7 Fundraising Challenges Stump Nonprofit Organizations

Every nonprofit faces fundraising challenges. It comes with the territory.

But the key to being a successful nonprofit is not allowing the fundraising race to consume you. 

After all, if you spend all your time worrying about money, it’s that much harder to execute your mission. Nothing drains the positive vibes out of a nonprofit leader faster than wondering where to get the cash to cover payroll. 

That’s why we’ve created this guide to conquering the 7 financial challenges we see nonprofits struggle with day after day. 

The actionable tips you’ll get below can help make your job as nonprofit leader a bit easier, so you can invest more of your time in executing your mission of service.

Ready to conquer your fundraising challenges? Great, let’s go…

1. Beating fundraising challenges starts with building trust with donors

Building trust with the public is one of the biggest fundraising challenges for any nonprofit.

Donors want to be sure their money will make a difference. And highly-publicized scandals have eroded the public’s trust in charities and nonprofits over the past few decades.

Even if there are only a few bad actors out there, it turns people off from charitable giving as a whole. When one organization fails, many people believe that all organizations are not trustworthy.

But the good news is that people still want to help organizations do good things in their community. 

Organizational discipline and financial transparency will help you warn their trust and even turn trustworthiness into a fundraising asset for your team.

Tips for building trust with your donors:

• • Keep accurate books and produce clean quarterly financial reports 
  • Conduct an independent audit of your organization’s books
  • Always file your IRS form 990 on time and include all necessary information
  • Invest as much money as possible into programs, and keep operations lean
  • Be fully transparent about where and how you spend your money
  • Get an accreditation from a respected organization like the Better Business Bureau or Nonprofits First

[box] Need to add trust to your financial picture? Talk to us about our nonprofit bookkeeping and accounting services.

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2. Diversifying revenue streams

Many community nonprofits get their start with individual donations, and there’s nothing wrong with that. But relying solely on individual contributions can keep you from ever feeling financially secure and stunt your growth. 

Because individual donations are often small and take a lot of resources to generate. Plus, when economic uncertainty hits, your revenue can dry up fast, as happened with many nonprofits during the COVID pandemic.

Similarly, if you rely primarily on one big grant to fund your programs, you could find yourself stranded if your funds are unexpectedly pulled for some reason.

Building multiple sources of revenue will help you survive the ups and downs that all nonprofits face.

Yes, it takes work to overcome this fundraising challenge for nonprofits. But when you have multiple ways to raise funds, you’ll never be strapped for cash when one area slows down, such as individual donations.

Fundraising ideas to move beyond individual donations:

• • Apply for grants with the federal, state, or local government
  • Apply for grants from private foundations
  • Charge membership fees in exchange for insider benefits
  • Host a fundraising event or gala
  • Seek out a corporate sponsor that shares your vision and values
  • Rent out your space to other organizations or provide paid services
  • Start a crowdfunding initiative with GoFundMe or Salsa

3. Making it easy for donors to give

It used to be that almost all individual donations came through cash or check. But no more.

Your donors increasingly expect to be able to pay by credit or debit card, online, and even on social media platforms!

Online donations to nonprofits grew by over 20% across all organizations in 2020. And for small and medium-sized nonprofits, online donations now make up nearly a quarter of all gifts!

Yet, even with those numbers, thousands of nonprofits still struggle to make it as easy as possible to use technology to make it as easy as possible for their donors to give in-person or online. 

The technology has gotten simpler to use. Bu if your team can’t figure it out on your own then hire someone or find a volunteer who can help. Ignoring technology for overcoming funding challenges is no longer an option for any organization that wants to succeed.

How to make it easier for your donors to give:

• • Offer a recurring payment option to automate future gifts
  • Use mobile credit card swipers to accept non-cash donations at events
  • Enable Facebook’s fundraising tools (you’ll miss out on a lot of donor information, but it’s a big source of fee-free donations)
  • Set up accounts with widely-used payment platforms like PayPal, Venmo, and CashApp
  • Enable text-to-donate with a qualified provider, like donorbox or txt2give
  • Always include a “donate” button on your website and in your emails

4. Building long-term relationships

Your donors care about your cause. And they want to feel like they’re a part of your story, not a passing observer.

Help donors feel valued by acknowledging that you received their gift, thanking them for their support, and showing them precisely how you’re using their money to make the community better.

The more you communicate with your donors, the more likely it is that they’ll continue to support your mission. Treat every donor with as much care as you can afford to, both because they deserve it and because large legacy gifts can come from the most unexpected sources.

