that generates a net of $194 million with 40% overhead a bad thing?
3. It’s unfair that nonprofits are not allowed to take risks.  How come movie studios and other businesses like Facebook or Twitter can lose millions of dollars yet if a nonprofit loses money on one single event, the media wants to investigate them and call the Attorney General?
 
 

8 responses to “What's Wrong with Fundraising?”

  1. Patrick Manion says:

    Greg- I did find this very compelling. I do have reservations on compensation though. First and foremost every employee of a non-profit has to be dedicated to the mission. It is the only way to achieve success. With that, there is an understanding that there are trade offs in compensation. There is no getting around that. The for-profit world has plenty of opportunities for people to make multitudes of money (or does it?). At a certain point there has to be a limit to compensation. As a mission dedicated non-profit professional I find it highly insulting for people to say that a non-profit has to settle for a less talented person because of the compensation package they offer. As a donor, I do not feel that I have to contribute to someone’s fancy tastes in jewelry, or clothing, or cars, that heads up a non-profit. I recently was amused by some friends on Facebook who were alarmed at high salaries at a certain non-profit that had a very upscale dinner in Washington, DC. Those that paid for the tickets were a little more ticked than those who had been given the tickets by their employers. My opinion as a donor carries the most weight in this conversation. Now you are going to have dedicated non-profit professionals who agree with me, and you are going to have highly compensated for-profit professionals that don’t. I recently made a post on LinkedIn that had this subject matter. It was interesting to observe the responses. Thanks for this post.

    • Greg Warner says:

      Thanks Patrick. I agree. This is a fascinating “paradox”. How do you raise more money and compete with other organizations while keeping costs low (especially pay)?
      Boy oh boy… what a challenge you all have.
      This is the crux of the matter. In other words, this is exactly why I created my products— to help fundraisers generate more and larger donations while actually spending less money to do so.
      Thanks for subscribing to the blog. It was a true pleasure to chat with you on the phone recently too!

  2. Patrick Manion says:

    Greg- I did find this very compelling. I do have reservations on compensation though. First and foremost every employee of a non-profit has to be dedicated to the mission. It is the only way to achieve success. With that, there is an understanding that there are trade offs in compensation. There is no getting around that. The for-profit world has plenty of opportunities for people to make multitudes of money (or does it?). At a certain point there has to be a limit to compensation. As a mission dedicated non-profit professional I find it highly insulting for people to say that a non-profit has to settle for a less talented person because of the compensation package they offer. As a donor, I do not feel that I have to contribute to someone’s fancy tastes in jewelry, or clothing, or cars, that heads up a non-profit. I recently was amused by some friends on Facebook who were alarmed at high salaries at a certain non-profit that had a very upscale dinner in Washington, DC. Those that paid for the tickets were a little more ticked than those who had been given the tickets by their employers. My opinion as a donor carries the most weight in this conversation. Now you are going to have dedicated non-profit professionals who agree with me, and you are going to have highly compensated for-profit professionals that don’t. I recently made a post on LinkedIn that had this subject matter. It was interesting to observe the responses. Thanks for this post.

    • Greg Warner says:

      Thanks Patrick. I agree. This is a fascinating “paradox”. How do you raise more money and compete with other organizations while keeping costs low (especially pay)?
      Boy oh boy… what a challenge you all have.
      This is the crux of the matter. In other words, this is exactly why I created my products— to help fundraisers generate more and larger donations while actually spending less money to do so.
      Thanks for subscribing to the blog. It was a true pleasure to chat with you on the phone recently too!

  3. Kirt Manecke says:

    Greg, This is one of my favorite topics and Dan is right on. Many nonprofits are losing their battles due to ineffective advertising (or none at all), weak PR and sales (fundraising), and in many cases, the wrong skill sets. Nonprofits need to get out of the bake sale mentality and treat their nonprofits like the businesses they are. This will mean hiring people with professional sale experience who know how to find the right people and create long term, profitable relationships. This also means hiring entrepreneurs with a “make it happen” attitude and getting rid of the staff and board members who simply are too slow moving. Thank you for sharing this excellent article.

  4. Kirt Manecke says:

    Greg, This is one of my favorite topics and Dan is right on. Many nonprofits are losing their battles due to ineffective advertising (or none at all), weak PR and sales (fundraising), and in many cases, the wrong skill sets. Nonprofits need to get out of the bake sale mentality and treat their nonprofits like the businesses they are. This will mean hiring people with professional sale experience who know how to find the right people and create long term, profitable relationships. This also means hiring entrepreneurs with a “make it happen” attitude and getting rid of the staff and board members who simply are too slow moving. Thank you for sharing this excellent article.

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