5 Common Fundraising Mistakes Made by Nonprofits and How to Avoid Them

As a nonprofit operating within the United States you know all too well that, in order to fund your operations, meet your objectives, and give something back, you will rely heavily upon donations.

If you’re serious and committed to using your organization to make a difference and bring about some very real change, like virtually everything else in life, you’re going to need funds to do so. Fundraising is, of course, one of the best ways of achieving your goals, providing you know what you’re doing.

Without question, fundraising is one of the most effective strategies for raising capital, and if done correctly, the rewards can be fruitful. The problem, however, is that fundraising, particularly as a nonprofit, is laden with pitfalls and is not always as simple and straightforward as you may have hoped.

For nonprofits and organizations relying upon donations, it’s important that your fundraising campaigns run as smoothly as possible. To help ensure precisely that, here’s a look at 5 common fundraising mistakes made by nonprofits, and how to avoid them.

Failing to Acknowledge Your Donors

One of the most common mistakes we see nonprofits across the nation making every single day, is failing to acknowledge their donors and their specific requests.

Whenever your organization receives a donation, no matter how big or small, it’s important to you acknowledge your donors, thank them, and do everything in your power to adhere to their requests and requirements.

If for example, a donor gifts a generous amount of funds, and requests that you use them in a specific way, it’s down to you to do what you can to ensure that you do precisely that (within reason, of course). If you fail to use the funds as instructed/requested by the donor, don’t be surprised if they fail to donate again, or worse still, they threaten you with litigation.

Put simply, listen to your donors, thank them, acknowledge them, and as long as their requests are reasonable, try to use their donations as instructed/requested.

Not Prioritizing Donor Retention Strategies

Another very common fundraising mistake made by nonprofits is failing to prioritize donor retention strategies. What do we mean by this? Basically, if organizations put more energy into retaining existing donors and building donor loyalty, instead of chasing new donors constantly, the rewards could be more fruitful.

If you can build trust with a donor, and if you use the funds as they asked (refer back to our previous point) they are far more likely to stick with your organization and become a regular donor. The happier they are, the more loyal they will be to you, and the more funds they will likely donate.

Of course, acquiring new donors is also important, but once you do acquire a donor, don’t take them for granted or prioritize them over new ones.

Failing to Reach Your Objectives

As a nonprofit, one of the hardest aspects of running an organization which relies upon donor funding is reaching your targets and objectives.

While not every campaign is guaranteed to be a success, for the most part, your donors expect you to hit the mark, meet your goals and targets, and do what you’ve promised to do. Failing to do so is only likely to tick off donors and build distrust. They’re putting their faith in you and have donated their money to help your organization to do what it promised to do. If you fail, their donations, in their eyes at least, will have been completely worthless and they’ll likely look elsewhere when making their next donation.

In order to help reach your targets, be sure to set realistic goals, don’t make outrageous claims, and above all else, don’t lie to your donors or try to hide the truth from them.

Not Being Transparent with Donors

In order to help the donations to continue flooding into your nonprofit, it’s important that you’re clear, concise, and transparent from the get-go.

Donors don’t expect to know all of the ins and outs of your organization, but they do expect transparency and will not appreciate being left in the dark. In order to help build donor trust and bring in as many donations as possible, try to be as clear and transparent as possible. This includes things like:

• Sharing success stories and showing what differences and changes your organization has brought about

• Be clear about who runs your nonprofit

• Be clear and concise on how donations are used

• Share how many funds you’ve raised and how far away you are from your targets

Failing to Comply with Charitable State Laws and Regs

Finally, perhaps the most obvious mistake you can make as a nonprofit is failing to comply with state charitable registration laws.

As a nonprofit, you get to enjoy certain perks, including tax exemptions, but there are a number of legal hoops to jump through beforehand. Before your organization can go live and seek out donations, you first need to ensure that you’ve registered the necessary documents, provided the necessary documentation, and signed the paperwork you need to sign.

These laws, rules, and regulations vary from state to state, so be sure to double-check you’ve carried out the necessary due diligence before you begin fundraising. Failing to do so will not only result in a heft fine, it could also land you in very serious legal trouble as well.