Use these strategies to overcome fundraising challenges:

• • Use surveys and polls to show donors you care what they think
  • Interview your large donors to understand why they support you and how you can increase their support in the future 
  • Don’t hide behind the podium– be accessible and interactive at live events 
  • Focus on donation channels that allow you to collect donor data (not FB/Amazon)
  • Use a CRM, like DonorPerfect or Bloomerang, to track your donor engagement, send targeted emails messages, and see what kind of messaging drives your supporters to action 
  • Post regular updates on social media, but don’t stop there…also engage with your supporters through comments and direct messages

5. Finding the perfect partners

Beyond donations, you can overcome nonprofit fundraising challenges by partnering with other nonprofits or for-profit corporations.

Partnering with another nonprofit that shares your mission–or has a complementary mission–can multiply the impact that both of you have.

Forbes magazine identified five ways you can leverage nonprofit partnerships to explode your impact:

1. 1. Team up to host high-value webinars
   2. Repurpose blog content, newsletter, or videos
   3. Share space at conferences or trade shows
   4. Co-host events and fundraisers
   5. Combine your diverse skill sets

Beyond the nonprofit space, seeking out a corporate sponsorship can be a powerful way to give your funding a big boost while also raising your profile.

Big corporations often have huge sponsorship budgets, but it can be hard to get their attention. So maybe start with a local company or small corporation that aligns with your mission’s value.

If you’re curious how sponsorships work, how they’re different from donations, and how to get the attention of big corporations, Ken Ungar of CHARGE Sponsorship Agency breaks it all down for you in this video:

6. Maximizing your assets

So far we’ve looked at 5 ways to tackle your nonprofit’s fundraising challenges. But each of them is just a different way of convincing someone to gift you more money. 

Whether that person is an individual, a corporation, a foundation, or the government, the goal is still the same: to get a gift without offering anything of significant financial value in return.

But now let’s talk about how you can also leverage your resources to earn funding from individuals or organizations.

Like your real estate or your expertise, for example.

Meeting places are always in demand. If you can rent out a portion of your space to individuals, corporations, or like-minded organizations, it can be a great way to generate some extra operating cash.

Or, you could leverage your knowledge to offer paid services or workshops within the community. 

Just because you’re a nonprofit, doesn’t mean everything you do has to be free. And even small program fees can help offset your expenses and give your bottom line a healthy boost.

Here are a few ideas for generating extra cash:

• • Rent out your space for evening meetings or weekend events
  • Sublet a portion of your office space to another nonprofit
  • Teach paid workshops (live or online)
  • Charge a fair price for some of your services
  • Sell items created by or supported by your organization (talk to your accountant first. Depending on your location, your mission, and what you sell, this income may be subject to sales tax and/or income tax)

7. Creating brand ambassadors

Are your supporters doing all that they can to spread your message? 

If not, it may be your fault, not theirs. Hore’s how to empower your loyal supporters to get your message out there.

Create an ambassador toolkit

Put your supporters in the position to do what they do best–support you–by telling them what you want them to share (and how to share it).

Check out this ambassador toolkit by the folks at DoingGoodTogether.

They’ve provided clear communication instructions, program overviews, videos, and other resources for their ambassadors to share. Something like this helps your ambassadors spread the message you want the world to hear.

Enlist your most loyal supporters

An ambassador can be anybody, but your most likely candidates are sitting right underneath your nose– like your employees, volunteers, and board members. They don’t need to have a big social media following or a PR firm to help you get attention. 

By simply sharing your initiatives with their personal and professional networks, they can raise your exposure exponentially.

Reach for the stars!

And, of course, then there are “celebrity” or “influencer” ambassadors.

If you know of a social media personality or celebrity that aligns with your mission, why not reach out? It’s not easy to get in touch with a top influencer, but if you’re friendly, persistent, and persuasive, you could end up connecting with a partner who can reach millions of new people with one post.

In the past, nonprofits were generally forced to fundraise locally. But with the power of social media, the world is your potential donor base!

Conquer Your Nonprofit Fundraising Challenges

Starting and running a nonprofit is hard work. Fundraising challenges only represent a small percentage of the challenges you will face. But you’ll need to identify, address, and solve them if you intend to make an impact for decades to come.

Once you’ve got your funds coming in, you’re going to need to keep track of them all so that you know what money you have to spend.

As you grow, you’re going to need to keep updated books and produce audited financial statements to earn the trust of ever-bigger donors and grantmakers. It’s going to take more than a volunteer bookkeeper and a part-time accountant to keep your organization thriving.

If you need help getting (and keeping) your finances in order, reach out to us to talk about outsourced bookkeeping and accounting services.

We can help you optimize and modernize your accounting systems to save you time and money. And we’ll prepare all your financial reports monthly, so you can run your business and always be audit-ready.

Plus, you’ll get access to your very own team of dedicated nonprofit accounting professionals for expert advice and guidance. Nonprofit accounting is all we do, so we know what your organization needs to keep your mission moving forward.