Water, lights, toilet paper, batteries, rent, copy paper, staples, pens, printer cartridges – what do the items on this list have in common? They can all be found somewhere in the budget of practically any nonprofit organization you support. Oh, did I forget the coffee? Someone must buy the coffee to keep the volunteers coming, and the staff energized as they serve day after day.
We don’t spend much time thinking about what keeps an organization going. But, the truth is if you are using it at your home, they are likely using it to make the organization’s work possible. So, who keeps the doors open, pays those expenses? You and me – donors to the organizations we intentionally support.
I am a proponent of organizations having a broad donor base. I liken donor support to the image of a triangle – broad at the bottom, rising to a point. Think of donors, standing shoulder to shoulder, many at the bottom of the triangle, and very few at the top. Now imagine the triangle is upside down – the donors at the top give large gifts, and a few donors at the bottom give small gifts. The upside-down triangle is unstable because the base is small.
The organization is in financial danger. Raising funds for direct services and general operating costs with a teetering donor triangle is exhausting. It leads to less than quality services and the inability to stay on mission.
Many Donors Keep the Doors Open
On the other hand, the donor support structure represented by a triangle resting on a broad base is stable, financially healthy. As a result, staff, volunteers, and board members can focus on services, stay on mission and reach for the vision of a better future.
It takes many, many donors to keep the doors of an organization open. A few donors making large donations is great. A few donors making large donations year after year gives an organization breathing room. But a long list of donors giving small gifts creates a strong base for an organization… making them jump up and down, even shout for joy.
A Long-Term Outlook Depends on a Stable Base
To be clear, a small number of donors making large gifts can keep an organization operating and delivering needed services for a time. But the long-term outlook is better when donors stand shoulder to shoulder, creating a solid base of support.
Combine financial health with solid leadership, vision and an important mission, and you have a great organization.
Financially stable organizations can better respond during crises, as we experienced during the last year and a half when the coronavirus turned the world upside down.
Unrestricted Giving Even Better
A second key ingredient is unrestricted funding. It’s at the center of trust-based philanthropy, a view that supports trusting the leadership of an organization to know where funding is most needed. So now it’s not just about the water, lights, toilet paper, batteries, rent, copy paper, staples, pens, or printer cartridges. It’s making it possible for the organization to serve more people, start new services, innovate and create.
The Center for Effective Philanthropy keeps its ear tuned to donor opinions and giving behavior. Their research indicates that only about 20% of donations are unrestricted. Trust is vital to the future of outstanding nonprofit organizations delivering critical services.
A Few Donors, Big Gifts – Good or Bad
Operating support and unrestricted funding can provide a nonprofit the capacity to focus on what’s important. But there is reason to be concerned. Recent research on 2018 giving from Indiana’s School of Philanthropy indicates the number of donors by U.S. households has dropped to a nearly twenty-year low. We don’t yet know whether more donors gave during 2020, a year with unprecedented challenges.
The study tells us 49.6% of a 9,000 household sample made monetary gifts in 2018. Of the total giving, significant gifts were made by only a few donors.
Remember the upside-down triangle? It’s a picture of 2018 giving, and unfortunately, not a good sign. We can keep the triangle right side up. Join other donors with gifts to general operating and consider making unrestricted donations. Help keep your favorite organizations healthy.
What’s your favorite way to donate to an organization?
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