How Does Fundraising Work?

Are you wondering how to raise more money for your nonprofit?

Let’s start with a clear understanding of how fundraising, which is seeking contributed income, works. Stripped to the essentials, here it is:

Two men looking at notebook and discussing it

  1. You work to connect with people to generate revenue and long-term donors.
  2. Some, but by no means, all of these actions create donors and dollars.
  3. Time, energy, and money limit your ability to do more.
  4. Your results improve by persevering and growing skills, and you create an “orchestra” that changes lives.

The words in bold are carefully defined below.

Definitions and Clarifications
Work includes requests for contributions, educating people about your cause, thanking people for support, inviting them, etc.

Connect: You meet people, build relationships, and help them achieve their goals. You provide them value.

People include actual and potential donors, individuals who never donate but otherwise contribute (i.e., volunteers and cheerleaders), and folks who take but never give.

Revenue: Dollars raised and items (in-kind) that you use instead of cash.

Donors: People who offer your nonprofit money or property. In exchange, you provide value. You translate resources into mission results.

Actions that don’t create dollars or donors include activities with zero results. What’s tricky about it? Some steps that seem like they will grow income but don’t, such as likes on your Facebook page. To free resources for more fruitful efforts, reduce activities that create minimal or no results.

Energy Limits: You understand time and money limits. What’s obscure is that energy burns each time you execute a good idea poorly. “We tried that once” kills many tactics others use to create donors and raise funds successfully.

Skills: Fundraising takes skills. For example, how to move people through a philanthropic development process. It takes finesse to ask people about their interests and align them with yours. Other skills include clarifying what you hope to accomplish and matching your expectations to the results. For instance, you decide on a new event to raise money, see if it works, respond to a board member’s demands, meet new donors, connect with current supporters, and capture snippets. After the event, you do your organization a disservice if your board only evaluates the function of how much money you made. Considering all of the goals, especially those that are vital measures or outcome drivers, is a subtle and essential skill.

Orchestra: A metaphor for creating an educated group of supporters whom you lead in concert toward your organization’s vision. You help people play their instruments to generate mission, money, and community. Together you make fundraising work.

Is Fundraising Working for You?

Now that you know how fundraising works let’s look at your situation.

How is fundraising working at your organization? Decide what you will do to make it work better. Rank yourself from 1 to 4 on the How Does Fundraising Work statement above.

To learn more about nonprofit fundraising,

Watch: What is a Culture of Philanthropy?

Read the Guide: The 7 Drivers of Fundraising Success