Bruce Pelz, founder of the Maji Safi Group and member of the Forbes Nonprofit Council, explains why donor retention continues to plague the nonprofit industry.
Bruce Pelz
Founder, Maji Safi Group, Member, Forbes Nonprofit Council
How would you summarize today’s nonprofit landscape?
Today’s nonprofit landscape is still vitally important to development and providing social services for vulnerable groups around the world, but it is very crowded and competitive. Giving has been on a decline in recent years, which it makes it even tougher for nonprofits to maintain their annual budgets and continue to provide their beneficiaries with quality service.
Additionally, nonprofits continue to be plagued by the long-held belief that their overhead costs should be between 15-20 percent of their expenses. While there has been a movement to debunk this myth, this harmful belief is still held by many grant makers and individual donors. Nonprofits these days are basically expected to run like small businesses, yet you see very few small businesses that only have a 15 percent overhead. This causes nonprofits (especially small ones) to struggle paying top talent and takes away from the time directors have available to focus on programmatic impact since they have so many different job responsibilities.
In your opinion, what is the biggest fundraising roadblock for nonprofits?
I think the biggest fundraising roadblock for nonprofits is that a connection between the clients/beneficiaries they are serving and where their income comes from is often lacking. Basically, this forces many nonprofits to have to run two different businesses. You have to do a good job serving your beneficiaries, who are often affluent and have varying levels of exposure to your mission, as well as your donors. This conundrum stretches nonprofit resources thin and forces staff members to wear many different professional hats.
Why does donor retention continue to plague the nonprofit industry?
Donor retention can be very difficult for nonprofits because charitable giving is often at or towards the bottom of most people’s financial priorities. There are also so many options for what problem or charity to support. According to the National Center for Charitable Statistics, there are more than 1.5 million nonprofits in the United States, which gives donors endless options and makes donor loyalty harder.