Ruined by Success? The Danger of Nonprofit Windfalls

Man with money held up to his faceThe nonprofit that served children won a grant of $500,000. It was a significant step forward, and it almost did them in.

A nonprofit that served seniors received a bequest, from a senior woman no one knew, for $1,250,000. It was terrific, and it nearly ruined them.

Almost every nonprofit, over time, will receive one or more windfalls. At successful nonprofits, these windfalls create grand celebrations. But after celebrating and investing the funds to further the mission, successful nonprofits return to their tried-and-true fundraising and income development plan.

For other nonprofits, windfalls create challenges that knock them over. Like their successful counterparts, they celebrate and make much-needed mission investments. However, instead of returning to consistent fundraising and income development work, they fixate on windfalls. At the senior program, 500 people visit them per year. They obsess on finding the next person to give them a request instead of developing lots of donors who will donate every year. The grant for children came from the community foundation as it was launching a new initiative in the area. They fixate on grant opportunities instead of developing more corporate partners where they had been making excellent headway.

How can you avoid a windfall from placing your nonprofit at-risk? First, be joyous. Be grateful. After the celebrations, return to a realistic income and fundraising plan based on consistent disciplined-work, proven outcomes, and fit with your organization’s temperament. Follow the paths that successful nonprofits like you follow. When your nonprofit wins the lottery, celebrate and then return to the tried-and-true.

How does your nonprofit handle windfalls? Have you developed a board policy about how to handle them? Has your nonprofit ever been “hurt” by success? Just a quick note below about what you learned.

For more about, how to raise millions together year after year, and after a windfall, download this free chapter of Let’s Raise Nonprofit Millions Together.

Karen Eber Davis

Before founding her firm, Karen Eber Davis developed the Sarasota County Community Development Block Grant Program. Under her leadership, this infant program received the National Association of Counties National Affordable Housing Award for the Down Payment Assistance Program. To date, the program helped over 1,800 families realize their dreams of homeownership. She also worked with the City of Ft. Lauderdale and the Florida Department of State, Division of Cultural Affairs, where she developed the division’s first audit program. In an earlier position at Good Shepherd Lutheran Church in Tampa, she organized senior, youth, and children groups plus family activities. Her youth staffing work with the Florida Synod of the Lutheran Church in America supported youth ministries in 120 congregations in Florida.