3 common fundraising mistakes nonprofits make—and how to avoid them 

Despite the importance of raising money well, the majority of small to midsize nonprofits use suboptimal strategies—methods that are expensive, time-consuming, and yield only minimal returns on a lot of hard work.  

As founder and CEO of Altruist Partners LLC, creator of the Altruist Accelerator, I have almost 20 years of experience working in the social impact sector. Based on my experience, here are three of the most common mistakes nonprofits make, along with what they should be doing instead: 

Fundraising mistake #1. Relying on one-time events or mass marketing efforts 

One-time events such as auctions, galas, and raffles are expensive to produce and almost always result in limited return on investment. By themselves, social media appeals, fundraising letters, and other mass marketing efforts offer low conversion rates and contribute to message fatigue and information overload. These are the kinds of revenue strategies that keep nonprofits just surviving instead of scaling. 

In this age of digital overload and short attention spans, nonprofits that want to raise more money will instead create and sustain authentic, productive, long-term relationships with a network of individuals, corporate executives, government representatives, and/or impact investors.  

Events, social media, and marketing are only small links in a much bigger chain of interactions with supporters. In order to successfully scale, a nonprofit must build and inspire confidence among its potential donors that it can effectively deploy their money to address a social issue. Instead of one-time transactions for small amounts of money, in Altruist’s experience working with top-level clients, this approach involves a six- to 12-month-long process for raising millions in new capital.  

Strategies for creating and sustaining long-term relationships with different entities include: 

• Individuals: Proposing “charitable investments” (a reframed term for “donations,” which I expand upon in fundraising mistake #2) via one-on-one, face-to-face meetings while using events to educate and thank investors and identify potential major prospects. 

• Corporations: Delivering evidence that the partnership can solve their business problems, add marketing and brand value, or create a broad platform for meaningful employee engagement. 

• Foundations: Relying on experienced, proven grant writers to research and write proposals. 

• Government agencies: Using experts to review the federal grant register and target new grant opportunities. 

• Impact investors: Soliciting program-related investments (PRIs)—loans that are often convertible to grants—from private foundations. 

Fundraising mistake #2. Using language that can be off-putting to potential donors 

According to the Better Business Bureau, only one in five Americans “highly trusts” charities. So, using the same kind of language as every other charity repeatedly expressing their need for funding may not be the most effective strategy.   

Nonprofits that seek to scale use language such as “charitable investment,” or “investment” for short. This brings the listener into a uniquely powerful frame: “We don’t seek gifts. We seek investments, not for a financial return but for a clear and measurable social outcome.” 

The frame we teach the nonprofits we work with is this: “Run toward words that differentiate you from the crowd—words that present you as an organization that is transparent and accountable.” Words that easily do this include “investment” and “partnership,” instead of typical fundraising terms such as “development” or “advancement.” 

However, nonprofits should tread carefully when using these terms. They need to be able to make good on promises of transparency and accountability. If we don’t follow through on our rhetoric, we will fail to sustain the trust critical to securing more funding. 

Fundraising mistake #3. Tackling too much 

Many nonprofits try to solve more problems than they have the resources to address. They may invent new initiatives in pursuit of funding opportunities, start a new program because a grantmaker is interested in supporting it, or find it hard to say no to an emotionally compelling issue. 

Despite their best intentions, this lack of organizational focus results in mission creep—the gradual expansion of a project or mission beyond its original scope. Marketing experts call this TMM: Too Many Messages, inundating the audience with too many choices. The resulting confusion and paralysis can cause low conversion rates. The less focused your nonprofit is, the less likely you are to achieve your goals because the organization is spread too thin. 

Successful nonprofits try to solve one specific difficult problem. They pick a goal, define strategies, and stay focused on the small handful of metrics that measure the execution of the strategy. These metrics are called Key Performance Indicators (KPIs), which can be broken down into lagging indicators (the desired outcome or the ending results, such as “dollars raised” or “percentage increase in registered voters in our community”) and leading indicators (the activities performed to create the desired outcome, such as “meetings had with potential investors”).  

Many nonprofit organizations are merely surviving instead of thriving. The good news is that there are better, proven ways to dramatically increase nonprofit revenue—but only if nonprofit leaders are willing to think outside the box. 

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